Dáil Éireann debate -
Thursday, 2 Feb 1984

Vol. 347 No. 8

Financial Resolutions, 1984. - Financial Resolution No. 11: 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.)

Minister for Agriculture (Mr. Deasy)

Irish farmers had a relatively good year in 1983 with an increase in real income of 3½ per cent, the highest in the EEC. This figure compares very favourably with the situation in some of the other member states. In West Germany, for instance, farmers suffered a drop in real income of 20 per cent, so by comparison the situation here was highly satisfactory. I am hopeful that 1984 will be equally satisfactory despite the threat of the super-levy proposal in respect of milk, a threat that has been with us since July last and which unfortunately was not dealt with satisfactorily at the Athens summit in December. Nevertheless, we are hopeful that there will be a satisfactory outcome to the negotiations at the forthcoming summit in March. The original proposal envisaged that the production of milk within the Community should be at the 1981 level plus 1 per cent, but the House will be pleased to note that the Greek Presidency proposed ultimately at Athens that Ireland be considered as a special case and that we be allowed produce milk at the 1983 level plus 10 per cent. This was a major advance in the negotiations. No other country received any such recognition.

Farmers in general and particularly the farming organisations appreciate the efforts of the Government in these very delicate and sensitive negotiations. We are hopeful that at the end of the day there will be a complete exemption from the super-levy in our case. It is imperative that there be a solution to the problem of the over production of milk within the Community because otherwise the alternative to the proposed super-levy on milk is too awful to contemplate: it is that there be a direct reduction in prices. Any such move would be detrimental to the dairying industry. We look forward to quite a good year in agriculture in 1984.

Mr. O'Malley

The sense of unreality of this Government and this budget is best illustrated by the few remarks we have just heard from the Minister for Agriculture. Incidentally, he has disappeared from the House already, as well he might. We have been told that 1983 was a very satisfactory year for agriculture. Does that man, the Minister for Agriculture, live in this country? Would he like to come down to Limerick, Cork or Tipperary and talk to the stream of farmers who are on the verge of bankruptcy, who owe the banks hundreds of thousands of pounds they have no chance of paying and who have receivers in? At least one farmer has been in jail as a result of his inability to meet his obligations.

We have been told that 1983, the year in which all these things happened in Irish agriculture for the first time, was a very satisfactory year and that the wish of the Minister for Agriculture is that 1984 will be equally satisfactory. If I had not been sitting here listening to him I would not have believed that any Member of this House, least of all the Minister for Agriculture of the day, would have made such remarks. When one of the major members of the Government — major at least by virtue of his office if by virtue of nothing else — has as unreal a view of the economic scene in this country as what we have heard in the past few minutes, it is no wonder that the whole of the budget is equally unreal and equally unrelated to the problems facing the country today.

I want to deal in some detail with an aspect of the budget that has given rise to much controversy and difficulty. However, I want to make my position clear before I start because I can see virtually anyone talking on this topic being instantly misrepresented as trying to assist people who are trying to evade tax. I want to talk about what was described in the budget as "bond washing" as if it were some new-fangled thing that had come in in the past few months, used by rich individuals and rich institutions to do the Exchequer out of tax that would otherwise have been paid. I want to make it perfectly clear I hold no brief for anyone who is trying to avoid the payment of tax to the Exchequer that is properly payable but I want, after a week, to put this whole matter in some kind of perspective because it has had the most fundamental and jarring effect on the financial institutions of the State and on future prospects for the Government of the day to raise money and to finance public needs from the public market that has always been available here to the Government.

To make my point, unfortunately I shall have to quote many figures. Most of them are contained on page 46 of the yellow pages of the Winter 1983 Quarterly Report of the Central Bank published on 18 January 1984. The figures are contained in the three parts of Table D. 4 on that page.

We have been told by no less an authority than the Taoiseach himself in the course of a rather strange statement he made in Trinity College at a breakfast on Tuesday of this week that up to £1,000 million was in the process of being improperly used in some fashion for the evasion of tax. This was in the course of a long homily on the iniquities of what he described as the rich. Not since the story in the Bible of the eye of the needle have the so-called evil rich come in for quite the level of criticism they got in Trinity College over bacon and eggs last Tuesday morning.

This sum of £1,000 million which we are told has been kept from the Exchequer by these evil people will have to be looked at in the context of Table D. 4 of the Central Bank Report. The total amount of marketable Irish Government securities outstanding on 30 September 1983, the latest available date, was £6.102 billion nominal value. The current figure, allowing for the tranches issued yesterday and for the redemptions, is £6.2 billion. That is held by nine different classifications of holders as set out in the first part of Table D. 4.

The first is the Central Bank which, in effect, is paying dividends to itself so it does not arise. The next seven are all dealers in securities and, therefore, are subject to tax. They are the associated banks, the non-associated banks, the building societies, insurance companies, Government Departments, including the Post Office Savings Bank, State-sponsored bodies, local authorities and other financial institutions.

The position with them is that they are dealers in securities and, therefore, they are subject to tax on the result of their profit and loss account, tax both on interest and on capital gains if they make them. They pay corporation tax at 50 per cent on their profit for the year. There can be no question of tax not being paid on what the Central Bank hold because it is paying itself and there can be no question of tax not being paid by these seven groups of holders. That leaves us with the ninth classification described as "other" and this classification held £2.2 billion nominal in marketable Irish Government securities on 30 September last and there is no reason to believe they hold anything very much different now. Therefore, they hold roughly one-third of marketable Irish securities.

The second part of Table D. 4 gives the maturity times in absolute amounts and one finds that the first column, those of less than three years to maturity, constitute £2.2 billion out of the £6.2 billion outstanding. In round terms that is roughly one-third. Therefore, of the short-dated securities held by non-dealing institutions and individuals, one-third of one-third, or one-ninth in all, comes into that category. The amount of nominal securities on which this activity could go on is one-ninth at maximum of the total amount outstanding at £6.2 billion. That comes roughly to £750 million nominal.

Then, you must go back to note (b) attached to "other" in No. 9 on the first table to see who these "others" are, what their liability is or their position with regard to the selling of securities with the right to the dividend attached. They are defined by the Central Bank in this note as companies' nominees, third party bank accounts, churches and schools, courts of justice, individuals, accounts under £5,000 and holdings by non-residents other than foreign insurance companies. Let us have a look at that list and see how many of those are liable for tax. A substantial part of that holding of £2.2 billion, of which only one-third relates to short-dated gilts and therefore only a third is relevant, are held by, for example, the Commissioners of Charitable Donations and Bequests. Are these engaging in this practice which we are told is so devious? I doubt it very much. Their holdings would come to a couple of hundred million pounds.

We are told here by the Central Bank that churches and schools hold many of these. Are these people engaged in this practice which we have been led to believe over the past week has become suddenly the most disreputable thing happening in Irish economic life? Foreign residents are not liable for tax on Irish Government securities; therefore what is the advantage to them in it? They are not doing anything wrong because they are not liable for tax anyway under any circumstances.

With regard to the courts of justice, these are the funds of suitors — the amounts of money in the name of the accountant of the High Court, running to several hundred million pounds at any given time. This is money invested in the courts on behalf of infants and persons of unsound mind. Is the accountant of the courts of justice, who is a civil servant in the Department of Justice, engaged in this practice in respect of the £50 million or £100 million of funds which are under his control? I suggest very strongly that he is not, nor are any of these other people. Taking a gross figure of £750 million in respect of which dividends could be used in this fashion and having extracted from that figure all these people who are listed here by the Central Bank, who clearly are not engaged in anything of that kind and who are simply holding the securities for the people who are entitled to them, this gives a figure, at the very outside, of about £400 million nominal value in securities where the bond could be washed, as the phrase now goes, or sold cum dividend.

The situation is that that £400 million, assuming that there was an interest rate of 12 per cent — and that is putting it pretty high, because on most of the shorter term bonds the interest rate is a good deal lower, as we saw from the tranches issued yesterday — would give a gross dividend of approximately £45 million. This, in turn, would yield a gross ceiling tax potential of about £15 million at the normal withholding or standard rate. That, in effect, is what we are talking about. That is the potential to do wrong in this way — at the very outside, £15 million per annum. In practice, the sum will be a fair bit lower, but I have not discounted the various factors which I outlined fully, in order not to weaken my argument by exaggerating.

Fifteen million pounds roughly is paid out in gross dividends on these funds. These are sold cum dividend some days before the dividends actually become payable and the purchaser acquires the right to the dividend. Let us assume, therefore, that that amount of dividend, £15 million worth, is sold. It is sold to somebody — and this point seems to have been totally overlooked in this debate — and the person who buys those short-dated stocks cum dividend has to take his dividend a day or two later and has to pay tax on it. What loss does the Exchequer suffer as a result? In practice, the people who buy them are banks and they do not have to buy very many, as I have shown. Indeed, there have been instances in the past year or two, I am advised, where there have been shortages on the market of this kind of stock being bought cum dividend as their payment date arises. There are simply not enough of them. This is borne out by the fact that the amount appears to be less than £400 million in all.

When the banks buy these, as they do, a day or two before the dividend is payable, for the purpose of maintaining their liquidity ratio, they then pay tax on the dividend. So what is the Exchequer's loss? What is all the fuss about? I feel that we are entitled to ask that question. The interesting thing is that because it is the banks who buy them, the income of about £15 million is computed into the banks' profits and the banks pay corporation tax of 50 per cent on their profits. If these were maintained by individuals to the date of the payment of the dividend, the average tax that they would bear would be more likely the general withholding or standard rate of 35 per cent.

The real joke of the situation is that the Exchequer is actually better off if the dividends bear corporation tax at 50 per cent, rather than general withholding tax at 35 per cent. With what is now being done, the Exchequer is likely to lose money, rather than gain it. That is borne out by one of the most telling points of all in the Minister for Finance's budget speech and in the accompanying table where, in spite of all the fuss which he and others have made about this matter, no figure is given by the Department of Finance for any increased revenue as a result of what the Minister for Finance is doing in this matter — none at all. There cannot be, because the Department of Finance are right.

There will be no increased revenue. Indeed, if anything, there may be a marginal decrease in revenue to the Exchequer as a result of what is now being done. What is being done is not being done to penalise people who are doing anything improper, or to penalise the institutions, or anything else. It is being done because it is perceived, by those who do not understand this — which includes the Minister for Finance — as being another of these illusory sops which are thrown to the Labour Party to keep the 16 of them toddling along behind Fine Gael like good little boys. That was one of the principal objectives of this budget and this is one of the ways in which it is being done. Now the poor Labour Party, God love them, who do not know from Adam what any of this is about, have read in the papers that some kind of a fiddle is going on in the Stock Exchange and the Minister for Finance at their insistence, got rid of it.

On my calculations the Minister for Finance certainly has gained no revenue and probably has lost some. But, far more important than the few million pounds of revenue one way or the other, the Minister for Finance has succeeded in the past seven days in bringing the Stock Exchange to a halt. We saw yesterday that he issued tranches of £80 million of new stocks. It is very interesting to see the new stocks he issued because they all bear a very low coupon, all very short-dated, all issued to try to overcome the difficulties that have been created by this matter. But there is no market in the Stock Exchange at present. All that happened yesterday was that £80 million of £120 million of redemptions which had come up yesterday and the £45 million of dividends which had been paid by the Government yesterday were taken back in by people who had nowhere else to put them. They were taken in on terms that were quite favourable because the Department of Finance had to fall over themselves making the terms favourable.

How much ordinary stock other than the tranches that were issued yesterday did the Government stockbroker buy in Anglesea Street yesterday? He bought nothing. The Central Bank Report — in table D4, page 46 describes all these stocks as marketable Irish securities. Where is the market? Who can sell their stocks if one happens to be a holder of Irish Government gilts at present? Perhaps these are not simply devices or paper used by rich people for their own purposes; these are trustee securities. A lot of those stocks are held for the benefit of infants, people of unsound mind, others for whom money has to be invested and who are entitled to get the benefit of it from time to time. What is the position of an infant who became 21 last week, who had obligations to the bank because he had borrowed against the money that would be paid to him out of court on his 21st birthday? He cannot sell his stock; it is valueless; it is Government paper and no more. He has not been able to sell it for a week. I do not know whether he will be able to sell it today or indeed next week. But these are not marketable securities. In treating their own paper in this way in the past week the Government, due to their incompetence, have pulled the rug out from under the beneficiaries of these trustee securities and have treated them in a fashion I can only describe as most improper.

Among the many lectures we had in the past week we were treated to the inequities of the institutions operating in the Irish money market. Let us look at who are the biggest institutions operating in this market. Without having checked all the figures, probably the biggest two are the two main banking groups, Allied Irish and the Bank of Ireland. Apart from those two banks, without doubt the biggest institution is the Irish Life Assurance Company. Who owns the Irish Life Assurance Company? The Minister for Finance owns 99.99 per cent of the shares. On whose behalf does he own these? On behalf of the people of Ireland. They are the biggest operators in the money market. They are the people who buy and sell more gilts than anybody else. Are these people criminals? Is that company — happily, one of the few rare exceptions of an extremely commercially successful State-owned company here — are the management, the board and the shareholders of that company engaged in something disreputable? That is what we have got for a week now from the handlers behind the Government who churn out to us what we should think about certain matters.

Who else deals in a big way in short-term gilts on the Irish market? Perhaps the next two biggest operators on the short-term gilt scene are the Industrial Credit Company and the Agricultural Credit Corporation. Who owns them? What are they there for? Whose money are they using? Whose interests are they trying to protect? Do these also fall into this category of quasi-criminal people?

The most distressing thing about all of this is not so much the principle of what was set out to be done but the grossly incompetent way it was done by people who do not understand what they are doing. And look at the long-term damage they have caused. Then, see it compounded and see the lack of understanding compounded by the silly speech made by the Taoiseach in Trinity College last Tuesday morning. He gets up there and because he feels he is under pressure from students about their medical cards he describes a scenario in this country that is enormously damaging internationally. The obligation of the Taoiseach of the day, whoever he might be, is not just to a group of aggrieved students. Every time he opens his mouth he has to recall that what he says will have repercussions for this country in Wall Street, in London, in Zurich and in Tokyo. If that speech is read there, as inevitably it will be, what will the people there think of this country headed by a Prime Minister who makes the kinds of statements made in Trinity College last Tuesday morning? He complained about divisiveness within the community. Has any single speech made by any political leader in this country in the last ten years contributed more to divisiveness than what was said last Tuesday? It was supposed to be a philosophical apologia for the mistakes made in the budget last Wednesday week. Look at how it has compounded those mistakes, perpetuated them and intensified the damage. He told that audience that he could speak with objectivity because he was a man of little or no property. There are 600,000 people in this country who own their own houses. I suppose they lack objectivity for that reason, or will they be looked on in coming months and years as people who, because they provided something for themselves and their families out of their savings and borrowings from building societies and so on, in some way form an undesirable part of our society? That is not the Ireland I want to see or to foresee.

That kind of attitude will destroy any spirit in this country that would get us back into the frame of mind in which we can take advantage of our natural resources and abilities. This is an effort, not to equalise society by trying to give a reasonable level of prosperity to everybody, but rather another effort — we have heard it from time to time from some people but we would never have expected it from a Taoiseach of this country — to drag us all down to a level of equality of poverty. Somebody who is in the position of Taoiseach should be able to resist the intellectual or emotional pressures imposed sometimes by articulate people to get us in this country into that frame of mind. That whole attitude, represented by that speech of the Taoiseach and by things done in this latest budget, runs counter to the frame of mind in which the Irish people and nation will best work. It is little wonder, therefore, that we have seen the Irish people and the Irish economy decline so markedly, in the past 12 months in particular, and facing into this rather awesome year of 1984 with less hope than ever.

We were told in the course of various remarks during the week by the Minister for Finance that the situation in the Stock Exchange was now under control. Indeed, it was; it had closed down. It is the same as if the Minister for the Environment told this House that traffic accidents were under control because he had banned all traffic. How foolish can you get?

Last night I watched the Minister for Finance on a "Today Tonight" programme. You often get more information from one throw away phrase than from a long dialogue. In the course of that programme he stated that the Government were not interested in the purchasing of securities. The Government's attitude was that it would be better for people to hold securities until they matured. I do not think the Minister for Finance realised the significance of what he was saying, but in effect he was saying that if you buy Irish Government paper the Irish Government do not want to deal in it until it matures. If that is so, how many people will buy Irish Government paper willingly from now on? We will be told that that was a slip of the tongue, that he did not mean it that way, that it was said in the course of discussion and was not a considered remark. However, it denotes an attitude of mind that frightens people who have to deal with these matters and shakes the already well-rattled confidence of potential investors in our economy.

Most of the discussions that have taken place over the past week in relation to this matter related to interest payments, with the benefit of which the stocks are sold. The capital gain has tended to be ignored, although not by the Department of Finance who were very careful indeed in what they placed on the market yesterday in the £80 million worth of tranches which they sold very astutely to try to overcome the difficulties that were created in the past week. In all the discussions that have taken place I do not think anybody has adverted to the fact that in this new arrangement proposed by the Minister for Finance no allowance is made for variations in interest rates here which would bring about capital losses in the market price of these short-dated securities. If the Minister for Finance is going to change the system he cannot ignore this obvious consequential part of the difficulties he is creating. Capital losses did not matter under the present system because one could offset them against the accumulated dividend. Now the situation is that you are taxed on the dividend and if as a result of this budget and the things that have been done in relation to it you suffer a capital loss of, say, five points, which will be quite likely in the weeks and months ahead, you cannot set that off against the income that accrued on the bond. That is ridiculous. The Minister countered that by saying that you are free of tax on the capital gain. There will not be very many capital gains in this situation except very small ones in respect of bonds which were very close to maturity. That problem did not arise before but it arises now and does not seem to have been dealt with. It will soon be spotted by people who have the responsibility of investing tens of millions of pounds of other people's money and, therefore, must be ultra careful of it. Most of this money is other people's money, those who have life policies with Irish Life, who make deposits with the ACC or put money into life assurance and so on.

Most attention has tended to concentrate on the short-term gilts but the Members of the House will recall that in the paragraph immediately following the very short one which referred to gilts there is a reference to Exchequer bills and what will happen in relation to them. Because for some years past there was an incentive for high taxpayers to tender for Exchequer bills — there is £15 million allotted by the Department of Finance each week for these bonds — the appearance of private individuals in the market created competition for the first time for the associated and other banks, who up to then were the principal tenderers for Exchequer bills. As a result the State was able to get a lower average cost on the Exchequer bills which they were allotting.

In view of the changes that have now been made in relation to Exchequer bills by subjecting the capital gain to income tax the private individual and the high taxpayer will disappear from the Exchequer bill tendering scene. The banks can now, as they have inadvertently done in the past, jockey up the interest rate structure by a few telephone calls to determine the level at which they will tender. If the Minister for Finance does not understand the consequences of that, I hope the Department of Finance understand it and put a stop to it because it is going to force up the effective interest rate on Exchequer bills by perhaps 2 per cent or 2½ per cent over the next couple of months. If that happens in relation to Exchequer bills, inevitably the whole interest rate structure here will be affected and, instead of hoping as we were some weeks ago for a reduction in interest rates, we may well now have further increases which will be directly attributable to these provisions in the budget and to the incompetent way in which they were put across.

We are entitled to ask what the standoff situation is in the gilt market and what are the new Exchequer bills going to do to the structure and the mechanism of the money market here. I do not think it is fully realised that all these are fully interlocking and we can, therefore, expect increased interest costs on Exchequer bills and, inevitably, a tendency for interest rates generally to go up. It is worth reflecting on the situation that has existed here over the last four or five years while the level of inflation was very high. There was no great incentive for private individuals to get into Government gilts. In one year recently inflation was 23 per cent. The highest yield obtainable at that time from gilts was perhaps 15 per cent or 15½ per cent. The only incentive therefore, to be in these Government securities at all lay in the dividend and, even with the payment of very high interest rates like that, investment in Government securities in those years represented a very big capital loss for anyone who happened to be in them. Some people were in them because they were innocent and did not understand what was happening. Others like institutions were in them because they had nowhere else to go. They were suffering a very big loss. They were unattractive for quite a long number of years. Therefore, any of these alleged malpractices which were taking place can only have taken place on a very limited scale. We should realise that and put the whole situation into some reasonable perspective.

As a result of the uncertainty created and the damage that uncertainty does, in much of the economy at present we have a form of paralysis which has been accentuated by the budget rather than alleviated by it. There is one particular form of paralysis — and it is only one of many examples one could give — which could usefully be referred to here today in this debate because of all the consequences there were when it was referred to in the House in December, that is, the question of the Dublin Gas Company, which led to the resignation of a member of the Government because he did not approve of the decision the Government had come to in relation to that company.

What is the position today? Is it any different from the position on whatever the date was, 12 December, when Deputy Cluskey resigned as Minister for Trade, Commerce and Tourism? It is not. Have that company made any progress since? They have not. Has anything specific or concrete been done in relation to the company since then? It has not. The agreement to which Deputy Cluskey objected has not been finalised by the Government, because they and the Dublin Gas Company are in a state of paralysis, as so much business the Government lay their heavy hand on these days is in a state of paralysis. The contractors are stopping work; 1,100 workers are under protective notice; the credibility of the company has been damaged; and of course the cost of their contracts which they still need to carry out has been greatly increased.

Confidence is missing in that situation as it is missing in so many others in the economy today. The detail of the individual instances does not matter. It is an overall aura of lack of confidence, deepened in every week that passes by these kind of things and, in particular, deepened by the budget of last week. Since the Government, I understand, have discovered in recent weeks that the letter of comfort they issued last year has no legal validity, since the banks will not deal with the company in this situation and since this paralysis is all pervading, could I say very plaintively to Deputy Cluskey: "Come back Frank, all is forgiven, because the thing you resigned about has not been implemented by the Government. You are as entitled to be back in Government today on 2 February 1984 as you were on 2 December 1983."

They have not done anything. Nor are they likely to do anything. Nor are they likely to do anything about the myriad of problems which beset so many companies throughout the country at present, so many of whom want, in private at least, to give up the ghost and the wiser ones of which in retrospect, I regret to have to say, are probably the ones who shifted the main emphasis of their investment out of this country in recent times. It is very regrettable to have to say that. One also recognises that they are the most successful. Those who did that will be able to survive and the profits they are generating abroad as a result of their foreign investment are keeping in being the Irish parts of the company which would otherwise have collapsed in 1983 or 1984.

What is needed now is not some approach to budgetary arithmetic or some emotional ideological approach which will simply satisfy a few Deputies here or there and keep them together for another year.

Minister for Defence (Mr. Cooney)

Another three years.

Mr. O'Malley

What is needed is a fundamentally different approach which will restore confidence and make people want to do something here which will make them feel that if they carry out successful commercial activities they will not be accused of being virtually criminals and guilty of the crime in Ireland of succeeding. Instead of that, what do we get? We have had our bellyful for a week of the so-called criminal bond-washing, which most people do not understand anyway. We are told Irish society will now be put to rights because these people will have manners put on them. How irrelevant can you get? How more irrelevant can anything be than that sort of trivial ideological nonsense to keep the Labour Party pattering along behind Fine Gael? How much more damage will we have to put up with while this sort of ideological tinkering goes on to keep the Government together?

We have today, I understand, the start of the testing of the first of the step-out wells on 49.9 off the Waterford coast. I can tell the House that will give rise to a great deal of bleating from all kinds of interests over the next couple of months. It will be very interesting to see what happens within the Government in relation to it. On the one hand, they are under pressure from the man who boasted in an American magazine recently that he could get what he liked in this country because he owns 32 per cent, or whatever it is, of Irish newspapers. On the other hand, the Government will be under pressure from their slightly unwilling partners in the Labour Party who will not greatly care what is done as long as ideologically it looks good, as this gilt edged nonsense over the past week looked good when they read about it in the papers.

If we are to judge by certain other things the Government have done over the past 12 months, the Government will not care at all about the real value of oil off Waterford or anywhere else to the Irish economy but will be more interested in going through the appearances of satisfying the various interest groups who will put pressure on them. Our feeling in this party is that the reviews that are needed in relation to resources, particularly off-shore hydrocarbon resources, are reviews that will ensure that the value of such resources to the economy will be maximised. The vague one or two-sentence statement by the Minister for Finance in his budget speech, which does great damage because of its uncertainty, indicates that the tax aspect will be reviewed. I see little need to review the tax aspect of our off-shore resources. I see great need to review the whole question of how they will be utilised, whether the Government will succumb to the pressure to allow the oil to be taken unprocessed from the country or whether they will ensure the maximum benefit to our own economy.

I know of no Government less likely to face up to the realities of that problem than the present Government. The reality of economic consequences means little to them. What is all important is how their handler can flog today's story. Let me offer my congratulations to the most successful member of this Government who does not sit at the Cabinet table, Mr. Peter Prendergast.

Mr. Cooney

I listened to Deputy O'Malley with a growing sense of irony mixed with admiration when he pointed out, as he sees it, the unfavourable business climate, the lack of confidence surrounding the economy and the lack of policy in tackling the scene. My sense of irony results from the fact that he was a member — one must naturally suppose an enthusiastic member — of an administration which in 1977 set in train a series of economic disasters which have clearly been the cause of all the constraints to which the economy is now subject. It was because of his connection with that administration and with those disastrous policies that I listened with an ever-growing sense of irony to his criticism.

My admiration related to his gall and his ability to wipe out history as if it had never existed. We are aware that in the Eastern Bloc a change of leadership can sometimes mean a rewriting of history and Deputy O'Malley totally ignored our economic history during the past decade. He must know in his heart of hearts that the administration which took office in 1977 and which continued until a very short time ago was directly responsible for the appalling policies which have led us into the present economic difficulties. There were international difficulties as well which would have caused difficulties for our economy one way or another but the externally related difficulties were undoubtedly grossly compounded and made much more difficult by virtue of domestic policy.

I listened to Deputy O'Malley attacking the budget measures to ensure that stock exchange speculation would not be used as a means of tax avoidance. Initially his theme was to demonstrate that the problem was so small that it was not worth all the trouble being caused, but if it is as small as he alleges it will not have any adverse or deleterious effect on the economy or on the investment plans of Irish businessmen. He was also worried that changes would damage the gilt market to the detriment of the Government. I think his worries are unfounded and the successful placings of yesterday are a speedy demonstration that the remedial steps taken to end tax avoidance have not done any damage.

In the latter part of his speech Deputy O'Malley equated the people who engage in stock exchange operations and manipulations with genuine capitalist entrepreneurs. A genuine capitalist will not make his profits or his investments by playing the market. That type of capitalist represents the unacceptable face of capitalism, to use a phase used in England some time ago, and I do not think any Government should hold any brief for that type of capitalist. Our talk should be to encourage the genuine entrepreneur, the genuine capitalist who invests in setting up new businesses.

For a considerable length of time capitalism became not altogether an attractive economic notion. It was painted as being unsuitable in the sense that one could not have successful capitalism and also have social justice and for some time socialism became the dominant economic force. Socialism had a number of meanings raging from direct State control of all means of wealth production and distribution as supposedly practised in the communist countries, to a sort of centralism which was encountered in western countries where central government, by virtue of various control mechanisms, interfered with a great many areas of economic life.

That was the type of economic policy that we exported to the Third World in the aftermath of the last war when the independence movement throughout the Third World was growing and independent native governments were being set up. Their economies were very often based on this type of medium socialism which meant nothing more than a sort of creeping centralism reaching out from central government. Unfortunately the result of that type of centralism, which might more accurately be described as interference, has been to stifle growth in many countries in which it has been widely practised. To be successful it requires sophistication in the administrative machinery of the State to a degree that is not available. A centralised administration and this central interference with the activities of an entire nation's economy must produce a whole complex system of administrative procedures and an expanding number of people. In the fog of complex procedures and in the groups of people the ultimate objectives of economic efficiency can be distorted and lost sight of. That is what has happened in countries which have practised centralism, which is a more accurate name for socialism as we have known it for a number of decades.

In recent times there has been a swing back to consider capitalism and it has now become a much more respectable form of economic activity. There is a school of thought that says economics is capitalism but that is probably going too far. Capitalism, as we have seen it in the Asian countries, has been remarkably successful because the economies of those countries have boomed and they have been able to send their exports right around the world and take over the markets of the ageing giant corporations of the western world. They very often have had to operate in political environments where there was a large amount of centralism controlling and restraining them.

Apart from the problems which the giant corporations of the western world had to face from the interference of central government they were also subject to a natural ageing process. Many of these corporations became too old. We see a lot of examples of that process in the neighbouring island where many of them have gone to the wall. We do not have as many here but we have some examples of large domestic corporations in the traditional areas that have gone to the wall because the ageing process overtook them and they were unable to adjust. Others have adjusted. Unfortunately, cutting down in operations and work-forces seems to be an inevitable consequence of that adjustment. I suppose that is a consequence of the introduction of new technology which needs fewer hands to man it. It is not essentially an expansionist process when the ageing existing corporations decide to tackle the problems of their age. It has the opposite effect but that is better than seeing them going to the wall.

We have to consider if the success of capitalism as practised in Asia can be translated to this part of the world and, in particular, to this country. We have evidence in the last few years of that spirit of adventure into the business market as exemplified by the growing number of new, comparatively small companies here in new technology areas which have been successful. That is capitalism acting at its best, the type of capitalism which gave so many countries in Asia such tremendous economic advantage over the western world. We have to ensure that the economic climate and environment in which these companies operate and make their investment will be as appropriate as possible and that the interference and controls by the State — some are essential — must be devised with sensitivity to the needs of Irish business to ensure that this will be an attractive environment for investment and that the genuine entrepreneur who wants to invest in a business or who wants to reinvest his profits in expanding his business will be given all the freedom he needs. We have to ensure that the stock exchange speculator, who does not deserve the title of entrepreneur but who often gets it, will be curbed because his activities are not of any use to the economy.

Study has shown that the genuine entrepreneur is interested in the success of his business not for the purpose of making excessively large profits for himself but in having a successful business so that he has profits to reinvest. The genuine capitalist wants to keep on investing. He wants to see his business growing. There is nothing wrong with that. In fact, it is something to be commended and to be encouraged because so long as he is doing that he is providing work and he is providing wealth for the country and strength for the economy as a whole. That type of capitalist has to be encouraged. At the same time we have had a significant large State involvement in commercial or quasi-commercial operations. There is a feeling that an enhancement of this involvement could contribute significantly to coming out of our present economic difficulties. If we look briefly at the areas in which the State is involved we can see that by and large the areas are infrastructural and in the commercial areas, where the State is involved, there are certain market constraints which inhibit the possibillity of growing in an entrepreneurial way in order to be successful in the normal business meaning of the word.

We have the public utilities providing electricity and power. The extent to which that particular body can expand is constrained ultimately by the size of our economy. Once there is a limitation on what it can do, it becomes a vastly different scene from that of the private entrepreneurial business that has no limitations. We must not blame a State utility if it has to comport itself in a different way from a private business. If its results do not appear to be as good as that of a private business we must not blame it because it is subject to constraints that are not present to inhibit the private business. In areas where the true entrepreneurial spirit can have free rein, the State companies have been remarkably successful.

The air company, for instance, in their subsidiary dealing with the hotels particularly have achieved tremendous and striking successes. In their main objective of running an airline the success, as seen in commercial terms, has not been significant. In fact, there has been a loss which is principally due to the fact that, for strategic reasons as a nation, we have imposed on that company the obligation to fly the Atlantic. If this company were strictly entrepreneurial in the private sense they would not have those constraints and their bottom line would be totally different. We must recognise that we cannot on the one hand expect these companies to be an entrepreneurial capitalist in the Irish economy and at the same time impose strategic constraints on them resulting from the political demands of the time. The capacity of these State companies to contribute dynamically to economic growth inevitably is limited by the political situation in which they find themselves. Nevertheless, we must maintain them. They form part of the environment that we must provide in order to attract private investment, both international and domestic, here, and we must make that environment as attractive as possible. In so far as the State sector is concerned it must be efficient and provide good value. That must be the role of the State corporations.

Government, by its economic policies, has an equally if not more important role in assuring that the economic environment is right for continued growth. This year's budget must be seen in the context of the economic position of the last number of years, of the constraints that the Government inherited when they took office, constraints of a poor balance of payments position, a huge burden of debt with consequential huge repayment problems, a very serious current deficit, a high inflation figure and poor investment. Really all those things together meant that huge economic problems had to be faced. Any one of them by itself would be a serious problem but all of them in the sum represent an immense burden to be faced, an immense problem to be tackled.

There were other adverse factors in the economy resulting from those general economic difficulties. Real wages were increased at too high a rate and that compounded the difficulties of slow growth which compounded the difficulties of declining employment. Too high an increase in real wages spilled over into the public sector and it meant increased public sector expenditure. This in turn compounded the current deficit position which in turn compounded the borrowing position which in turn compounded the repayment position. We were in a vicious circle of economic problems.

It is interesting to recall that in 1977 the famous programme then was going to end unemployment. It failed for a number of reasons and I will draw attention to two of them this morning. A condition precedent to that programme was that imports would be kept to a minimum and that extra demand which was created in that programme and which was a central part of it would be spent on domestically produced goods. The second condition precedent was that there would be wage restraint to a level never previously seen in this country. On both of those important conditions precedent there was a failure. The extra consumer spending leaked very badly into imports resulting in balance of payments difficulties resulting even more drastically in damage to the domestic manufacturer and supplier. Wage restraint just did not take place, with the consequences to which I have just referred. The results of the failure of those two critical conditions to that programme are still with us in the sense that the penetration of our markets by foreign goods has continued. The quality of the goods and the standard of salesmanship have ensured that. It is one of the consequences of free trade and we must endure it. The penetration that was permitted then is still with us and still represents a serious difficulty with the Irish economy. It will be a test for the Irish manufacturer and producer to see if they will be able to meet and beat off this competition.

The expectation of a high rate of real wage increase is still present but is muted to some extent by a realisation of the adverse economic consequences of high increases in real wages without accompanying increases in real wealth to sustain them. There is now a growing realisation of the need for that trade-off and the rate of wage increase has slowed down. It is to be hoped that this year that process will be continued. The budget does not provide any funds for any increase in the public sector.

The Government recognise this area as being of critical importance in its overall plan and medium-term target of getting the economy turned around.

They were the problems that faced us. They were urgent and had to be dealt with quickly. They required action that would deal with the ills of the private sector and take on the problems of the public sector. In the private sector one of the strategies adopted was to have a slow-down in the growth of real wages. This, coupled with another action that was "taken" when there was an adjustment of the exchange rate — some people would be so crude as to call it devaluation; we prefer in this age of euphemism to say that there was an adjustment of the exchange rate — slowed down, in fact halted the wage-price spiral and helped to contain inflation which was the other great problem facing us when we took office. It has to be said that the action needed to correct the public sector difficulties did contribute to inflationary pressure in 1983. However, that contribution was more than matched by the contrary effect of slowing down the wage-price spiral which took place in 1983.

We see the results today of that Government policy. Inflation is in check and, hopefully, will continue to fall throughout the year. In fact, it is doing less than justice to the achievement to say that inflation is in check because inflation has fallen significantly. We hope that trend will continue. Competitiveness is being restored and we can see this from the high level of exports. That could not take place unless our goods were competitive. I know that many goods being imported are in new high technology categories and are not subject to the problems of ageing corporations to which I referred earlier. Nevertheless, if there was not an underlying productive and competitive climate in those businesses they would not have located here in the first instance and they certainly would not be able to export at the level they have achieved in the last year. Our capacity to compete abroad and get markets has been improved and this is directly related to the policies undertaken in last year's budget. Another consequence — it is a very useful one because if it went badly wrong we could have a very dangerous situation — is that our balance of payments, our trade balance, is in a very healthy condition. That is an economic constraint that is missing and we are very glad to do without it.

However, we have problems to overcome. We have still a considerable distance to go on the road to economic recovery. Investment remains sluggish, a problem that is being experienced in many Western countries. Investment needs funds, a suitable environment and a prospect of a return better than can be got from playing the financial market. We are hopeful that this year more funds will be available for investment because the amount the Government are taking from the economy — broadly this is a neutral budget, a non-event as it was oddly described from the far side of the House — is not being increased significantly. There should be more funds available for investment as a result.

We reckon that the economic environment will be more favourable this year for the reasons I have detailed and as a consequence of the steps taken last year. We hope that because of reduced inflation and reducing costs the rate of return to the investor will be attractive. If those factors come together during the year we can be reasonably confident that we will see a pick-up on investment.

However, there is one further critical intangible factor, the factor of confidence. The investor, the capitalist, the entrepreneur must have confidence. Not merely must he have confidence but there must be confidence in the country as a whole, preferably confidence in the areas to which he would be likely to go to sell his goods but we cannot deal with that, we can only look at our own jurisdiction. I sense, and this is coming across from recent opinion polls, that there is a growing confidence that the Administration are now getting on top of the economic problems of the country. That feeling is beginning to spread out. It is a pervasive thing, it spreads throughout the economy and, suddenly, for no apparent reason there is a different climate and different national morale. That process has begun, and advanced significantly. Provided the discipline needed can be achieved over the next few months — the Government intend to provide whatever discipline they can bring to the economic scene — this air of growing confidence that we are in charge of our affairs again, that things are under control, will continue to grow. That will be a very important factor in promoting increased investment during the year.

The other great problem we have — we do not share it alone — is the problem of unemployment. Unfortunately, unemployment is still rising but clearly at a much slower rate. As a result of the sluggishness of the economy over recent years and because the upturn is only beginning there is still plenty of capacity within the economy to be taken up by the existing work force. A lot of enhanced productivity can be achieved without expanding the work force. It will be some time before the upturn in economic activity manifests itself in significantly reduced numbers of unemployed but the upturn that is taking place is slowing the growth of unemployment.

As part of their overall policy the Government are creating the environment where investment will take place, investment in real wealth producing jobs because they are the only jobs that are jobs in the real sense. There have been calls on the Government from time to time to create jobs. That was tried in 1977. The public service was expanded at an accelerated rate and people got "jobs". The public now realise that jobs of that type must be paid for out of taxation. The public pay for them and they are not real jobs. There is no serious expectation that the Government would tackle the unemployment problem in that way. There is a growing realisation that unemployment has to be tackled by creating a proper economic environment where growth can take place, and that is what the Government are doing. Unfortunately, it is not a remedy that permits of overnight success. It is a long haul and the Government, while waiting for that long haul to be completed, must ameliorate the effects of unemployment to ensure that there is adequate training and work experience opportunities. The Government must ensure that all those things are done for the unemployed so that when the upturn comes and the demand for more labour arrives we will have a highly skilled and competent work force. I do not have to tell the House about the vast variety of schemes, Government inspired and public financed, that are available to provide this training and work opportunity for people pending the final upturn of the economy and the significant reduction in unemployment.

The budget has been criticised as a non-event. When I look back on recent budgets and consider what harsh events they were as far as almost every man, woman and child was concerned, I believe we should be truly thankful that in that sense the budget was a non-event. However, it was not in that sense that the criticism was meant. The criticism was that the budget was insignificant, that it did not do anything. The budget has to be looked at in the context of last year's budget and its success in bringing matters under control. We felt that this year was an appropriate time for not quite marking time but for not doing anything radical: let the economic position settle and stabilise, and move forward from that stabilised state.

There was criticism that the deficit was not significantly reduced, that we were not achieving targets. This is an odd criticism from people who last year had criticised us for being obsessed with bookkeeping. This year when we appeared not to be following the straight line of bookkeeping we were criticised for not doing it. It is hard to win. Of course, one can understand the frustration of Oppositions in trying to devise criticisms of policies that are patently working, but their criticism this year seems to be scraping the barrel of credibility. We will overlook that.

We did not move too much on the deficit this year because to attack the deficit too vigorously could be over-deflationary. We do not want excessive deflation. We had a deflationary situation last year at the beginning, but fortunately that did not have a serious continuing deflationary effect because productivity and the general business movement are beginning to improve. This year it was important that that scene would not be disturbed, that we would not attack the deficit too vigorously, because if we did it would have a deflationary effect and we do not want that — it would be a critical factor in the important intangible ingredient, confidence. Too much deflation this year could have the effect of damaging confidence.

In this year's budget we have been broadly neutral on tax policy. It is not a year for doing otherwise. We decided that the deficit should be at the figure it was, and that removed any need to have any sort of swingeing tax policy to get income, from the deficit point of view. That is another beneficial consequence. It is not to say, however, that the present tax regime is as we would like it to be. We consider it to be a disincentive to a high level of work activity by wage earners. I do not have much sympathy with the point of view that a high tax level will damage investment or adversely affect the entrepreneurs in our society, because their reward is not only what they can cream off for themselves. Of course the genuine entrepreneur wants a good income, and he is entitled to it, but his main motivation is to generate profit for reinvestment so that he can keep his activities rolling. He is not too worried by too high rates of tax. He will not be inhibited by them. But high rates of tax are a disincentive because they blunt the competitive edge, the energetic edge of the workforce. When they see the game is not worth the candle, that their work is not being remunerated properly because the State is taking too big an amount back, their edge on that extra bit of effort that can be brought to the job towards increased productivity is blunted because of high tax charges.

This year we were able to make only a smallish advance towards easing the tax burden, but we hope that if the projections for economic growth will be met this year the Exchequer position may have improved by next year's budget and some progress towards easing the tax burden might be made in a more significant way. But we will still have a deficit next year and the problem of dealing with it. If we had in mind an easing of the tax burden in order to give incentives and to accelerate the growth that we hope will take place this year, how much we can do on the deficit will depend on our willingness to tackle public expenditure — the other side of the deficit.

Having engaged in debates on cutting public expenditure for a considerable number of political years and having noted the reaction of people to cuts, I realise that we are coming very near the time when further cuts in public expenditure can be done only at the expense of services that are essential for the efficient running of the country. In other words, we are probably at rock bottom in regard to the services we can cut. Clearly, here and there odd things could be eliminated without an adverse effect on the efficiency or the social stability of the country, but financially they would not be of great significance. To make big inroads now in public expenditure would affect adversely the services to which the people have become accustomed.

We will have to give serious thought to the social and economic consequences of doing that. However, there must be a critical examination of the numbers in the public service. I do not have to tell the House of the huge cost of remunerating the public service as a proportion of Government spending. We will have to look at the numbers. The embargo applied in June 1981, when we decided to fill only one out of three vacancies, has worked quite well. It has slowed down growth and brought about a significant reduction. However, that obviously is a crude instrument which has led to anomalies in manning in the public sector. The Government's job will be to refine the embargo or replace it by a more precise instrument. There is room for pruning there so that there will be more efficiency of manpower.

The other side of the coin is that there will have to be a ruthless approach towards efficiency. It is a common and probably well-founded belief that from many Government schemes the public do not get good value for money, that if these schemes had been carried out by somebody with a profit motive or a bank manager to satisfy, they would have been carried out more efficiently and at less cost. There may well be something in that, and one of the big tasks we have to tackle this year will be to ensure that the public will get full value for public money being spent, that there will be a high level of efficiency. I feel that that examination will disclose areas of inefficiency. Perhaps it would be unfair to call them areas of waste, but there are areas which are coming close to being wasteful. These will have to be cut. It is along those lines that the attack on public expenditure will have to be made with a view to next year's budget.

It is just 13 months since we took office. We were faced with literally an economic mess in every area of the economy — balance of payments, current deficit, borrowing, inflation, high wages and unemployment. There were gigantic problems in every area of the economy and in 13 months, due essentially to good management and prudent budgeting coupled with a response from the social partners — industry, trade unions and agriculture — we have faced up to those problems. They might complain about a particular matter in our budgetary or economic policy they disagreed with, but broadly there was agreement and they co-operated in achieving the objectives of the Government's economic policies.

Considerable progress has been made. This year might be seen as a year of marking time because of the comparatively neutral nature of the budget, but it is in fact a critical year. If it is a year in which we mark time we will find that next year we will have gone backwards. This year must be a year of advance. It is my expectation that this will be so. The forecasters are forecasting a fairly significant growth during the year. It is a long way from the heady days of the seventies but it is a long way on from the last number of years. If the spirit of confidence which I sense is beginning to pervade the economy again continues and grows, we will see an upturn of significant proportions. We confidently expect to see this upturn and it is on that confident expectation that our budget was based and on which our economic policies are drawn.

Mr. Kitt

I welcome this opportunity to speak on the budget. The description of the budget in the media was that it was a neutral budget, as if there was some great merit in that, but the Government are merely holding the fort. The Minister for Defence has referred to this. Many Government speakers have said that the proposals are there and they are hoping that the economy will improve and that the recession will end.

This is a negative budget. It left our economy at a standstill. The main reason it is negative is that there were great hopes that an incentive would be given in the budget to employ more people. I take the Minister's point about the Government creating jobs directly, but the imposition of increased PRSI on employers was a mistake at a time when we have such high unemployment. The director of the Confederation of Irish Industry described it as a straight tax on employment. It will take a further £35 million from the business community. There are 208,000 people registered as unemployed. That is a challenge to the Government and to all of us as public representatives.

Unemployment increased by 8,474 during the month of December and by over 28,000 in the past year. It is disappointing to note that the opportunity of creating jobs in the industrial sector was not taken by the Government. People in the PAYE sector, who are already burdened by taxation, are happy to pay the 1 per cent youth employment levy if they feel the money is used for the creation of jobs. In 1982, £34 million was taken in by the Government under that levy and £73 million in 1983. I wonder why that money is not given to the industrial sector to enable them to employ more people. We need jobs, especially in areas of high technology.

The sector where we hope there will be great growth in the future is the agricultural sector. In the Estimates for this year there is a reduction in Government spending on agriculture. From a figure of £109 million in 1982 it was reduced to £85 million last year and only £77 million was provided this year. This means in real terms that agricultural spending is down by 40 per cent. This had led to great uncertainty in this sector.

We noticed last year that the Farm Modernisation Scheme was suspended and there was a reduction in the income limit for off-farm income whereby farmers qualified for headage grants. That affected part-time farmers because the reduction was from £5,500 to £3,500. The Minister for Agriculture or the Government do not deny the important role part-time farmers play in the economy. Charges were introduced for visits from advisory and farm development staff. After all the cut-backs we had in 1983 the agricultural sector and the economy needed better treatment. As the farming organisations pointed out, before the budget was introduced, we had a mini budget when disease levies were introduced. These are expected to cost farmers £5 million. The only reference to agriculture in the budget was where the Minister for Finance said he was giving £5.7 million to extend the ground limestone and AI subsidy schemes. He also allocated £100,000 to the new potato marketing co-operative. While I welcome that I would point out that the ICOS were promised £1 million. I hope the Minister will tell us when the rest of this money will be provided.

The uncertainty in agriculture, especially in the EEC context, is not lessened in any way by the performance of the Government and of the Minister. When the Minister took steps to reintroduce the Farm Modernisation Scheme he realised that he was not being taken seriously by the EEC and we now have the situation in which the Community is endeavouring the phase out the grants in respect of dairying. Because of the suspension of the Farm Modernisation Scheme we lost money in 1983. The Government estimated that there would be savings to the extent of £10.3 million but in terms of that money being supplemented on a £1-for-£1 basis by the EEC, we lost more than £20 million. There is grave dissatisfaction among the 4,500 farmers who did not qualify for grants under the scheme in 1983. These problems must be tackled by the Minister without further delay but he must have support for his efforts not only within the Cabinet but at EEC level also.

The dairying industry is experiencing a difficult time. The number of creamery milk suppliers has fallen to 55 per cent of the 1967 figure and there has been a decrease in the number of suppliers of fewer than 5,000 gallons.

The Minister must continue to seek an extension of the severely handicapped areas in so far as the 12 western counties are concerned. We are told that this scheme operates on the basis of district electoral divisions. From time to time there have been reviews of the situation and some extra areas have been included. Before the last general election we were told that the Coalition would have the district electoral divisions changed to a townland basis for inclusion under the scheme but this has not happened. Indeed, since 1982 no additional areas of land have been included for the extra payments. I appeal to the Minister to press the EEC on the matter of having extra areas included. In Galway, for example, there are 77 district electoral divisions included in the severely handicapped areas but twice that number are excluded. I expect the same situation prevails in the other western counties. Farmers are losing a lot in terms of grants because of the additional areas of land not being provided for by way of increased payments.

I urge the Minister also to introduce legislation as soon as possible to deal with the whole question of land. We have been hearing that land increasingly is coming into the hands of non-farmers. This must be of concern to all of us. I was very disappointed that the budget did not contain provision for money for the proposed land-leasing arrangements and also that there is no mention of a new land policy. A number of questions arise in relation to the whole area of land policy. For instance, is it the intention of the Minister to provide money for land-leasing? Will there be a standard type of lease available and what is to be the future role of the Land Commission?

There is a need for the retention of the acquisition powers of the commission. Most rural Deputies will have had occasion from time to time to ask the Land Commission to intervene and to put a section 40 notice on lands in order to give a breathing space to the people concerned but at present the Commission are not becoming involved in the sale of land. In reply to a question put to the Minister yesterday by Deputy Flynn as to the amount of money made available in the past few years for the acquisition and division of land, the following figures were given: 1981, £9.9 million, 1982, £8.7 million and £3.9 million last year but that this year there is only £1 million being provided for this purpose. That latter figure would seem to indicate that effectively the Land Commission are being put out of business. I do not understand why this should happen in the absence of a land policy or of legislation on land-leasing.

There has been a good deal of talk about the group purchasing of land but this is contrary to what the Minister seemed to indicate is not something new. It is a practice that has been followed for some years. Last year there were about 18 group purchases in the entire country. The consent of the Land Commission is not necessary for these deals though they become involved to the extent of giving technical assistance. For that and for the help they give to farmers, the Commission ought to be congratulated. However, the answer to our problems is not to allow a situation in which land can be bought by people who have no connection with farming.

I notice that in the Public Capital Programme the standard costings in respect of structures, fixed assets and land improvement are being increased under the farm modernisation scheme. That is to be welcomed because the costings have fallen way behind. However, the point is then made in the programme that the actual rates for structures are being reduced by 5 per cent and that aids are being discontinued for the category of farmers who up to now qualified for the lowest rate of grant. It is stated in the programme, too, that grants are being discontinued for mobile equipment, for keeping farm accounts, for the group purchase of fodder machinery and also for the guidance premia. Therefore, while there is good news in the first part of the programme in connection with agriculture, we find that the benefits are negatived by the reduction in grants or, in some cases, the removal of grants.

Drainage is also a very important aspect of agriculture. The western drainage scheme which was introduced by Deputy MacSharry as Minister for Agriculture has contributed to land improvement throughout the country. I notice that in 1983 more than 5,000 farmers received a total of £10.3 million under this heading. The figure for 1984 is only £9 million. Many farmers are waiting for their applications to be processed. I thought the provision would have been increased.

The same is true with regard to arterial drainage where a sum of £11.65 million has been provided. During the Christmas we heard there were lay-offs in the staff of the Office of Public Works who work on arterial drainage schemes. It was pointed out by union representatives that the Department of Finance should take into consideration that half of the money spent by the Government on arterial drainage can be recouped from the EEC. This year the provision is £9.1 million so I assume that approximately £2,500,000 will be spent on surveys, studies and cost-benefit analyses that will be needed for many of the schemes.

On a number of occasions I have raised with the Minister for Finance the question of the drainage of the Dunkellin river in my constituency. It is an old chestnut as far as Deputies in our area are concerned. There had been much talk of draining the river but we did not get a definite statement on the matter until 1982 when the then Minister of State, Deputy Barrett, explained that studies had to be carried out. The studies were to be threefold, namely, relating to the geology of the river, the fisheries and the wildlife sanctuary on the river. The Office of Public Works are doing studies on the matter but I cannot understand why the Department of Fisheries have not done anything about it. Certainly they did nothing in 1983 and I was told bluntly by the Minister that no money was spent on the scheme and even the question of involvement by the Department in 1984 has yet to be decided. I hope the Department of Fisheries will carry out studies this year. As I understand it, the Office of Public Works have half of the studies carried out but the Department of Fisheries have not yet started to carry out the necessary surveys. This means a further delay because of the lack of effort by the Department of Fisheries.

I welcome the extra money provided for SDA house loans and for the Housing Finance Agency. I was glad to hear after the budget the announcement by the Minister for the Environment regarding an increase in the amount of loan. He also raised the income limits. The amount of loan could perhaps have been increased a little more but at least it was a step in the right direction.

I am sure every Deputy, Senator and county councillor would like to ask the Minister for the Environment what he is going to do about our roads. The Minister and his officials have contacted local authorities telling them that the increased rate for 1984 over the 1983 figure will be only .08 per cent. This is the increase in the rates support grant at a time when inflation is approximately 10 per cent. The local authorities will undergo a serious crisis this year if the Minister cannot give an increase at least in line with inflation. In my county it means that for the first time workers will be made redundant. Already negotiations are taking place in County Galway with the trade union involved concerning 65 immediate redundancies and proposed lay-offs between February and April and September and December this year. The problem is that the liabilities of the local authority still exist. They have responsibilities to the Western Health Board, to ACOT and to the Office of Public Works and knowing these bodies I am sure they will be looking for more than an increase of 0.8 per cent from the local authority.

There have been a number of deputations from my county to various Ministers concerning the financial situation of our county council but we have had not much success. When the Tánaiste was Minister for the Environment we raised last year the matter of money paid in social welfare benefits to workers when they are laid off work. There have been only a few examples of people who got more money in social welfare than when they were working. The Minister was asked to consider the possibility of transferring this money from social welfare to the local authorities to keep the men employed. He told us that legislation would be required but no such legislation was introduced last year and the same situation exists.

The Minister for the Environment should consider what can be done to have that money transferred in order to keep our people employed. I refer in particular to those who are working on the roads because this would also mean that the roads would be maintained in the proper order.

There is a reduction of 10 per cent in real terms in the capital programme. Work on many water and sewerage schemes will not proceed. Obviously local authorities have to see where cuts can be made. In talking with some of my colleagues I have noticed that the library service appears under threat in every county, which is sad. Two years ago the taking of VAT off books was an imaginative move. The libraries were then able to buy more stocks, which particularly helped the school library scheme, one of our best. However, every year the allocation for library books, especially under the school library scheme, is being reduced. It is certainly negativing much of the good work done by removing VAT.

There are other areas which the Government could examine with regard to local authorities fulfilling the functions which the Government ask of them. I am thinking, in particular, of the operation of the higher education grant scheme. These grants are paid in instalments by the council and this is a very good scheme which works very well. Unfortunately, recoupment from the Department is so slow that the local authorities find themselves in debt in the meantime. This problem must be dealt with very quickly by the Government if the local authorities are to remain in business at all.

One feature of the capital programme which certainly disappointed me was the statement under the energy section that expenditure on the Derryfadda briquette factory near Ballyforan was stopped, pending the outcome of analysis of the viability of the scheme. This scheme has been reviewed three times in three years. Bord na Móna have been given the price increases and made a good profit last year. They are in no doubt as to their ability to borrow and repay money, yet, after the reviews in 1981 and 1983, there now is a third review.

I am glad to see provision in the capital programme for the continuation of this factory. I say continuation because money was provided to clear the site and develop the bog for the factory, the first sod being turned on 8 November 1982. Nothing at all was done in 1983 except the introduction of a second review. When we talk about spending money on our natural resources, surely one of the most important of those is our bogland. With such high unemployment — in Galway, for example, it has increased by almost 100 per cent in three years — it is hard to understand why the Government are insisting on delaying this project. I hope that the Tánaiste, now that he is dealing with energy matters, will bring this review to a quick conclusion and submit the results to the Government so that the project can continue.

In the area of social welfare, for the second year in succession payments have been delayed beyond April, which was the normal time for payment. Under the present budget, unemployment assistance and unemployment benefit are payable from July, children's allowances from August and the family income supplement only from the end of November. These increases will amount to only 7 or 8 per cent in the case of employment assistance, which is certainly less than the inflation rate. The Minister for Social Welfare should be ashamed that these rates could not be increased by more than that.

What will be the position of the smallholders, or those who get what is known as the small farmers' dole? I think that should be called an income supplement, because that is what it means to people in rural Ireland living on small holdings. Over 1,000 smallholders lost their unemployment assistance in 1983. Many are appealing that decision and await the outcome of these appeals. This matter has been the subject of much media attention lately, but I have asked the Minister for Social Welfare to suspend factual assessment so that the present backlog of appeals can be dealt with. The Minister proposes assessing 14,000 farmers over a three-year period. From figures which he gave me for the first seven months of that three-year period, 3,445 farmers had an assessment on a factual basis, over 900 of whom appealed against the decision and some of whom did not appeal at all. The total number who lost their assistance was 1,141.

I have read that Senator Higgins blamed social welfare officers for the way in which the interviews were carried out when factual assessment was being done. He called them Fianna Fáil agents and accused them of using Gestapo tactics. It is amazing that, after the Government have been over a year in office, one of their Senators should blame Fianna Fáil for the investigations with relation to factual assessment. I was glad to hear that the Minister for Social Welfare deplored that statement.

Many constructive suggestions have been made by Deputies and Senators from all sides of the Houses concerning the way in which assessments are carried out for social welfare purposes. Certainly, the most constructive suggestion is that advance notice be given to a person who is about to be interviewed for any social welfare entitlement on a means test. Twenty one days' notice is sometimes given, or adequate notice, and this should be the case in these matters. This should be done, even if the assessments take more than three years to complete. The person involved should be given time to make the best case possible to the social welfare officer. When a factual assessment is being undertaken by the Department there is need for reasonable expenses to be allowed. Bearing in mind increased inputs into farming, a farmer needs some time to put all of his expenses on paper. This is true also of other social welfare applicants. I hope the Minister will deal with that problem because it is a lot more serious than he realises. When I say that over 1,000 people have lost assistance he will see the magnitude of the problem involved.

I was glad to note an extra £2 million provided in the budget for national school buildings in addition to the £26 million in the Estimate. However I note that the £26 million constituted a 6 per cent reduction on last year's figures. More money was needed for this purpose because departmental policy on the provision of additional school classrooms warrants examination. Where there are additional pupils attending any given school, thus requiring an additional teacher and classroom, it seems to be Department policy to erect a prefab hoping that the numbers will decrease after some years when they can dismantle that prefab. However that is not what happens. The prefab is left there, sometimes even when in a very bad state of repair. I hope that Minister and her Minister of State will agree to the erection of solid structures where additional classrooms are required. They have done so in some cases, for which I give them credit. I understand also that the Office of Public Works will no longer be involved in national school buildings, that it will be entirely in the hands of the Department. I hope the Minister will phase out prefabricated structures and ensure that no more are erected even on a temporary basis. They constitute bad value for money anyway, as one is continually either replacing them by others or putting up solid structures in their place.

The school transport system is most unsatisfactory at primary and secondary level, with drivers endeavouring to undertake double, sometimes even treble, runs in some areas. This has aggravated the situation, making the school day longer for many pupils. The Minister should examine that aspect. In some areas meandering school buses — occasioned by extra pressure and runs for drivers — means that many children arrive home quite late from school. Perhaps the Minister for Education would tell us what will happen in that regard in the future.

The proposal in the Minister's Budget Statement that received most publicity was that concerning VAT on clothing with an exemption for children under the age of ten years. This proposal has been described by many people in the business as unworkable and leading to widespread confusion. I think that will be the case. After all, it was attempted by a previous Coalition when they imposed tax on footwear, or endeavoured to, two years ago and when the Government fell on that issue. The examples given on "The Late Late Show" on Saturday last of there being different shapes and sizes of ten year olds would indicate that the proposal will be unworkable. Representatives of the clothing industry made a strong case to the Minister before the budget, pointing out that jobs were being lost in that industry. The director of the Apparel Industries Federation pointed out that employment had come down from 24,000 to 14,000 in the last ten years and that, in the year 1983 alone, 2,000 jobs had been lost in that industry. At present the clothing and footwear industries employ more than 17,000 people and they are very disturbed at this latest imposition. It is disturbing not alone for the industry but for many parents with teenagers, fast growing sons and daughters, who must supply them with school uniforms and who will find this latest proposal very harsh on them.

Another sector of industry that made submissions to the Minister was the liquor trade. They pointed out that there had been a 40 per cent tax increase on drink over the past four years and they made strong representations for a price freeze on drink. They were most disturbed at the fact that the Government had decided to impose a price increase on the working man's pint. No doubt that increase will lead to unemployment in the drink trade, to short time openings and perhaps week-end openings only in rural areas where there is not the same type of passing trade there is in cities and towns.

The Minister for Defence admitted that the income tax situation had not received much attention. In his Budget Statement the Minister for Finance said that 15,000 people would be taken out of the tax net by the abolition of the 25 per cent tax band. It should be remembered that those 15,000 people paid very little tax anyway. Rather what the Minister succeeded in doing was placing 56,000 people into the new lowest, 35 per cent, tax band. It is estimated that the Government's net take from those changes will be in the region of £90 million, which is something that the PAYE sector did not realise would happen. Nothing positive has been done for them; in fact their tax burden is increased.

There is also an increase in car tax and on petrol and it is estimated that the average cost of running a car will be about £70 per week. Unfortunately, there is also an increased tax on diesel which will lead to higher costs in industrial charges, especially in rural areas, where people depend so much on transport to move goods.

The Minister announced that there would be £300,000 available for Oranmore Airport. I welcome that decision and I know that the Chamber of Commerce and the development committee there worked very hard to get that allocation. They are looking for a sum of £800,000 between the Department's contribution and the EEC. I see this as a step to helping industry, especially in Galway city, and the western region.

This was a negative budget as far as employment is concerned and merely an attempt to balance the books. While the Government granted concessions in some areas they took them away in others. For example, the Minister said that the special PRSI tax allowance was to be renewed but later on he said that the temporary levy of 1 per cent was also being renewed. Where he gave £51 million he took back £45 million. The media described it as a neutral budget which would leave the economy at a standstill. I was disappointed that it did not deal with the problems we have now rather than saying that when the recession is over we will be able to tackle them.

Minister for Justice (Mr. Noonan,

Limerick East): I wish to open my remarks by pointing out that areas which are under my Ministerial control account for a large volume of expenditure. In fact that total amount provided in 1984 for the group of Votes for which I am responsible is £296,279,000. This represents an increase of 7.4 per cent over the 1983 outturn of £275,990,000.

The need for most of the money in my area provided for in the Estimates for 1984 arises from the existence of crime. There is no doubt but that the extent of crime and vandalism in this country amounts to a very serious situation. For those who live in cities and towns the problem of vandalism is all too visible. Most acts of vandalism when viewed individually are of a somewhat petty nature such as broken windows, damaged telephone kiosks or graffiti-laden walls, but it is in the sum total that vandalism becomes a problem of major proportions.

The mindless destruction of private and public property, of our facilities and of our natural environment, is causing serious damage to the national economy. Local authorities are faced with an ever-increasing number of malicious damage claims from householders, car owners and business people — claims which cost the taxpayer and ratepayer many millions of pounds each year.

The Garda Commissioner's Report on Crime for 1982 shows that the value of property stolen in that year was over £29 million. Apart from the actual losses involved as a result of crime and vandalism, the cost of the various State services involved in these areas is shooting upwards at great expense to the Exchequer. The Garda and the prison services cost the State almost £246 million in 1983 and projected expenditure in 1984 is in the region of £267 million — and these figures do not include such costs as the administration of the courts, criminal legal aid, probation and welfare service and other State-run services which exist as a direct or indirect result of crime and vandalism. There are also other hidden costs of a substantial nature such as loss of tourist revenue and loss of foreign investment. Apart from any other considerations, therefore, the implications for the development of our economy demand that crime be tackled vigorously and resolutely.

It is important that people be fully aware of the harsh reality that crime and vandalism are a drain on the economy. Public funds are being drained in this utterly wasteful and destructive way when they are so badly needed for the health and welfare of our people and for the provision of jobs. I have no doubt that if all the costs involved as a result of crime, vandalism and subversion could be quantified they would paint an alarming picture. No figure is readily available for the loss of valuable tourist earnings as a result of the Northern political problems. No figure is readily available for the expenditure by business people and householders on security measures necessary to combat the steadily rising rate of pilfering, burglary and robberies. Who can put a cost on the loss of a quality of life in this country which was unique and precious in the past?

Too often it is the weak in our society —the old, the infirm and the very young — who are the victims of crime and vandalism. Increased crime is said to be a characteristic of social change and increasing urbanisation but no matter what reasons are advanced there can be no justification for the violence and viciousness being inflicted on society by the criminal and the vandal. The Garda are doing everything in their power to combat crime but they need the help of the general public if they are to be successful.

It must be remembered that everyone has a role to play in the maintenance of law and order. It depends on all of us making a contribution, not just the Garda. Parents, schoolteachers and others in positions of influence and authority have a particularly important role to play in fulfilling their responsibilities to themselves, their neighbourhood and to society in general.

The rise in crime and vandalism must be contained in order to make more effective use of our resources. It is clear that vast expenditure on resources of manpower and equipment will not produce the expected dividend without the full and whole-hearted support of the public. I need hardly emphasise that the crime situation is a matter of the greatest concern to the Government. A top priority of the Government is to restore safety and security for our people in their homes, in their work places and on the streets and to protect life and property.

The Garda are, of course, the first line of defence against crime. I am glad to say that the restrictions on the filling of vacancies in the public service generally will not apply to the Garda Síochána and that recruitment to the Force will continue during 1984 to achieve and maintain overall Garda strength at 11,400. The current strength of the Force is approximately 11,300 and special emphasis is being placed on the optimum deployment of Garda manpower so as to ensure that all our resources are used to maximum effect in meeting the police needs of the community. We have had a very substantial increase in Garda numbers over a short period and I think it would be prudent at this stage to stand back and see where we can make improvements in the utilisation of the resources that are now available. Our objective is to bring about a substantial improvement in the crime situation and to introduce ways and means of achieving this aim. One of the measures already introduced is the increase in the Garda presence in the streets of our cities and towns and it is my policy, and one with which the Commissioner of the Garda Síochána agrees, to have as many uniformed members of the Force as possible available for foot patrolling, and to bring the Garda into closer contact with the communities they serve.

Another measure to bring about improved utilisation of resources is the provision of the new radio communications network for the Garda. This project is well advanced. Approximately £5 million was spent on the project in 1983 and further major expenditure will be incurred this year. It is planned to have the network operational in the Garda Divisions outside the Dublin Metropolitan Area within the next few months and, by the end of the year considerable progress will have been made on the purchase and installation of the radio system which has been specially designed for the Dublin area.

Modern computer technology is also being exploited for the benefit of the Garda Síochána. The Garda have their own computer facilities and they receive technical assistance and guidance from the computer unit of the Department of the Public Service in the development of computer systems which will be of benefit to them in both their operational and administrative tasks.

It is vital to the success of any organisation that it have a sound personnel promotion policy — that there are means, which enjoy the confidence of all members of the organisation, through which the best available people are selected for positions of supervision and management. I am very pleased, therefore, to have been able to approve of the introduction of a new promotion scheme for the Garda Síochána which has the full backing of the Garda Commissioner and of all the Garda staff associations. A feature of the new scheme is that its operation will be monitored by a Promotions Advisory Council which includes persons from outside the Force with suitable experience in personnel matters, in addition to representatives of the Garda Commissioner and of the different ranks of the Force. This council has now been established and I an confident that under its general direction, the new scheme will operate smoothly and to the general satisfaction and benefit of the Force.

As regards the financial provisions in the Garda Vote, a total of £220,988,000 is provided for the Garda Síochána in 1984, representing an increase of about 8 per cent over the 1983 outturn.

The Estimate for Transport (Subhead G.) of the Garda Vote shows a reduction on the expenditure on transport in 1983. The main reasons for the reduced provision are the advance purchases in December 1983 of cars planned for purchase in 1984, and the purchase in 1983 of Garda cars from funds originally earmarked for ministerial cars. These factors had the effect of reducing the amount required in 1984 and, although purchases in December 1983 did not, in fact, reach the level expected, the provision for 1984 is sufficient to maintain an adequate fleet if good order.

Under the heading of Equipment the Garda Estimate also shows a substantial reduction. The reason for this is that, towards the end of 1983, about £3.2 million worth of radio equipment was purchased outright. The equipment included some which it had been intended to lease in 1983 — with consequential higher leasing charges to fall in 1984 — and some which it had been intended to lease in 1984. The provision for 1984 is sufficient to maintain the momentum planned for the installation of radio equipment.

Another area of major expenditure for which I am responsible is prisons. A net total of £46,168,000 has been provided by the Government in the Prisons Vote. This is £2.4 million more than was provided in 1983. Of this, £27,246,000 is in respect of salaries and overtime for prison officers and £11,498,000 is in respect of the prisons capital programme.

It is public knowledge that there are, and there have been for some time now, serious problems in the area of prisons and places of detention. Probably the greatest single problem is that of accommodation. I will deal in a moment with the question of providing new accommodation, but the most immediate effect of the lack of accommodation is the need to "shed" prisoners in advance of their normal release date. This, I accept, is a wholly unsatisfactory situation and one which will have to be ended as soon as possible. Every feasible effort is being made to ensure that prisoners who might be considered dangerous to the public are not released in this way. Where possible prisoners who are "shed" are carefully selected following consultation with the various services in the prison and with the Garda.

Over the past year the prison population has increased by about 30 per cent. I have provided an additional 400 places in that period but this involved, to an extent, doubling up prisoners in some of the institutions. I would hope that when the Criminal Justice (Community Service) Act comes into operation later this year it will have a telling effect of the number of offenders sentenced to imprisonment and particularly to detention.

There has been an industrial relations problem in the prisons for some time past but I would hope that relations can improve and that even now they may be taking a turn for the better. Prison service staff, like other Civil Service employees, have to accommodate themselves to the restraints of the Government's budgetary provisions and to the Government's overall requirement of greater efficiency in the public service. Currently there is a prison service staff of approximately 1,500. This year the Government have provided £6.5 million for Prison Service overtime. This overtime figure is £800,000 less than the actual outturn for 1983 although the 1983 outturn itself was down by about £100,000 on the 1982 outturn. It is clear, therefore, that to remain within the budget allocation for this year will require, among other things, a very high level of co-operation between staff and management.

Because of the labour-intensive nature of the prisons and because of the need to provide new prisons to cater for the continuing increase in the numbers being committed to custody, it is very difficult to reduce expenditure in the prisons area. Furthermore, it must be borne in mind that the daily average number of prisoners in 1984 is now expected to be over 1,600 compared with 1,418 in 1983 and also that about one-third of non-capital expenditure on the prison is taken up by the two prisons — Portlaoise and Limerick — which are set aside for the custody of prisoners committed for subversive-type offences. All this leaves very little room for manoeuvre in cutting costs but I am satisfied with the progress made in the last year, especially in relation to prison officers' overtime.

Obviously in the prisons area, the primary objective must be to provide sufficient funds to run the prisons from the custody point of view. However, I am glad to be able to say that the Government have also set aside funds for the continued development of the education and work-training programme in the prisons. These programmes are vitally important not only because they provide much needed occupation for prisoners, but because it is through them that efforts are made to improve the prisoner as a person and improve his awareness of his responsibilities to himself, his family and the community. The prisons' work-training programme received some assistance from the European Social Fund last year and I hope that it will again qualify for assistance this year.

As I have said, there are many problems in the prisons and, as Deputies will be aware, I have very recently established an important committee with wide terms of reference to look at our penal systems and in particular at our prison system. The importance which I attach to the industrial relations problem is highlighted by the fact that I will be asking the committee for an interim report on that aspect of their terms of reference before the end of next year.

Moving away from the prisons to the probation area, a total of just over £1 million has been provided for probation hostels and workshops. It has been the policy of my Department for the last few years to encourage voluntary committees in the community to develop this type of facilities for offenders who are under the supervision of the Probation and Welfare Service. Already several such projects have been established by voluntary committees working in association with my Department's Probation and Welfare Service and a total of £350,000 has been set aside for the development of new projects this year.

My Department provide grants to the voluntary committees who run these projects of up to 90 per cent of the running costs. A total of £615,000 is provided for these grants this year. I believe that this type of expenditure, which is small in relation to the total expenditure on the Prisons Vote, is very cost effective. The projects funded cater for offenders — mainly young offenders — under supervision in the community who are homeless or who, because of their circumstances, find difficulty in being accepted on ordinary training courses. The availability of this type of facilities helps to make probation a viable alternative to imprisonment — at present there is a total of about 2,200 offenders under the supervision of the Probation and Welfare Service.

The budget also contains provision for the recruitment of probation and welfare officers so that the Criminal Justice (Community Service) Act, 1983, can be implemented. This Act provides that an offender who is convicted of an offence for which he could be sentenced may be ordered, with his or her consent, to perform under supervision a specified number of hours of unpaid work for the benefit of the community. I hope to make an order to implement this Act as soon as the necessary staff are recruited and trained.

During 1983 the capital programme for prisons and places of detention progressed significantly. Work on the site at Wheatfield, Clondalkin, County Dublin, which has been in progress since September 1980, continued without interruption. The enclosure of this site of approximately 30 acres, drainage, servicing and lighting is nearly completed. The buildings to house the heating, electrical, maintenance and storage services are also nearly completed. It is intended to locate two separate places of custody on this site. Tenders for one of these, which will provide custody for over 300 persons, have been issued and are due for return on 3 February 1984. The terms of the draft contract provide that building work will be completed in three years. Design of the second place of custody is well advanced and will be completed this year.

At the training unit, Glengarriff Parade, Dublin, construction of an extension to provide additional work-training places is nearing completion.

At Cork Prison the reconstructed north wing of the custodial block was completed last summer. Design of a new place of detention for about 200 male juveniles on a site adjoining the existing prison is far advanced.

Design of a new security prison, which will be sited near the existing Portlaoise Prison, is far advanced and site preparation for this has been carried out.

Efforts are being made in all existing places of custody to carry out adaptations to increase, where possible, the accommodation available.

The Government, notwithstanding present economic difficulties, have allocated £11.498 million to the capital programme for prisons in 1984. This amount will enable building to proceed on the place of detention for male juveniles at Wheatfield and design of other planned places of custody to be brought to completion or virtual completion.

Expenditure on these projects is necessarily related to the availability of financial resources and the economic situation generally and work has to be staged to correspond with overall priorities.

I now wish to make some comments on the financial provision for the courts in 1984. The funds allocated to the courts are spent mainly on the salaries of the courts staff and of temporary district justices and a temporary Circuit Court judge. There is expenditure also on travelling expenses, on the provision of the necessary resources such as legal text books which the Judiciary require to assist in the performance of their judicial functions and on the various miscellaneous expenses arising from the running of the various courts and court offices. The salaries of the Supreme and High Court judges and of the permanent Circuit and District Court judges and justices are, of course, paid from the Central Fund. Provision has also been made for expenditure on computer and data preparation equipment and related items. A computer which has been installed in the Dublin Metropolitan District Court has expedited the issue of summonses and the preparation of court lists and has led to a big saving in time both for the court staff and for the Garda Síochána.

A computer project is also being developed in the Land Registry. It is intended to continue the policy of developing computer projects insofar as it may be feasible in the future so that the best possible return may be obtained for the taxpayers' money.

On the courts capital side provision has been made in the Local Loans Fund which will enable the local authorities responsible for the building of courthouses in Tralee and in Bray, and for the restoration of the courthouses in Monaghan and in Cavan, to meet their commitments for 1984. Tralee courthouse has of course been completed for some time and it is expected that Bray courthouse will be completed this year. Work on Monaghan courthouse is expected to commence this year and, while Cavan County Council have not yet decided what is to be done to Cavan courthouse, I expect a beginning to be made later this year.

I wish to make a brief reference to court fees. The purpose of court fees is to pay, in part at least, for the services provided by court offices. As the cost of providing these services is continually increasing it is inevitable that court fees must also be increased if the burden on the Exchequer is to be eased. In this context court fees are being increased from 1 March next by an average of 25 per cent. This increase is to compensate for the erosion of the real level of fees which has taken place due to inflation since the fees were last increased in March 1982. However, it is not proposed to increase the fees in the case of probate matters or in the Wards of Court Office as I am satisfied that the present level of fees is sufficient to pay for the services rendered in these areas and that an increase would bear heavily on persons with limited means such as widows or wards of court.

Another area for which I have responsibility is that of the Land Registry and the Registry of Deeds. Despite the recession the intake of work in the Land Registry continues to be remarkably high with a total of over 232,000 applications in the main categories of work having been received in 1983 as compared with 219,000 in 1982, an increase of 6 per cent. This has created problems for the registry since the embargo on the filling of vacancies applies to it in common with the rest of the Civil Service. Nonetheless I am happy to say that the service being provided to the public is being maintained at a satisfactory level in most areas. For example, land certificates, copy maps, copy folios, and copy instruments, in respect of which there was a total of more than 120,000 applications in 1983, are being issued within an average of four to six days; and applications for registration in respect of land already registered, of which more than 84,000 were received last year, representing 92 per cent of all applications for registration, are processed in about three months on average.

There are long delays where applications for first registration, including the establishment of title acquired by possession, are concerned. The number of applications in this category is small — roughly about 5 per cent of the total number of applications for registration. They involve detailed and complex examination of title and often protracted correspondence with solicitors, as well as the issue of statutory notices to interested parties which usually give rise to further correspondence. Proposals for a radical re-organisation of the processing of these applications have been prepared for some time but because of the embargo they cannot be implemented at present. In the meantime all that can be done by the Land Registry to speed up the processing of the applications under the existing system is being done.

A development during 1983 which has proved to be very helpful has been the holding of seminars for solicitors in different areas of the country. These seminars are being organised by the Incorporated Law Society and are being addressed by Land Registry officials with the aim of minimising the causes of delay in processing applications.

There were over 19,000 applications in 1983 under the ground rents purchase scheme. This lodgment, which represented an increase of 189 per cent over the lodgment in 1982, has created administrative problems and, while every effort is being made to solve them, there will be long delays in the issue of vesting certificates under the scheme.

The Land Registry is by law required to be self-supporting and income and expenditure are kept under constant review to ensure that it is so. The last adjustment of fees was on 1 December 1981 and a new fees order will be operative from 1 March 1984. While there have been increases in the fees charged for most services the maximum fee has been retained at £200. The registry has been operating since 1 January 1967 under the terms of the Registration of Title Act, 1964, and its income and expenditure are analysed on a cumulative basis since January 1967 when the Act became operative. It is interesting to note that the maximum fee in January 1967 was £60. On the basis of the movement of prices between mid-February 1967 and mid-November 1983 the maximum fee would now be £430 instead of £200. In the case of individual fees the comparison between the new fees in the 1984 order and the 1967 fees is favourable to the new fees. For example, a land certificate would now cost over £14 instead of £10, a copy folio or instrument would cost £3.59 instead of £3 and a copy map would cost nearly £18 instead of £6. Registration of a transfer order under the Housing Act, 1966, would cost over £14 instead of £4 and registration of a purchaser under the Labourers Act, 1936, would cost over £7 instead of £4. There is reason for some pride in the fact that the registry can manage to be self-supporting and provide a reasonable public service while maintaining its fees at a level significantly below the rate of inflation.

I am disappointed that because of the existing staffing restrictions it has not yet been possible to proceed with a proposed reorganisation of the Registry of Deeds which includes the amalgamation of the staffing structures of the Land Registry and the Registry of Deeds and the computerisation of some of the Registry of Deeds records. When the time is right I hope to have the reorganisation implemented without delay.

In conclusion, I would like to repeat a point that I made in my opening remarks, that is, that the need for most of the money being provided for my area of responsibility arises from the existence of crime. While that money could be usefully spent elsewhere, I am sure the House will agree that the current level of crime justifies the provisions that are being made for 1984.

Mr. Kirk

I welcome this opportunity to speak on the 1984 budget. In last year's budget financial rectitude was very much a virtue. Reduction of the budget deficit was, in the Minister's words, a prime consideration. Unfortunately, this year has not assumed the same importance. What has happened in the intervening 12 months to cause this change? Does it represent the fundamental difference between the Coalition partners in government? I believe it does and that the necessity to keep the show on the road was the paramount consideration when the budget was being framed.

Most people believe that budget measures should reflect the economic and social needs of the nation at the particular time. How does this budget measure up as far as that is concerned? There is unanimous agreement that the spiralling rate of unemployment is the great social and economic problem which faces the nation. One often despairs for the future when one sees so many young people unemployed. If the underlying policy strategy in the budget is not directed towards confronting these problems one is left with the sense of disillusionment which those who are unemployed must feel. The budget has not recognised the underlying difficulty in our economy of the great mass of people who are unemployed. There are 1.2 million of our work force unemployed and the remaining people unemployed are unemployable. It is unfortunate that the broad underlying policy direction of the budget has not confronted head on the great problem of unemployment. The time was ripe to take measures to prime the economy in the key areas, to provide money in the capital programme and to generate employment in the infrastructural development that is so badly needed.

People feel that our level of taxation is killing off the personal initiative which is so essential for us as a small economy to enable us to absorb our great workforce. Unfortunately, the investment to create employment is not even a consideration in the budget. The Minister is not prepared to recognise the importance of investment to stimulate economic activity and thereby create employment opportunities for so many of our young people. The level of taxation has tended to penalise and discourage people. Hard work and initiative are anathema to the underlying policy direction of the budget. The enterprising entrepreneur has become an endangered species. The Minister has clearly said that he does not want that person to set up home here any more. He is prepared to hound him out of the country. This direction will have to be reversed.

Decisions taken on this basis will be regretted in the future because they will have retarded growth. Even though we have had a relatively low percentage growth rate for some time, we should be mobilising all the forces in the economy to encourage this growth rate. Growth is the only way we can get out of the very difficult recession we are in. The level of taxation has tended to demoralise the spirit of enterprise which our entrepreneurs have. These people should be encouraged to be in the vanguard of the attack on the great social evil of unemployment. Their contribution towards solving it is very considerable. It is essential to recognise that, but unfortunately there was nothing in the budget which recognised it.

The people in my constituency of Louth hoped for a reduction in VAT rates in the budget. I have spoken many times in the House about the evil flowing from the very high level of VAT and the leakage of money across the Border. Millions of pounds have gone northwards. There has been a great loss of revenue to the State because of the excessive level of VAT imposed on many items. Before Christmas bus-loads of people were travelling northwards bumper to bumper on the national primary route and all the secondary routes to do their shopping north of the Border. That was a great loss to the economy in terms of revenue and employment. It is inevitable that the money earned here which is not spent here will have its effect right through the economy. Reduction in expenditure in this part of the country will have its effect on the jobs of many people employed in the wholesale and retail trades. There are many angry business people in the Border constituencies, particularly in County Louth, because there was no reduction in VAT.

It is unfortunate that the increase in petrol and cigarettes has had to carry the can for very wasteful public expenditure in some areas. There are approximately 800 people employed in the cigarette manufacturing industry in Dundalk. Over the last 12 months there was a net reduction of 20 through retirement and those positions have not been filled. Perhaps this is because the storage capacity for cigarettes is being taxed to the limit because of the curtailment of sales on account of the very high burden of taxation imposed on them. The people employed in this industry are very worried about the future of their jobs. The Government do not seem to care about them. I hope there will not be any further job losses in Dundalk but I am afraid, because of further taxation on cigarettes, there will be. There has been a great leakage of money northwards from Dundalk, Ardee, Drogheda and other towns in County Louth during the last few years.

That leakage of money will be accelerated by the increased taxation on petrol and by the new measure of the imposition of 8 per cent VAT on clothing. Clothing was one item that was still attractive enough to induce people to stay at home and buy it in the Border towns. I am afraid that the imposition of this 8 per cent VAT will close the gap and perhaps tilt the balance in favour of going northwards to spend their money. Heretofore people were attracted to going there to fill their cars with petrol at the weekend and purchase all their groceries and domestic needs for the week. The imposition of this 8 per cent VAT on clothing was an ill-conceived and ill-considered measure and the Minister will regret having introduced it. I hope that if it is not too late he will reconsider it here in this House and perhaps remove it altogether.

As I have said, clothing was the one area where the balance of advantage lay on this side but I am afraid that that balance will be tilted now in the other direction. The effects of that are obvious. We will have a resultant increase in the number of unemployed in the retail end of the apparel industry and jobs there will be very much under pressure. People from a very wide area gravitated towards Dundalk in the past because there the full range of their weekly needs, domestic or otherwise, was fully and adequately supplied. Those supplies will be affected now. It is obvious that retailers must look at the stocks they carry and the cost of carrying them. They must examine the position and decide whether they can afford to carry those stocks. They will have to look at the level of employment they have been giving. I am worried that the answers that will be forthcoming when they pose those questions to themselves bode no good for the business life of the town or the employment position of the many people employed in the retail and wholesale trade there. All in all, these measures bode ill for the Border towns and constituencies.

A Leas-Cheann Comhairle, you will understand if I lay particular emphasis on the towns in my constituency. Knowing the position at first hand, it is inevitable that we think in terms of them first, but we recognise that the same problem exists in the other Border counties. If this position is to obtain over a long period it will have very serious consequences. Many people hoped when the Minister introduced the budget here that he would reconsider many of the present taxation measures. Unfortunately, these people suffered disappointment which has been worsened by the 8 per cent VAT imposition on clothing. I fear greatly that the budget measures proposed here will leave places like Dundalk, Ardee, Drogheda and County Louth generally an economic desert, and that would be very unfortunate. We have been very proud of the industrial base and the fine agricultural industry we have had and the long-established industries that have been a great source of employment to the people of the town and the region generally. Now many of those industries have come under very severe pressure. For instance, the beverage and cigarette manufacturing areas which I dealt with a short while ago find that the easy option of the imposition of taxation on them has begun to take its toll. It is to be regretted that these industries, which for so long were regarded as sources of secure and prosperous employment for so many, have ceased to be so. Recruitment into them has reached a standstill. I would venture to say that in most of these industries the level of recruitment has been zero because of the excessive taxation they have had to bear.

The Government measures, unfortunately, roll merrily along without any regard to the effect they will have in the areas I have just mentioned. People who have spent a life-time of hard work, endeavour and investment in building up businesses now find their efforts going down the river of despair and frustration because of the budget strategy which is being pursued. Job losses continue at an alarming rate. Tesco and the Dundalk Bottling Company, I understand, between them have laid off 50 workers recently. This is just the tip of the iceberg. Many of the small retail outlets have been laying off people gradually because of their reduced sales. I fear that this trend will continue. This source of employment, even on a part-time basis was very useful and valuable to many a hardpressed family in Dundalk, Drogheda, Ardee and other towns along the Border. Many a family has been able to carry on and meet the domestic calls with the aid of this additional money. To people who worked short hours or part-time it has been valuable and useful. Students have availed of this part-time employment which saw them through university and college days. We have reached the point of diminishing returns on such items as electrical goods and petrol. When we consider taxation on petrol, its impact on transport and the distribution of so many goods throughout the country, I believe the point of diminishing returns has been passed. I am sure the Revenue Commissioners have available to them comparable figures for recent years and are aware of the downturn in revenue returns. That should have set the alarm bells ringing. It is unfortunate the Minister did not heed those alarm bells and take the necessary steps to redress the balance and tilt the balance of advantage back for a period.

At a time like this we must recognise that the relationship between the currencies was an element in the past but the blame for the difficulties being experienced by traders in the Border towns can be laid squarely on the Government because of the level of taxation those people have to carry. When will commonsense prevail? Many people living in Border constituencies believe it is time that commonsense prevailed in the area of taxation because they are being discriminated against and asked to carry an unfair tax burden. They are being victimised so that the Government can balance the books.

I should like now to deal with the country's primary industry, agriculture. Serious problems have occurred in recent years for our potato producers. We had a glut on the market in recent years, and production costs, the cost of fertiliser, diesel oil and so on, increased enormously. The investment involved in that area is considerable. Potatoes have been the prime vegetable in Ireland for generations. There has been a general acceptance at Government level, by those involved in the production of potatoes and by consumers, that there was a need to bring some sense of sanity to that industry. The marketing process, the presentation and general distribution organisation is very unsatisfactory. Many of those involved in the industry expected that the Minister of State at the Department of Agriculture, Deputy Hegarty, would provide the money to establish potato co-ops throughout the country. I accept that £100,000 has been provided for this but that is inadequate. If a major operation like this is to get off the ground more money is needed. It is possible that the £100,000 will be wasted unless more money is provided immediately.

Yesterday, in the course of a Parliamentary Question, I asked the responsible Minister to indicate the quantity of vegetables being imported. The reply, by the Minister of State, Deputy Barrett, was very interesting. He told me that the total value of such imports, including potatoes, from January to November last — the latest figure available — was £50 million. That is an enormous sum to pay for vegetable imports for a country which is basically agricultural. There must be something wrong when that happens. The fact that we import vegetables to such an extent is an indication of the urgent need for us to have adequate marketing structures. Money is needed to establish proper marketing structures to co-ordinate the various elements involved in the industry, producers, processors and those involved in marketing and presentation. That will be a sizeable operation but it should be embarked upon immediately. It was startling to discover yesterday that we import £1 million worth of vegetables every week. On the basis of the information given by the Minister of State yesterday there is a need to expend more money to get proper co-ordination and organisation in the production and marketing of vegetables. If we were able to supply the home market properly we would eliminate the necessity to import vegetables with obvious advantages for our balance of payments position. A golden opportunity was missed by the Government when they failed to proceed with a programme of establishing vegetable co-ops throughout the country. An obvious need has been identified but I do not think the sum of £100,000 will be adequate to deal with the problem.

Other problems exist in the agricultural industry. Last year the Minister for the Environment decided to introduce a charge for planning applications. We were told that there was a need for local authorities to be able to raise money locally. However, when introducing any taxation measure the Government should weigh up the consequences of its introduction. The Government must investigate if such taxation will militate against any sections of the community. Farm buildings, over a certain exempted area, are still subject to a fee of £1.75 per square metre and it is not surprising that there has been a big falling off in the number of farm buildings erected. Builders who have been involved in that work over the years can verify that. I accept that the lack of purchasing power by those in the agricultural sector is a contributory factor, as was the decision of the Government to suspend the operation of the farm modernisation scheme. The decision to introduce planning fees, taken in conjunction with the other elements, turned out to be the straw that broke the camel's back.

The Minister for Agriculture announced recently his decision to reintroduce the farm modernisation scheme. However, in many instances farmers may find that they will have to pay planning fees almost equivalent to the amount of the grant they will receive under that scheme. The difficulty there is obvious. There are State and semi-State bodies collecting fees, and on the other hand others are handing out money in grant-aid which is being given to encourage farmers to erect suitable, efficient and workable farm buildings. The Government should take a serious look at this and weigh up the balance of advantage against the disadvantages it creates.

Many people are involved in horticulture, and the room for expansion in it is tremendous. However, people who have been involved in the glasshouse industry in recent years have been faced with huge increases in charges for energy power, and many have gone to the wall. However, as a result of recent negotiations between the Government here and the authorities at Stormont, agreement has been reached for a gas pipeline from Dublin to Belfast. This could provide a lifeline for many in the glasshouse industry along the east coast from County Dublin through the Cooley Peninsula and on to Carlingford and Omeath. Many of the people engaged in the glasshouse economy in those areas have the convenience of the sea and the availability of more light, giving them a tremendous advantage. The provision of a spur or spurs from the Dublin-Belfast gas pipeline, therefore, should be considered seriously.

I pointed out earlier that we import about £1 million worth of vegetables per week, so the opportunity to create many hundreds of thousands of jobs in horticulture, from County Dublin to the Cooley Peninsula, is obvious. Apart from its effect on our balance of payments, the convenience of markets for the produce is obvious with the great concentrations of population in Dublin, Dundalk, Drogheda and other towns along the east coast. Therefore, the Minister should consider this primary producing area. Any additional State investment here would be well spent because it would regenerate the glasshouse industry, it would have a good effect on the balance of payments and its employment creation possibilities would be enormous. Such an injection of State capital would be very welcome.

We have the great social evil of unemployment. I understand that the number of under-25s unemployed now stands at 61,531. That is a huge figure, something that bodes ill for the future of our nation. There has been huge State and parental investment in the education of these young people in excellent educational institutions throughout the country. The young people are faced with the frustration of coming out into the world with their education completed. There is the danger that unemployment will breed the prospect of social unrest, and this evil is not now the distant problem we thought it was years ago. It is a real problem immediately around the corner.

Unfortunately, the budget strategy this year has not given adequate recognition to the serious problem on the ground, not only for our young people, but for all who are unemployed, for those still in educational institutions who will be coming out to join the already swollen unemployed queues. Unemployment has brought great poverty to our people, many of whom had thought they were in secure employment but who suddenly found liquidators moving in and their lives, their jobs, their families in ruins. Many of the unemployed, with four or five children, suddenly found themselves with additional family problems, with mortgage repayments that will continue for another 20 years in some cases. The most frightening aspect of unemployment for people in the 30 to 40 year age group is that their prospects of ever working again are dim in the extreme.

Unemployment is truly a desperate situation and there is an onus on all State agencies and on the Government to mobilise all forces at their disposal to tackle it. I do not try to pretend there are ready-made solutions, but there is an obligation on us to be seen to be tackling the problem, to generate confidence in the minds of the people, and not to preach the doctrine of doom and gloom. That simply adds to the problem. We must redouble our efforts in this matter.

All State agencies associated with industrial development must give all the encouragement at their disposal to entrepreneurs. When looking at industrial development strategy the Government should ask the IDA whether some of the measures introduced have failed, whether they have been adequate to give the necessary confidence to people who are prepared to invest, which is essential for job creation. People must be encouraged to provide money for risk-taking assignments throughout the economy. There is a great need to provide more money for product research.

Debate adjourned.