That Dáil Éireann approves the policies set out in the National Economic and Social Plan—Building on Reality.
The Government's plan Building on Reality 1985-87 is a statement of the Government's general policies for the next three years. In preparing the plan the Government have drawn on advice from many expert sources, and in particular from the National Planning Board, who published their report Proposals for a Plan 1984-87 last April. The social partners and various interest groups have offered views and policy proposals on many areas and these have been carefully considered by the Government.
In making the choices, many of them difficult, the options were limited. It has not been possible to walk away from economic realities and serious budgetary problems or pretend to a belief in instant solutions. Bogus remedies have been avoided.
The challenge facing the nation is immense. In some ways, it is greater than when the first economic programme Economic Development was published in the late fifties. At that time, while there was a crisis of national self-confidence after a period of comparative economic stagnation and large-scale emigration, the external environment was favourable and the world was experiencing a long period of economic growth. In recent times, conditions have been entirely different. The Irish people chose by referendum in 1972 to participate fully in the international trading economy. Full membership of EEC has brought disciplines and costs, as well as benefits. Ireland has become a more open trading economy, more fully exposed to external economic events, at a time when the world economy has been severely disrupted by two major recessions. Our population has been rising, and emigration is low by comparison with the pattern of the fifties. The structure of employment has changed and social, health and educational services have been greatly improved and extended.
Unemployment, with the human misery it entails for so many people, has re-emerged as the major problem. The recession has meant that job opportunities have been diminishing at a time when young people were entering the labour force at the fastest rate in Europe. Public expenditure and taxation have been rising sharply while at the same time demands were being strongly made for both lower taxation and more public expenditure which could only be sustained by more and more borrowing.
On taking office, therefore, the Government were faced with critical policy choices and apparently conflicting priorities arising both from the impact of the recession and from the way the economy had been managed in previous years.
The Government faced that challenge with a range of short-term corrective measures, including difficult decisions in the 1983 and 1984 budgets. The aim was to create the conditions for economic recovery, to minimise any adverse effects on employment and growth, and to preserve the essential fabric of our public services in health, social welfare, education and other areas. Now, Building on Reality contains a set of decisions and priorities for the effective continuation of the Government's work in the medium term.
Last year about this time, I opened a debate in this House on the economic situation on behalf of the Government. In doing so, I referred to the twin dimensions of the task facing the Government; first to the dimension of control which was and is necessary if we are to continue to exercise discretion and choice at national level in the management of the economy and to sustain the social progress already achieved, and secondly to the major need for a creative dimension in national policy if we are to obtain the sustainable and worthwhile jobs that are required by our people in the years ahead. These themes are now just as relevant to the presentation of the national plan Building on Reality which embodies the overall strategy of the Government, both in terms of general policy directions and specific decisions for the next three years.
The phased correction and careful planning of the public finances are still of vital importance. There are and will continue to be major constraints and limitations on policy and on the choices that can be made; these arise from the effects of recession, from the burden of accumulated debt both domestic and foreign, and from the necessity to halt the growth of the overall level of taxation. At different times, in the course of the past 22 months the Government have been criticised for being over-concerned with "bookkeeping", with "balancing the books", with being obsessed with numerical financial targets rather than the real problems of our people in their daily lives. The facts have never sustained this line of argument. On the other hand, the Government have been criticised for not taking more severe action on the public expenditure side. Very often the people or interest groups making this criticism have done so on a general basis, without being specific on where and how public expenditure is to be cut or if they are specific, the direction favoured for cuts often has been, at least by implication, those services in the areas of welfare, health and other areas so vital to the poor and disadvantaged in society. In addition, calls for "reflation", from some quarters at any rate, have been accompanied by clear signals favouring major and indiscriminate restrictions in the social services. The Government reject this approach.
In the plan, the Government have laid out a set of general proposals for the public finances that are consistent with the economic and social policies chosen. The earlier aim of phasing out the current budget deficit by 1987 was always to be seen in the context of taking due regard of prevailing economic conditions, and in particular to the importance of achieving economic growth and dealing with unemployment. The broad overall budgetary targets were met in 1983; we expect the 1984 target to be achieved also. Circumstances clearly dictate that the phasing out of the current budget deficit by 1987 is neither possible nor desirable in terms of public expenditure cuts or increased taxation. It would be immensely deflationary.
Following consideration of the report of the National Planning Board, and in view of the current state of the economy and the trend of interest rates, the Government aim at a position whereby in 1987, there will be:
—a reduction or at least a stabilisation of Exchequer foreign debt and foreign debt servicing, both as a proportion of GNP;
—a halt to the growth of the overall National Debt/GNP ratio;
—a reduction of the balance of payments deficit to a manageable three per cent of GNP;
—a reduction of the Exchequer borrowing requirement to less than 10 per cent of GNP, a level last attained in 1977;
—a reduction of the total public sector borrowing requirement from 17 per cent to just over 11 per cent of GNP;
—a reduction of the current budget deficit to five per cent of GNP.
These objectives are related to the specific assumptions listed in the plan, to the other targets chosen, and to the successful implementation of the policy choices made.
These aims show clearly that the Government are not obsessed with a set of financial targets at the expense of the unemployed, the weak or the poor. They mark a significant step forward in the essential task of correcting the nation's finances and represent a realistic framework within which policies for growth and employment must be developed.
The overall financial situation rules out apparently "easy" solutions by indiscriminate additions to public expenditure involving borrowing in excess of the limits specified. This is so when we examine the facts of the situation. For instance, the National Planning Board report pointed out that in the EEC the average net borrowing of general government for 1975-83 was 4.4 per cent of GDP whereas in Ireland it was 12 per cent of GDP, or almost three times the EEC average. Debt service now accounts for some one-third of total tax revenue and foreign interest payments from the Exchequer are some £700 million in 1984. In 1985-87 much foreign debt will have to be refinanced and additional new loans raised.
Nor is there any answer in increased taxation. The Government have decided that the overall level of taxation cannot be allowed to rise further. There is considerable scope, however, for both changes in the tax system and for new taxes considered necessary in the pursuit of equity, and the plan states several decisions in this area.
The broadening of the tax base and the reduction in the need for social welfare payments through increased employment will aid the process of financial adjustment. While the Government foresee a steadily expanding economy for the next three years, this alone cannot ensure adequate correction in the national finances.
Therefore, in formulating the plan the Government have examined carefully all the major areas of public expenditure both current and capital with a view to achieving economies that are the least damaging socially or have the minimum adverse effect on employment, and devised new measures, for example, in relation to roads and the construction industry that will have a positive effect on employment.
In fact, the plan along with the statement of the Government's industrial policy which preceded it and other Government decision in the course of last year contain a wide number of new and creative measures aimed at employment creation. For their successful implementation, widespread support in the community at large is required, as well as active and continuing consultation with the social partners and a firm will and commitment on the part of the Government.
I want now to refer to the key role of the public sector in ensuring the success of the plan's overall objectives. First, this Government is not anti-public sector, ideologically or otherwise. Secondly, however, the public sector cannot be immune from keen public scrutiny and concern at its performance, both in the Dáil and the Oireachtas Committees and throughout the community. Thirdly, this Government are committed to ensuring greater efficiency in the public sector generally and at establishing monitoring and control procedures that are effective. Fourthly, a substantial proportion of the adjustment called for in the plan falls on the public sector.
I now wish to refer to the semi-State bodies that deal in goods and services in the commercial sector of the economy. Many of these enterprises have experienced serious difficulties in recent years, partly arising as in the rest of the economy from the effects of recession and adverse cost movements. However, in different enterprises other factors have compounded the situation; for example, confusion about objectives and about the commercial, social or strategic roles of various organisations, deficiencies in planning, project design and execution, the expectation by boards, management and employees that Government would in the end support clearly non-commercial operations and honour debts, and a lack of flexibility in adapting to market situations. In the Government's view, commercial public enterprise has a key role to play in the future; this means addressing the weaknesses that have arisen and laying major emphasis on developing modern industry, on commercial viability and on the earning of adequate profits. As stated in the plan, capital investment must be more carefully directed with returns clearly sufficient to justify the allocation of resources to new projects.
Legislation to establish the National Development Corporation is being prepared. The corporation is a primary instrument in translating the Government's philosophy and approach to direct State involvement in industry into practice. The NDC will have a wide ranging mandate in industrial development. For example, it will have key functions in the development of structurally strong Irish firms, in initiating itself new commercial job creating projects and in stimulating projects involving productive employment in the existing public sector, and in acting as a State investment company in existing or new private sector enterprises, or in joint ventures with the private or co-operative sectors, particularly in the advanced technology area. The corporation will become involved in natural-resources based industry; in stimulating the development of food processing, in forest products and in high technology projects. The NDC will deal only with commercial operations and will strengthen indigenous industry and enterprise. The Government will be ready to make funds available to the NDC for commercial projects as and when needed.
It is clear that more enterprise and innovation is required if we are to get the sustainable jobs that are needed. The plan provides a framework aimed at creating favourable conditions for investment and growth and should assist the private, co-operative and the commercial public sector to create more productive jobs in the years ahead. The corporation will need time to develop its expertise to get suitable projects together, but I have no doubt that it can be made to work, and that it can re-introduce the ability to take risks to the commercial public sector bringing a new dynamism to the task of job creation.
I believe that the potential of the commercial public sector, with jobs that will last and stand the test of the market place, can and must be built in the years ahead.
I would like now to refer to the many thousands involved in health, education, local authorities, the Garda and Army, those working in Government Departments, and in public administration generally. Most of these workers provide services that are absolutely essential for the community at large, and they do so with dedication and integrity. They work in areas where market forces, either from the nature of the activities involved or by deliberate choice, do not operate. This does not render their work any less valuable or important — in fact any honest evaluation would suggest that in many cases the contribution to society made by the public service far exceeds that of many types of activity in the market sector of the economy.
However, the structures of the public service have changed little over the years, and now, at a time of scarce resources nationally, it is necessary for efficiency to be improved, for new and better standards of management and accountability to be developed, and for the effectiveness of public expenditure to be more thoroughly analysed. In the plan it is stated that a White Paper is near completion on the management and operation of the public service. It is clear that a more efficient and effective public service requires the co-ordination of policies on manpower, personnel management, organisation and pay. It is in this context that over the period of the plan, a reduction in public service employment is projected to occur; redeployment, retraining, the search for better ways of delivering services to the public and better methods of determining priorities are all factors to be considered carefully.
Pay accounts for the largest share of voted current spending and achievement of the Government's public expenditure targets requires the growth in the public service pay bill, especially in 1985, to be severely restricted. However, the setting of an overall cash allocation for public service pay provides the opportunity for consideration of the appropriate pay structures within the framework of the allocation. It must, indeed, be recognised that public service employees have, in the past been willing to show moderation, most notably in 1982 when the then Government unilaterally amended the public service pay agreement and in a responsible attitude to pay claims in 1984. Given the share of resources pre-empted by debt service, in the plan the Government have sought to achieve an appropriate balance between the need to allocate resources to employment, to essential transfers in the social services, and to public services pay and pensions.
The issue of employment is the central concern of the plan. Since 1980 there has been a decline in the numbers at work of some 40,000. We are now at a turning point, and prospects for increased employment are far better. Inflation has fallen substantially from over 20 per cent in 1982 to about 8 per cent, manufacturing output and exports, particularly in the new industrial sector, are experiencing rapid growth, and the balance of payments has improved significantly.
In all sectors of the economy, there is need for greater initiative, innovation and managerial effectiveness. Competitiveness is vital to the success of the plan, but this concept must be applied far beyond comparisons of movements in money wage rates. While in the short term, with a given technology, movements in money wage rates greater than those of our competitors will tend to reduce investment and increase unemployment, critical additional factors at the level of the enterprise include efficiency in production, adequate quality control, marketing skills, good customer service and a capacity for research and development in new products or methods of production. In both the public and private sectors, there is need for adequate and mutually understood structures for communication and consultation between management and employees.
In the modern enterprise, survival is often dependent on a willingness to develop a commitment to flexibility and change whether in methods of production, work practices or product innovation. The main responsibility in this respect lies with management; its quality and capacity for leadership are critical. In this context also, the plan recognises the importance of good industrial relations between management and employees, refers to discussions on industrial relations reform currently in progress, and notes that the aim is to achieve shortly the maximum possible degree of consensus. The Government intend to introduce new company legislation to deal with malpractices in the management and direction of companies and to act by legislation on the Fourth EEC Directive on Company Law.
Over the period of the plan, world trade and Ireland's export markets are expected to grow by about 4 per cent per annum, and a continuing strong export performance is of great importance to the success of the plan. Therefore, as part of the new industrial policy, State assistance will be directed away from fixed asset investment and towards support for export marketing and the acquisition of technology from abroad. The international environment for manufacturing industry will be highly competitive and technological change is likely to be rapid. Projects will need to be evaluated in the light of their contribution to value added in the economy as a whole — this provides a basis for increased employment through better linkages with sub-supply industries.
The Government's aim is to ensure that the environment created by tax and incentive policies is conducive to employment creation in the private sector, and as I have already said is committed to a programme of action, through the National Development Corporation and other State companies, whereby the public sector can contribute effectively to employment growth in the years ahead. In summary, manufacturing industry is expected to contribute some 13,000 net additional jobs in the period 1984-1987 and private services, where employment has held up well even during the recession, a further 22,000 without including employment in the new schemes started this year and planned for the future.
In the building and construction sector, output has fallen sharply in recent years after a major and somewhat artificial boom in the late seventies. When the Government took office this sector had become over dependent on public spending, and the inherited financial constraint meant that public sector investment could not be undertaken at a level that would offset the substantial fall that occurred in private investment. For the future, substantial increases are planned in road construction and in educational building; the maintenance of the £1,000 grant and £3,000 mortgage subsidy represent important incentives to private housing. New measures relating to local authority housing including a non-repayable grant of £5,000 for a local authority tenant or tenant purchaser buying a private house and giving up a local authority dwelling is an important innovation. In summary, employment in the building and construction sector after a number of years of decline should at least stabilise over the period of the plan.
Agriculture is still of major importance in the Irish economy in terms of output, trade and employment. Stability in the national economic environment, and a reduction in inflation and interest rates are of major significance for future development. Continuing changes in the common agricultural policy make clear the necessity for greater efficiency and competitiveness across the range of farm enterprises. Farming has now become a business, requiring maximum attention to efficient production at farm level, needing adequate training and expertise, and a close co-ordination between the producer and the processor to satisfy the needs in the market place of increasingly sophisticated consumers. While direct employment in farming must be expected to decline, the further development of the food industry, which requires careful planning at farm level, is a major priority for the Government. Controversies about the amounts contributed by farmers in taxation, which I will deal with later, are not to be confused with the vital national need for an efficient, productive agricultural sector.
New measures aimed at the developing of our tourist industry have been outlined in the plan. The Government attach major importance to the development of industries based on natural resources such as forestry and fishing. Work is proceeding on completing reviews and studies in these areas that will provide a firm basis for future development.
A range of supplementary measures to aid employment creation have been devised or are already in operation. The enterprise allowance scheme introduced this year is proving a significant success in providing opportunities for unemployed people to start their own enterprises. The Youth Employment Agency is involved in co-ordinating the vastly expanded training and employment schemes for young people under the age of 25. The employment incentive scheme has recently been revised and improved.
However, the plight of the long-term unemployed whose numbers have grown substantially, calls for additional direct Government action of a special nature. In the plan, the Government specifically reject the false view, held by some sections of society that unemployment is in some sense the "fault" of the individual involved. In fact the great majority of the unemployed are without work through no fault of their own, and are genuinely seeking a job. The Government have announced a significant initiative in the plan — a social employment scheme — directed to offer an element of opportunity and hope to significant numbers of long-term unemployed people, and in addition decided to introduce a special scheme entitled "The Alternance Scheme" offering a combination of appropriate formal training with an element of on-the-job placement in a public or private sector firm or organisation. My colleague, the Minister for Labour, will deal with the details announced in the plan during the course of this debate.
The measures in the plan and other decisions by the Government in the last two years are aimed at halting and eventually reversing the upward trend of unemployment. Already, this year, the rate of growth of unemployment has slowed significantly. The first task is to get overall employment rising again, and the Government are confident that this will be achieved. Experience in other countries of the European Community, whether they are ruled by governments of the right, left, or centre show us that there are no easy remedies, no painless solutions to the unemployment crisis. The Government are determined to avoid bogus optimism; rather the policies in the plan are based on realism and offer a measure of hope that as a society we can gradually, but decisively, again increase the number of our people at work and begin to grapple with the problems of economic and social organisation of the last decade and a half of the century.
The energy sector is important to future economic development. In the plan, the general thrust of Government policy is presented; the need for secure supplies of energy and to implement where possible a market-related pricing policy, to lessen our dependence on imported oil and to encourage the exploration of additional domestic supplies of oil, gas and coal. The distribution of natural gas to towns and cities will be pursued where this is economically justifiable. However, the cost of infrastructure must be recovered and an adequate price paid to Bord Gáis related to the true value of the gas as measured by its opportunity cost. During the period of the plan, the ESB will be completing their programme at Moneypoint. Following consideration of the report of the committee established to review ESB prices, further measures aimed at improving costs and efficiency in the electricity industry will be adopted. I want to direct my main remarks today on energy, however, to issues relating to exploration for oil and gas.
The House is no doubt aware that at various times during the last year or so, and again in the past couple of weeks, there has been much speculation, as reflected particularly in share trading, on whether or not Ireland is about to become an oil province. I would like to say that this type of speculation with the associated euphoric build-up of wild hopes is of no assistance to the national exploration programme. Of its nature, exploration is a long-term job and rewards come only after a long period of high risk investment in exploration, appraisal and development of successful discoveries.
In the long term, it is inevitable that the type of speculation to which I refer will have harmful effects and could be damaging to our efforts to encourage the major oil companies to explore offshore Ireland. Many of the speculators who gamble in oil shares have no long term interest or involvement in the development of offshore exploration.
At the present moment, three offshore wells are being drilled in the Celtic Sea. This is a real and physical manifestation of the Government's ongoing policy, as outlined in the national plan, of seeking a thorough and expenditious programme of exploration of the Irish offshore. It was in pursuance of this policy and in response to the increased oil industry interest in the Celtic Sea generated by the discovery there in 1983, that I launched our third offshore licensing round in February of this year. I remain optimistic about the success of this round and hope that through the round we will achieve the success we have been looking for since the first well was spudded in 1970.
During my tenure as Minister for Energy, every effort will be made to ensure that hydrocarbons discovered will be developed if this can be done. As far as the 1983 discovery is concerned, delineation work is proceeding. In the meantime, exploration work is also going on this year and will continue next year under existing work programmes. The more exploration drilling that takes place, the greater the chances are of identifying the presence of commercial reserves.
If oil revenues are secured in the future, they must be used in such a way that, added to our other resources, they will enable us to achieve a real and lasting economic independence. The Government intend to proceed on that basis.
The Government must, therefore, look ahead, not in terms of any one use of oil resources, but to all possible uses, which could provide the best overall return in terms of economic activity, employment, revenue and securing our national energy requirements.
Our primary consideration in formulating policies will be the national interest. It is vital that the benefits from oil should continue, even when the oil itself has stopped flowing. The House can be assured, therefore, that as Minister for Energy, I intend to apply all the effort and resources necessary to ensure that the oil exploration effort is pushed ahead as vigorously as possible.
The plan recognises that society needs a unified and integrated economic and social policy and that economic growth can be self-defeating if its effects are to maintain and re-enforce injustice. Poverty and inequality are still widespread in Ireland, and even in times of severe financial constraint, social progress is essential. In the plan the background facts common to the formulation of both economic and social policy are stated; the high proportion of our total population in the dependent age groups, our high rate of population increase and our extremely high level of unemployment. Although there is need for selectivity in the use of scarce resources, social policy is not about social expenditure only. The Government are vitally concerned with the wider question of social justice, of appropriate legal provisions and with actions aimed at tackling the structural and other causes of poverty in society.
The plan states some general principles underlying the Government's approach. While there will continue to be access for all, irrespective of income, to certain specified services it is recognised that Government assistance, in the social area, where possible and justifiable, should become more specific and more carefully aimed and delivered to the poor and underprivileged instead of using generalised measures. There must be greater efficiency and cost effectiveness in the administration of the social services, and it is important that all involved — the recipients of the services, those in the public service administering them, and the taxpayers who finance the services — should be prepared to accept changes over the years. Needs and priorities change over time and this may require the modification or phasing out of established services and structures to provide a more efficient system in the future. Nevertheless, any necessary restriction of allocations in areas of main social spending Departments and any decisions on increased charges have been chosen with care, so as to minimise hardship and protect the basic fabric of the system built up over the years.
I do not intend in this presentation to the Dáil to elaborate in detail the Government decisions in the social policy area. Rather I will refer briefly to some of the main areas and decisions taken
—in social welfare, the Government have committed themselves to keeping long term payments at least in line with inflation and short term unemployment and disability payments in line with take home pay.
—a new child benefit scheme will be introduced to unify in a single payment support towards the cost of rearing children. This will integrate the present child support schemes and will be treated as assessable income for tax purposes. In this way the effective benefit of the scheme will be tailored to take account of income levels and family circumstances, so that resources can be more efficiently directed to those in need.
—further reductions in food subsidies will be deferred until the introduction of the child benefit scheme to ease the impact on low income families of increased costs of basic foodstuffs.
—provision has been made for the establishment of a permanent combat poverty organisation to develop community action against poverty.
—in education, primary education will be a priority for expenditure, including special funding for disadvantaged areas. The major thrust of policy at second level will be in the area of curriculum reform, and at third level real resources will be increased by 1987 and the maintenance elements of grants and income limits for eligibility increased. Full time courses for young people involving basic educational training will be developed with the aid of ESF funding.
—three new Bills in relation to the care and protection of children will be presented.
—the development of health policy will be based more and more towards a preventive approach and on the provision of community care. There will be no charges for public ward treatment.
—provision for development aid will be increased by 47 per cent from £34 million to £50 million by 1987 and the share of GNP devoted to this purpose will be raised by 0.015 per cent per annum. This is not as rapid an advance as we would have wished but represents a substantial commitment for the years ahead.
In the plan, the Government have given a clear commitment to policy measures aimed at halting the escalation of the tax burden. Taxation as a proportion of GNP has more than doubled since 1960, and since 1979 the increase has been from just 27 per cent to over 36 per cent of GNP. The overall level of taxation will not be increased; while some individual taxes may have to be increased and new taxes introduced, changes will be counterbalanced by tax reductions. In personal taxation, the Government will adjust tax bands and allowances each year so that the overall income tax burden will not increase.
It is not possible at present to undertake the restructuring of the tax system as recommended by the Commission on Taxation. However, it is accepted that the tax base should be extended and this will be a priority over the period of the plan. There will be selective amendments to VAT rates, but the Government have concluded that a uniform VAT rate is not a feasible option at this time. Any adverse effect of VAT changes on the lower income groups will be taken fully into account by public expenditure and taxation policy generally.
In view of the Government, the yield from capital taxation should be increased in the interests of equity and visible redistribution of wealth in society. The base for capital taxation has been narrowed unacceptably in recent years. Progress, however, has been made in redressing the balance, the residential property tax has been enacted and while the yields have been disappointing so far, increased revenue should arise as the tax becomes a fully established part of the system. The Finance Act of 1984 instituted substantial changes in the taxation of gifts and inheritances, and capital transfers are now taxed comprehensively on a lifetime accession basis. The yield from this revised tax should grow appreciably over time. The Government introduced a significant number of new measures over the last two years aimed at countering tax evasion. These measures are now beginning to show their effect and will be pursued with vigour. It is of critical importance that the collection system is as efficient as possible to ensure that liabilities for all taxes, including capital taxes, are fully discharged.
It is necessary for the Government to devise new measures to substitute for the PLV system and to ensure that the farming community pay their fair contribution. Accordingly, a new farm tax, based on adjusted acreage will apply from 1986. It will be levied and collected by the local authorities, and full time farmers with holdings below 80 adjusted acres will be exempted from income tax from 1986-87. The new arrangements will be devised to increase the yield from farmer taxation in 1986 to about twice the level produced by the present system. This objective of increasing the yield is an absolutely critical factor and the legislation will be designed to ensure that the administration and collection of the tax will be fully effective. The implementation of the farm tax system will be accompanied by appropriate measures to ensure the effective collection of health charges, the youth employment levy and the special income levy, until it is phased out.
There is a widespread demand for a reduction in the level of taxation. However, without unacceptable reductions in public expenditure, much of which is related to services expected and availed of by the public in their daily lives, the furthest the Government can go at present is to prevent the overall level of taxation rising further. Within that framework, the taxation base can be and is being widened and the Government are fully committed to the pursuit of equity.
As I said at the beginning, the Government drew on advice from expert sources in the preparation of the plan, both from within the public service and from the National Planning Board, and the views of the social partners were fully considered. In the final analysis, however, the Government are accountable for the decisions taken and the policy thrust of the plan. However, other experts and interest groups will have different and varying views on the best evolution of policy. While a common basis of analysis may be agreed, trade union, industrial, employer and farm organisations, for example, can be expected to advocate different choices in many areas, both on the broad thrust of policy and on the details of individual decisions. The Government, in seeking the maximum consensus for the implementation of what is a national plan, are conscious of the need for appropriate consultation in the implementation of chosen policies.
In the reconstituted National Economic and Social Council, the representatives of the main economic and social interests will have an effective influence on the development of economic and social policy, and this forum will provide an opportunity for regular consultation with Ministers on economic and social policy. However, direct bilateral contact and meetings between representative interest groups and the Government and individual Ministers will continue to be necessary and appropriate from time to time to discuss policy measures.
The plan contains projected expenditures up to 1987 by ministerial groups. Expenditure on the supply services is projected to increase by £940 million in 1987 over the 1984 budget provision, but this is estimated to reduce this main portion of public expenditure by 2¼ per cent of GNP, that is, from 35 per cent to 32¾ per cent by 1987. I have already referred to the measures decided in relation to public service and parliamentary pay. In addition, wasteful and unproductive expenditures are to be eliminated and a number of other policy decisions have been taken with the objective of reducing current public expenditure as a proportion of GNP.
Allocations for the major headings of the Public Capital Programme are also presented in the plan. The structure of the Public Capital Programme will change significantly over the three years with the phasing down and completion of the ESB investment in additional generating capacity by 1987 and the finalising of an intensive stage of telecommunications investment. Adequate resources will be made available for investment in industry, and as I have already said, the roads programme will be greatly expanded with a planned increase of £53 million or 52 per cent in annual spending within three years. Overall, the Exchequer borrowing requirement for capital purposes will be reduced by less than one percentage point of GNP by 1987.
It should be noted that special circumstances will apply in 1985, with a substantial increase in debt servicing payments. In that year, the Government intend that both the current budget deficit and the Exchequer borrowing requirement are kept broadly to their 1984 proportions of GNP.
I wish now to make some concluding points. Each of the parties in this two-party Government had a major input into the formulation of the plan. What has emerged is a set of decisions and a charting of the course of policy over a three year period — a national plan which the Government are presenting to the Dáil and the people. In the light of commitments entered into in the Programme for Government and the inescapable facts of the economic and social situation facing the country, the plan represents a realistic course for the three year period ahead.
The Fine Gael and Labour Parties have different traditions and political philosophies. Both are independent political parties. This has always been the case in the past and will continue to be the case in the future. Individual party policies for the development of Irish society do and will diverge. Arrangements for participating in Government have been made in the interests of the people as a whole and for stated objectives. What has occurred in the preparation of the plan, and has been happening in Government is that enough common ground has been found and sufficient shared values exist in relation to practical short term political choices to offer a realistic set of proposals for the lifetime of this Dáil. Members of the Government will be participating in this debate over the next few days and elaborating on the plan's proposals. I do not wish to prejudge the contributions to be made by the Opposition parties and Deputies generally. Indeed, I expect that many important points relevant to the implementation of the plan will emerge.
I commend to the House the motion "That Dáil Éireann approves the policies set out in the National Economic and Social Plan Building on Reality.