Deputy O'Rourke has eight minutes left.
Economic Situation: Statements (Resumed).
Before Question Time I was discussing the Youth Employment Agency. Now that I have a captive audience which includes the Minister of State with special responsibility for that area, I would like to read what was said in a policy statement adopted by the board of the Youth Employment Agency in December 1982 and which we received recently. On page 14 it says:
The National Manpower Service Survey of 1981 school leavers carried out in May 1982 found unemployment rates of 40 per cent among those who had no qualifications, 24 per cent among those with Inter Cert/Group Cert, and less than 20 per cent among those with Leaving Certificates. Earlier in the year, in January, 13 per cent of those who had entered the labour market with first degrees obtained in in 1981 were jobless. The cumulative impact of those variations, along with the data on overall unemployment referred to above, suggest that the vast majority of the young unemployed, and particularly those out of work for long periods, are relatively unskilled and of low educational attainments.
I make no apology for repeating what I said earlier. That is a factual statement and I agree with it. Young people with low educational attainments are not equipped to get jobs.
I emphasised earlier that there must be a marriage between education and training and that there must be an essential level of training in every second-level curriculum. Senior pupils should be trained for something. The divorce between education and training is too wide. Pupils leave school unprepared to avail of the courses and job opportunities offered. Finance should be made available for a training programme in all second-level schools.
Yesterday in the Athlone Regional Technical College a very advanced scheme was inaugurated. A work programme course is being undertaken there. This is a very welcome development but I would like to see it spread throughout the country. Emphasis should be put on socially disadvantaged and uneducated young people because they will not get the jobs.
Many pupils are leaving school early because they say the course they are following has no relevance to real life. They cannot apply what they are learning in schools to their lives outside. Many of them find the classroom a place of boredom. That is why they feel the educational system is failing them and they are disillusioned.
I have been hearing about the curriculum development board and the examinations board for 12 months. I am tired of hearing about them. I want to know if there has been set up a board with a serious intent to reform the curriculum of second-level schools to make it more relevant to the everyday life of young people. I do not want to hear the Minister make pretty speeches and say it is her intention to set up a curriculum development board. I want it to be set up now. In the past everybody had very good intentions about curriculum councils and wrote about them in their manifestos but nobody did anything about them. The Minister said she is going to set up this board, but she is 12 months "agoing". As I have said on many occasions, I give my party's commitment to the setting up of this board, but I want to see action. Young people going through the educational system now do not want to hear about results the development curriculum board will issue in four years' time. They want to be sure that before they leave the system the results of the board will have some relevance to their lives.
Education should not suffer the scalpel. It may be said that that is simplistic, but I recall a 1978 Ard Fheis speech by the then Leader of the Opposition, Deputy Garret FitzGerald. He said that no nation would judge kindly a Government which did not place heavy emphasis on education. No country will judge kindly this Government if they do not redirect their policies towards positive discrimination for education. I do not think a Minister, particularly a Minister for Education, should always stress the importance of his or her brief, its funding and finance. He should not be acting as an unofficial Minister for Finance. He should be seen to revel in the rhetoric of rectitude. Young people pass through the education system only once and they need all the help they can get.
To make a statement on the present state of the economy in 30 minutes is practically impossible. I am glad to have this opportunity to express my views on the economy and hope Mr. Cashman's request to the leaders of our political parties for an immediate debate on the state of agriculture, with particular reference to the super-levy, will be granted. Deputies will then have an opportunity to express their views on the state of Irish agriculture.
When Fianna Fáil were in office they were no great shakes in lifting up the economy. It can be said that during that period there were no great economic wonder-workers among them. The root cause of all of these problems was the 1977 general election manifesto. The 1973 to 1977 Cosgrave Coalition Government had such a grip in the country, had carried out much practical work that in my opinion they will go down in history as one of the best Governments ever in this State. Fianna Fáil had to have some unusual means for their removal. In the event the step they took meant they had to break their own word, wreck the economy and the country and that is what happened.
Sometimes we in Parliament tend to feel that the people outside are in a state of senile decay. It should be remembered that the people are far more intelligent than we give them credit for. When I see hours and hours of the time of this House being spent on an amendment of the Constitution in relation to abortion, when I hear the long speeches made by those clamouring for divorce, those of Deputies Fennell, Barnes and others, particularly those of the Labour Party, when I hear the Minister for Health speak of his intentions to introduce new contraceptive laws, the speeches being made directly and indirectly attacking the family unit, the fundamental unit of society, in the present state of our economy, I ask myself who in this House has any sense of reason or responsibility left? Do we realise that we have almost 250,000 of our people unemployed, something never before experienced in the history of this State? Coupled with that we have the youngest and fastest growing population in Europe, our young people depressed, without any hope for the future. Deputy O'Rourke spoke about the quality of education and training for them. That is all right but where are the vacancies for jobs to be found in order to give them a standard of living to which they are entitled?
I have a few suggestions to make to the Minister for Finance in connection with the 1984 budget. First, steps will have to be taken by the Government to alleviate what is happening in homes, amongst families, where there are no bread-earners, where there are many people signing in labour exchanges for ten and 11 weeks and receiving no money and at the end of which they receive perhaps a fortnight or three weeks of what was described in the old days as home help or assistance, now called supplementary social welfare benefit, a swanky name for the same thing. Some of our people are experiencing the most appalling conditions never before encountered. Yet there is talk of abortion, contraception, attacks being made on the family unit and, to complicate matters further, talk of facilitating people to have an easy means of divorce. Would it not be better to look after the family, give increased rates of children's allowances, proper rent allowances, assisting husbands' and wives' to live together by effecting an improvement of the economy? Those would be the proper steps to take.
Also in relation to the 1984 budget I suggest that the Minister for Finance reduce the charges for electricity for industry to the EEC average because, as long as the present charges obtain, we shall be unable to compete with our European partners. We are living in a fool's paradise if we think we can compete without such charges being reduced. Interest rates must be reduced also to about 9 per cent or the EEC average, another necessary step if we are to survive. Let us not do this piecemeal. We must also reduce our postal charges to the EEC average. Why should we always be the record breakers in the EEC with regard to everything that is difficult, upsetting the trend of the economy, in comparison with our partners? Likewise we must remove VAT at the point of entry, thereby effecting vast savings on high administration costs for private enterprise and the State alike. The estimated cash flow in industry for raw materials is approximately £40 million. Ours must be the best industrialists in the world today and the trade unions and those working for them are no cowardly men to be able to hold on to their jobs in such conditions.
We must also encourage investment in new business by allowing personal investment to be offset against tax liability. I am a believer in private enterprise, in the private employer but they must be encouraged and must receive some form of incentive. The best way that can be done is by having personal investment offset against any tax liability. The same relates to everything we produce here. There are some reasonably good industries in my constituency. Where we have gone wrong is in the organisation abroad of the sale of our produce, in Europe, the United States, Canada and elsewhere. Our salesmanship abroad is not right. In this respect I appeal to the Minister for Finance to provide at least £5 million or £6 million for the recruitment of between, say, 200 and 300 additional export marketing staff to be resident abroad, under strict supervision, being given a quota that must be complied with abroad for the sale of our produce. We cannot compete unless something is done in that direction.
There must also must be increased expenditure on our roads because at present we are not doing enough in this regard. We cannot accommodate present day traffic from area to area unless expenditure is incurred and improvements effected. We must establish a roads finance agency to facilitate private sector financing. We must get private contractors and individuals into road construction and maintenance. We must ensure that there is no further increase effected in VAT rates because it is those charges which are choking us at present. The necessary steps must be taken to remove VAT from newsprint, from newspapers, national and provincial. Ever since the introduction of VAT I have made this appeal for its removal from the printing and newspaper industry. It must be remembered that newspapers constitute a means of education, whose cost has now gone beyond the capacity of the average wage earner. I hope those suggestions I have made will be taken up by the Minister and be implemented.
There are many distractions to keep people's minds off the economy. But people's minds cannot be kept off the economy if they have no money, no food, no means of meeting vastly increased rents, rents which are increasing daily. One can only get out of any economy what one puts into it and, if one starves an economy, one must face the consequences. We must invest in the economy if we are to get results.
Have we given up the ghost? Have we decided that for all time Ireland, the beautiful land flowing with milk and honey, is dead? How can we expect tourists to come into this land when tourism as an industry has been killed by those connected with it, by high charges and VAT? Tourists will go elsewhere instead, but they would be prepared to come here if things were different.
We must invest in employment. The building industry, the one we depend on most after agriculture, is at a standstill. That industry employed carpenters, bricklayers, plumbers, plasterers. The industry connected with it, the furniture industry, employed woodworkers and joiners. There was vast employment in the provision of stone and sand and gravel. Machinery was required. There would be unlimited employment in the building industry if it were properly encouraged. Throughout the country I have never experienced such a shortage of houses. In my constituency I see young married couples living by the roadside in caravans with young mothers getting up in the middle of the night to move their babies' carrycots out of the rain coming through the roof. Because of the housing shortage, families are expected to live together in unnatural conditions. It is surprising that so many husbands and wives can stay together in such impossible, unhealthy conditions. The building industry, therefore, needs much investment so that new life will be put into it.
The nation is now being taxed at a level beyond which people cannot bear. The property tax in the last budget should be abolished. It is now conceded that it will not yield the revenue expected from it because people who have the name of property cannot pay. It is causing great hardship.
The Tánaiste yesterday promised that in the next year or two we will have the re-introduction of the wealth tax. Where are the wealthy people in Ireland today? They have all gone out of the country, or those who were wealthy are now the new poor. The sooner the Labour Party realise that the people described as rich are now the new poor, the better for the country. Statements of that kind should be discussed in the parliamentary party before they are made.
Who will pay this wealth tax at a time when there is no stimulation of the economy? Instead of talking about a new tax we should be wondering about how our people can pay the taxes now imposed on them. A new wealth tax would not work. I beleive in private investment in the private sector and I do not want to see private individuals being subjected to draconian taxes. I do not want to see what people earned hard taken from them. What people have, they earned, and nobody has a right to take it from them. Deputy Kelly is always talking about the property tax. The sooner it goes the better and the sooner we stop talking about a wealth tax the better for the lot of us.
What are described as the big farmers are threatened with extinction and that is why I agree with Mr. Cashman's suggestion that we have a debate on agriculture here. Farmers are now unable to pay the heavy interest rates on debts built up over a number of years. As a result, the land is not properly stocked. People are afraid to invest in dairying because they do know what is ahead. I advise them not to be put off. There is a future for the dairying industry if the farmers get help. We were told that the EEC would bring us a new market comprising 250 million people. That market is still there, so why are we discouraging farmers from investing? Why are our farmers not encouraged to produce vegetables so that we will not be importing them from Holland and Denmark, potatoes from Israel and Italy and elsewhere? Have we lost our sense of patriotism and nationalism?
We must produce, sell and but Irish. If we do not, we are finished. Earlier in the week we were told the ESB had completed a big contract for US coal while we are only scratching the surface in the matter of producing our own fuel. We must tell our farmers to get back into producing potatoes, lettuces, cabbage, wheat, oats, barley. I have never seen such a smaller area under tillage, although our farmers are great people, probably the best in any country.
Of course our farmers need encouragement and help like all others in the private sector. If they do not produce how can we invest in the public sector and who will pay for such investment? When we see not dozens or hundreds but thousands of people lining up in dole queues throughout the country once a week we must ask where is the dignity of man. Those people have lost all dignity. I know the grandest and the finest people who are out of work and being obliged to line up outside labour exchanges every week. Where is the point in telling them there is a recession? It is useless to tell them that good times will come when here and now their only interest is in work which will buy them food?
It is by the activities of today that today's Government will be judged. I hope and trust that nobody is living in the clouds in relation to the conditions under which people are living today. People coming to my house tell me the same old story. The young people ask about the prospects of getting work and whether they are doomed for life to stand outside the labour exchange and suffer the consequent loss of personal dignity as they put out their hands for miserable charity. Man is at his best when he is creating and producing. If he is denied the right to work he will not develop to the fullest extent.
We must buy Irish-made goods and there must be a drastic cut in unemployment in the building industry. I would also invite the Minister to consider in the next budget subsidising food for poor people. There are many today whose weekly allowance will not purchase the necessities of life and there are those who will not seek charity. It takes far too long to provide money for those in need from official sources, although the Society of St. Vincent de Paul can do the job in one hour.
There are 11,500 nurses in this country but 2,500 nurses are unemployed, even though hospitals are understaffed. Some qualified nurses are working as waitresses because that is the only work they can get.
We must exempt the clothing and footwear industries from PRSI contributions if we want these sections to flourish. We must go ahead with the building of schools and hospitals. Local authority financing must be examined. A subcommittee of the Cabinet should be set up to deal with the financing of local authorities.
CIE provide a public service and I hope that steps will not be taken to curtail that service. I spoke on the Bill which was introduced to establish CIE and I recall Deputy Lemass saying that CIE were being set up to give a better and cheaper service.
We need a revival in the economy and we must give confidence to the people. Newly qualified young people must be given hope for the future and the Government should seriously consider the plight of these people. There are great people in this country. All they want is a helping hand. A stimulus must be given to the economy so that they will have a part to play and will be proud to call themselves Irish, enjoying the standard of living to which they are entitled.
(Limerick West): I would remind Deputy Flanagan that we were ahead of the IFA regarding the proposal to introduce a super-levy on milk. Our party have a motion on the Order Paper to the effect that Dáil Éireann expresses its deep concern over the implications for Irish agriculture of the proposed EEC super-levy on milk and calls on the Government to reject the proposal as detrimental to our vital national interests. I will be calling on the Taoiseach next week to allow Government time to discuss that motion.
We do not want the credit to go to Fianna Fáil because Mr. Cashman wrote to the Taoiseach and the Labour Party at the same time as he wrote to Fianna Fáil. I know that.
(Limerick West): Before the letter ever came from Mr. Cashman this motion was on the Order Paper. It is disappointing to have to accept that there will be little or no economic growth this year. The speeches made during this debate, especially the speech made by the Tánaiste, give little hope for the future. I hope that the Taoiseach will give some guidelines in regard to the way forward and some hope for the future to our young people and those looking for jobs. There must be hope for the recovery of the economy and I trust that the Taoiseach will point the way forward.
There is no scope for further contraction of the economy in 1984 because in many respects it has now reached the lowest point. The volume of investment in 1983 will be the lowest in several years. The impact in terms of employment is obvious but it also underlines our national capacity to respond to world economic growth which we hope will occur in the years immediately ahead. I hope when the Estimates are published within the next couple of weeks that we will see some guidelines, some hope for the future and some investment which will provide employment. I wonder if I hope in vain. Time will tell.
The latest inflation index is equally depressing. Inflation strikes at all sectors of the economy, not least agriculture. Nevertheless, there is one ray of hope —no thanks to the Government — in the performance of the agricultural sector despite all the difficulties at present. I still hold that the expansion of agricultural exports, and I want to re-emphasise this, is the quickest and surest way of lifting the economy out of the present depression. In past recessions we looked to agricultural to lead us out of it. There is no reason, provided the Government have a political will to provide guidelines for agricultural development rather than contraction of agriculture, why we cannot again look to agriculture to lead us out of this recession to progress and prosperity. It is to the credit of the agricultural sector and heartening to know that this year agricultural exports will increase in the region of 5 per cent in volume and a little over 10 per cent in value over the year 1982 and that the same growth output of the sector will be 2½ per cent. This is an indication, even without Government guidelines, leadership and incentives, that the agricultural sector has the incentive to recover and expand.
Again I appeal to the Government to give the wherewithal that is necessary. As the latest Central Bank bulletin intimates, these gains could be of a temporary nature but, as I have already stated, I am certain that, given adequate encouragement, they could continue and be sustained. The Government have an obligation to support an improving economic climate in our greatest industry. The first essential is to lower interest rates so that when moneys are borrowed by farmers for expansion by development, they will have the same interest rate prevailing throughout the duration of that plan. The Government should reconsider the proposals which were being implemented when we left office at the end of last year. We were introducing a four-year plan for agricultural development and also the provision of capital for this at fixed interest rates throughout the duration of the plan.
If the farm modernisation scheme was restored, even on a limited basis, we would see immediate results. The present recovery in agriculture should not be allowed to be of a temporary nature. The implications of the proposed reform of the common agricultural policy and particularly of the proposed, dreaded super-levy, cannot be over-stressed, not only for agriculture but for the nation as a whole.
With regard to the proposed super-levy and our total opposition to it, the Government, notwithstanding what the Minister for Agriculture said this morning, are not adequately and effectively communicating to the Commission and to the other member states our total opposition to the super-levy. The establishment of the Commission's task force is not necessarily reassuring and may indicate that Ireland can be bought off with a few marginal concessions. Because of the concern of my party, I decided to meet the members of the Commission and other interests in Brussels over the past few days and I found, in my meeting with Commissioner Dalsager, a certain appreciation of the special circumstances of the Irish dairy industry. However, I was left in no doubt that the Commission intend to pursue their proposal without exemption and that they have the support, in principle, of all the other member states.
Following my discussions with several parties, I was left with the distinct impression that the Government have not convinced either the Commission or the other member states of Ireland's vital national interest in this matter. Irrespective of what the Taoiseach, or the Minister for Agriculture, have said at home the Government have not pursued the issue strongly enough at European level. There is still time for them to make up this lost ground. They can do so by putting forward the strongest possible case not only in the interests of Irish farmers but of the country as a whole. I should like to assure the Taoiseach that he will have the support of Fianna Fáil even if he decides to exercise a veto in this regard.
Following my discussions in Brussels it is clear to me that there is no appreciation that Ireland would contemplate such drastic action to protect our vital national interests. I am convinced that the only way out is for the Government to adopt a strong line and maintain that position to the end. I explained that the proposed super-levy was totally unacceptable to the Irish people and that our Government would have the support of Fianna Fáil in resisting its imposition on Irish farmers. I understand that the EEC faces genuine financial problems but I pointed out that the proposal to introduce this levy was contrary to the principles of the Common Agricultural Policy, accepted principles of economic efficiency and would discriminate against expansion here. I stated that we produce only 5 per cent of Europe's milk supplies and yet under the super-levy we would be expected to meet 10 per cent of the cost of the surpluses. The nine other EEC countries can produce an increase in milk output this year greater than our total annual output. That is a situation the Government must resist. I hope the Government have the strength, the resolve and the political will to resist this imposition. I hope the outcome will be satisfactory. That will happen if the Government oppose the levy to the end. Nothing less than total exemption for Ireland is acceptable. Derogation for a number of years is not acceptable because of the problems our agriculture and economy will face.
I hope agricultural output will continue to increase. The Minister for Finance should not bask in the joy of increasing agricultural output and exports, however understandable that may be. Looking into the sector, I am alarmed that acording to the Central Statistics Office June census, the non-dairy cow herd has fallen to an all-time low of 421,000 head. Equally depressing is the revelation that in-calf heifers intended for the beef herd have also fallen by 3 per cent this year. The cattle and beef industry is far too important to allow this slide to continue any further. I strongly urge the Government to ensure that in their forthcoming budget, every possible encouragement is given to our basic industry and I am certain that the farmers of Ireland will respond, as they did in the past. Our farmers need leadership and an incentive to invest and I hope they get those in the forthcoming budget.
If we are to rise swiftly and steadily out of the present recession it is vital that we optimise every resource, both human and natural, that we possess. Despite rumours of oil and the growing importance of natural gas our farmland is still the greatest natural resource we have. Land use and land ownership have always been very emotive issues in Irish life and politics. This can be explained partly by the different motives and viewpoints with which people look at the whole land question.
The usual view taken of land is as a limiting factor in food production. How the available land is used to maximise production and increase national prosperity is clearly of the utmost importance. The use of land for non-agricultural purposes such as development, forestry, recreational facilities and so on is another area with major implications for the environment and the country. However it is the question of land ownership and transfer which is most important. The problems of land sale, farm inheritance, retirement and land leasing are all components in this difficult equation. The magnitude of this problem can be appreciated when we see that over the past 20 years average farm size has only increased by about 8 per cent. This is a pathetically small change considering the major effort which the Land Commission have put into tackling the problem. The farm retirement scheme should be looked at so as to ensure that the proposed land legislation is effective. In areas, other EEC schemes were in effect encouraging and supporting farmers to retain their farms in direct competition with the retirement scheme. The popularity of the conacre system where land is rented for 11 months is not conducive to either land mobility or indeed maximising production. Too often this land is taken by larger farmers who can work on a very tight profit margin as their home farm partly subsidises the land which they rent. The smaller farmer with a greater need for extra land just cannot compete in this situation.
I am convinced that the major part of any such investment should come directly from the EEC or from one of the Community-backed structural programmes. There is an urgent need for the formation of a small group of top level people representing farm organisations and other interests to look into the whole area of land structure. If the question of land mobility is looked at we should be able to prepare quickly a countrywide land leasing programme which can be adopted and implemented. I stress the words "adopted and implemented" because there is little point in producing yet another report to gather dust. Such a group could also issue proposals on the question of land sales and transfers. The area of land utilisation is of vital importance to an agricultural country such as Ireland. What is needed is a clear and pragmatic policy rather than pious aspirations. Having regard to the recent fall in land prices now is the time to implement such a scheme. This opportunity should not be missed.
I must, at the outset, answer some of the quite extraordinary statements made by Deputy Haughey at the beginning of his speech. First, he claimed that the current budget deficit was not being reduced and will, in fact, be not much different in 1983 from what it was in 1982. The fact of the matter is that he knows as well as I do, that the share of our national output absorbed by the current budget deficit this year, allowing fully for the small overrun in expenditure, much smaller, I believe, than the figure suggested, will be 7.3 per cent as against 8.4 per cent in the preceding year. That is progress. Some may think it should be faster but most people will probably think it is as fast as we could go, given the pressures on the community which this involves.
Second, he said that the level of Exchequer borrowing is not being reduced. But he knows as well as I do that Exchequer borrowing in 1983 will be 3 percentage points lower than in 1982, that is, 13.5 per cent as against 16.5 per cent, a reduction of almost one-fifth in a single year.
Third, he said that inflation is not falling. But he knows that whether you measure it in terms of the latest 12 months period, or year-on-year, it has dropped significantly since his time in office. For the 12 months ended August, the rate has been 10 per cent against 17 per cent for the 12 months ended August last year. For the year 1983 as a whole it will be between 10 per cent and 11 per cent as compared with 17.1 per cent in 1982.
The slight increase in inflation in the last few months is not, as he claims, stated by the Central Bank to be "largely due to devaluation". What the Central Bank says is that it is "caused partly by the appreciation of both the US dollar and sterling"—for which he scarcely ascribes responsibility to this Government. The bank goes on to say that other factors that are contributing are "the effects of the EEC farm price review and the devaluation of the Irish Green Pound on food prices". That is the only reference to devaluation in the bulletin issued by the Central Bank, as Deputy Haughey well knows. Is he saying the Government were wrong to seek and secure a review of EEC farm prices? Deputy Noonan can tell me if that is his view. I do not think it is, but if it is he should say so. Is he saying the Government were wrong to seek and secure an adjustment to the Irish Green £? I doubt that. If it is his point, he should say so plainly so that every Irish farmer may hear him loud and clear. However, I do not think he is making that point; in fact, I do not think he has got any point to make. The other factor mentioned by the Central Bank in respect of inflation is "the higher price for potatoes", responsibility for which I presume Members opposite and their leader do not seek to pin on the Government.
Fourth, he said that "it is almost certain that there has been a deterioration in national competitiveness rather than an improvement". In fact, there has been an improvement in the only measurable component of national competitiveness — labour costs — of as much as 5 per cent this year allowing for exchange rate effects. However, it has to be said that much of the damage done by past increases in labour costs — which rose, for example, by 18.5 per cent in 1980, Deputy Haughey's first year as Taoiseach, and also allowing for exchange rate effects — remains to be repaired.
Fifth, he says that foreign indebtedness went up this year by almost the same amount as it did last year. Yet the fact is that whereas in 1982 new foreign borrowing was £1,150 million this year it will be £800 million, a reduction of almost one-third in our first year in office.
Sixth, he says that the improvement in the balance of payments would be welcome if it could be attributed to an improvement in the economy. Unfortunately, he says, it has been the reverse and mainly reflects the decline in the general level of economic activity. The fact is that, as can be seen from the current Central Bank Bulletin, table 1, only £18 million of the improvement expressed in 1982 money terms is due to a fall in the volume of imports as against £558 million attributable to the increase in the volume of exports, that is, 97 per cent of the effect of volume changes in trade, the remainder being due to an improvement in the terms of trade as export prices rose faster than import prices.
Anyone who tells us that the balance of payments improvement is due mainly to a decline in the general level of economic activity when 97 per cent in volume terms is due to increased exports and 3 per cent to declining imports is showing a remarkable ignorance of the facts as set out in the Central Bank Bulletin and similarly authoritative publications.
Seventh, he states that the rate of increase in unemployment is not slowing down but is rising steadily. The facts are that in the six months ended September the seasonally adjusted rise in unemployment averaged 1,800 per month as against over double that figure, 3,700 per month, in the immediately preceding six-month period.
The inability of the Leader of the Opposition to get almost any of his facts right must set some kind of a record for speeches of this kind. It certainly disqualifies his other remarks from being taken seriously. Above all, his attempted exculpation of the previous Government from responsibility for the present level of external debt, and of interest on and repayments of this debt, can be dismissed out of hand. No less than four of the 13 pages of his script were taken up with this attempt to re-write history.
The whole of this section of his speech can be summed up as an assertion that the post-1977 Government were not responsible for the whole of our present external debt, which is, of course, something I never said. The figures I used related specifically to the increase in external debt arising from increases in public spending after 1977. I did not use figures relating to the total amount of repayments and interest next year because some of the repayments and the interest derive from borrowing prior to 1977. My speech made that quite clear.
What I said was that of our total interest and capital repayments abroad next year, £900 million, or an average of £1,000 per family, was due to increases in spending over the 1977 level in the years from 1977 to 1982. Of course there are interest and capital repayments next year on moneys borrowed abroad by the Government that left office in June 1977. Some idea of how much of next year's total payments to bankers outside this country is attributable to borrowings by the 1973 to 1977 National Coalition can be secured by referring to the Central Bank Bulletin for summer 1978 which shows that repayments due at the end of 1977 — a small fraction of which may have been incurred by Fianna Fáil in their first six months in office but I am quite happy to take responsibility for the full figure — and repayments due in 1984 of sums borrowed prior to that time were £70 million. Interest payments in 1984 on these borrowings were then £18 million although these figures have been somewhat increased since to £100 million and £26 million respectively by exchange rate movements, especially in the dollar and the deutschemark as well as by refinancing. Of course, the refinancing effects will apply equally in the future to borrowing incurred by the Government now out of office. We do not know how much that will be and we will have to leave it out of account at the moment. We can only make a comparison between the amount outstanding at the end of 1977, revalued to allow for exchange rate movements, and the amount outstanding at the end of 1982, not even taking account of future exchange rate movements. On that basis it is clear that the vast bulk of the debt now having to be repaid derives from the profligate spending of the Government who came into office in 1977. The four pages of smokescreen trying to obscure this fact suggest to me a very uneasy conscience about this burden imposed on every family.
It gives me no pleasure to go back over these past errors or to dwell on what might have been had we had a Government in those years after 1977 with a sense of its national responsibilities, but I am entitled to put the record straight in a debate which is being used by the Opposition not to propound constructive ideas as to how we may get out of our present difficulties — there have been a few of these which I will refer to later — and overcome the obstacles that stand in the way of a recovery in employment and the reduction of unemployment — but rather the great bulk of the debate has been used to make party points, and points on this occasion of a singularly ineffective character.
A party point, to be well made, should be based on solid data of some kind, perhaps selective data. Selectivity is permissible in debates of this kind. I would not criticise it. In Opposition we, too, have made certain selective use of data to make our points, but it is a different matter when the points made are, in respect of so many crucial items, the reverse of the truth. It is not a question of selecting some particular item and presenting it in a favourable light but of giving facts and figures which are in fact totally incorrect, as I have demonstrated.
The people outside this House are not interested in party bickering. They know we are in trouble. They know that this trouble is caused partly by events external to this country, for which no party here bear responsibility, but partly also by the events of the past five years. And they know above all that our troubles will not be resolved unless there is a willingness to face realities and to take the necessary tough measures to give us once again some control over our future — to restore the economic independence that has been lost to us by the mortgaging of our future to foreign bankers and to financial interests outside this State.
The Leader of the Opposition, I am afraid, believes in the politics of the epithet. Failing to understand the seriousness and intelligence of our people he seems to think that he can find his way back to power, not by putting forward constructive ideas as to how our present problems are to be tackled, but by describing the Government which are seeking to tackle them as "hardhearted", a phrase used on a number of occasions in his concluding paragraph. This will impress no one even in the Fianna Fáil organisation, never mind outside it.
I think that many people realise that at least this Government are hard-headed, but they know too that a Government bringing together the Labour and Fine Gael Parties with our long-standing tradition of social concern, demonstrated in successive Coalition Governments, is a Government with compassion as well as determination. Our concerns as the Tánaiste pointed out in his opening speech are with two major problems, unemployment and equity. Everything we do as a Government is and will be dominated by these two considerations.
For a more dispassionate account of our recent economic record, I will draw the attention of the House to the economic policy guidelines for 1984 which were adopted recently by the EEC Commission as part of their Annual Economic Report. This document starts by pointing out that the absence of growth in Ireland in 1983 reflects the unfavourable international conditions. It goes on to say that, however, there have been "definite encouraging features". In what might almost be a point by point refutation of Deputy Haughey's speech, though the Commission's document was prepared some time ago, it goes on to refer to the reduction in the rate of price inflation; the marked improvement in the deficit in the current balance of payments; to the fact that the trend towards increasing budget deficits, particularly for current purposes, "has been decisively arrested"— and that Exchequer borrowing was reduced by about 3 per cent of GDP in 1983.
After a reference to the continuing rise of unemployment, the Commission goes on to say that the outlook for 1984 points to a modest revival in economic growth. In analysing the factors at the root of our present difficulties it points to demographic changes which are adding large numbers of young people to the labour force each year and to the considerable public expenditure, funded by borrowing, on the encouragement of export-based industry and the provision of essential infrastructure, from which full returns have not been realised in recent times because of the recession in international trade.
In a criticism of the policy of the previous Government, which is relatively severe from a body such as the Commission, it then points out that after the two oil shocks "fiscal policy remained expansionary, promoting short-term income generation to the detriment of the country's productive capacity" I could not have put it better myself. "Attempts to maintain increased real earnings despite adverse movements in the terms of trade reduced the ability of many sectors in the economy to compete." Our ability to compete has been undermined by Fianna Fáil in Government. Those words I have quoted were taken from the European Commission.
The following paragraph refers to the "corrective action, taken vigorously in hand"— action taken by this Government — which has concentrated largely on reducing the Exchequer borrowing requirement and on the commitment to phase out deficit spending for current purposes by 1987. It suggests that the emphasis in the forthcoming budget should be on expenditure cuts rather than on a "new general increase in taxation" and suggests that the target for the Exchequer borrowing requirement in 1983 should be a reduction of 1 per cent to 1.5 per cent of GDP by reference to the likely outturn for 1983.
In its concluding paragraphs, it mentions, inter alia the possibility of some further lowering in interest rates, an encouraging thought referred to by the previous speaker, given a further favourable external environment and continued success in curbing domestic inflation and reducing the current Exchequer deficit. The document is damning in respect of past policies and strongly supportive with respect to the policies of the present Government.
Let me now turn to the basic problem that we all face in the years ahead, namely, the problem of employment. We have almost 200,000 unemployed, 60,000 of them young people under the age of 25. Manufacturing employment is still falling in the face of the world recession and of the rise in productivity which firms have been forced to seek in order to survive in the face of increasing international competition.
Despite the maintenance of house-building at a high level as a result of Government support, and indeed imaginative Government action through the establishment of the Housing Finance Agency, other forms of construction activity have been sharply reduced, leading to a sharp fall in construction employment. This is because the need for additional industrial and office building has been declining in the face of the prolonged recession and the farming community has been retrenching on farm building in the face of the sharply increased interest payments on past building work, which they have to meet out of reduced real incomes.
This general decline in manufacturing employment and in construction employment outside the house-building sector has itself contributed to a fall in demand that has affected employment in the private service sector. This sector is very responsive to movements either upwards or downwards in the level of economic activity and in the volume of real purchasing power.
At the same time, in the public sector, financial constraints have imposed themselves, limiting the expansion of employment, save in certain specific areas, such as teaching and policing where special needs exist. But increases in these areas have to be matched by reductions through wastage in other parts of the public service. As a result of the policies pursued by this Government the size of the civil service has been declining since we first undertook these policies in 1981.
These are the realities that have to be faced — as is the reality of an annual increase in the labour force of the order of 20,000 or so, as the number of young people completing their education and seeking employment exceed by around that figure the number of those retiring or withdrawing from the labour force.
Even in more favourable conditions in respect of the public finances it would have been very difficult indeed for any Government to have coped with the scale of the employment problem thus created. Indeed, we can see that virtually none of the other industrialised countries, even those best placed in terms of tight control of their public finances, has been able to halt the rise in unemployment in the last two or three years. In our case, with a small open economy, in which more than half of any increased demand generated by additional employment goes on imports of goods and services, it is inherently more difficult than in larger economies for Government action to stimulate domestic employment. The bulk of the extra jobs created by increased public spending in this country are jobs generated abroad.
But the position of our public finances is in fact such as to leave no room even for such limited reflationary action as might be open to a small economy like ours in normal circumstances. Unfortunately, in the years between 1977 and 1982 the share of national output absorbed by current public expenditure rocketed from 36 per cent to 50 per cent of national output. Exchequer borrowing jumped from 10 per cent of our national output to 16.5 per cent and our external debt rose by £4.25 billion.
It is this situation that has made necessary the drastic revision of Government financial policies — a revision, I would recall, that on several occasions has been temporarily endorsed by the Leader of the Opposition, although on no fewer than three occasions now, he has failed to sustain his commitment and has slipped away into the kind of "soft option" stance that has undermined public confidence both in himself and his party — so that they now find themselves in Opposition for at least four more years. And this new and latest soft option approach makes it unlikely that even after four years they will be trusted again with Government by the people.
Within the constraints imposed on us by the state of our public finances, this Government will endeavour to create fresh stimulus for enterprise and to give new encouragement to people to work. However limited the room for this may be, we can make the most of any leeway we can find, both in the next budget and in other budgets to be introduced during our term of office. This must necessarily involve a more radical approach than that suggested by the Leader of the Opposition who described his approach as "an entirely new approach towards industrial development, concentrating on industries which are based on high technology and capable of productivity". It is hardly an original thought. If that is the nearest thing to a new idea from Fianna Fáil it comes a bit late in the day and will not convince anybody that there is any serious thinking going on across the House.
Work on the drafting of the Government's industrial policy has now been completed by the Minister for Industry and Energy and will be brought before Government in the immediate future with a view to early publication. This document is the first comprehensive attempt by any Government to devise an industrial policy directed towards the complex needs of our society. When it is published I hope that it can be debated in this House and that Deputies from both sides of the House will be able to contribute constructively to the discussion on the many elements of policy contained in this document. It is a document which ought to be an occasion for constructive debate rather than for party debate as it has largely been.
In the meantime, pending the publication of this policy, the Government have already begun to place greater reliance on our native talents and resources in bringing about industrial development. Deputies should be aware of the intensified efforts that have been made by the IDA and other promotional agencies throughout all parts of the country in recent months to identify the potential for indigenous industrial enterprise and to activate this potential. Moreover, based on the work of the sectoral committees, now rapidly coming to fruition, we will be giving a new practical impulse and momentum to each individual sector based on the tripartite recommendations coming before us from these committees.
In the light of the scale of the unemployment problem facing us, I have to say frankly that I doubt whether even the most comprehensive review of industrial policy will in the present circumstances suffice to resolve these difficulties. It would be wrong of me to pretend otherwise. I think that a number of the issues mentioned by the Tánaiste in his opening speech: the ending of restrictive practices, the relationship between shorter working hours, increased leisure and income, the limiting of overtime, earlier retirement and later entry to the work force through increased emphasis on the transition from school to work, will also have to be considered seriously if we are to halt the growth of unemployment and, within a reasonable time, begin to achieve a reduction in the numbers out of work. I would add that work-sharing also needs to be looked at — a very preliminary and incomplete survey within the Civil Service, has recently revealed 500 potential volunteers for work-sharing schemes. Further study and reviews in that area would, I think, increase that number substantially.
I cannot stress sufficiently the need for a radical review not merely by the Government but by all those concerned with our economy if we are going to bring this problem under control. A failure to measure up to the scale of the problem can only lead to a continued inequitable rise in the numbers out of work, with all that will mean in terms of human misery and the risks to the stability of our society.
It is for this reason that I have invited a number of the major national organisations to meet with me during the months ahead so that we may discuss this national problem together in all its implications. I look forward to these discussions and hope that they may provide a basis for effective action in respect of unemployment.
The Deputy who preceded me raised questions in relation to the super-levy and the negotiations now under way in the EEC. The super-levy is the key issue for us in these negotiations while we accept that corrective action is needed in the milk sector at community level to limit growth in production and curb the very substantial increase in budgetary costs on the disposal of milk surpluses, we do not accept that the proposed super-levy provides an appropriate answer to this. It would in effect freeze Irish milk production, historically determined as it has been in our case by external factors imposed upon us and thereby alter fundamentally the entire economic balance accepted when we joined the Community. In short, given the importance of the dairy sector to our economy, the proposed super-levy would affect this country's vital national interests and is, therefore, unacceptable to the Government. That, I hope, has been made plain.
There are other issues at stake also in these negotiations, issues with which we must concern ourselves. The future shape and direction of Community integration, the Community's considerable achievements to date and the very survival of the Community are involved. It would be of no satisfaction to us if we found at the end of these negotiations that they had failed and that there was no increase in the 1 per cent VAT limit without which the CAP cannot, in any event, survive.
I want to return in conclusion to the main theme of my speech. We face a critical situation with respect to the nation's finances. We are tackling this with courage and determination but also with a sense of concern for the least well-off in our society, who must not be made to bear the brunt of the deductions in spending, changes in public policy, or tax adjustments that may be necessary to get the balance right. At the same time, we must take a radical view of industrial policy, designed to stimulate growth in this sector even under unfavourable external conditions.
In fairness I would like to add that I find myself in agreement with a number of points raised by the Opposition. There are problems at present in the use of training funds with which the Government are getting to grips. I agree with Deputy O'Kennedy that the present climate of taxation obstructs growth, but I must add that we would increase it even more if we obstructed public expenditure as he also proposed. Indeed, one of the defects of the Opposition's presentation is that they propose more spending and reduced taxes in various places.
The Taoiseach was a dab hand at that himself.
At the end of it there is no indication as to how that is to be reconciled with the need to bring borrowing and the current deficit under control. Let us remember that it was the party opposite who set the faster timetable and the most stringent provisions for a reduction of borrowing and the elimination of the current deficit. We heard very little in this debate as to how that is to be achieved. Certainly it will not be achieved by the process of reducing tax and increasing spending, which is what we have heard from the other side. Nonetheless, Deputy O'Kennedy is right, the present climate of taxation obstructs growth.
I agree with Deputy Flynn that we must encourage venture capital investment. That is one of the primary objectives of the new industrial policy. I do not necessarily agree with Deputy Flynn's assessment that half our industries are not viable, being out of line with our competitors, but he is right to point to the fact that there is a significant problem of viability and competitiveness in respect of much of our existing industrial sector.
At the same time we have to secure acceptance amongst our people of the need to provide for our rapidly expanding labour force. With the external economic situation which, even on the most optimistic assumptions, seems unlikely to return to the kind of sustained and rapid growth to which we were accustomed for a number of post-war decades, measures of this kind may prove inadequate to halt and reverse the growth of unemployment. Much more urgent steps may need to be taken and the work that is available in this community in making goods and services saleable competitively at home and abroad and in providing public services efficiently to our people, may have to be spread amongst those available in a new way, that would call from those fortunate enough to have employment a willingness to share their good fortune with those at present excluded from that possibility.
In tackling this range of problems to which we may require radical solutions, the Government now in office are determined to use the four years ahead constructively, providing the necessary leadership to our country during a critical period in our history. That they have the capacity to do so is, I think, evident from the manner in which the members of that Government have conducted themselves in this House and outside it. And we are sustained in our efforts by the support — never uncritical but nonetheless unfailing — of the members of our two parties who are committed to ensuring that this Government return to the people in four years' time with a record of effort and achievement that will justify their return to power for a further period in office.
Deputies
Hear, hear.