I will start by expressing appreciation of what Deputy Skelly had to say with regard to the complications of finance legislation, and in particular one must pursue certain sections backwards in time to one Act or another. It is difficult, without doing major research, to get out of any Finance Bill its clear meaning just by reading the Finance Bill. One would hope for some format or publication which would include the current Finance Bill and section of Acts referred to in their original or amended forms. Such work is done by research scholars. This Bill is bulky as it is, but I argue that it should be even bulkier because it would help to clarify what the Minister for Finance is trying to do.
My main criticism of the Bill is directed at its tone, the use that is being made of it or not being made of it in the current economic situation. It is adeja vu Bill, there is no sursum corda in it, no attempt to use taxation or revenue collecting as an instrument for reviving the economy, for increasing employment, though the Minister referred in his speech to the need for increased employment.
It is a very disappointing document. The Minister said that the forecasts made in his Department for this year were accurate—that the revenue and expenditure were more or less on target. If one reads the commentaries in the newspapers or listened to the comments from this side one would be doubtful and sceptical about the Minister's claim. I have a copy ofIris Oifigiúil for 27 March 1984 which gives the receipts, which I will go through quickly to indicate to the House why the Minister could not have been convinced that what he was telling us was the truth.
Up to 23 March 1984 the customs receipts were £16,900,000 compared with £15,600,000 in the same period in 1983. The excise collected in the same period was £220,940,000 about £20 million down in the same period last year which brought in £239,112,000. Not merely have you to take account of the difference, almost £20 million, but you must also take into account that you were in a different inflation period between 1 January 1983 to 25 March 1983 and January to March 1984. Estate duties are also down from £584,000 to £198,000. There was no residential property tax last year but £127,000 was collected this year: in this context, peanuts. Capital taxes are down from roughly £5.5 million to £5.185 million this year. Stamps are up to £2 million. Income tax on the other hand has risen from £413.7 million in the first quarter of 1983 to £462.9 million this year. This indicates where the shoe is pinching in our economy.
Corporation tax, significantly, yielded £25.4 million last year and £25.5 million this year. In real terms that is a major decrease. The income levy reads at £18.6 million this year and there was nothing for the corresponding period last year. Again the unfortunate customer is filling the gaps. Value-added tax this year yielded £330 million against £277.7 million last year. Inflation applies in this area as well. It is significant that income taxation and value-added tax are the items which show significant increases, as do agricultural levies at almost double what they were in the first quarter of last year — £3.7 million as against £1.9 million.
Motor vehicle duties are also up by £7 million, from £23.9 million to £30.9 million. The youth employment levy is down — probably indicating that fewer people are employed and contributing — from £12 million to £11.6 million. The Post Office is out of the reckoning this year but it contributed £47.2 million last year. The figure for Miscellaneous — always an interesting customer like A.N. Other on a football team — is down to £15 million this year. Mr. Miscellaneous was much more productive last year when he accounted for £21 million.
I agree that the vagaries of when payments come in can affect the overall figures, but three months is not a bad indication of what is happening in the receipts field as far as this year is concerned. I know various factors have to be taken into account and that various receipts come in bulk at different times of the year, but nevertheless one can take it that, losing on swings what one is gaining on roundabouts, there is some indication in those figures.
I am not confident that the Minister for Finance is right when he says the whole system of monitoring of both revenue and expenditure has improved. The total receipts for that period were £1,163,733,766 and the issues for the same period were £1,565,888,166 or a gap of £402 million. Four hundred and two million pounds for a quarter would indicate £1,608 million for the whole year. Again taking into account the vagaries of receipts and making allowance for them it is still a substantial deficit at this time of the year. On the issues side there is a figure which interests me, that is, the pay out under the Transport Acts, 1964-81 of £3,853,000. If the Minister has time I would like him to tell me exactly what that covers.
There has been great stress on restoring order to the public finances. This has been made a fetish by the present Government. We contend, and we can back it up with facts, that there is no significant impact being made on the deficit on current account and that the finances in general are not being improved by the policies of the Government. Some financial people in Europe are interested in bringing order into finances at international level. I have spoken — a voice in the wilderness — in this House about the desirability of doing something about the relative rates of exchange. Recently we had the advantage of a drop in the price of petroleum products, particularly petrol and diesel because our currency had strengthened against the dollar. For the last number of years we have been on the receiving end of a very strong dollar. The point I made already, and which I repeat now, is that no matter how good our Minister for Finance may be, no matter how good his advice in the Department may be, no matter how cannily financial policy is decided by our Government, these are factors over which we have no control.
The Bretton Woods Agreement drawn up by a number of people — a man who is not very popular nowadays, Keynes, played a large part in drawing it up — served us well up to the early seventies. Now it is of no use. It has been discarded since then but there are aspects of that discarding which have benefited our economy. My contention is that there should be at international level — when I say "international level" I include not merely the EEC plus Britain, who stayed out of the EMS, but the United States and Japan — an attempt made to bring some kind of order into the rates of exchange. I spoke some time ago about a meeting at Williamsburg. People hoped that some form of international agreement, no matter how loose, would be reached as a result of that conference but nothing emerged. Many economic commentators expressed disappointment.
In the current issue ofThe Economist an interesting proposal is put forward by a man called McKinnon in which he wants to involve the yen, the Deutschemark and the dollar. I will not go through the details. He is a monetarist but nevertheless he sees the need for a formula whereby some kind of order can be brought into international finances. From our point of view it would have been desirable for the United Kingdom to join the EMS. They chose not to do so but not all of the establishment there are satisfied that they did the right thing in this regard. There are still strong advocates of the UK joining the EMS. Our exporters have benefited from our being in the EMS and the fact that the pound sterling is stronger than our punt. Very few commentators or whiners among the exporters call attention to this. The only journalist who called attention to it was the economic correspondent of the Sunday Tribune some time ago. There is a 20 per cent advantage in the UK market.
Later I will refer to our loss of competitivenessvis-à-vis the countries in the EMS, a fairly serious matter which is referred to by the people who put together the ESRI report, edited by Kennedy and Cunniffe, on employment and unemployment. This document did not get the attention it deserved from this House or from the economic commentators. It was cast aside by people who are purblind, concentrating like hypnotised rabbits on one thing only, balancing the books, and not directing their attention to the unemployment scene which is a running sore in our society. It must be remedied. It cannot be done overnight but we must be seen to be thrusting in that direction. If not, we on all sides of the House are failing in our duty to the country, particularly to our younger citizens.
McKinnon believes that exchange rates powerfully affect real economic activity and that if they are misaligned they will increase protectionist demands. I do not subscribe to monetarism and I do not believe anybody on either side of this House subscribes to the full, bare, naked, Stone Age central theory of monetarism, although the Government have obviously taken most of the monetarist philosophy and are trying to put it into effect. McKinnon wants to make monetarism international so that it recognises what every banker knows but most monetarists ignore, that demand for a country's currency is not confined within its border. This is a very short article and I would recommend Members to study it and to try to get the Minister and his officials working along the lines which will save us from what is happening with regard, for example, to what we are paying per annum for oil. In farming you can do all the right things and the weather will let you down. You can do all the right things in finance and the exchange rate may let you down, affected by the interest rate in the United States.
The opening paragraph of this article states:
After a dozen years of floating exchange rates, much of the argument about the results is sloppy and stale. Some (mostly Keynesians) want to return to fixed rates,—
The term "fixed rates" might be too strong for what I am advocating. The EMS is perhaps the best in that there is a kind of constricted float between the currencies. The article continues:
—saying that they helped to bring the steady growth and low inflation of the 1950s and the 1960s. Others (mostly monetarists) want a squeaky-clean float giving each government absolute freedom to choose its own fiscal and monetary policies without importing the effects of others' policies via a semi-managed exchange rate.
That is all right if you are in the big league but it is a horse of a different colour if you are paying, as we are, for all our fuel in dollars.
If the GNP of all EEC countries was added together, including that of the UK, it would be greater than the GNP of the United States. Because of that, there is no reason whatsoever why we should not have a European currency — call it, perhaps, the ecu — which we could use for buying oil. It should be as strong as the dollar. It would mean that the UK would have to join so that there would be a ten-country pool or basket. I know from reading some EEC documents that there are financiers in Europe who are interested in this.
The Minister says in his speech that the first requirement is to secure the right financial and economic climate for the creation of employment. That is the one thing which was not included either in the budget or the Finance Bill. There is a story told about the couple who waited to get married until they could afford it. The door of the church was opened and a clanking of crutches was heard as the two approached the altar. If you wait until the finances are right for making a drive to create employment then you will have waited too long. You will not be able to achieve the purpose which was supposed to be the basis of your financial activity in the first place. The reference to the couple who waited to get married until they could afford it is apposite and to the point.
The Minister talks about wage cost competitiveness. I agree it is very important. We are inclined to talk about our borrowing as a percentage of our GNP. We must also talk about our borrowing as a percentage of our exports of goods and services. As has been said by Deputy Skelly, our exports have been particularly buoyant, but the buoyancy is on a narrow base, mainly in the chemical industry. In the data office equipment electronic area we have been very successful over the past year. There are other areas as well. We must never forget our agricultural exports, and so on. Reckoning borrowing as a percentage of our exports of goods and services may carry certain little dangers, seeing that the export is so narrowly based. It is important to take cognisance of it, and it is important that the Minister for Finance should take cognisance of it.
There is a table in this week'sEconomist giving the interest payments on external debt as a percentage of exports of goods and services. The story the graph shows here is a sad one, in that the percentage is as high as 45 in some countries. I am sure every Member of the House who takes an interest in economic affairs would be able to name the countries. In Brazil the interest they pay on their exports of goods and services is up to 45 per cent. In Argentina, Mexico, the Philippines, Sudan, Costa Rica, Turkey, South Korea, Nigeria and Yugoslavia the percentage goes down to a little over 10 for Yugoslavia.
I have a question down to the Minister about this. I do not know whether it has appeared on the Order Paper yet. If we are looking for a grain of optimism in dealing with our economic affairs, perhaps we could look at that. I may be wrong. We have big interest payments per annum. I should like to see the figure. I do not think we are in the kind of league I have just mentioned.
I want to refer to cost competitiveness and price competitiveness. I referred already to the advantage we have in the UK market because the punt reads roughly 80p as against sterling. There are disadvantages when we are importing raw materials. I suppose the ideal would be to import raw materials from areas where the punt is a stronger member of society, so to speak, perhaps the EMS if possible, although transport costs would come in there, and to export to where we have the exchange rate advantage.
In the context of the discussions which are about to begin with the trade unions and the volleys which are being fired by the Government at the trade unions and the Congress of Trade Unions, and the counter volleys, perhaps we are attaching too much importance to the issue of wages and salary only in relation to competitiveness.
On page 88 of the ESRI Employment and Unemployment Policy for Ireland we have indices of the price competitiveness of Irish manufacturing exports. It is a strange story, because we were more than highly competitive in the UK market. I have here a graph which nearly went through the ceiling in 1980-81 for competitiveness in the UK. The very strange thing is that in the EMS from 1975 to the present time, with a little spurt up here and there, we have been losing our price competitiveness. We should think about this. I am sure the 20 per cent advantage we have in exchange rates is responsible for a great deal of the high price competitiveness in the UK market.
I am quoting from page 90:
The decline in competitiveness against the EMS countries, and the gain in competitiveness against the UK, remain the main features if such adjustments are made.
There is an interesting table 6.1 on page 90 which gives unit wage cost competitiveness indices for Irish manufacturing industry from 1975 to 1982. It has its own lessons with regard to the Finance Bill. I do not intend to go into it, but on costs it says:
There is relatively little information on non-labour costs in Ireland compared with other countries.
That is a deficiency we should try to make up. The reason I am talking about this is that the only thing referred to is the labour costs, the wage deals, such and such a round. Energy, telecommunications and transport are all highly relevant also, and others about which, as the study says, we do not have very much information. The report says that the conventional wisdom is that electricity charges are very much greater in Ireland than in other EEC countries. This was not always the case. In 1978 at comparable load factors electricity charges here were relatively cheap by EEC standards. Since 1978 there has been a deterioration to the extent that, at comparable load factors, charges in Ireland in 1982 were close to the very highest in the EEC. I am talking about this in the context of what is starting up — a row between the Government and the trade unions.
The report says that since 1982 the situation has deteriorated. There are all kinds of implications for the production of energy. I want to refer to a lecture Dr. Whitaker gave recently in which he pointed out the massive capacity for over-production the ESB have, and the problems which will arise from that. The House already knows about some of those problems, for example, in connection with the turf generating stations in the midlands. I will come back to that again.
In regard to oil they say that residual fuel oil carries the second highest EEC selling price. Again, so far as cost competitiveness is concerned that must be taken into account. The report says: "Diesel oil selling prices are also second highest in the EEC." Again, this is highly relevant to the Finance Bill because that Bill has provision for increasing the prices of diesel oil. "...there has been a marked deterioration in the position relative to the UK and West Germany over time. This deterioration has resulted because of taxes and duties, since excluding these the base price improved its relative position." The UK are a big market and West Germany are a growing market. "Heating fuel oil selling prices of Ireland were the lowest in the Community, only because of the relatively low level of taxation on that particular fuel." Again, there are telephone costs.
If we are talking about competitiveness as the Minister is, we must not talk either about cost competitiveness or price competitiveness in isolation. We must not home in on the wages and salaries end alone, important as they may be. One could perhaps argue that they are the most controllable factor, on which we can make the most impact, but that is not an excuse for ignoring the other factors.
I refer to the exercise, which I think would be illuminating as far as this House is concerned, of reckoning our interest payments as a percentage of export of goods and services. It is important to find what makes success in exports — cost and price competitiveness yes, but there is more to it than that. I quote from the report:
In relation to export performance it needs to be said that the statistical relationship between competitiveness and export is not a neat and tidy one.
It is important to realise that.
The determinants of export capacity in the long run have related largely to the decisions of firms (mainly foreign) to locate in Ireland.
Costs — and wage costs in particular — are important to our developing exports, but they are not the exclusive factors to be taken into consideration. I am repeating myself there, but doing so deliberately.
...it would be simple-minded to expect that a strategy which relied on improvements in relative costs alone would lead to a resolution of the employment and balance of payment difficulties facing the Irish economy.
Even when an economy has a comparatively favourable cost position in products that are already being manufactured, exports do not take place without a measure of entrepreneurial and marketing effort.A fortiori they do not take place automatically for products in which the country has a potential cost advantage which remains to be exploited.
It is important to realise that. I shall give from the commercial world one example which has a strong relationship to my constituency. Bailey's Cream is one of the great commercial successes of recent years. There are, of course, Bailey's, Emmets, Waterford, Carolan's but the market leader is Bailey's. We had excellent grass-produced cream, not an artificially induced production. We had the whiskey which to my mind is the only whiskey in the world, but I am prejudiced. Whiskey started here and, to my mind, it still stays here. We did a little harm by weakening its strength down to 13 u.p., supposedly to help the tourists, but I believe the best way to help the tourists would be to leave the whiskey stronger. We had the 24 u.p. whiskey, we had the cream and the formula. However, it is a splendid exercise of marketing which put that product into every hotel and every bar that think anything about themselves. It is an up-market product in Europe, and particularly in the United States where it was the thing to have in the cocktail cabinet, although that is perhaps a dated description. We had advantages — the splendid raw materials, the idea, but above all we had a powerful marketing effort in that regard. As this study says, you may have an excellent product but the world will not come to get it. You have to go out and sell it. The conclusion, therefore, is that cost competitiveness is a necessary but not an exclusive condition for success on the export market.
I am again hanging my remarks on the reference made by the Minister to the damage done by absenteeism and industrial disputes. Again, we tend to hammer our work people. I shall read to the House some statistics on this matter in a moment which will indicate that we are not as bad as we believe ourselves to be. I opened a factory in my constituency where the main interest is a European one. I should not have been listening to a conversation which took place immediately following on the formal ceremony, but overheard one European asking his man on the ground in my constituency about Monday morning absenteeism. No doubt the man questioned did not tell the local trade union official this, but his reply was "We are much better here than you are in the mother factory". I was pleased to hear that, but made no comment because I was earwigging.
I have here all the articles written criticising the report. I am not holding a brief on the report but am saying that it is trying to do probably what all should be doing, thinking out every possible way for creating employment in our society. We have that duty and obligation and I am not speaking in a party political sense. That is the duty of the Government because that is where the power lies. That is the duty of the Opposition, because we were elected to this Parliament, and that is the duty of every citizen. We tried to get that message across through an overt Fianna Fáil programme at Christmas to get people to buy Irish goods, so that more would be employed in Irish manufacturing.
The House will be interested to hear the absentee rate in the following countries: The Federal Republic of Germany, 5.7 per cent; Sweden, 5.6 per cent; Czechoslovakia, 5.5 per cent. They are the top of the league, according to Table 6.4, page 98 of the report. There is nobody in this House who is not aware of the achievements of the Federal Republic of Germany in manufacturing, in exports, in giving strength to their economy. Many people hold up Sweden as the paragon of western democracies as far as development is concerned. Czechoslovakia, 5.5 per cent — that is a country where the ideology is different — but apparently they are in the top three of the league; France 4.6 per cent, Norway, 4.6 per cent, Ireland 4.6 per cent, the United Kingdom 4.3 per cent, Yugoslavia 4.1 per cent, the Netherlands 4 per cent, Spain 3.8 per cent, Austria 3.7 per cent, Belgium 3.2 per cent, Italy 2.6 per cent, the United States of America 1.9 per cent and Canada 1.1 per cent. Obviously that is the most recent information available to researchers. Therefore from the point of view of absenteeism we are not the best but we are far from being the worst.
The study is narrower in relation to sickness rates and gives cause for worry. In 1954 the sickness rate in the Republic of Ireland was 6.6 per cent, in Northern Ireland 6.8 per cent and in Britain 4.5 per cent. In 1966 it was 7.9 per cent in the Republic of Ireland, 8.1 per cent in Northern Ireland and 4.8 per cent in Britain. By 1976 we were deteriorating, and badly, in that the rate in the Republic of Ireland was 8.5 per cent — the first time we had a higher sickness rate than in Northern Ireland — almost double the rate in Britain. It must be remembered that our society was not subjected to the kinds of pressures to which people were being subjected in the Six Counties — in 1978 the rate in the Republic of Ireland was 10.5 per cent, in Northern Ireland 9.6 per cent and in Britain 6.1 per cent. If we are talking about competitiveness those are areas of which we must take cognisance.
In the second paragraph of the Minister's introductory remarks — and this is related to my theme — he said there are provisions in the Bill before the House designed specifically to encourage employment, that there are now grounds for optimism, that the worst is over — but the melody lingers on — and that the employment outlook will gradually improve. I hope that is true but it appears to me to be flummery. There is no specific provision in this Finance Bill, nor was there in the budget speech, plan or policy to indicate hard thinking with regard to the encouragement of employment. Deputy Skelly even referred to the niggardliness of the few little references in the Bill with regard to employment. The Ceann Comhairle had to take him to task because, in order to be easy on his Minister, he turned the blame onto the draftsmen. There is nosursum corda in this Bill, as there was not in the Minister's budget speech; there is no sursum corda with regard to the improvement of the employment position here.
We on this side of the House accused the Government of having swallowed wholesale the diabolical economic policy of Milton Friedman. I suppose we are not being totally just to the Government in that they are not 100 per cent sparkling blue monetarists, but the general principles of monetarism are those that are being applied. I do know that in our schools of economics there has been a bit of a heave towards monetarism. I suppose this is something one might expect, as Deputy John Kelly might say — what they do in the United Kingdom today we try to do yesterday. I should make it more colourful — I am doing an injustice to Deputy Kelly by using such pedestrian language — but the fact is that those are the lines on which our economic wagon has been travelling. I want to tell the House what the harbingers of monetarism are doing. One of the basic principles is the control of money supply. I will give the money supply and its percentage rise of a year ago for the two countries in the world at present pioneering monetarism. The narrow money supply in the USA — one can call it what one likes; there are different names for it in different countries — was plus 8.5 per cent in the past year, and the broad, plus 9 per cent. In the United Kingdom it was plus 10.5 per cent on the narrow and plus 9.9 per cent on the broad in the last year. I think I read last evening that with the exception of Italy and Australia, that constitutes the greatest expansion in money supply there has been over the last year in the following countries: Australia, Belgium, Canada, France, West Germany, Holland, Italy, Japan — the narrow figure is not available for Sweden but the broad was 6.8 per cent (and it must be remembered that Sweden is a socialist country), Switzerland, the United Kingdom and the United States of America. If we want an argument in this House to impact on the Government about their fiscal and monetary policies one has one there where the godfathers of the system are expanding money supply.
The Minister in his introductory remarks also referred to the Commission on Taxation. I have sympathy with the Minister — he is not a man who attracts sympathya priori anyway — with regard to the recommendations of that commission. I would go along with what he says for the most part, that one cannot do it in a hurry. What Deputy Skelly said about policies being started and then continued is significant and relevant in these circumstances, namely, that to do something with regard to income taxation one needs a consistent and fairly long spread of government. Of course the fact is that the spell in government is short and we on this side are very anxious that it should be even shorter and, as Joxer would say, vice versa. There is no doubt at all about that. But the shortness of the spell is one of the weaknesses and I appreciate what the Minister said. He will give his views, he said, on this report on another occasion.
To have a radical overhaul of the taxation system in any particular year is not perhaps so simple since the budget and the Finance Bill are taken for only one year. It is a very difficult situation. I admit that. There is no question about it. In a sense a dictator who has ten years in which to plan is in a stronger position. However, if he is on the wrong line, as I think this Government is fiscally and financially, then there is no way of shifting him. That is the weakness in that system. I think it is a pity that Dr. Miriam Hederman's work has not been put into effect. I read the first volume. We have just got the second volume on our desks. It would really need all-party agreement in order to have anything effective done with regard to taxation and the figures I read out fromIris Oifigiúil would indicate the necessity for a very hard look. There we saw there was a fall back in customs and excise, a fall back here, there and everywhere, but income tax is up and so is value-added tax, both carrying the can for everything else.
The relief in regard to the £25,000 for long term risk capital — I take the point Deputy Skelly made — should be welcomed by both sides since it can lead to new trading or the expansion of existing trading. In this regard there has been some change from the date of the budget. Certain services were mentioned. When we were in Government we were considering the whole area of services. I understand that seven out of ten employed in the United States, a strong country economically, are employed in services of one type or another. For that reason we should not be ashamed of extending our services in order to increase employment. We seem to have pitched services into a kind of corner. We adopt hushed tones when we talk about increasing employment in the services. I just cannot understand it. I do not think it is a valid approach. I think we should encourage the development of services. When we were in Government there was talk of some international services, like the American Express, getting headquarters here. We should attract people like that because they will bring development and in that development there will be employment.
I have had a letter from someone who was recently in Ethiopia and the writer said CIE had a chance of getting a contract in Addis Ababa for a development there. I do not want any cynical remarks with regard to that. Some semi-State bodies have already exported their services to the Middle East and so on. I just make the point about CIE to indicate that all our semi-State bodies should be trying to get contracts, contracts designed to give employment to our citizens who, according to this report, will be coming on the market at the rate of a future 25,000 to 26,000 extra qualified personnel per annum.
I am glad the Minister dealt with groups of workers and co-ops in his speech. I know the co-ops were very worried about some of the sentiments expressed in the budget speech of the Minister. Those Deputies who peruse the co-op magazine will have noticed how many co-ops are in the top 500 companies at the moment. Everything that can be done to strengthen them, particularly in their job creation activities, should be welcomed. I was glad to hear on the news on the way in to the House today that Bailieboro Co-op had about a 45 per cent, £1.5 million, profit last year. Now there you have diversification. You have an engineering section. You have a cream section, a food section as well as the basics associated with a co-op.
There is a beauty of a sentence here. In relation to bond washing the Minister said the announcement brought on a strong overreaction which temporarily disrupted the fiscal market but that the market had settled down and is now functioning normally having absorbed the change. I think the last sentence is a beauty. It is, of course, one of the functions of the market to adjust to change. I think that sentence has the genius of simplicity. I agree with the Minister in what he did.
With regard to tax relief for money expended on education and the arts I welcome that provision. Here I would like the House to take note of what Mr. Potterton has said very bitterly recently about the weakness in our legislation in that we cannot stop very valuable works of art from leaving the country. We have no law to stop them. He was, I think, referring to a statue of Venus in Westport House which turned up at an auction in Christies. This is an area to which we should direct our attention. Works of art are capital and, if they are allowed to leave the country, it means capital is scattered and lost to the country.
With regard to the relief for toll roads and bridges, I think this is an excellent idea. There is a labour content in the construction of bridges and toll roads. In these there is a strong employment content, and I would hope the coverage here would be extended. The House will remember we had a major programme of decentralisation involving many provincial towns up and down the west coast, in the north midlands and midlands, in the south and particularly in some areas in my own constituency along the Border. I would appeal to the Minister to extend this tax relief for that particular sector and encourage privatisation so long as that decentralisation is conserved. It would be a welcome boon to the moribound construction industry. At regular intervals we get statistics from the Central Statistics Office on the numbers unemployed. Sticking out at between 40,000 and 50,000 month after month is the huge number of skilled people in the construction industry who are idle. This is a haemorrhage which can be staunched by intelligent investment in worthwhile infrastructure. I shall refer to Dr. Whitaker's lecture later. That is one of the recommendations he makes.
If I could sow the seed in the Minister of State's mind or in the minds of his officials to have a look at that it would be a good day's work. I am not advocating any kind of foolish investment or one from which there did not flow direct economic and social benefit to the country. The energising of the construction industry must carry economic and social benefit to the state.
Section 84 loans has been covered adequately by various speakers. I am glad that services activities are included. However, nobody spelled out which ones, and if I remember correctly the Bill stated "certain activities". I do not know if it is tied to "international" or not. It is to be welcomed if the end result is an increase in employment. My stamina is reasonably good but I nearly collapsed when reading through all the provisions in which this section 84 concession is wrapped. It is there in paragraph after paragraph, as if there was a crowd of chefs around a dish and one saying add another little ingredient there to block off this chancer and another saying add this little ingredient here to stop that chancer. It is hedged with caution, but no one can cavil if the main purpose is to protect the nation's finances and see to it that the concession is used to the benefit of the community.
Great play was made about principal private residence and developments. I have no argument with what was done. Is there any idea of what the gain to the Exchequer will be as a result of this? It looks like something to catch the eye, with very little relevance. Only a few people will be affected, but it is good as a propaganda exercise.
To be quasi-parochial for a moment, I have written down in my notes — pints, petrol, electrical goods and electronics. I do not have to tell the House what they mean with regard to Border areas. The price of all those and tax, whether VAT or excise duty directly imposed by the Government, has put us at risk as an economy. I do not want to sound alarm bells. I and my fellow Deputies from the Border areas have spoken about this so often that there is a great danger of the wolf, wolf syndrome applying. I put it on the record that the effect on business is catastrophic. As far as my constituency and other areas around the Border are concerned, when one adds to that the gash that has been inflicted regarding the development of the dairying industry one gets an idea of our economic plight as of now. Our young farmers were on a course to raise productivity from the national average of 700 gallons per annum per cow to 1,200 gallons. Many of them had achieved that and many were on a five year plan to achieve it. That has been guillotined. This is an area which has been bled by emigration since the Famine and has lost 30,000 or 40,000 people since we won our last All-Ireland. That is something which should give the House thought and the Government should take direct and positive action to try to remedy it.
It is a reflection on the Minister's speech that there was so much time given to talk about betting duty. No comment, a Cheann Comhairle. The Finance Bill and the budget should be an instrument of resurrection and hope. It should be a stimulus to an ailing economy. The money supply in the UK and the US has been increased by respectable percentages in the last year and they are the powerhouses of monetarism. Could the Minister not look at something other than the books? Could he not get something else? Make no mistake, he is a cold fish; but he is an intelligent man. He knows exactly what should be done. I am sure, unless they have become dumb altogether, the Labour Members of the Government must be telling him that the unreformed Scrooge should not be the leading philosopher with the country in the plight it is in.
There is 8 per cent VAT on clothing. In the area I referred to that was the only sector where we had a little advantage and, damn me, but they took it off us this year. The best of boxers, like Cassius Clay, get punch drunk at the end of their careers. The economy in my area, as blow after blow lands on its head, is becoming punch drunk. There can be no doubt about that. I am not exaggerating. The Minister is giving extra powers to VAT inspectors, God save the mark. They must get the powers to do their job. For God's sake, let him get somebody of reasonable courtesy and urbanity in his Department. I am sure they are there. Poets, writers and philosophers have come out of the Department of Finance, believe it or not. I hope the Minister will get someone to teach his inspectors what to say, something that the Minister for Social Welfare did not do before the last blitz on the unfortunate people who were drawing unemployment assistance.
In my area, where they are trying to push ahead a little with tourism, if they go to buy an overcoat that cost £100 last year it will cost £108 this year, and they will wear it to protect them when the weather gets bad on the Sheelin or Oughter or any of the other lakes or rivers. I am glad that there was a reduction from 23 per cent to 18 per cent on the hiring of boats, etc. I am glad also that there has been a continuation of relief with regard to inheritance by young farmers. That has exercised the minds of Macra na Feirme, the ICMSA, the IFA and the Department of Agriculture, and there was a danger that if this was not continued the transference from father to son would be delayed again on many farms.
The final paragraph of the Minister's speech is a joke. The Minister must have left the room and the only humorist left in the Department of Finance wrote that final paragraph. The Minister said that this Bill was important legislation which provided for substantial improvement in our tax code. He said that in the course of his Budget Statement he set out the principles that would determine the Government's tax policy over the next few years. In regard to Dr. Miriam Hederman's work he said the direct opposite, that he would make a statement some other time. He said that we were working towards a more equitable and efficient tax system based on a wider tax base and lower rates of taxation. I will not let people in my constituency read that paragraph because my credibility would be gone; indeed, if I took that speech in a bag to a meeting my credibility would be gone. The Minister said that we had a long distance to go yet before we could claim that these objectives had been achieved but progress was being made and the Bill before the House was evidence of this.
I said that I would refer to a lecture that Dr. Whitaker gave recently. I want to make way for a man who has particular expertise in agriculture and I do not want to deprive him of an opportunity to speak. Dr. Whitaker in an address which he gave to the Confederation of Irish Industry's National Council recently had a number of things to say. In fact, one could talk for two hours on what he had to say in that address. I will tell the House in a moment why I am referring to it. Criticising the budget and so on he said:
Although current expenditure nearly held in real terms, the current budget still tops £1,000 million...and seems impregnable.... The national debt is now 120 per cent of GNP and involves debt service which takes 37 per cent of tax revenue....
I was referring earlier to a percentage of export of goods and services. We should have a look at that, and anyhow I have put down a parliamentary question about it. Dr. Whitaker continued:
The State's borrowing requirement is still high and vulnerable to exchange losses....
And also vulnerable to what happened in 1983, namely devaluation which added to the external debt. Then he said, and I wish he had expanded on it a little:
The public capital programme, although down in real terms, still contains doubtful items....
He did not exactly specify them. Now I will give the reason that I said I would refer to this. He talks about pay and the need for moderation, and the trade unions themselves will admit that. My main thesis in the earlier part of my speech today was that it was not the only thing that impacted on competitiveness, whether cost competitiveness or price competitiveness. Again I refer to the ESRI report which in this House, because it did not fit in with the philosohpies of the Government, did not get the credit it deserved in addressing itself to employment and unemployment problems.
Dr. Whitaker in the course of this address talked about productivity being good. I want to make a point about that which occurred to me years ago. I do not know whether it is practicable, but we are all agreed on the importance of exports. We are all agreed that manufacturing industry for the most part produces what we export. On the agricultural side it should be more than it is. However, what if we showed our appreciation of the importance of the exporters by giving the workers in manufacturing industry, whose products are exported on which we all live, some income tax concessions? We give the entrepreneur an income tax concession. Could we not think of giving a concession to the worker in manufacturing industry? That would have several effects. It would point up the importance in our economy of manufacturing exports. It would recruit very good people for the factories concerned because if they were getting a tax advantage they would be very anxious to work there. It would raise consciousness of the importance of this sector in the community. It would attract to the industry the very best people who would be anxious to be well paid and get these concessions. I can hear people asking why they should have that advantage, and so on. All right, I am prepared to argue that also. It would be discrimination amongst citizens, but we discriminate amongst manufacturers for the advantage of the manufacturers.
Regarding the capital side Dr. Whitaker said:
Telecommunications outlay has passed its peak. Energy expenditure has left huge overcapacity in ESB.
Moneypoint will cause a great deal of trouble, apart altogether from the overcapacity and the trouble it may cause in the generating stations in the midlands and the west. Also, it is in a south-westerly corner. I intend to put down a parliamentary question today about acid rain. The emissions from such generating stations have caused a great deal of acid rain and damage to forests and the environment all over Europe. The ESB should be cognisant of it and take steps to remedy it. However, that is an aside. Dr. Whitaker continued:
The probable tailing off of some large expenditures—
Moneypoint, of course and telecommunications——
and the curtailing of the loss element in others should provide room for some increase in effective unemployment-reducing expenditure on roads and other infrastructure.