Dáil Éireann debate -
Thursday, 24 Feb 1983

Vol. 340 No. 6

Financial Resolutions, 1983. - Financial Resolution No. 14: General (Resumed)

Debate resumed on the following motion:

That it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision in connection with finance.

—(Minister for Finance.)

Mr. McCartin

Before I moved the Adjournment of this debate I was referring to the Estimate for Agriculture against the background of the situation in that industry. I pointed out that in real terms agricultural earnings at the end of last year were 90 per cent of what they were in 1969. Last year there was an increase of .02 per cent while earnings in the economy increased by 50 per cent in that period. What can we do through our budgetary procedures, or by other means, to improve the situation in agriculture? Last week I pointed out that we can negotiate to the best of our ability for every reasonable increase that can be obtained for agricultural produce through the European Economic Community. It is a popular stand to debate for the protection of the CAP and as high a price as possible for produce for our farmers but the fact remains that there is a definite limit to the price increases we are likely to get in the foreseeable future because most of the products we are likely to sell are in surplus in the Community. It is very costly to dispose of those products. We must be realistic and accept that while we must do our best there is a limit to what we can get, 6 or 7 per cent this year. Such an increase will not mean very much to the average farmer. If we succeeded in getting more than that the Irish farmer who could be described as a small producer would only get a fraction of the benefit which will go to our competitors in Holland and the UK. We must remember that the average Irish herd is 13 cows and the average UK herd is 40 cows. The truth is that if we succeed in taking more money from the European budget for agricultural produce farmers in other countries will get more than those involved in the industry here. The situation will not improve very much for our farmers but at the same time the problem of the European budget will be aggravated. That must be recognised.

We must ask ourselves if we have been pursuing a policy of bashing everybody who questions the wisdom of the CAP or the British for their opposition to it instead of planning a realistic approach to the development of our agricultural industry at home. That was not done and there was no effort in the budgetary procedures of the last three or four years to provide anything for the improvement of that industry. It has been pointed out that the Estimate for agriculture amounts to £256 million and I believe that less than 30 per cent of that figure finds its way beyond the farm gate into the pockets of farmers for the development of agriculture or the improvement of farm incomes. Under the estimate £44 million is provided for salaries and £57 million for food subsidies. I am surprised that the House in passing the Agriculture Estimate annually has accepted as valid the insertion into that Estimate of the social cost of subsidising food. It does not have anything to do with agriculture and, in the interests of truth and justice to the agricultural community, that figure should be listed under a different heading. It is ridiculous to include it in that Estimate and try to pretend to farmers and other sectors that it is being spent on agriculture.

The Estimate also includes £1 million for international co-operation, payment to the world food programme, a comparatively small amount but it is not part of the Agriculture Estimate. It does not have anything to do with the development of that industry and does not give direct benefit to farmers. We would have a more honest presentation if such matters were not included in the Agriculture Estimate. The bulk of that money does not have anything to do with the agricultutral industry and is not being spent for the benefit of farmers. I do not like making an attack on the public sector because over the years I have seen the cream of the labour market being recruited into that service but it is questionable whether the fine people on the administrative staff of the Department of Agriculture are being properly utilised to the benefit of the agricultural industry. In my view their talents are not being utilised. If we arrived at a situation where we did not have that area of the Department, would the House in considering the development of the industry put that type of structure back? I do not believe the House would. The truth is that there is sufficient money in the Estimate to give to every full-time farmer a pension or income supplement in the region of £40 per week. If one takes out of that the 50,000 or 60,000 farmers who are viable and earning an acceptable income one would see that the remainder would be more than well catered for under the Estimate. The truth is that farmers are getting very little.

I acknowledge that the Government had not many options open to them, they had no way to turn. However, grants for farm development have been eliminated and the western drainage scheme is slowing down. Therefore, we must ask ourselves what the administrative officers who were involved in that work will be doing in the coming year. I recognise that the scaling down of the grants is a temporary measure but before that decision was taken certain sectors of the staff in the Department were an embarrassment to each other as they drove around the country or walked around offices with no apparent job to do. That is rarely said openly but it is the truth of the situation. If at any stage we find it necessary to reduce grants or withdraw schemes we should immediately make some revision either for useful occupation of the people involved or the removal of them, their cost and expenses from the Department.

In recent years in response to political pressure by groups there has been a building up of scheme after scheme in the Department of Agriculture. I can recall when the Estimate for that Department was a higher proportion of GDP, four times higher, than it is today. At that time any person familiar with the agricultural scene could list the number of schemes in operation for the benefit of farmers but there are so many schemes today that one would need a computer to keep track of them, the regulations involved and the administrative costs involved in the handing out of a few paltry pounds that is not doing much good for the agricultural industry. It should be remembered that two other Departments are linked to the Department of Agriculture. The Department of Lands costs £16 million annually — almost half of that figure goes for wages and expenses — and the Forestry Division costs £43 million annually. The three Departments have the same aim, the development of our agricultural resources to give a better standing of living to everybody, especially those working on the land. We could easily eliminate the administrative structure of the Department of Agriculture and have enough money left in the £59 million for Lands and Forestry to provide the educational services that are needed.

It is remarkable that the first cut introduced — it was carried out before the Coalition took office — was in educational facilities. There was a reduction in the amount of grants to AnCO and the number of advisory officers was reduced. That is the last place we should consider reducing spending because it is one area that needs development and further investment. If we eliminated the entire spending of the Department of Agriculture there would be sufficient money left in Lands and Forestry to pay all the administrative and educational expenses needed in agriculture. The £256 million provided in the budget could go directly into the agricultural industry by way of reorganised schemes or a better plan to assist farmers improve their income and develop their lands. This would, as has often been pointed out, create further wealth in food processing and all the upstream and downstream activities that this would generate.

What can we do in the short term for the agricultural industry? The Government have a very difficult situation facing them. It is very hard for the Government to easily recognise what they can do. There is something which I believe could possibly improve the situation which has not been very popular. I know there are very few politicians who would recommend it. I believe we have reached the stage when we must seriously consider, not only for the sake of agriculture but for other reasons, whether our currency is over valued. It has been pointed out by the social economic council, the IFA and many eminent economists, that it is possible, if our currency was devalued, this might improve the situation in our economy but, in particular, the agricultural industry. If the value of our currency means anything how can we have a situation where our inflation rate is an average of 8 per cent or 9 per cent higher than our European partners and at the same time our currency can maintain its value against theirs.

I did not believe it was a foolish thing to join the European monetary system but I expected that any Irish Government who had control of our economy would realise it was important for them to exercise economic discipline and to pursue the economic policies of our partners within that system if we were to maintain the value of our currency in relation to that of our competitors. People said that we already had a devaluation because of what happened the British pound. They have said that for two or three years but they cannot say it anymore. I do not accept that is a valid argument because it was solely the British currency which was revaluing. While the British might have found it more difficult to sell into our market and while we should have found it easier to sell into theirs, the truth is that every other country in the world had the same advantage that we had and they had the same advantage competing with us on the British market. The argument put forward that we have had an effective devaluation is not a valid one.

What is the situation at the present time? Not only is the British inflation rate so much below ours but the British pound is devaluing at the same time. If those people were correct about what they said in the past, surely there is every argument in favour of an immediate devaluation now or we cannot survive? We would be absolutely swamped by British competition if that argument was correct. There are other arguments in favour of devaluation. They say we must freeze wages and salaries and we must exercise severe disciplines. We must do these things even if we devalue. It is not true to say that if we devalue our currency we must immediately have a wage freeze. We should say that if we devalue our currency we should not seek to make good the loss through some sectors by, at the same time, demanding wage increases. If we do that we will undo the advantage of devaluation.

Another argument that has been put forward is how can we pay our national debt, how will we buy our oil? I do not accept those arguments. I wonder why so many eminent politicians accept those arguments. The truth is that we will buy our oil and pay our national debt with goods and services sold abroad competitively at world prices. That is how we will meet our foreign commitments. I do not believe it is true to say that if we devalue our currency it makes it that much more difficult. We can also say that if we devalue our currency a reduced amount of national borrowing will accommodate our needs. I believe that the people who lead the argument against devaluation are the sector who have nothing to lose, the people who have money, banks, insurance companies, and all those people who will naturally lose by a devaluation of our currency.

We are listening too much to those people. They have had a good innings. Power has been slipping in our economy from the people who are doing things, taking risks, producing wealth to the people who had ready cash in their hands. Those people have bled the productive sector over the last few years. They have bled the agricultural industry with exorbitant interest rates that could not be paid. They have bled the exporters, the people who are producing and creating employment, with interest rates that could not be paid. I do not accept that was necessary. Why should we have had those interest rates if we were not devaluing our currency?

Let us take a German who had one million Deutschmarks to lend five years ago. If that man loaned that money in Germany at the going rate of interest, which was 6 per cent, 7 per cent or sometimes 10 per cent or 15 per cent lower than our interest rates, he would have got over the last four years 30 per cent less than if he converted it into Irish pounds, gave it to Irish farmers and industrialists and returned it to Germany. The productive sector of our economy has been bled by the people who demanded exorbitant rates of interest. I believe one of the ways we can put that right at the moment is by a devaluation of our currency.

We also heard the argument that if we devalued how would farmers pay the money they had borrowed from abroad? They said the Government would be forced to subsidise the interest on their loans to make good the deficiency which would arise. I do not accept that argument either. If the Government had facilitated the agricultural industry to borrow in Deutschmarks four or five years ago and the Government were saying all the time they would not devalue, surely we had to take the risk that the Deutschmark would devalue a little bit? The gap between interest rates was so wide that that was no risk at all. The price of agricultural produce would rise directly as a result of any devaluation that might occur. This would have enabled our agriculture to pay the difference that would arise as a result of our devaluation. I believe it is time we took not least of all because of the trend in our balance of payments deficit, which is obvious in the last month, a look at this situation. We must look at some possibility of giving agriculture and industry an opportunity. I admit there will be sectors within our economy who will say they are entitled straight away to have the losses made good to them. If we adopt that approach and if we have a Government who are soft enough to preside over such people robbing back the benefits we can get for our competitiveness the effort will have been wasted. I believe now is the time to try because there are very few options open to us.

I would like to refer to the question of the Department of Lands. It is four years since a former Minister for Agriculture, Mr. Gibbons, told the Land Commission not to buy any more land and to distribute the land they had. Since that successive Ministers who have taken office have not changed that nor am I aware of the Land Commission being in the market for land over that period. Surely at this stage the Land Commission could have got rid of all the land they had at that time? I am sure if that Department were seriously seeking to divest themselves of the land they hold — there are farmers in every area waiting for it — that land would be distributed by now. All the employees and the departmental officers in the Land Commission would be sitting at their desks asking the Minister what he wanted them to do now or should they just go home. The truth is they have been spinning it out, hoping the Minister will change his mind, perhaps under political pressure some new land policy will emerge. Whatever it may be, it is time we had a rethink on this whole subject. I am confident that the Government who are only settling themselves in office will bring forward a solution so that we will not have to come here next year to vote an Estimate for a Department that has been redundant for the past four years. In my county 50 per cent of the land is in the hands of people who are over 50 and unmarried while there are other people who would very much like to acquire more land but who cannot do so because of the high interest rates. Even if they were in a position to buy additional land they would not be able to stock it because of the cost of borrowing, and we all know that small farmers do not have money in the bank. There is no plan by which the Government can transfer land to people who can make good use of it. I am looking forward to this new Government applying themselves to the task of settling the question of the role the Land Commission are supposed to play.

The whole area of education has been given much attention in recent days. The cost of school transport must concern every Deputy. As I have said in recent days, we could put to better use the £30 million involved. We all respect the officials and workers of an organisation such as CIE. We are concerned about their jobs but we cannot keep them in jobs merely to have them working. If they are not doing a job that is productive and useful, we must reconsider their position. A scheme whereby direct grants would be given to parents, teachers and school managers could be organised in such a way as to eliminate the whole administrative cost of school transport. People must realise that the evergrowing demand for money for school transport cannot continue to be met by the Government. In the interest of the children and of making economies, I am confident that all those concerned at local level would be prepared to take on the very light burden of administering the school transport service.

The Department of Social Welfare is another area in which administrative costs could be cut drastically. This Department, like the Department of Agriculture, operate so many different schemes that one would need a computer to keep track of them all. There is no need for 25 per cent of the schemes in existence. Surely the purpose of a social welfare system is not, as appears to be the case now, the creation of a floor below which any citizen must not be expected to live or to labour. We should be able to operate our social welfare services at only a fraction of the current administrative cost. When I entered politics about 15 years ago it was easy to answer inquiries as to what schemes were available, but that is no longer the case because of the many schemes and variations of schemes available through either the Department of Agriculture or the Department of Social Welfare. Surely unemployment assistance, unemployment benefit, disablement benefit and the many other social welfare schemes could be condensed into one workable and useful system that would achieve the very same purpose. Despite a situation in which we have civil servants computing pay-related benefit, it is found necessary now to bring in others to calculate the tax.

In the old days when we operated the system of home assistance officers there was no opportunity for the abuses of the system that are prevalent now. Each home assistance officer knew exactly who was working and who was unemployed in his area. There would not have been any chance of half a dozen people on the same stretch of road drawing unemployment benefit and working at the same time. The Department do not seem to know what is going on. They are so bogged down in paper work that they are not able to police the dozens of schemes for which they are responsible. We must simplify and decentralise the whole social welfare system in the interest not only of effecting economies but of providing a better service for the people concerned.

Without wishing to be too pessimistic, it seems that we are only beginning to feel the pinch. We are only beginning to suffer for our sins of extravagance of recent years. Last year we were able to give a 25 per cent increase to social welfare recipients. At least that compensated the poor and the weak for cost-of-living increases, but we are not able to give that level of increase this year. Unemployment is increasing. One must have every sympathy with the Government in the task facing them; but at the same time I am confident that, having faced the task and having put the public finances in some sort of order this year, they will proceed to develop real policies that will put matters right. The Government must not be influenced by public servants, by specialists or by bankers in their efforts to come to grips with the situation. From their own experience and knowledge they must apply themselves to the work that must be done if we are to preserve our democratic system.

Mr. Noonan

(Limerick West): In the time available to me I intend concentrating on the budget from the agricultural point of view. So far as the small farmer is concerned the budget represents not only panic but ineptitude on the part of the Government. While attempting to deal with the problems of public spending the Government are not paying attention to the question of the expansion that is so necessary in all sectors of the economy. There is no inducement in the budget in respect of any such expansion. Let us take the new situation regarding income tax. For the first time all farmers are to be included in the income tax net regardless of whether they have an actual liability. This means that even the smallest farmer, whose income, it is acknowledged, represents less that a living wage, will now have to employ costly accounting services. Obviously, this will reduce his income further. Another aspect is the removal of the stamp duty exemption on the transfer of property in consideration of marriage.

The Government have further dismissed the already chronic and urgent problem of late farm inheritance. The final proof, if proof be needed, of this Government's total ignorance of farming problems is shown by their petty inclusion of a charge on farm services and on advisory services. Is it the intention of the Government and of the Minister for Finance, who should be more aware of the problems affecting Irish agriculture today, not only to halt any extension in farming but actually to send agriculture reeling back on the road of development, a road over which agriculture has been travelling for the past 20 or 30 years?

In this context it is relevant to look particularly at the comments in the Farmers Journal editorials over the past week or ten days. In the Farmers Journal of last October and November there was a common policy with regard to the approach of farmers at that time to the election. One would imagine reading those statements that my party, now on this side of the House, would not get any representation at all in Dáil Éireann from rural Ireland. In the Farmers Journal of Saturday, 20 November, there were cries of anguish. If one contrasts the approach then with the approach now one would think that the Minister for Finance, Deputy Alan Dukes, and the Minister for Finance in the last Coalition Government are no longer such favourite sons of the Farmers Journal. The journal, which appeared to be fiercely on the side of Fine Gael in the election, is today totally dissatisfied and disillusioned with this Government. It certainly illustrates with some accuracy the reaction of the farmers to the budget and to many recent decisions on the part of the Government with regard to farming.

I have here the most recent issue of the Farmers Journal. At page 1 it states that the cuts in the farm modernisation scheme may be a breach of EEC rules. Is it the intention of this Government to be in breach of EEC laws? In their anxiety to tax agriculture are they prepared to breach EEC laws to gather in more tax? In the editorial at page 2 the budget is described as a “budget of economic despair”. The editorial reads:

The past week was a sorry one for the country! We have had a budget of economic despair. By every criterion Alan Dukes national finance planning for the coming year is negative:

There was no emphasis on economic growth. In fact, the budget provisions will further damp down production.

There was no incentive in the budget to encourage increased performance for agriculture... harder work and overtime are now treated as dangerous exercises, carrying progressive tax increases.

Waste and overspending continues in the public service.

Further it states:

The statement on national finances as presented by Alan Dukes provides little hope for the future! Increased borrowing and extra government spending means that we are sinking deeper and deeper into the morass of national insolvency.

The editorial concludes by saying:

Yet there are no plans for substantial cost cutting. The white elephants are still being fed to capacity and there is no birth control in that group. Even the civil servants will enjoy the freedom from PRSI.

Finally the editorial states:

We had thought that Garret was made of better stuff.

At page 4 of that issue of the journal there is the reference to a possible breach of EEC laws in relation to the farm modernisation scheme to which I referred earlier. It is gone into here in more detail. At page 5 the new rates of reactor grants are dealt with. It is pointed out that they are completely inadequate to meet the high cost of replacement as a result of the eradication of TB and brucellosis. Further on it is stated farm bodies react strongly to the budget. At page 6 the comment is: "Dukes castrates four-year plan". That was a plan formulated and ready for completion when we left office. It would be interesting to hear when we will see this four-year plan put into operation.

On page 7 the heading is "County committees bemoan ‘the good old days'". That is a reference to the county committees of agriculture whose budget has been reduced by almost half. At the bottom of this page there is an article headed: "No early decision on trading role for CBF". On page 8 it says: "Living standards of farmers will fall because of Budget". This is an interview with John Barry, former president of the ICOS. Further articles in this paper are entitled "VAT sting?", "Retirement scheme shelved" and, on page 9, in case anyone thought that salvation might come from Brussels: "Deasy almost powerless at EEC level". On page 10, Joe Rea of the IFA states that £100 million will be taken from agriculture and that farm incomes will fall by 10 per cent.

I challenge the Irish Farmers' Journal to admit that they gave bad advice to their readers last November and that Deputy Ray MacSharry and Deputy Brian Lenihan served farmers well when they were Ministers for Agriculture in successive Fianna Fáil Governments. When one contrasts the Irish Farmers' Journal's advice to farmers in the run up to the election with their comments last week one can see how disillusioned and dismayed that particular paper and the Irish farming organisations are by the approach of this Government, and particularly that of the Minister for Finance, who should be aware of the problems affecting Irish agriculture at present.

The budget directly affects the living standards particularly of farm families, which successive Fianna Fáil Governments built up over the years, as well as severely damaging the national economy at a time when a significant reduction in the balance of payments deficit is a top priority how could the Minister for Finance deliberately strike at the capacity of our greatest industry to increase exports? This is precisely what he has done by the suspending of the farm modernisation scheme. As if that was not enough he proposes that farmers should pay for staff visits from the Department of Agriculture under the ACOT scheme. These payments are estimated to amount to something in the region of £ 1.5 million this year. This will kill farm development and will drastically reduce the provision of advice to farmers, already one of the lowest in Europe.

A further major disincentive to an increase in farm output is the proposal to withdraw £2 million from the interest subsidy scheme for non-development farmers and to restrict the scheme to those in severe financial difficulties. The cutting back of the financial contribution to agriculture is a decision that will set farm expansion back many years, expansion that was nursed carefully by Fianna Fáil Governments down through the years.

National and individual farm interests coincide with the eradication of disease, particularly brucellosis and bovine TB. The decision to save £1.85 million is a blow to the national interest and the interests of Irish agriculture. Farmers are angry at the alarmingly slow progress being made in the eradication of these diseases. In the process of the removal of reactors and replacement of stock the farmer continues to incur heavy financial loss. Reference was made in the Irish Farmers' Journal to the increase in the compensation for reactors. It is completely inadequate, and I would ask the Minister for Agriculture and the Minister for Finance to look at this again and make substantial increases.

In this budget the poorer regions and the smaller farmer have been singled out for especially penal treatment. A sum of half a million has been taken from participants in the disadvantaged areas scheme. The increase in short term welfare rates has been denied to smallholders whose means were assessed using the PLV basis. That these smallholders have the option of having their means assessed on a factual income basis offers little consolation. Are they expected to engage a professional accountant?

The hallmarks of this budget are bungling amateurism and blind panic. The Minister has made one frantic drive towards balancing his books, but he has done it without even the most basic understanding of the need to put confidence back into the community and to provide incentives to self-help. A responsible Government should strive to improve business and to increase employment. Without generation of income at the lower level we are looking for water from a rapidly drying well.

The efforts to scrape tax out of every corner are most evident in the area of farm taxation, with all farmers being liable for income tax from 6 April 1983. This may get a few extra pounds for the Exchequer and bring more farmers into the tax net, but at what cost to the community? Small farmers whose income is not even above subsistence rate will be put to the expense of acquiring financial advice to prove their already patently obvious penury. This is madness.

This budget does not show any sign of understanding the current position of farmers' income. I represent an area where a very large number of farmers will be affected. For years Fianna Fáil tried to provide an incentive towards better farming and higher incomes. We have always taken the position that this section of the community deserve sympathy, encouragement and advice. In this budget the Government have shown their contempt and ignorance for these people. How can a farmer exist on an income lower than that of an unskilled worker, and yet hope to have the money to hire expensive accountants? The Minister for Finance must be unaware of the problems facing our small farmers.

We have encouraged farmers to look on farming as a business. With Fianna Fáil Governments that was a sincerely held belief, but with this Coalition Government it is merely the mouthing of words. Farmers have spent the past 30 years developing the agri business. In the early days things that appeared basic to us, such as mechanisation, were treated suspiciously by farmers and had to be promoted gradually. The idea of liming and fertilising the land was a new concept, far removed from the old idea of keeping one's money in a tin box and providing three acres per cow. Farmers realised they had to start out on this new road if agriculture was to develop strongly as a business. Co-operatives also realised they had to expand. These people showed greater bravery by adopting new concepts than any other section of the community. They had to face the jibes and contempt of people who would accept no farmer but a poor farmer. The idea that a farmer might have a reasonable standard of living was alien to them. We thought this type of mentality was on the decline, but it is alive, well and thriving, and its chief architect is the Government, particularly the Minister for Finance.

Where is farm development to come from? We are not only taking farmers' incomes but we are adding an extra liability by way of professional fees. We have dampened any spark of enthusiasm farmers might have. Where else can this Government hit the farmers? One cannot knock the ingenuity of this Government. They know how to get the farmer by the throat. If a person wants to crucify agriculture he must take away technical advice. This is the latest stroke of this Government. There has been a substantial reduction in the allocation to ACOT and the advisory services provided by that organisation. In the early years of development there was one indispensable ingredient — free advice by agricultural advisers, paid for by the Fianna Fáil Government. Everyone knows farming is becoming more complicated, more scientific and more businesslike, and the free advice given by the Department of Agriculture and ACOT must move with the times. Over the years we have seen how ACOT streamlined the information given to farmers. In short, we have made the advisory services indispensable, and now this Government are putting a charge on this advice and curtailing the service by reducing the number of advisers at local level.

This approach is not alone simple madness but, in my opinion, it is vindictive. This Government are saying plainly that they do not care what the farmers do from now on. They do not care if they do not expand their businesses and increase their incomes. They will take the last penny from them and then leave them to flounder. Step by step this Government will gradually undo all the work of the past 35 years. To pay these savage impositions the farmer will be forced to borrow, sell his stock or go bankrupt.

The pre-budget submission of the Irish Farmers' Association to the Government suggested that a code be introduced which separates the farmer from his enterprise for tax purposes and taxes him on his personal disposable income, in common with all other citizens of the State. Surely, this was a fair request. What have we against the farmer that he must be treated as a social outcast? In many other areas agriculture is suffering because of a lack of care. It has been strangled by a tax system differing from that of other citizens. The stock valuation system does not take into account that a large amount of work capital is required to finance the stock, yet the resulting turnover would not be considered sufficient per year in any other business.

The very nature of the growth of agriculture is slow. In the long run, it would be well worth the wait, but it must be allowed to develop and not be strangled at birth by the various taxes. The very contractor who was the basis for saving the farmer heavy capital expenditure on machinery is now being affected by taxation. Very low margins of profit and the impending imposition of increasing taxes have made contractors nervous of further capital outlay. If they do not invest in machinery, the farmer must again take that burden. Even the most basic of systems such as PAYE deductions for sons and daughters is not allowed to expand to a proper value in today's terms.

Let us examine and analyse the budget approach when compared with what is needed by our farmers. The farmer asks for confidence from the Government and from the community, encouragement to expand and a reasonably fair taxation system on his profits. Those seem bland enough words, but they mean very real things to the farmer. He must be confident that advice will be forthcoming and that such advice will be kept up to date with world information and that Córas Tráchtála and the other business industries will actively promote his produce abroad. It is important that the farmer be assured that if he makes an inch of increase in his income, the Government will not try to grab a yard of tax. He needs to know, as in every other business, that development capital will be available and will be assured to him for a long period of time. Above all, he needs to know that every time another section of the community makes a cheap jibe at his incipient expansion the Government will not jump on the bandwagon and tax him out of existence.

The farmer needs to know that his holding of land can pass intact to his wife and his children. He must be encouraged to pass over that land when he becomes old and before the children pass the age of ambition. He must know that more than lip service will be paid to the realisation of his needs and the provision for them.

I repeat my remarks about the removal of the tax incentive — the exemption from stamp duty on the transfer of property on consideration of marriage. In relation to agricultural holdings, it is of paramount importance that we encourage the early transfer of holdings from father to son, or father to daughter. I deplore the decision to remove this exemption, which had been introduced many years ago in a Fianna Fáil budget. It will discourage the transfer of farms at an earlier age. Would the Minister of State, Deputy Connaughton, have a word with his colleague, the Minister for Finance, to see if this exemption will be continued? The Minister of State is deeply involved and has contributed much in various farming organisations to the importance of early transfer of land.

Is it possible that as the population drifts from the land the priorities of Government will also drift? Can it be that the present Government see less votes in rural Ireland and decide to leave the farmer in the lurch? Can it be that they have decided that this smaller section of the community are no longer important in their quest for power and that, in their rush for votes, they go with the popular surge and crucify the rural community, and in particular the farming community?

This budget strikes at the very existence of the small farmer. It supports the fashionable theory that the necessarily slow pace of the farmer's development makes him financially unviable. It thus ignores any social aspect of his existence. It is, in fact, denying him the right to exist. We have become a nation so obsessed with financial grabbing at all costs that we will attack the existence of such sections of our community in our rush to balance the books, irrespective of the consequences. Is this what our Constitution was written for? Is this why we have become separate as a nation? Is there no greater value to our existence than the balancing of two columns of figures? Unfortunately the answer to those questions is "yes" in so far as this Government's uncaring attitude is concerned.

I have accused the Government of amateurism. I did not accuse them of evil intent but what is the use of that fine distinction if the eventual effect of this budget is evil? Not so long ago, not many months ago, we saw another Coalition tumble because of an equally lunatic and unfeeling imposition of VAT on shoes and clothing. This House, in the face of such a wild, evil imposition, tumbled that Coalition Government from power. Will we have the same courage when it comes to the small farmer? Do we respect his historical and current contribution to our community sufficiently to ignore the fact that his votes are becoming smaller, or will we sit here nodding denyingly as his numbers are further decimated?

I believe most deeply that this budget is bad finance and bad policy. It is unthinking, amateurish, a recipe for disaster. Most of all it is a recipe for the further erosion of the importance of rural Ireland, the importance of agriculture and farming as an industry and, above all, it will lead us along the road to ruin. It provides no opportunity for expansion, no opportunity for the provision of employment, particularly for our young people, not one iota. It imposes penal tax after penal tax, until we now find ourselves in a situation in which our people can no longer bear the heavy burden of taxation. I appeal to the Minister for Finance to take cognisance in the Finance Bill, which will be introduced in due course, of the importance of increased agricultural production, thereby ensuring that our basic industry, which accounts for close on two-thirds of our total exports, will prosper, that we shall continue to expand, providing the wherewithal to control our balance of payments.

This budget displays no sympathy at all for agriculture. Indeed, it gives the impression that this Government know little about agriculture or indeed could not care less. The Government appear to be completely unaware of the real pulse of Irish farming. Their approach is vague, particularly when one bears in mind that agriculture, prior to the recent general election, was showing such positive signs of improvement. I would hope this Government would come up with specific proposals. In particular I would hope that the Fine Gael element would give greater consideration to and take a greater interest in the importance of developing agriculture, and perhaps not alone the importance of its development but of maintaining it at its present level. If we do not do so agriculture will be sent reeling back many years over its period of expansion in the past 30 to 35 years. All of that would be lost, because agriculture is basic to this nation. It draws its raw materials from its doorstep and indeed it is of enormous benefit to our balance of payments.

I would appeal to the Government that what I have suggested here be implemented, particularly in the Finance Bill, and that the many penal impositions be removed if the Government can only see the light, the reality and can see the importance of agriculture to our economy.

Surely the Government cannot ignore what was written in last week's issue of The Farmers Journal in the editorial I quoted from at the beginning? Surely people deeply involved in agriculture in the Government — the present Minister for Agriculture and the Minister for Finance in the previous Coalition — cannot be unaware of the disastrous effects of the budget on agriculture and ultimately throughout the economy.

Our record in agriculture can be seen. Fianna Fáil delivered in accordance with their policies outlined over the years. Our deal, incorporated in a four-year plan which I hope will be published in the near future, is a good one. Under Fianna Fáil both gross and net agricultural output grew and so did agricultural incomes. If that policy had been continued by this Government — but the reverse was the case in the recent budget — I can confidently say that in 1983 we could have expected a further rise in agricultural incomes. We had restored farmers' confidence. Farming prices went up and costs were on the downward trend. Indeed the rise in prices for agricultural produce exceeded in the rise in costs. Now costs will again exceed price rises.

Our policy radiated confidence in agriculture. A clear example was the prices negotiated in the EEC by the then Minister for Agriculture, Deputy Lenihan. The results could be seen in 1982.

Agriculture has always made a major contribution to our balance of payments and therefore I again appeal to the Government to consider very carefully, and I hope sincerely, the major blow that has been struck at Irish farmers, particularly small farmers who are the backbone of our economy, by the penal impositions in the recent budget. I advise the Government to consider carefully the importance of agriculture to our economy, particularly employment and the building of confidence in rural Ireland.

Mr. G. Mitchell

I rise to speak on the budget after a period of economic mismanagement which would frighten even the most amateur economic observers. It is a very difficult time for our economy and it is therefore a very difficult time for any Government, whether they be Fine Gael, Coalition or Fianna Fáil. The last 18 months has made it exceedingly difficult for any party to face the economic problems facing the country. By and large those problems commenced in 1977 and continued until 1981. During that time we borrowed more than we had borrowed in the previous 25 years, somewhere in the region of £5,000 million, thereby doubling the national debt to £10,000 million and giving rise to the frightening economic problems we have today.

All of the problems were not induced by Fianna Fáil — some of them were international — but many of them were the responsibility of Fianna Fáil and the reckless period of Government between 1977 and 1981. This will be the first and only reference in my speech to the last Government. It is fair to say that all I have said is accurate and true and it is very regrettable that that was a period of economic mismanagement that will go down in history as the most severe blow to the development of this State since its foundation.

More important than the 1983 budget is the direction in which its proposals will lead Ireland. Few if any of my colleagues will disagree with me when I say that the economy is stagnant. Without exaggeration, our responsibility to the Irish people is constrained by the choke-hold of the present economic situation which has us all gasping for solutions. I will refer to where I think this Government's economic policy will lead us. We must all remember that the proposals for economic recovery put forward by the Government are only the initial steps on a long journey to establish conditions in which all sections of society can benefit.

None of us likes the very difficult steps that must be taken, particularly Deputies like me who represent vast areas inhabited by PAYE workers who are finding it difficult to understand why unemployment is so high, why those who are in employment should continue to have to pay the heavy levies they are burdened with.

But they must be responsive to the steps we are taking. We told the people in February 1982 of the difficult decision we had to face. Let us face it, at that time they gave us a vote of confidence. If it were not for the quirks of PR that Government would have been returned with a sufficient majority. At that time the people were ready for economic reality.

That Government were succeeded by another Government who had promised boom and bloom at a stroke of a pen, but now we are seeing the outcome of that intemperate economic language and failure to deal with the real problems that faced the country at that time. It is our duty as representatives of the public interest to advance a recovery and to add both strength and durability to the economic fabric. Without this thrust, as well as political direction, no State, Government or party could grasp the complex problems we now face and produce solutions to them.

There is no doubt that certain areas of the economy will suffer from the specific but necessary operations and changes in the budget. We must remember that the cuts as outlined are being made to alleviate as well as avoid potential damage which past economic mismanagement has created.

The constraints we must apply in order to tackle the mounting disparities in our economy are necessary if we are to ensure that the quality of Irish production continues, and guarantee financial stability in a volatile international market place. These constraints, as preliminary initiatives in the first of five stages of economic revitalisation, serve to direct our attempts to close the gap between the deficit and borrowing. At the same time, however, these constraints serve to enhance the validity of the Government's determination to remain progressive in all areas, especially in social welfare and other welfare areas.

In his speech the Minister outlined the opening current deficit and the projected current deficit at the end of the year — something in the region of £897 million. The Fianna Fáil Government promised that that deficit would be £750 million, and yet there would be no extra cutbacks and no extra taxation. That Government said they would do the job better, that they would raise £150 million more without making cutbacks, without borrowing and without raising any additional taxation. When we are speaking about the economy, we should be responsible enough in our present state of economic chaos to stick to the facts and stop throwing rubbish at the people by telling them: "We will reduce the deficit to a greater extent, but we will tax you less, cut back less, and borrow less." That simply is not on. It is time we stopped giving the people that sort of garbage.

In the light of the severe recession in which we find ourselves, it can be said that a policy of tight fiscal control is a challenge which must be faced without threatening any of the established provisions which guard against a potentially deflationary economy. The first leg in this five-year plan is to relieve the current budget deficit. In their economic report for 1982, the Central Bank said that the fulcrum of a plan for economic recovery is a phased reduction over a fixed period of the current budget deficit.

Since they left office previously, this is the first Government to set about establishing a specific time period for eliminating the current budget deficit. The elimination of the current budget deficit is not a book balancing exercise, as some speakers would have us believe. It is part of a coherent plan to meet the economic requirements, and to put this country on a proper footing for economic recovery. It is part of a plan which the Central Bank described as the fulcrum of a plan for economic recovery. Therefore, it is central to a plan for economic recovery, a plan to lift the economy out of its state of depression, and to deal positively with our very severe economic and unemployment problems.

The borrowing requirement remains a major problem for the Government. The steps the Government are taking in time will reduce the need for reliance on borrowing. It is important that the House should record the burden on the public. For the record, in 1982 the national debt had reached £12.7 billion and half of that, taken with interest, was borrowed between 1977 and 1981. The projected current deficit of £897 million for this year will be in the region of 6.8 per cent of GNP. Although this projected deficit does not exemplify the extreme measures necessary to harness the recession and its effect on the economy, it makes a real attempt to safeguard the economy from the volatile reaction and deflationary result of a too-tightly restricted fiscal policy.

If the Government had gone for the lower end of the possible budget deficit reduction, this could have meant contributing to our difficulties by causing deflation. That is the essential point which I fail to understand in anything any of the Opposition speakers have had to say about Fianna Fáil's The Way Forward, God save us, in our present economic difficulties. I am sick and tired of listening to rubbish from Opposition speakers about uncaring Ministers. That sort of emotional nonsense will not get us anywhere. It is time we got down to the job. For 18 months we have been wrangling about budgets and necessary fiscal changes. We hear all this nonsense about an uncaring Government, this emotional stupidity. It is time we got down to talking about hard-headed, pragmatic economic solutions for the unemployment problem and the need to give incentives to people to give employment and to invest.

I should like to stitch it into the Official Report that the national debt of £12.7 billion represents approximately £2,711 for every man, woman and child in the State. That is a phenomenal figure. The interest on that figure is now funded by every penny the Government can collect in income tax. Every penny the Government collect in income tax has to go out of the country to bankers in Paris, Bonn, Zurich and all sorts of places, at a time when we have the fastest growing young population in the whole of Western Europe, at a time when we need to retain those funds for job creation. How reckless we have been.

At the beginning of 1971 we had a very small current budget deficit of £200 million odd, and we had inflation in single figures at 6.5 per cent after a very tough period. Then we blew it. We should now be ahead of our neighbours in economic recovery because of our own economic structures. We find ourselves away behind. In Britain the Chancellor of the Exchequer will be giving away billions of pounds in his budget, while we have to tax our citizens because of reckless and careless decisions taken without reference to the public interest. The sooner that nonsense stops the better and we all get it home to the public that there is nothing for nothing and that everything has to be paid for somehow. We must all get down to reality and deal with the problems facing us.

Within the limited borrowing level, policies which protect the interests of many areas of our society require special attention as well as safeguarding. One of the most obvious and major areas of disproportionate decay is the extreme level of unemployment. A policy which I strongly support is the creation of the Youth Employment Agency which shows the Government's determination to stimulate national production. The decision of the Government to appoint a Minister of State at the Department of Labour with special responsibility for youth affairs, and to transfer that office from the Department of Education, is a signal development in the Government's economic plan. Heretofore we had youth employment schemes and youth incentive schemes in the Department of Labour presided over by the Minister for Labour. We had a Minister for youth affairs attached to the Department of Education with responsibility for administering a very small grant aid fund mainly to youth umbrella groups and, in some cases, to other bodies.

Both of those funds are now being administered by the same Minister with responsibility for youth affairs. That is a very significant development. I welcome it and I know it will be part of a specific attempt to deal with the growing economic problems as they face our young population. No Government can hope to survive or proclaim their viability if they cannot ensure that the opportunities for employment among our young people exist. The new Minister of State at the Department of Labour represents the Government's determination to establish within the infrastructure of Government a fiscally sane policy to promote incentives as well as competitiveness.

A potentially strong population of young people want, more than any other group in society, to work for their families and for the stability of a strong domestic market place. We cannot expect to lay the foundations of a steady and firmly planted economic environment if we do not reaffirm our commitment to the potential of this country and to our young and vibrant people. We entrust to them the task of carrying our country through the complexities of the last quarter of the 20th century. Who are better prepared to do so?

As a person in the younger age group, I have great confidence in the young people. All my life I have been involved in youth work and I have great confidence in the future because of the standards and the ability of the young population. We extol the virtues of faith and charity but we never think of the virtue of hope. We should give hope to our young people, not despair. If people think there is an end in sight to our difficulties, they will be prepared to put their shoulders to the wheel and to accept the sacrifices they are being asked to make.

Unemployment in all sections remains the single most horrific reality facing the Government. By the end of the year unemployment will be in the region of 200,000 people — a terrible thought. There has been the closure today of the Semperit factory which will affect people in my constitutency and many other factories are under threat. People in the motor assembly industry in my constitutency will have their employment called seriously into question by 1985. This is not the action of any government but is because of an EEC agreement. All of these matters must be considered seriously. If we give people the ability to manage their affairs, namely, if we provide employment, then we will have made a major start towards solving other problems.

If we do not attempt to take further action other than those actions resulting from the budget, by the end of 1983 the country will be faced with the prospect that a staggering number of people will be in the dole queues. This Government are determined to take the necessary steps to create incentives, increasing demand and production and, as a result, increasing employment. That will not come about in the short-term but I believe that the Government's economic plan will have the desired effect in the long-term.

We must accept the reality that our economic woes will not go away in the blink of an eye, policies that have characterised previous Governments. We have accepted the task of stabilising the economy and it would be naive to pretend that the medicine will always taste sweet. The sores are festering and without the immediate application of harsh medicinal treatment we will surely be plagued with the recession's infectious results. However, we cannot afford to ignore any sector of the community that may not be strong enough to stand the treatment that is required.

Particular areas strike me as being vitally in need of evaluation. The job of stimulating incentive cannot be completely laid on the shoulders of Government. Individuals in the private sector must also bear their share of responsibility. I agree entirely with Deputy O'Kennedy, the new Fianna Fáil spokesman on finance, who as Minister for Finance introducing similar measures some short years ago said the Government could not be held totally responsible for giving every iota of incentive and stimulation to the economy. Others have responsibilities also: employers, trade unions and leaders in the community, religious and social.

It is time people stopped thinking that we can legislate away all our problems. We have a dreadful drugs problem in this city. We put through legislation here thinking we were solving the problem, but the problem has got worse. It is not possible to legislate away our social problems. It is time that other sectors of the community should take the lead given by Deputy O'Kennedy. It is time they got involved with the Government and took seriously their responsibilities in the national recovery.

It is only too evident that the employed sector feel opposed to their compatriots who, because of the misfortune of past economic policies, remain unemployed in a mobile economy. Between 60 and 70 per cent of business concerns could be described as small. That must be an important consideration in any steps taken by the Government. These businesses are the stabilising force in our economy and it is they who must fight in the international market place for viability and competitiveness. The incentive to work and to establish work remains primarily in their hands. The Government's policy of budgetary control and restriction, as well as their commitment by way of a simplified tax structure to guarantee the solvency of small firms, introduces an environment in which those individuals who are in a position to do so can stimulate the pulse of Ireland's economic vigour. In the interests of these small firms and others who must take up the reins of responsibility we must guarantee that incentives exist and, as a result, that employment exists.

As a parent I know that every mother and father wants their children to enjoy the benefits of employment. If we, as parents and citizens, do not attempt to increase the boundaries of our economic system, we must share the responsibility for the economic decay that will be caused. All should know only too well the immediate symptoms of a sick economy — increases in crime, the dissolution of social values and apathy.

As an accountant with experience in the area of taxation I know that companies face difficulties. I understand the disincentives capital taxation can evoke, but I resent the view expressed in this House that the PAYE sector are the representatives of the community, and, therefore, should foot the bill. That is an outrageous view. The PAYE sector have been overburdened already. The reason is that there has been a transfer from capital gains tax and from capital acquisitions tax. There has been the abolition of the wealth tax, the abolition of rates and there has been the temporary abolition of car tax. Somebody has to pay the bill. What has happened is that it has been foisted completely on the PAYE sector. Extra percentages are easily collected from this sector in each budget.

We must not give a disincentive to people with capital. I do not have any great sympathy for those who have a lot of capital but I have sympathy for the unemployed. If we discourage people with capital and if the result is that more unemployment is created, then I consider we have to give the necessary incentive because of the people who will be affected, many of them constitutuents of mine, people anxious and willing to work but unable to find it. People with capital did very well when times were good and it is time that they took the national interest a little more seriously.

The Coalition Government of 1973-1977, who were vilified at the time, did a good job in difficult times. It is difficult to listen to different sections of the community talking about rampant socialism when they are off in the Costa del Sol enjoying themselves. It is time some of these people took their responsibilities seriously. I am glad to see Deputy Skelly here to defend the PAYE sector. These people did well out of the country. It is time that another look was taken at the area of capital taxation.

The imbalance between PAYE taxpayers and those paying capital taxation could be redressed without causing any disincentive. The balance is too much in favour of the capital taxpaying person at present. Ireland must remain responsible to the democratic ideals on which it is based. Clearly we must guarantee that equity in taxation does not imperil those who work and strive to increase their standard of living. While a few interests continue to bemoan the burden of capital taxation the vast majority of citizens are truly suffering from disproportionate taxation. The obscenity of certain sections of the community luxuriating while at the same time complaining about the possible effects of capital taxation is to be regretted at this time of national need. Those with wealth who can afford to do so should be compelled to make a greater contribution, and in many cases this could be done without any disincentive to employment.

I was amused to hear the leader of a public service union speaking about outstanding taxes. We are all concerned about this. People in the public service who set themselves up as authorities would sometimes be better to hold their breath to cool their porridge. There are people in the public service not paying the same share of tax as those outside it. Would this leader of a public service union who was so critical of companies which do not pay tax agree that the public service is avoiding tax by not contributing the same rate of PRSI as others? If he says they would not benefit by so paying would he not agree that since they do not qualify for sickness benefit or unemployment benefit they are in a special situation and should make a special contribution? I am tired of listening to people in secure employment lecturing to the rest of the community. They have little or no experience of the real difficulties being faced by companies.

In the area of outstanding taxes, which the leader of this public service union is so concerned about, one of the difficulties is meeting exacting timetables of the Revenue Commissioners who have no real first hand experience of business difficulties. If some people were to pay their taxes there would be resultant insolvency and unemployment. There are three main categories involved in this area. There are the shady operators, for whom no one has any time, who set up a company, collect VAT and PAYE but do not pay it over to the Revenue Commissioners. They wind up the company and then set up another company and do the same thing all over again. They set out to defraud the State and evade paying tax. The sooner they are tracked down the better. We must bring in company law to deal with such people. It will have my full support.

There are people in the estimates category who are presented with an estimate from the Revenue Commissioners and told they owe £X. The person concerned may have lost money and may not owe anything at all. However, that goes into the area of outstanding taxes and is clocked up on the Collector General's computer. The third category is the honest employer who is in difficulty. His debtors do not pay him and he cannot pay his creditors, including the State. If he was to pay VAT on the twentieth of the month and PAYE on the fifth day of the month he could not continue in the business. People would be put on the dole and the resultant chaos would be horrific, all for the sake of balancing the books of the Revenue Commissioners.

I have no time for tax evaders or people who do not pay their way. Neither have I time for civil servants who demand unreal targets from people in order to keep their records tidy. I received a letter from a constituent of mine from which I should like to quote:

As a company director who paid PAYE since it was introduced and who recently, because of the recession, had to cease taking a wage and because I am a director I cannot claim dole, I wonder how many of the so-called hard done by would like to be in my position?

Would the leader of that public service union please take note?

My company was, up to about two years ago, contributing upwards of £170,000 annually in various forms of tax, and now I cannot even claim out of work money. I am sure I am far from unique in this situation as the recession is putting companies out of business at an alarming and previously unheard of rate. I am also in a personal overdraft position as the company owes me a sizeable loan which I have little hope of ever retrieving. I wonder would others switch places with me? The nonsense about companies not being able to keep up with PRSI payments seems to be totally unresearched. Just to take the Carrigaline pottery case alone where £800,000 is the approximate figure involved, nobody came up with the real facts of the situation. If the Revenue Commissioners had put them out of business when they first fell back on payments the workers' contributions would be little over one-third of the total owed. The State would have to find approximately £1 million per annum to pay dole to the out of work staff. This would mean PAYE and other taxes would have to be higher if the Revenue Commissioners forced the company to close. Add to that £1 million loss of exports and approximately £1.25 million loss on wages and it does not take a financial genius to see whether it paid to leave the company in operation or close it down.

The letter continues:

On more than one occasion I had experience of such treatment when astromical figures were levied against me and it was up to me to prove, at no small expense, that I owed not a penny. On one occasion the figure was something like £19,000 with a threat of a seven day collection by the Sheriff.

Before people accept everything in the Revenue Commissioners' report they should look at the facts. Every businessman in the State is not a crook or out to screw somebody. People take their responsibilities seriously. Let us give them some incentive to create employment. Let us amend company law and go after people who abuse the system. It would have my full support. My concern is for the people who are unemployed.

I appreciate the good work done by the public service but I regret the use of confidential information by tax inspectors and others in the newspapers and media. They obtain the information in the course of their duty. If it has to be used, let it be supplied to the elected representatives of this House or in committee when the public expenditure committee is set up or when other committees are working. Civil servants should not be politicians. Let them leave politics to the politicians and get on with the job they are supposed to be doing. We get enough complaints about work not being done by tax officers, so let them get down to that.

The abusers of the social welfare system are every bit as bad as tax evaders and the fly-by-night merchants who are out to rob the State. Tax abusers are creating a situation where the Government are panicked into action because of inflated unemployment figures in some cases and the growing taxation consequent on the growing welfare payments. There are farmers working who are not in need of dole. I worked for a farming organisation at one time and I acknowledge that there are farmers in need of social welfare payments, but there are many who are not, and these absues should be stamped out. If we add to that the guys in Dublin who are carrying on businesses, doing nixers and drawing dole who are not really unemployed, the problem is immense. If we could eliminate all these people from the social welfare fund, the genuine people in need of assistance would get a fairer deal, which they are not getting at present. It is very much in the national interest to do this, and in the interest of those genuinely in need of social welfare benefits.

I have outlined several areas outside the public sector which require to be examined and, in many cases, altered. It is also important to examine areas of disparity within our political fabric. With regard to central Government spending, I concur with Deputy John Bruton who suggested that the examination of public expenditure, prior to its being allocated and spent, should be the primary responsibility of this House. His proposal to create a public expenditure committee, with a commissioner, should be speedily implemented so that monitoring of future expenditure can be undertaken to safeguard against abuse and waste. We must also remain committed to a plan for overseas development. As a nation undergoing the pain of economic evolution in a highly developed international market, we must bear in mind the validity and importance of our responsibilities and duties to developing countries. Our responsibilities in this area are most important and must be fulfilled to the letter. Despite our relative economic problems, the dire economic situation that many of those countries in the Third World are experiencing should be addressed by the Government. The appointment of a Minister of State with responsibility for overseas development is welcome, and I hope that Minister will direct his attention to this need.

Further reforms are necessary in the health service. This is an urgent priority which demands immediate consideration. There is an urgent need for the creation of a central drugs purchasing agency. If the health boards were able to acquire drugs in volume they would save, in 1977 terms, £10 million, so it is vital that further health board reform is undertaken. I do not know what £10 million in 1977 is now worth, I presume somewhere in the region of £15 million. Is it not a crime in these times of economic stringency that we are not pursuing this recommendation which was made by a Government commission's report? It has been left sitting in the Library without any action being taken. A sum of £15 million is a great deal of money, and if we were to relate it to some of the pruning in costs it could have saved many cutbacks. We have an urgent responsibility to re-examine those recommendations.

If the present health board structure was reorganised on a more decentralised community involvement basis, there would be significant improvements in health management and in the saving of expenditure on the health budget. There should be smaller health board units, especially on the east coast, where the Eastern Health Board are dealing with approximately one-third of the population.

With regard to the Department of Justice, it is regrettable that every time there is a mention of crime in the city, the only response you get from the Garda Representative Body is to talk about overtime. The State is not in a position to continue to fund all State agencies at the previous rate. It is time we told the Garda Síochána that they must stick to their budget and get on with the job. There is a terrible crime rate in the city and I am sick and tired of listening to people talking about overtime. The sooner that that minority of the gardaí who have that mentality get back to the vocational aspect of their job, the better. I have the highest regard for the Garda as a whole, there is only a small minority who have this mentality. It is time that that minority was criticised, openly and publicly, not just in the interest of the gardaí themselves but in the interest of the public who are suffering from an enormous increase in crime, especially the aged, for whom I feel very strongly. If that minority of gardaí do not like their work, there are thousands waiting to take on the job. Some gardaí were paid more than Dáil deputies last year, and they should realise that they cannot expect to be paid indefinitely if they will not do their job properly. The majority of gardaí should be intolerant of this minority. We all have the greatest respect for the majority but this small, new minority should be told to get on with the job.

One of the primary objectives of the new committee on public expenditure, together with their commissioner, which I hope will be created soon, will be responsibility for examining excess expenditure in areas that have not proved their need. It has been suggested, for instance, that the ESB's expenditure of public moneys to finance projects which are beyond their current capacity is really an exercise by people within the ESB following their own pet projects. That is not what I suggest but it has been suggested to me. It has been suggested, for instance, that unnecessary millions of pounds are spent by the ESB for capacity many years hence which may never be needed because of changes of energy sources. This public expenditure committee should look at all of these areas and hold these people more accountable. They should say, "Hold on there, that is not your money. That money belongs to the people from whom we have a mandate and we want to know precisely how it is being spent as would any shareholder in any company". The sooner we are equipped to do that the better.

I have suggested, and in fairness this came from the public service, that Government Departments and State agencies face disincentives to having balances on their books at the end of the year. It is a bad thing to have a balance on your books at the end of the year, so people look at their books three-quarters of the way through the year and decide that it would be better to spend money fast because if we do not do that we will not get the same allocation next year. It is time that we started to give incentives to State agencies and sections of the civil service to come up with balances at the end of the year. We could promise them identity and extra reward for coming up with balances at the end of the year and not for spending funds simply for the sake of spending. It is a national scandal that sections of the public service simply spend the budget they are given because at the end of the year they do not want to have any money left over in case their budget for the following year will be pruned. How can we justify continuation of that behaviour in times of economic recession? Is it not clear from this that there is a need for this public expenditure committee to get to work and the sooner the better? There is obvious need for them and there is great waste in the public service which could be cut out.

We must all desire to increase trade not only at home but abroad also. Directing this international incentive requires a domestic situation which attracts both interest and exchange. To inspire interest in such development I suggest that a strengthened tourist industry is necessary. Since 1973 that industry has suffered severe setbacks in its ability to serve foreign tourists and our prospective interests. To alleviate this growing problem why can we not, with the present transfer of taxes from rates, wealth tax and capital taxes to VAT, give discount to tourists? We used to depend so much on tourism as an industry. Can we still say that we depend on it? Who in their right minds would come to this country to spend money? Surely some simple system can be developed to give a boost to the tourist industry by giving vouchers, discount or some similar arrangement to tourists coming in here who obviously find our present VAT rates resulting from the erosion of the tax base and the abolition of other taxes far too high. Who can blame them for not coming? Is it not time to look at this area with a view to giving the necessary incentives? Surely this is not impossible.

I take this opportunity to emphasise the delicate balance facing the Government. Their priority remains a dedication to ensuring a national economy which guarantees fairness and equity. The responsibility of the Government is to move onward rather than to remain entrenched in political debate which leads only to stagnation and further decay in the standard of life. I stand committed to values of human liberty which this country has fought so hard to secure. Liberty is the foundation on which we base our system of government. That foundation has been strained dangerously by the eroding forces of this recession. Who suffers? We all suffer. If working men and women are suffering more than most from the excesses of past mistakes, the fairness which we have tried so desperately to preserve must continue to be the hallmark of our commitment to the values we cherish. Continuation of policies which ignore realities of the present economic circumstances press not only those who have the ability to adapt but, more important, pose a grave threat to the aged, the unemployed, the little man who represents past, present and future generations of our traditions and values.

Ba mhaith liom mo dhea-mhéin a chur in iúl don Aire san phost achrannach atá aige agus tá súil agam go gcuirfidh sé sin go léir ar bhealach ár leasa leis na polasaithe a chuirfidh sé i gcrích.

Mr. Foley

In my contribution to the budget debate I would like to open with reference to the recent statements of the Taoiseach and the Minister for Finance that they now intend to tackle the serious situation of unemployment. When one studies the recent budget one can only come up with one conclusion, that both Fine Gael and Labour have backtracked on that promise. The budget shows expenditure cuts of £368 million in the projected level of State current and capital spending for 1983. These cuts involve a number of measures which will affect the living standards of a number of social groups, in particular the weaker sections of our community. Old age pensions, widows pensions and all long-term weekly welfare rates will be increased by 12 per cent and short-term rates will be increased by 10 per cent. This in fact is an increase of only 6 per cent and 5 per cent respectively when one takes into account that the increases will not take place until June. For the first six months of this year the recipients will receive no increase and they must face increased charges. Such was not the position under the previous Fianna Fáil budget under which the weaker sections of our community and all social welfare recipients received an increase of 25 per cent. Fuel, which was zero-rated until the budget, will now bear VAT charged at 5 per cent and this again will hit the older people. This increase will means that many of these people will not be in a position to provide that extra comfort that they are entitled to. I am asking the Minister for Finance, Deputy Dukes, to reconsider the increase in VAT of 5 per cent on fuels with particular reference to the old age pensioners, widows and social welfare recipients. I ask him, if he can, to revert to the original position of zero-rating. We have been told in the past and during the recent general election by Labour Party speakers that they compaign as the champions of the old age pensioners, widows and all social welfare recipients. Have they changed since they came into Government? They cannot deny that they are party to these miserable increases of 5 per cent and 6 per cent and to the 5 per cent VAT on fuels.

I would like to deal with tourism. All sections of the tourist industry have been hit by increased VAT. Many of our leading hotels will be forced out of business. Kerry, which claims 24 per cent of the overall tourist business, will be extremely hard hit, and I am repeating here what I said last night in connection with the B & I ferry service. Employment in the trade will drop, and this applies also in the services area. Recent large increases in petrol and liquor are another major factor. Would the Minister consider a system of petrol vouchers or some form of incentive for all holidaymakers? In 1977 and 1978 we had the largest ever number of tourists coming here but since then we have seen a steady decline.

Bord Fáilte have encouraged some of our people to holiday at home, but with rising costs it will be cheaper to go abroad, even though anyone leaving the country will have to pay a tax of £5. Bord Fáilte estimate that the budget increases will mean an extra £30 in the cost of a holiday for the average family. The average American tourist spending £288 here will face an extra bill of £14.40. This must be compared with the extra £2 levy on Irish people going abroad.

During the past few days we had a debate during which I and my colleagues from the Cork area made a case for the retention of the Cork-Pembroke service. We argued that a full regular year-round service be provided as soon as possible between Cork and South Wales, such as operated very successfully over the past ten years. It is imperative that the Government should insist that B & I provide a service immediately for the remainder of 1983. Failing this, both Cork and Kerry will lose out. Already as a result of the uncertainty about this service many cancellations have been coming through.

No county has done as much for tourism as Kerry, and this has been achieved with very little State aid. Hoteliers have invested large sums of money during the past ten years and we have in Tralee some of our leading hotels offering the best value. We pride ourselves on having the best guesthouses, town and country homes and farm guest houses. A wonderful service has been provided, offering a real cead míle fáilte to tourists. Employment was also created and the money derived in this business went directly into the economy, helping to boost the local environment. This certainly will not continue.

According to Bord Fáilte statistics, Kerry claims an average of 22 per cent of all tourist business. This is reflected in the very successful promotions throughout the years by groups from Tralee, Killarney, Ballybunion, Dingle and others. There has been a decline in tourism in recent years and the budget increase in VAT has dealt a further blow. The Minister met a deputation of hoteliers before the budget and they were very impressed with that interview, convinced that he would reduce the rate of VAT from 18 per cent to 10 per cent. Instead he increased it from 5 per cent to 23 per cent, making an overall increase of 13 per cent in less than 18 months. I appeal to the Minister and the Government seriously to consider the future of our tourist industry. There is no doubt that it is declining rapidly and needs an injection. The Minister might consider dropping VAT on rooms. This would be a big help. Many hotels in Kerry are closed at present and many more have reduced staff. All hope to resume full business in April but the indications are that this will not be possible.

Last night we heard the sad announcement of the loss of 100 jobs at one of our leading hotels, the Burlington, in Dublin. I say without fear of contradiction that the Burlington has the finest and friendliest staff in the country, who have taken a personal interest in the hotel. They have all been ambassadors in their own way in promoting the hotel and tourism in general, and it is very sad that 100 of them are to lose their jobs. This news has come as a bombshell to the Irish Hotels Federation. After the budget they foresaw the loss of at least 600 jobs and also that 2,500 seasonal jobs would not be available this year. Already we have seen in Dublin the loss of the Hibernian, the Wicklow and the Central hotels and I understand there will be others. This pattern could continue throughout the country. The hotel industry cannot take this increase in VAT, and I appeal to the Minister to consider some form of concession such as the reduction of VAT on rooms and service. We must compare our position with that in Britain, where the rate of VAT is only 3 per cent, or with Belgium where the rate was reduced recently from 16 per cent to 6 per cent.

The Government have also decided to take £6 million from the IDA this year, and the Minister has not given a reason for this. The IDA have given a good return for investment over the years and they have been recognised as a job producing agency. It is obvious that the Government do not accept this view. Unless they can come up with a better alternative, the IDA should be given extra funds. According to the 1981 IDA report, they have embarked on the preparation of an overall plan for the period 1982-92. This work has been undertaken to pinpoint development opportunities and to ensure that the IDA are geared to operate effectively in the changing economic environment. It will analyse labour force trends and will also deal with job creation and economic development. Is this effort now to be dropped? More industries are needed immediately in areas like Tralee, Listowel, Ballylongford and Castleisland which are experiencing a constant rise in unemployment. People in those areas find it hard to accept the decision to cut the allocation to the IDA by £6 million.

Kingdom Tubes Limited of Tralee closed on 14 January last with a loss of 295 jobs. Many of the workers there had been 20 years with that company. They are involved in a sit-in at the premises so as to highlight their differences with the company. It is most unfortunate that they had to adopt that attitude, and I hope procedures will be established between the IDA and the unions to avoid such situations occurring again. We are all aware of what is happening to the workers of Ranks (Ireland) Limited and we do not want something similar to occur in Tralee or anywhere else. The existing procedures are antiquated, and in up-dating them we must give some protection to the workers. I appeal to the Minister, and the Government, to consider Tralee and other areas of north Kerry as being in need of special and immediate attention in view of the many industrial job losses over the last 18 months. The IDA have had 600 acres of land in Ballylongford for a number of years. There was mention of an oil refinery and a smelter for that area but in my view those projects were never on. I cannot understand how so much money is invested in such land without any return. The Minister should take this matter up immediately with the IDA. North Kerry needs a worthwhile industry sooner rather than later. There are industrial land banks in Tralee, Listowel and Castleisland.

Another disappointing feature of the budget is that the Minister has provided £31 million to, as he described it, cover extra social welfare payments in view of the anticipated increase in unemployment figures before the end of the year. That is a defeatist attitude. It is sad to think that the Government have accepted that unemployment figures will increase. AnCO are doing wonderful work, and I should like to know if it would be possible to extend their functions so that they could be more involved in creating worthwhile employment. We have one of the best AnCO centres in Tralee, and students from that centre have been awarded many national prizes. There is a high standard of training there. The time is opportune to set up a new development employment agency involving AnCO and the trade union movement. I have no doubt such an agency would pay dividends. Such a change must take place.

The budget contains a number of tax changes, hidden tax increases and other measures anounced by the Minister. The hidden measures include the decision to give permission to local authorities to raise £65 million in 1983, or 35 per cent of the revenue that would be raised if domestic and farm rates were reimposed. If local authorities are given freedom in the choice of charges the business sector will be worst hit. The sum involved, £65 million, is almost £2 million higher than the cost of domestic rates when they were abolished in the seventies. The Minister has also increased the limit of PRSI payments by £3,500, thus increasing the tax take from middle income earners outside the public sector. Health contributions will also be increased and the increase in road tax will yield £16 million. It is expected that the increased bank levy will raise £25 million and the decision to introduce a residential property tax will yield about £10 million. The higher tax on fuels and oil will mean an extra £18 million for the Exchequer and the reduced PRSI allowance and the inclusion of farmers in the tax net will bring in £2.5 million.

Cuts in Government expenditure include a reduction of £4.2 million in Education. Disease eradication and grant scheme cuts will save £5.8 million, and there will be a saving of £2 million by reducing overtime in the Department of Posts and Telegraphs. Cutbacks in the pay-related-benefit will save £7.5 million. It is interesting to note that by reducing the drug refund scheme there will be a saving of £5 million. There are also unspecified health savings of £16.5 million. Between the latter schemes the Minister will save £21.5 million. I should like to ask the Minister if that will be reflected in the grants to health boards. If that occurs the weaker section of the community will be hit. Some months ago, as a result of cuts in the health board for the Cork and Kerry region, overheads had to be reduced by approximately £4 million. Efforts were made to reduce the number of beds in Tralee, Killarney and Cork hospitals but that was not accepted. I understand that the Southern Health Board had a shortfall at the end of 1982 of approximately £2.5 million and that that shortfall will be taken off the 1983 budget. In the light of that and the further cuts introduced by the Minister I should like to know how he expects that board to carry out their programme.

I should like to draw the Minister's attention to the attitude of the Valuation Office in recent years. It is well known that those who apply to a local authority for permission to carry out improvements to a business are listed for revision for rates purposes. Since the decision to abolish domestic rates the Valuation Office have paid special attention to business premises. Many business people in Kerry were shocked when they received their revision notices from Kerry County Council, and the urban councils of Tralee, Listowel and Killarney, in December. They found that because of the improvements they had carried out to their premises their valuations had been substantially increased. That was a retrograde step which will rebound in the long term. I have no doubt that many business people will decide not to carry out improvements to their premises because of present trends. We have always been proud of the good standard of business premises, but those who own them are being forced now to let them run down. The Minister should investigate this matter, because the attitude appears to be that business people must make up for the drop in income as a result of the decision to abolish domestic rates.

I appreciate that increased valuation means extra money for local authorities, but it is wrong to single out business people for penal treatment. I was disappointed that the budget did not offer any hope for the future. There is no incentive in it for business people and no attraction for capital investment into our economy. It does not offer any job opportunities for the many thousands of unemployed young people. I have no doubt that they will not accept that situation. They do not want handouts. They want employment and job satisfaction. This is a budget of no concern which underlines a policy of despair.

Minister of State at the Department of the Taoiseach (Mr. Nealon)

Despite the severe financial constraints facing the Government in the formulation of the budget and the difficult decisions which they have had to take in order to bring public expenditure under control, I am pleased that the Government were able to increase the Grants-in-Aid for the Arts Council from approximately £3.8 million at the start of 1982 to £4.594 million this year, representing an increase of about 15 per cent. This, I hope, should enable the council to maintain its existing level of programmes in 1983.

Naturally, as Minister of State with responsibility for Arts and Culture, I would like to see more financial support being provided for arts and culture functions but it would be unrealistic to expect that these should be exempt at a time when the Government have been forced by economic necessity to make cutbacks in expenditure in other areas as outlined now by Deputy Foley. Nevertheless, I see it as my obligation to continue to seek to improve the level of assistance for the arts whenever possible. That obligation I will be pursuing with vigour.

One very useful contribution which I feel that I can make in my new Ministry is to bring some rationalisation to the process under which assistance is provided for arts and culture. At present responsibility for various arts and culture functions is spread over a number of different Departments and, in consultation with the Taoiseach and other members of Government concerned, I am at present examining how best this situation can be improved by centralising responsibility for many of these functions. I feel that the promotion of State aid to arts and culture can best be achieved by bringing together many of these related but scattered services in a coherent way, thereby providing a better structure under which Government policy can be implemented. While the present state of the public finances will not permit of disproportionately increased funding for the arts, the centralisation of responsibility for many of these functions will focus critical attention on the services concerned and facilitate the formulation of a considered programme on which future funding can be based.

I would like to take this opportunity of expressing my appreciation and, I am sure, that of the Dáil, to the Arts Council for the excellent work it continues to do in promoting artistic endeavour, both by stimulating public interest in the arts and by encouraging the individual artist to develop his or her potential. The task has not been an easy one and on occasion, policy decisions of the council have generated much controversy. Indeed, it is a feature of life that bold decisions or imaginative decisions usually create controversy. By and large, however, I feel that the council has served us well and I know that it will continue to enjoy the confidence placed in it by successive Governments.

The council recently issued details of its expenditure programme for 1983. I do not propose to deal here with all of the areas supported by the council but I feel that special mention is merited in the case of the assistance provided for the theatre, for literature and the recently introduced Aosdana Scheme.

Support for the theatre accounts for almost half of the grants made by the Arts Council and the total allocation for drama in 1983 will be almost £2 million. Over half of this allocation will be for the national theatre comprising the Abbey and the Peacock.

The council plan new innovations for theatre in 1983. A sum of £10,000 has been set aside to support special theatre projects which might make an unusual contribution to the development of Irish theatre and it is planned to assist five or six such projects. A playwright's workshop will be organised by the council in the autumn for which £18,000 is being allocated.

Special measures are to be taken to assist the Cork Opera House which has experienced major difficulty in recent years. The council has decided to provide the Cork Opera House with a grant, which will be more than double that given last year, to enable the financial situation of the Opera House to be stabilised in order that it may plan for the future.

These are just some of the specific measures planned by the council to assist the theatre and, quite apart from the important cultural and artistic role of theatre in Irish life, this aid is also welcome in view of the employment potential of the theatre generally and the present very serious unemployment situation which I discussed recently with the Irish Transport and General Workers' Union representatives.

The provision of £125,000 for the Irish Theatre Company is to cover its debts in 1982. Its future is for the Arts Council to decide. I understand that the possibility of locating the ITC in some form or another in Cork Opera House is being considered. This would have to be agreed by all concerned and funded by the Arts Council. Certainly a distinguished centre of the performing arts like the Opera House in Cork deserves every support and the basing there of a professional touring company would be a very welcome addition to its situation. This is the kind of development in which I have a great interest because I am a great believer in its potential.

Aosdana was established by the council in 1981 and is an affiliation of artists engaged in literature, music and the visual arts. The members are selected on the basis that they have established a reputation for achievement and distinction in their disciplines. The scheme is intended to honour those artists whose work has made an outstanding contribution to the arts in Ireland and to encourage and assist its members to devote their energies fully to their art by offering those who need it a basic level of financial security.

Under the scheme members of Aosdana can apply to the Arts Council for Cnuas grants. In order to qualify members are expected to concentrate full-time on their art. Cnuais are payable for a period of five years and are then reviewed. The council proposes that Aosdana will receive increased grants this year and the scheme is now the principal channel of support from the council for individual artists.

One of the more notable successes in recent years has been the establishment of the Tyrone Guthrie Centre at Annaghmakerrig House in Monaghan in the Ceann Comhairle's constituency. This was the former home of the late Sir Tyrone Guthrie and was bequeathed by him to the nation in order that there might be opportunities for creative artists — writers, composers, painters and sculptors — to stay there and give concentrated attention to their work. The centre is administered by a company established in partnership between the Arts Council and the Arts Council of Northern Ireland.

The centre provides residential facilities for up to three months for artists and will continue to be subvented by both Arts Councils. Over the past three years £170,000 from the Special Border Areas Programme Fund has been provided in developing the centre which is a model of practical co-operation between people living in both parts of this island.

There are many other areas assisted by the council but unfortunately time does not permit me to discuss them in greater detail now. However, I would like to stress the need for continued State support for the arts and I will make it my priority to press for increased funding for the arts in the years ahead.

Another important body which comes under my aegis as Minister of State for Arts and Culture is the National Concert Hall. The hall has had notable success since its opening in September 1981. The grant-in-aid to the National Concert Hall has been increased from £135,000 in 1982 to £170,000 in 1983, an increase of 26 per cent, but a substantial portion of its income is generated by the hall's own promotional activities. It is my hope that, in time, the National Concert Hall will be able to become self-financing and I feel that considerable progress is being made in this regard. However, until such time as this occurs some State assistance will be needed to make it viable.

Since its inception the concert hall has fulfilled its purpose of providing a suitable venue for the performance of classical music, as well as jazz, folk and other light music. In addition to the many Irish artists of distinction who have performed there, the hall has attracted international artists of the highest calibre such as Yehudi Menuhin, Stephane Grapelli and Mstislav Rostropovich.

I am glad to note also that the Ulster Orchestra has included the hall in its itinerary and looks set to become a favourite with audiences here. Despite the difficulties created by the current recession, the hall has enjoyed a high degree of public support — attendance figures average 75 per cent.

On visiting the National Concert Hall one evening last week for a performance of the RTE Symphony Orchestra with soloist, John O'Conor, I was glad to find that every seat in the hall was booked. Because of my involvement in politics I have been missing out on visits to the theatre but since my appointment as Minister of State with responsibility for the arts and culture, I have resumed this interest. I take this opportunity of recommending to Deputies that they visit the National Concert Hall and the theatres from time to time. I am confident that they would find the exercise very relaxing, especially after a busy week-end at their clinics. While in Dublin to attend to their duties here, they could spend some of their evenings, after the Dáil has adjourned, attending the theatre. If anybody is interested in going to the National Concert Hall tomorrow evening, he is in for a special treat, because performing there is Bernadette Greevy, who is one of our greatest internationally-acclaimed artistes.

The concert hall is also the home of the RTE Symphony Orchestra, providing proper facilities for 100 musicians and a permanent studio with full recording facilities. RTE radio and television have broadcast many events from the hall, thus bringing events in the National Concert Hall to homes throughout the country.

As the House knows I have in recent days also been appointed Minister of State to assist the Minister for Posts and Telegraphs. I have been asked to take responsibility for all matters relating to radio frequency management and broadcasting for which the Minister is at present responsible. The functions of the Minister for Posts and Telegraphs in relation to these areas are set out in the Wireless Telegraphy Acts, 1926 to 1972, and in the Broadcasting Authority Acts, 1960 to 1979.

The Broadcasting Authority Act 1960 established RTE as a separate Authority, set out its functions and duties and those of the Government and the Minister for Posts and Telegraphs, and made other general provisions in relation to the Authority. The Act has been amended on a number of occasions, most extensively in 1976. The 1960 Act deliberately limited the direct functions of the Government and of the Minister for Posts and Telegraphs in relation to broadcasting. While the Minister has a general responsibility to the Oireachtas for the performance of its statutory functions by the RTE Authority he has no functions in relation to day-to-day programming and administration in RTE.

Since the 1960 Act, RTE have been the only organisation to legally operate broadcasting transmitters within the State. Regrettably, however, there has been much illegal broadcasting in recent years. The problem has persisted for much longer than it should have because of the inadequacy of the existing law. Order must now be restored to the use of the airwaves. It is clear that unlicensed and unregulated broadcasting cannot be allowed to continue indefinitely. The Department of Posts and Telegraphs have received formal complaints of harmful interference by unlicensed radio stations here to licensed stations overseas. We are bound under our international obligations to act on foot of these complaints. Even if we were not so bound, the present disorderly use of frequencies is so palpably unsatisfactory, and the open flouting of the law so improper, that action must be taken to correct it.

It will be my task to proceed at the earliest possible date with legislation necessary to achieve the orderly development of radio services. A broadcasting and wireless telegraphy Bill was introduced in the Dáil in 1979 but it did not proceed. That Bill provided for substantial new penalties for unlicensed broadcasting and for various activities which aided and supported such broadcasting. It also provided for some desirable amendments to the existing Wireless Telegraphy Acts. I shall be looking urgently at the provisions of this Bill with a view to early introduction of legislation to cover these matters.

A second Bill was introduced in the Dáil in May 1981 to set up an independent local radio authority. I do not consider myself constrained to reintroduce this Bill in its entirety; some changes may be desirable in the light of developments since the Bill was published. I will be looking, as a matter of urgency, at alternative ways of providing for local radio services in the context of the commitment made in the Programme for Government to provide for the orderly development of community radio services by RTE and community interests. As soon as I have developed proposals, I will put them to the Government for approval. Draft legislation to provide the framework will then follow as quickly as possible.

Another positive potential development, which I am pleased to be able to talk about, is that of satellite broadcasting. Under a frequency plan drawn up by a world administrative radio conference in 1977, Ireland was, like all other countries, allocated an orbital position and five broadcasting channels. Irish satellite broadcasts will be receivable throughout much of Britain, as British broadcasts will be received in this country, although each country must, in so far as possible, under the plan, minimise the overspill of signals into neighbouring countries. The potential use of satellites for broadcasting and for telecommunications purposes represents an exciting prospect for the development of information-based industries in this country. The previous Minister for Posts and Telegraphs, Deputy Wilson, established a committee in November last to inquire into what action should be taken to maximise the benefits for this country from satellite developments. I am sure the committee's findings will be of great interest and relevance because of the potential which exists. It must be stated also, of course, that large-scale satellite developments will be very costly, and regard will need to be had to this aspect also.

There is, finally, one other topic related to broadcasting which I would like to refer to, that is, television licence fees collection. The purchase of a television licence is, to use a rather good marketing phrase, a distress purchase. It is a purchase which must be made but which offers no direct resulting satisfaction other than an easy conscience, though the easy conscience aspect has proved a very poor salesman.

A consequence of the nature of the purchase is the level of evasion of payment of the licence fee. The problem is not unique to this country but it is one that has to be tackled vigorously. I am glad to say that special steps are being taken to reduce the level of evasion. Two nationwide house-to-house campaigns will be made this year to detect unlicensed and incorrectly-licensed television sets. The first of these campaigns will commence in a few weeks' time. Arrangements are also being made to computerise all the licence records in the course of this year. This will have the effect of improving considerably the information readily available on those who have licences and, more important, those who have not. It will also allow staff to devote more time to the pursuit of persons failing to properly license their televisions. Steps are also being taken to ensure that the information provided by television dealers on sales and rental of sets is fully up to date and comprehensive. All of these steps should have the effect of ensuring a reduction in the level of evasion and, as a consequence, moderating future licence fee increases.

Now to matters that primarily concern my own constituency of Sligo-Leitrim, and developments in the west generally. I am glad to see my colleague, Deputy Brennan, here. I am sure he will be reminding us of the omissions that we found necessary because of the financial constraints in which we found ourselves as a result of the squandermania of the previous Government. However, I will confine myself to the more positive aspects of the situation.

Despite the progress that has been made down the years it is a sad sight that still more than one quarter of all the houses in the Sligo health district, that is the County of Sligo, excluding the city, are still without running water. The same situation prevails in many other parts of the west, and I am glad to see that in this regard the Government have decided to increase the allocation for sanitary services to £110 million for 1983. This is an increase of about 17 per cent on the 1982 outturn. This allocation will enable major schemes in the west to go ahead in 1983. Among the major schemes which are now out for tender are two important schemes in my own county of Sligo, the Lough Easkey water supply scheme, and the Lough Talt water supply scheme.

The Lough Easkey scheme will serve a rural area of 21,000 hectares in north west Sligo, including the important holiday resort of Enniscrone and also the town of Easkey. Equally important, the starting of this work will encourage the group water scheme development, and indeed I am aware myself of several projects that are simply waiting this source of supply. The Lough Talt water supply scheme will serve to improve the supply to Tubbercurry and will also facilitate the proposed group water sheme developments in the Killoran-Mullinabreena, Tobertelly and Cabragh-Coolaney areas. I am very pleased with the possibility of early action on these schemes. After all the progress that has been made the very minimum that should be demanded and expected by all householders wherever they are in the 1980s is that they should have available to them a supply of running water.

A further development of interest to Sligo, and provided for in a generous manner by the Government and the Minister for Transport, is the development of Sligo harbour. The Government have approved an allocation of £625,000 for the purpose of dredging the channel and the berth at Sligo harbour so as to enable larger vessels to be accommodated. The grants allocation included provision for the overhaul of the Commissioners' own dredger The Sligeach which is to be used for the dredging operation. It is hoped to dredge the depths of 2.7 metres below chart datum to deep water berths and to 1.8 metres below chart datum to the upstream jetties.

I am glad to be able to say that work on the improvements of the telephone system will also continue in the Sligo-Leitrim area at a very rapid pace in 1983. The Department's plans envisage a fully automatic service with a high quality maintenance service for all areas of the constituency by the end of 1984. Like the country generally, this area is benefiting from the current telecommunications development programme. A new telecommunications complex at Rathedmond, Sligo, costing in the region of £9 million is now nearing completion. This will be the headquarters and the main switching exchange for the telephone and telex complex, serving all of Counties Donegal and Sligo, almost all of County Leitrim and about half of Counties Mayo and Roscommon. The first phase of this major development, a digital trunk switching exchange, and a digital customers exchange with capacity for an additional 3,000 telephone customers in the Sligo conurbation, will be brought into service within the next couple of months. The commissioning of the new digital exchange in Sligo will be followed quickly by digital exchanges in Castlegarren, Cliffoney, Collooney, Dromard, Riverstown and Strandhill. A new telex exchange has also been recently installed in Sligo.

Preparations for conversion of the telephone service to automatic working in Ballymote and Tubbercurry are progressing on target. The aim is to commission the new exchange in Ballymote during this summer and Tubbercurry immediately afterwards. The smaller exchanges working through these two centres will be converted to automatic during the later months of this year and early next year. Included in this is my native Aclare. The foundations were laid simultaneously with my arrival in the constituency.

In County Leitrim the major project in hands is the completion of a new digital trunk switching and local exchange in Carrick-on-Shannon costing approximately £2 million. This project, which will provide the facilities for automatic service in nearly all of County Leitrim, will be connected to the national network about the middle of this year. The exchange will be linked to the trunk exchange in Sligo by a new high grade radio link system completed last year, and also by a modern upgraded co-axial cable system linking Sligo, Carrick-on-Shannon, Mullingar and Dublin.

On completion of the Carrick-on-Shannon and Sligo projects users of the telephone and telex services in Leitrim and Sligo are assured of an efficient, high-grade telephone service, both nationally and internationally. Provision for the necessary investment to enable all these schemes to be completed on target has been made in the current year's Estimates.

There are now about 9,000 telephone customers in the Sligo-Leitrim area. More than 3,000 new connections to the telephone service were completed in this area within the past three years. Already many telephone exchanges in both Sligo and Leitrim are in an "on demand" situation — that is, service can be provided within three months of application date. Finally, after many years of frustration, the telephone subscribers and potential subscribers in the area can look forward to a service to match that available anywhere in the world.

Postal services in the Sligo-Leitrim area were improved recently in two respects. First, an overnight delivery service was recently introduced for all mails posted in the area in time for the night mails for addresses in Counties Galway, Mayo and Roscommon. This was made possible by altering the despatch arrangements and, with the generous co-operation of CIE, the running schedule of the night train from Sligo to Mullingar so that mails from the Sligo-Leitrim area would connect with rail and road services to Galway, Mayo and Roscommon. Second, special arrangements were made to convey evening postings from the Sligo Postal District which includes the Manorhamilton area where the offices of the North Western Health Board are located, to Lifford so that next day delivery could be achieved throughout County Donegal in the North-Western Health Board area.

The severity of the recession has given rise to a situation where employment in many sectors of industry has contracted as companies face the prospects of diminishing markets and other difficulties. The effects of the recession are being felt by industry in the West and in my own area of Sligo-Leitrim in a particular way, but at the same time there are some encouraging signs which provide hope for the future. In County Sligo alone the IDA approved 46 new projects with an employment potential of 474 in 1982. In County Leitrim, approval was given to 26 new projects with employment potential of 214. These projects may take time to actually get off the ground but they are an indication that steady progress is being made. The IDA's marketing strategy of attracting technically advanced industries such as pharmaceuticals, chemicals and electronics has ensured that Ireland is perceived as a highly attractive location for mobile international investment, and the higher grants available for industry locating in the west are an added incentive which many companies have availed of. I, as a western Deputy, will avail of every opportunity to promote locations in the west as centres of potential industry.

Unemployment, however, remains the major problem which our Government face, the problem we must tackle, with all our resources and ingenuity.

The traditional solution in the west of Ireland was emigration. But whatever one thought of that as a solution it is no longer an option — the job supply overseas has virtually disappeared for the kind of mass exodus that used to take place. We now have to face up to solving our own unemployment problem. To do this we must get our finances right, and this budget is the first step on a difficult road. I have no doubt that we have the courage to persist and the ability to succeed. Also, I believe that in the tough, and they are tough, measures undertaken by the Minister in this budget we have the full support of the public in a way never before witnessed in this country.

Mr. M. Brennan

I should like to take this opportunity, first of all, to congratulate Deputy Nealon on his appointment as Minister of State in the Department of the Taoiseach. I am sure he will do an excellent job in both Telefís Éireann and Radio Éireann and I trust that he will make every effort to promote Irish culture, particularly Irish music, an art form so much loved in his own county and in my county.

Coming to the budget in general and to the special problems of my own constituency in particular, no constituency has suffered as severely from this budget as Sligo-Leitrim. I regret the deferment of the Sligo general hospital. I regret the Government's decision to cut back on the schemes in relation to the drainage of the Boyle and the Bonet. I also regret the deferring of weight influence in regard to cattle headage for off the farm income. It has been said that you cannot strengthen the weak without weakening the strong. I believe the end result of these proposals will be not only to weaken the strong but also to paralyse the weak. I do not take issue with the objectives outlined in the budget statement but I object to the methods proposed for their implementation. The twin evils of inflation and unemployment are the greatest threat to the stability of our country and the basic structure of our society. In a small town in my constituency at present there are 26 houses up for sale due to massive unemployment in the area, rising costs and the inability of young people to meet the ever spiralling costs of keeping a roof over their heads. The reduction in mortgage relief can do nothing but place unbearable strain on those borrowers who are now finding it next to impossible to meet their repayments from their ever dwindling resources, resources that for so many will disappear altogether in the economic collapse that is envisaged following the disastrous measures taken in this budget.

The decision not to go ahead with work on the Sligo general hospital is regrettable. Thousands of building workers in my constituency were looking forward to that work commencing. They have been shattered by this disastrous decision. I have to deplore this decision also on the ground that it fails to recognise the chronic overcrowding from which the hospital has been suffering for so many years. It is an every-day experience that the only accommodation available for some patients is in the corridors. This is an affront to their dignity and it must make their treatment and chances of recovery more difficult. The decision also shows contempt for the needs of the local work-force and the community as a whole. It makes it very difficult for the doctors, nurses and staff of the hospital to continue working in the conditions in which they have been working for a number of years. It is very difficult to move around when there are patients in the centre of wards and in the corridors. It is a pity this work could not have gone ahead.

I should like to say something about the Bonet and the Boyle drainage schemes. The Bonet scheme is in my constituency and also in the Minister's. It was officially opened last summer by the then Tánaiste and Minister for Finance, Deputy MacSharry. It is a shame this scheme is not going ahead. The rural population of this catchment area have had their hopes dashed at the last moment. Many of those people are trying to remain economically viable in agriculture and they are working in marshlike conditions. We cannot expect farmers to become more efficient if we leave them struggling in what is, in some parts of my constituency, no more than a wet desert. This news will be the last straw for many farmers in the Owenmore and Arrow basin in the Ballymote area who have for so long been waiting for the drainage of those two rivers. It is a terrible and a crying shame to defer these schemes when they are matched pound for pound by the EEC. When we postpone one or two schemes we are also putting back other schemes that are behind them. If we went ahead this year with the Boyle and the Bonet rivers perhaps in three or five years time we could go ahead with the drainage of the Owenmore and Arrow rivers. It is a shame not to avail of this money from the EEC.

The Minister has spoken of water schemes and telephone schemes. He mentioned the Lough Easkey and the Lough Talt schemes. We were glad to announce before leaving office that these schemes would be included in the 1983 estimates. These schemes are very badly needed in Count Sligo. There are many miles of water pipes involved and many people will get water from these schemes.

All livestock improvement schemes have been scrapped, I believe. This is unfortunate because we are exporting cattle on the hoof and carcase beef to Europe. We need the best quality cattle leaving this country if we hope to get a good price. Our agricultural industry is the best industry at present and will continue to be. The special premium bull scheme has been discontinued. When the scheme started 57 years ago a bull licence cost five shillings. In 1982 it was still five shillings. If the Minister decided to charge £10 for a bull licence the scheme would only cost the Exchequer £250,000 and if it was decided to charge £20 it would cost the Exchequer nothing. Farmers would be only too glad to pay £20 for a bull licence. We want quality cattle. Unfortunately the constituency I represent is more suitable for beef rather than dairy cattle. Many small farmers in my constituency keep from five to 20 or 30 cows but they would like to have a bull running with their cows. I am afraid farmers may not be inclined to buy bulls when the subsidies are no longer available. I hope the Minister takes another look at this to see if he could bring back the bull subsidy. If he does not, shows like that which has been held in Carrick-on-Shannon since 1926 may fall by the wayside.

There is no longer a ram subsidy. This is regrettable because sheep are being graded in the factories and if we do not produce the right type of sheep we will not be able to sell to the French and other European markets. It is essential that these subsidy schemes are reintroduced to ensure that we export the best quality livestock.

The decision to compel all farmers to make tax returns is ludicrous because it will cost the Government far more to implement and collect any tax due than this system will yield. Most farmers in my constituency are small farmers with low valuations, low turnover and with different types of land — some good and some not so good. They have to cope with fluctuating prices for most of their products. Because of inflation the margin of profit they might have made a few years ago has been eroded.

These people have their backs to the wall, and an additional burden placed on them can only have one effect. The Minister should consider very carefully not taxing all small farmers. If farmers with ten, 15, 25 or 30 acres with valuations between £5 and £25 are asked for accounts, the only person who will make money is the accountant. It would be a shame if the small farmers had to pay that type of money.

Mr. Nealon

I do not think demands will be sent to everybody.

Mr. M. Brennan

That would be good. I am sure the Minister understands what I am saying because he, too, comes from a small farming community. At a time when thrift and wisdom should be encouraged, it is a shame to penalise savers even further by taxing the interest on deposit accounts.

Today a car is essential for everyone, particularly those living in rural Ireland — farmers and industrial workers alike. The cost of running a car for an industrial worker who has to travel from ten to 20 miles to work is from £25 a week for petrol alone. With the increases in the price of petrol and road taxation these workers wonder if they should bother going to work.

The overall effects of this budget can only be counter-productive. It is a tough harsh budget for everyone, farmers, industrial workers and everybody else. At a time when the world is poised to experience a tremendous change in its way of life, our people need confidence, encouragement, direction and hope. There is little hope and less direction in these proposals before the House.

Mr. Bell

Before I comment in detail on the budget I would like to take this opportunity to congratulate you on your election as Leas-Cheann Comhairle and assure you of my co-operation and assistance at all times.

I would like to refer briefly to a few remarks made by my fellow County Louth Deputy, Deputy Faulkner, who spent a considerable amount of his time referring to the Labour Party position in relation to the budget. That is fair comment in the sense that we are involved in government and must share the responsibilities for decisions taken by the Cabinet, but I took exception to his remarks dealing with the Drogheda branch of the Labour Party and their involvement in the budget. I spent some time considering the reasons why he did that, because we have several other branches in County Louth which also commented on the budget. Having spoken to some of my colleagues about it, I came to the conclusion that it must have something to do with the last election rather than the current budget. I thought his remarks might have been fuelled by the fact that we took a seat from them for the first time in 30 years. Having spent a week considering it, I came to the conclusion that there was no point in making an issue out of what was a typical sour grapes attitude. The officers of the Drogheda branch are quite skilled in replying to people like the Deputy and will use their own platforms since they cannot come into the House to do so. They do not need me to speak for them, so I shall leave the matter for another day.

It would be unfortunate, at the commencement of a period of government when we should all be working in the interests of all the workers, if we were to engage in attacks on individuals within a branch or cumann, whether it be Fianna Fáil, Fine Gael, or Labour. That would achieve nothing. I am not prepared to enter into a childish, nonsensical waste of time of the House and of the Members.

To show that there is no ill-feeling, I must say that there were a couple of things with which I agree. The fact that one represents a Border constituency is very important when speaking on the budget. I ask my colleagues in Government to keep in mind the special problems experienced in the Border county of Louth. This county is, to a high degree, industrialised by comparison with many others and unemployment is a major issue for us. I have said in the paper quoted by Deputy Faulkner and say again, so that it will be on the record of the House, that the increases necessary in the budget have caused special problems for my constituency.

Anyone who knows the county will realise that a half-hour's drive from Drogheda and a lot less from Dundalk or Ardee would bring one to Newry. Spirits can be purchased in Newry and, indeed, in the markets, both legally and illegally, from the back of vans along the side of the roadway, for less than half their cost in Dundalk, Drogheda, Ardee or elsewhere in County Louth. From 20 to 40 buses leave Drogheda—and I am not speaking about Dundalk where one has only to walk up the road to cross the Border—every Saturday. The shops in our county very soon will not be able to continue in business. This is not the case in Counties Donegal, Cork, Clare or Kerry, where the people are not a half-hour's bus ride from Newry. The people travelling across the Border can even make a profit if they go by car. They can buy one gallon of petrol in Drogheda and ten gallons in Newry, making a profit on just getting there, before buying anything.

Irrespective of the economic situation and the aims of the budget, as a Deputy representing a Border constituency I must point out very forcibly that we have major problems. I am not blaming the Government because, irrespective of what party were in power, the same measures would have been necessary. There is no point in our telling each other that in the House. You cannot tell hoteliers, publicans and garage owners that. You cannot tell the smugglers who are making millions of pounds—and I mean millions. Last week, in a market place just across the Border, from the back of an open lorry one individual sold 2,000 cases of illegal liquor. It is mind-boggling that that can be done in a couple of hours' work and what damage is being caused by this to public house owners and hoteliers in County Louth and elsewhere in the Border counties. Deputy Leonard and other colleagues representing Border counties will be aware of that. Irrespective of who is in power, whether Fíanna Fáil, Coalition or any other arrangement of parties, something must be done about this major problem. If something is not done about it, there will be mass unemployment in the entire Border area and, in particular, in County Louth, which is the most highly populated county of this area.

Supervision of customs traffic on the Border is totally inadequate, but one cannot blame the customs men. People in their thousands are going across the Border and one would need the whole Irish Army to be on duty at the various crossings to control the traffic. It is unfortunate that there are not four or five Ministers of Cabinet living in this region. They would probably have a greater sense of involvement and a greater idea of what is happening there. No party in Government for the last couple of years have fully appreciated what is happening in the Border counties. I say that sincerely, not as a criticism, but as a fact. Certain steps must be taken to offset those difficulties and redress the situation of unemployment being created daily as a result of the price differential in Border counties.

Perhaps my colleague, Deputy Nealon, would use his influence in convincing the Government that a major contribution towards redressing that situation would be the extension of the natural gas pipeline north of Dublin city. At least, leave those living in the Border counties in a position where they can draw on that pipeline. If it is not extended into County Louth and along, or perhaps across, the Border, that area will no longer be able to attract heavy industry. This will leave us in a non-competitive situation directly or indirectly due, not alone to the present necessary budgetary measures but the budgetary measures applied by Fíanna Fáil and the last Coalition Government. We must call a spade a spade. There is a constant attack on the Labour Party's involvement in Coalition, as if all our ills should be carried by the Labour Party. There are two parties in government, sharing the responsibility equally, and they will continue to do that. All the problems cannot be put at the feet of the Coalition Government. These are an accumulation of problems as a result of downright bad government over the last 15 years. One need not have been an economist to have seen what was happening. The dogs on the street were able to see it. Successive Governments were spending money in order to buy votes and win seats rather than addressing themselves to our real economic problems. One would get the impression also that there was nothing in this budget that would in any way justify the Labour Party's involvement in Government. For example, there was not much coverage right across the media of the most important announcement made, including all of the points made on the subject matter of the budget overall which formed part of the agreement, put to our delegate conference in Limerick, providing for a pay-related national pension scheme for workers.

I have been a trade union official full-time for over 20 years and, before that, part-time. I have worked with colleagues in industry, such as clothing, footwear and textiles, the weaker industries as they have become known but very important in relation to the employment of our people. Those industries were run into the ground by lack of a national co-ordinated policy on the part of successive Governments, in particular since our involvement in the EEC. One might well pose the question: how many workers in the footwear, textile or clothing industry have a decent pension scheme? I can tell the House that 95 per cent have none at all. In other words if one happens to be a textile worker and reaches the age of 65 there are two choices open to one, either retire on retirement benefit and wait until age 66 to receive the old age pension or continue working until one drops.

For me, as a trade union official, the announcement by the Minister for Social Welfare of his guarantee in Government that a pay-related national pension scheme for workers would be introduced means that I could suffer an awful lot of what is contained in the budget to secure that one well deserved scheme promised over the period of the last three or four Governments, when one Minister after another passed the buck. Hopefully my colleague the Minister for Social Welfare will be in office for four or five years. I am quite satisfied, therefore, that we will not be able to offer the excuse at the end of our term of office that we did not have sufficient time, that the Government had lasted for nine months only to be replaced by another Government, another Minister, with office-holders changing like chaff on a threshing machine.

An opportunity is now afforded this Government to make the biggest single contribution to the welfare of the working class in the history of this State. My father was a baker and chairman of a bakers' union at local and national level. He spent 54 years in a stinking bakehouse, up at 3 o'clock in the morning, working his guts out to give us some education and feed us. After those 54 years he received £4.50 pension per week. Therefore when I hear people cribbing about the level of their pensions I contend that they would need to go down to some of the bakehouses in Drogheda, Athlone and elsewhere, to the textile mills or the clothing factories where the workers have a miserable pittance of £2.50 as pension or none at all.

I say clearly to the Cabinet, as a trade union official and now as a Labour Party Deputy, that is my top priority. They can eliminate all of the combat poverty committees, all the do-gooders who tell us what we should be doing about the old and the sick. I say that is what they should do — implement a proper pension scheme for workers so that they can retire from work with dignity, so that they do not have to be going to community welfare officers or anybody else for handouts. They will have sufficient money to live on if they have a proper index-linked pension scheme which means that, as the cost of living increases, so also will their pension. That will be the major contribution of this Government to the poor and underprivileged so that no longer shall we have people like Michael Bell senior, having spent 54 years as a baker, retiring with £4.50 pension.

When one considers the thousands of old people, who are perhaps sick, who are hardly able to feed themselves on the level of social welfare benefit they draw, one can only come to the conclusion that we have had a lot of people in Government over the past 15 years — and I do not give a damn which Government — who did not know where the poverty in Ireland lay. That is where the bulk of poverty lies, in the old, the sick and underprivileged. I thank my colleague the Minister for Social Welfare for his commitment to the people who really need to be looked after. I can assure him of my full support in the introduction of a national pay-related pension scheme. I can say sincerely that I shall be speaking also on behalf of all my trade union colleagues in welcoming that proposal. I hope we shall not fail in that respect because, if we do, I shall feel that we have failed in Government.

Many other people have contended that Labour is responsible for this, that and the other. It would appear from what some Deputies say — such as Deputy Faulkner, my colleague from the Louth constituency — that nobody else was involved in Government but the Labour Party. Nothing of value to the working class people was mentioned by any of those speakers.

It goes without saying that this has been the toughest budget, certainly in our peace-time history. Before dealing with whether or not it was necessary to have such harsh measures may I mention some of the things this budget did not include. For example, it did not include 40 per cent of what the ordinary consumer buys, which is totally exempt from VAT. There is no VAT on food, clothing or footwear. Here I might make a few comments in relation to that subject. In the penultimate general election plenty of noise was made by Fianna Fáil in County Louth when they hung up shoes outside polling booths. With hindsight probably that was responsible for my not winning a seat in County Louth on that occasion. Every resident in Drogheda, Dundalk and Ardee got VAT on clothing and footwear for their breakfast, dinner and tea. Then it was stuffed down their throats on their way into the polling booths. In all fairness that must be recorded by somebody like myself who has spent a lifetime in those industries, who made a very strong case to my parliamentary colleagues in relation to that subject. On behalf of the workers of County Louth, who I suppose represent the largest industrial grouping in the country, I must express thanks and congratulate the Cabinet on not having applied VAT to clothing and footwear.

Debate adjourned.