National Economic and Social Plan: Motion (Resumed).

The following motion was moved by The Tánaiste on Wednesday, 10 October 1984:

That Dáil Éireann approves the policies set out in the National Economic and Social Plan —Building on Reality.

Debate resumed on amendment No. 1:

(1) To delete all words after "Dáil Éireann" and substitute the following:

"deplores the failure of the Government's National Economic Plan to provide a strategy for reducing the overall level of unemployment; condemns the continued refusal of the Government to establish tax equity, and particularly its failure to ensure an adequate return from the business, farming and self employed sectors; expresses serious concern at the additional cutbacks proposed in the public service; regrets the failure of the Government to take into account the principles expressed in the recently published Irish Congress of Trade Unions document,Confronting the Jobs Crisis; and believes that the plan is basically a restatement of unsuccessful social and economic policies pursued by previous governments”.

—(Tomás Mac Giolla).

An Ceann Comhairle

Deputy J. Leonard had reported progress. Notwithstanding anything contained in Standing Orders he has 30 minutes.

Mr. J. Leonard

Less three minutes. I had been advocating last week that in any plan priority should be given to the development of our natural resources because, through their development, a positive approach can be made towards import substitution thereby providing many thousands of jobs.

Many of the plan's proposals appear to me to be short term. It is time a positive approach to long term policies was adopted. The Government should request the agencies involved in such areas to develop our natural resources. For example, the RDOs and the county development teams are in such a position. Every resource available within our shores should be developed to its optimum.

If one examines import figures it will be seen that in the year 1947 we imported 40 per cent of our clothing requirements, which figure had increased in 1983 to 70 per cent. The importation of textiles in the same period increased from 50 per cent to 70 per cent and foodstuffs from 18 per cent to 30 per cent at present, which is a disgraceful figure. In the first nine months of 1983 there were imported £67.3 million worth of footwear. Most of that footwear is being imported by companies who heretofore had been manufacturers. Rather than there being machines and workers in many such factories there are now crates and forklift trucks only handling this imported footwear.

Practically every hide taken from an animal in every meat plant in the country goes for export; I think the figure is something like 98 per cent. There were figures given recently to a committee on which I was involved regarding the importation of fruit and vegetables and the possibility of developing a fruit and vegetable market here. At present there are 350 acres of glasshouse produce of which approximately 180 acres is in use periodically only. Some lie idle during the winter months because of the price of fuel oil rendering them uncompetitive with their foreign counterparts, countries who substantially subsidise the growing of such produce. For example, there is imported here over 6,000 tonnes of tomatoes, which would be the equivalent of approximately 80 acres costing approximately £4.6 million. There are no such glasshouse schemes at all in operation in Northern Ireland. They import approximately 6,000 tonnes which would be the equivalent of approximately 80 glasshouse acres. Foreign production methods, such as those involving the use of thermal screens, should be examined closely here. We might examine also what is being done in other countries, that is, a switch-over to solid fuel heating systems on the basis of which, if a subsidy was given, our producers could compete with their foreign counterparts, be not alone self-sufficient but also supply the Northern Ireland market. It must be remembered also that £2 million worth of packaging material in that fruit and vegetable industry is imported. There is real development potential in that area.

The Department of Agriculture must examine the potential of land at present not utilised, land remaining undivided by the Land Commission. They must consider apportioning it to groups such as Macra na Feirme, Fóir Oige clubs, young people with an interest in acquiring such land, giving them an opportunity to develop it in conjunction with ACOT and the agricultural colleges. Indeed much of that work could be done at VEC level as well. It is important that we cease to import, as we did last year alone, £1.6 million worth of carrots, £2.5 million worth of onions and approximately £750,000 worth of cauliflowers — all of which could so easily be grown at home.

In this national plan much comment is devoted to the health services. While many of its proposals would meet wide agreement I would question that a revision of the policies obtaining for many years now would result in the service costing a lot less. For example, there is general agreement that prevention is better than cure in bringing about a reduction in the incidence of disease. Many such health proposals are dependent on educating people in regard to the dangers of smoking, of bad dietary habits, excessive drinking and so on. These proposals lack reality in that funding costs are based on substantial reductions being effected under those headings. While health cost savings can be effected within the community rather than through the hospitalisation of people, the fact remains that our hospitals service has been developed from the time the health boards were initiated. We have increased hospitals intake. For example, in the health board of which I am a member we have talked consistently about a development of community care services rather than the institutionalisation of people. Every time we meet to discuss a budget we are faced with the problem that we are not able to withdraw as much money from institutions as we would wish to devote to community care and getting people out of hospital.

Recently I heard on radio an eminent surgeon trying to justify his action and that of a small number of colleagues in holding up the opening of Beaumont Hospital because they could not have their way with regard to a private clinic. We were told that no section would hold up the implementation of this plan. The Minister for Health has denied the people of my county the basic facilities and maternity services to which they are entitled and which they have enjoyed since the foundation of the State, but he will not make his presence felt in regard to the opening of a £40 million hospital and is being held to ransom by a small number of people.

The importation of cement is causing grave concern to many producers of concrete products in the Border region. Much of this cement does not comply with Irish standards and its importation is endangering jobs in the area. Even the legal imports are very high and this is having a very damaging effect on the economy.

The reorganisation of CIE is to be welcomed. I notice that excise duty on spirits is to be reduced. It is late in the day for conversion since for two years we have been explaining how damaging these high taxes have been. Many family concerns have gone out of business as a result of these two years of grave disadvantage.

We all agree that the provision of jobs is a real problem but the Government have shown a lack of confidence by budgeting for an increase in unemployment. The problem must be faced in a positive manner by stimulating the construction industry, the fruit and vegetable industry, the growth of afforestation and the general development of our resources. A great opportunity will be missed if an all-out attempt is not made to bring people back to work.

While the application regarding severely handicapped areas has been approved at Government level and sent to the EC, the news coming through is that the constituency I represent will fare very badly. I would hope that Government Deputies would use their influence to ensure that justice would be done so that the area would be recognised and receive the increase it deserves.

While there are a number of good points in the plan, it is not built on reality. There are many grey areas. I have already mentioned housing and transport and the areas to which a positive approach has been made, but if flesh is not put on many other points an opportunity will be missed. Our productivity is below the EC average and this is due to our high proportion of dependent people, the old and the very young. Too high a proportion of our workforce is involved in non-productive jobs. There is a combination of poor management and under-capitalisation in many areas and the Government should look at these areas as a matter or urgency if they want this plan to be remembered as something more than a good public relations exercise and if they want to bring young people into employment.

Minister of State at the Department of Labour (Mr. G. Birmingham)

I understand that a large number of Deputies wish to contribute to this debate. I suppose that is not surprising, given that we are effectively having three budget debates compressed into one within a fairly short timespan. I will be as brief as I can and try not to utilise my full time. Even accepting that discipline which I am imposing upon myself, it would be useful before looking at the plan in detail to say something, however much in outline, about the historical background to the plan.

A good place to start might be a book published some time ago by Dr. T. K. Whitaker, a figure whose standing in public life and among the economic community is without question. In that book entitled Interests, he identified four major turning points in our history. Let us remind ourselves what they were. He identified the year 1950 and the introduction of the capital budget; 1958 and the publication of the document Economic Development; 1972 and the first public, overt departure from a tradition of attempting to balance the current budget, an initiative taken by the then Minister for Finance, the late George Colley; and 1977-78 when the Fianna Fáil Government jettisoned the reform programme of the Coalition Government which had already reduced deficit financing and borrowing and brought in a budget involving a then unprecedented current deficit and Exchequer borrowing requirement.

Without introducing any element of partisanship into this debate, it is instructive to note that while the first two "turning points" could be identified as having been positive and benign and led to economic expansion and development, the last two — coincidentally or otherwise, introduced by a Fianna Fáil Government — were so malign that Dr. Whitaker had to comment on them in the most trenchant terms possible to imagine. He said:

Terms such as `policy', `strategy' or `rationale' would clearly be unapplicable to such a destabilisation of the public finances.

He supported that argument because, using his phrase, the disastrous course of events was supported by hard evidence. He said:

The national debt, which had stood at £1,422 million in 1972 and £4,229 million in 1977, had risen to £10,195 million by the end of 1981 according to the 1981 Finance Accounts. By year end 1982 it reached the order of magnitude of £12,800 million — the foreign debt component climbed from £127 million in 1972 to £1,039 million in 1977, £3,794 million at the end of 1981 and to £5,200 million by the end of 1982.

That is worrying. As worrying as the complete lack of regard to future pressures created — and burdens placed on future generations and their successors — was the quite extraordinary challenge that opened up between budgetary projections and results and outturns. That was most marked during the period 1979 to 1982 when my constituency colleague, Deputy Haughey occupied the office of Taoiseach. For example, in 1979 when introducing his budget statement the Minister for Finance projected the current budget deficit at £289 million, a figure we could have lived with but it turned out to be £522 million. That is an incredible 81 per cent in excess of the projection, but that was only the start. In 1980 the excess was 58 per cent; in 1981 it was 62 per cent and in 1982 it was 46 per cent. Again Dr. Whitaker's remarks are of some interest. He said:

The underestimation of current deficits and consequently of the Exchequer borrowing requirement, has been so seriously disproportionate as to invalidate the whole budgetary exercise.

It is against that horrific background that this Government have had to operate. What are the tasks which that has confronted us with? It has meant that since 1983 we have had to restore credibility to the public finances by having our budget figures related to reality and at the same time have that credibility restored and commence planning a long process of correcting an imbalance which had been so wantonly created.

I believe the publication of Building on Reality on 2 October 1984 will in retrospect be seen as the decisive date on which this country was once again put firmly on the path to sound economic development. The corrective actions we have already taken, unpleasant, uncomfortable and painful, taken in mid-1981 have already had their effect and contained the explosive growth in Government borrowing inherent in our predecessors' actions and intent. As the national plan points out in chapter 7 on the public finances:

In the budgets since July 1981, the total corrective action, through both raising taxation and reducing expenditure has, with the associated savings on debt service, reduced the potential deficit by almost £1,000 million. In other words, the current budget deficit at the end of 1984 would be almost £1,000 million higher than now expected had no corrective action been taken from July 1981.

We can look forward to a situation where the plan will bring our public finances in a phased way into a state of order. On the current budget deficit there will be a reduction from an estimated 7½ per cent of GNP in 1984 to 5 per cent of GNP in 1987. Government borrowing — the total Exchequer borrowing requirement — will be down from an estimated 12¾ per cent of GNP in 1984 to 7¾ per cent of GNP in 1987.

This document is different in many ways from anything that has gone before. Let us compare it with a number of documents which have come on the floor of this House, some in white, some in buff, some in green and some in turquoise. The document National Development 1977-1980 was published in January 1978, Development for Full Employment was published in June 1978, The Programme for National Development 1978-1981 was published in January 1979 and the most spectacular and famed The Way Forward, was published in October 1982. But what are the differences?

Within this plan a myriad of fiscal decisions have been taken by the Government covering the period of the plan. I do not believe that ever before in our history have a Government ever set out in this way a planned economic and social policy, Department by Department, vote by vote, subhead by subhead over a period of years and informed the public of the actual resources available in each area until the end of their term of office. The plan has been produced on foot of a major independent planning exercise undertaken by the National Planning Board which produced Proposals for Plan 1984-1988 in April 1984. In large part the advice tendered by the board has been accepted. Most important this public and independent planning process ensures that credibility can be placed on the results of this exercise.

This plan has a political opportunity to work. This Government have a stable period of three years ahead of them and, with the best will in the world, that factor has not been available given the fact that there have been four changes of leadership of the country since 1979. We debate this document in the full knowledge that the Government have the time in office to prepare the plan and, most important, they have the stability, the commitment, the will and the time to implement it.

This plan is published in a context carefully prepared for its implementation. Central to the background is the publication of the White Paper on Industrial Policy published in July 1984 which brought to a conclusion some years of uncertainty as to the shape of our industrial development policies in the coming decade. To have continued that period of uncertainty, indecision and questioning would have been incompatible with the sort of decisiveness that is required by the national plan. The plan has to be seen in the context of solid achievements like the reduction in inflation, from over 20 per cent in 1982 to below 8 per cent. The decline in unemployment has at last been halted. New employment policies are in place and beginning to show results. There is credibility in the figures which we put before the House and at the same time — and this is important — there are improved budgetary procedures and improved accountability to Dáil Éireann.

The social acceptability of what are undoubtedly unpleasant, difficult and tough decisions has been hard earned by the Government's decision to maintain and improve the purchasing power of social welfare payments which will be achieved by imaginative new schemes such as the child benefit scheme and the family income supplement.

I want to mention a number of specific matters in the plan. With regard to manpower policies, the national plan properly sets out the central, economic and social priorities such as the tackling of the unemployment crisis. It purports to offer — and does offer — realistic hope. In Chapter 2 it very firmly dispels unwarranted pessimism by setting out the basis of that pessimism. It says:

2.3 To move towards a situation in which everyone who wants a job in Ireland can get one is not a question of establishing numerical goals. It is not, as we have seen to our cost in the recent past, a question of the Government borrowing money to pay the wages for jobs which will either vanish themselves or will, if taxation is ultimately raised to continue these payments, cause other jobs to be lost.

2.4 To achieve rapid employment growth in Ireland, we must establish the conditions under which Irish workers can effectively achieve their productive potential...

2.5 To say that the economy cannot provide enough jobs would be to say that Irish workers cannot produce sufficient goods and services that are in demand at home or abroad.

In the clearest possible way and in the most determined way possible the plan sets out to tackle head on that kind of defeatist attitude and to make it clear that of course it takes time to develop the productive framework required if the unemployment challenge is to be met. The plan sets out the Government's intent and how they see their part in achieving just such a transformation of the environment for production.

It is not just addressed to the Government. Every section of society has to learn the lessons contained in Chapter 2. In consequence, every section of society has to be prepared to reject the magic wand approach, that you assume a growth rate of 6 per cent, 8 per cent, 9 per cent, or whatever figure is convenient, and you assume a job creation target of say 30,000, 40,000 or 50,000 jobs per year and you predict on that basis that our problems will be solved by a given date, that date usually falling conveniently close to a general election.

The plan sets out the significant role that has to be played by our approach to manpower policy and I quote as follows:

4.1 The new approach to manpower policy will seek to exploit to the full the employment opportunities presented by new developments and to influence changes in the economic and social environment so as to maximise their employment potential. In the short-term, it will be directed at intensifying the Government's efforts for expanding employment, by improving the effectiveness of existing measures, exploring the scope for new job-creation initiatives and making special efforts to help those who are experiencing particular difficulties in coping with unemployment, such as the long-term unemployed, the socially disadvantaged, the disabled and the handicapped.

I am happy to tell the House that the task of presenting a detailed articulation of manpower policy is now all but ready in the Department of Labour. That will be the first such detailed statement of where we are and more importantly where we are going since the very different days of 1965.

Central to the plan is the determination to halt the rise in unemployment and to do so using a number of different weapons. First, we must record a substantial growth in employment in the manufacturing sector and in the private services sector and we must also take a number of special measures. Those measures, identified in the plan, will involve the provision of 10,000 full-time jobs and a further 10,000 part-time jobs. I will refer to those measures only in outline because my friend and colleague, Deputy Ruairí Quinn, Minister for Labour, will be intervening in the debate at a later stage and will be fleshing out the proposals in somewhat more detail. It would be appropriate, however, to sketch the background. As everyone in this House and members of the public know, we have had a striking and unhappy deterioration in employment which has caused problems right across the board. It has caused particular difficulties for some segments of the labour market.

I suggest to the House that no section of the labour market has been as adversely affected as the long-term unemployed. The total number registered for more than a year has risen from just over 14,000 back in 1970 to 84,000 in April 1984. That is disturbing enough but, if we examine the implications, there is even greater cause for concern because, faced with an influx of more skilled and better qualified persons into the labour force, the prospects for that core group of long-term unemployed having any chance to compete successfully for available employment inevitably diminish. That is compounded by a tendency on the part of employers, however much we regret it, to look beyond the long-term unemployed.

If we are not to say to people in that category that their role is off the playing pitch, if we are to offer them any opportunity of reintegrating into the paid economy, then a comprehensive package of initiatives is required and the plan offers that. In particular it deals with two such proposals, what is referred to in the plan as the social employment scheme and the alternance scheme. Also of great import here is the enterprise allowance scheme, which is perhaps among the most spectacular achievements of this Government. It is hard at this stage to remember that it was introduced just ten months ago and that it was introduced on the basis of a pilot project limited to 500 people. I am sure there is not a Deputy who does not weekly answer queries on its options and direct people to take advantage of it. Less than a year on, 2,500 people previously unemployed have themselves rejected unemployment in favour of entrepreneurship and self-employment and that number grows week by week.

Well in excess of 100 people a week are taking advantage of that scheme and making their own future, their own reality. We all know examples. There is the example of some constituents of mine, among the very first participants of this scheme. They drew on their background as coopers and set themselves up in business, using former distillery and Guinness barrels to make flower pots, table tops and furniture of one sort or another. They have a viable business and are looking towards expanding their employment. There are people like the constituents of the Leas-Cheann Comhairle who have established a courier service, identifying a need in a local business. There are the people in Sligo who recognised that the prolonged absence of free range eggs meant a market for these. They had no particular background in the poultry business but saw the market and set out to fill it. Each week more than 100 others come to join these in finding their own answer to the problems confronting them.

I have referred to the fact that that interventionist approach on the manpower side is to continue with the introduction of a scheme targeted for the long-term unemployed, offering them the prospect of meaningful and rewarding employment on a part-time basis for a two-and-a-half day week. It is also the intention to expand further the range of options available and, for that reason, to introduce the alternance scheme offering a combination of formal training with on-the-job placement for some 2,500 people. However, they are matters which can be dealt with at greater length by the Minister for Labour.

In the area of youth employment and training we can report progress achieved. That is not to suggest that there is cause for complacency, because there is no such cause at all. However, it is the case that, following the establishment of the Youth Employment Agency and the imposition of the youth employment levy, dividends are being achieved. We have seen a trebling participation by young people in training and employment programmes. We increasingly focus our attention on ensuring that those programmes are of the required quality. Numbers, of themselves, are meaningless. Increasingly, we focus our attention on ensuring that those programmes will help those most in need—-school leavers and others in the areas of disadvantage. There has properly been an anxiety to see that those various programmes are structured and co-ordinated and the national plan sets out a response at both national and local level. At national level we see more effective co-operation between the training agencies, specifically AnCO and the world of education. That will ensure that the levy paying public will have better value for their punt. At local level, the decision to establish six COMTECs, bringing together representatives of all the people with an expert knowledge on the ground of the conditions in their own local area is ending the myth that decisions of this nature are most effectively taken at HQ in Dublin.

I have only seconds left to mention the next area, which is the publication last week in record time of the report of the committee on youth policy chaired by Mr. Justice Declan Costelloe. Given a timetable of 12 months, they produced uniquely in time their interim report and then their final report. Again in record time, the Government agreed to the publication of the report and, more significantly, have given me an opportunity to begin to respond by making extra funds available for the development of the youth service during each of the years of the plan on the current side. In addition, for the first time in many years, they have made resources available on the capital side to assist local communities in acquiring their own community youth and recreational facilities.

All told, it is a challenge. It is there for all of us, those in public life, the business community, employer organisations and trade unions. I hope that each one of us will be worthy of that challenge. I certainly have no doubt that this Government can recommend the document to the House.

Dr. O'Hanlon

The Minister of State has given the House the history and background of the document before us. He did not give the reality of the situation between the years 1973 and 1977. While he spoke at length about borrowing, he did not point out that for the first time in the history of this State borrowing on any large scale commenced in the first year of a Coalition Government and we borrowed for a serious deficit. That went on up to 1977 and, indeed, the highest level of borrowing in the history of the State occurred in 1975. That was commended to this House by prominent members of the then Government as being the way to solve all our difficulties.

The present Government are borrowing this year over £1,000 million and borrowed the same amount last year. For the first time in the history of the State, our borrowing has exceeded £1,000 million. The Government came to office on a promise of financial rectitude. The Taoiseach told this House that we would have to get the finances of the State corrected and that that was their policy. He said that the policies which he would pursue were diametrically opposed to those necessary to create employment for our people. Now, two years later, we have the worst of all worlds. There is no financial rectitude. The Government have abandoned their policy of correcting the finances of this State. There are 60,000 more people unemployed than two years ago, which was part of the Government policy as outlined to us here by the Taoiseach in the spring of 1983. We have a crippling level of taxation that people are finding it almost impossible to tolerate. That has been the result of the first two years in office of this Coalition Government. The Minister drew my attention to the colour of the covers of previous documents presented to this House. Perhaps there is significance in the fact that the present document has a grey cover. Certainly, its contents are very grey in very many parts, particularly on what the Government intend to do.

I attended a meeting of the NorthEastern Health Board yesterday. One of the items on the agenda was a discussion on the economic plan. Members had been circularised previously with a section from chapter 5 of the document. It was sent to the chief executive officer on 18 October by the Department. It was very significant that the only section circularised to members was the section with the good news. I do not know why chapter 7 was not sent to the members of the health board. It would have been very relevant now that we are discussing the financial problems of the health board as a result of Government policy.

Chapter 7 deals with expenditure. savings and cutbacks in the health services. It is significant that that when this document was being launched, a similar exercise took place. A special bound edition of the plan was given to Government Deputies and Senators. That volume contained the good news only. It must be pleasant for Members on the Government side of the House to be able to carry it around at weekends and show it to people, but it does not contain the real hardships included in the document presented to us here.

In the special bound document there are seven short paragraphs on page 30 and not one of them talks about cutbacks, or a reduction in the allocations over the next three years. They do not refer to any of the difficulties the health services will face. We are told in chapter 7 that the Government intend to cut £30 million from the pay in the health services over the next three years. Not one of the paragraphs refers to that. They contain all the good news and refer to the upgrading and rationalisation of health services facilities and to an improved vaccination service including measles immunisation to be introduced in 1985. That is the sort of information given in this document sent to Government Deputies and Senators. They were not given the real facts which appeared in subsequent chapters. It is not surprising that at our health board meeting yesterday the same thing happened.

I accuse the Government of deceiving their own Members in the special document and members of elected statutory bodies. The health boards were not given sufficient information to consider the document in a rational and proper way. I heard the Minister of State talking about credibility but, having regard to the way in which this document was launched, the Government should not talk about credibility.

One of the major problems of our time is the high level of unemployment. The figure is now over 200,000 and 66,000 young people under 25 years of age have not got jobs. There has been an increase of 60,000 unemployed on the live register since this Government took office as a result of deliberate Government policy. The saddest reading in the document is on page 27 where there is a graph which shows that in 1987 the level of unemployment will not be lower by one person than it is at present. That is a very sad reflection on Government policy. Surely the first priority of the Government should be to try over three years — whether they will be in office for another three years is a very debatable point — to create jobs for our people. There is a graph in the document on page 27 which tells us that the number unemployed in 1987 will be the same as it is today. There is no joy in that for anyone reading the document.

The high level of taxation is another major problem. People feel crippled under the level of taxation. The Tánaiste told us last week the Government have decided that the level of taxation cannot be allowed to rise any further. It is important that it should not be allowed to rise any further, but there is no joy in that for people who are already paying levels of taxation which they are unable to meet. The Government do not give any hope that over the next three year period they will reduce the levels of income tax or PRSI on the very hard-pressed PAYE sector.

If one reads the document carefully it is evident that there will be charges for services and that the remaining food subsidies will be removed in 1986. If the Government survive they will be removed at the time when child benefit is introduced. While the document does not say anything about levies we already have two levies and we cannot be sure there will not be more levies. It is dishonest for the Government to say they have decided that the overall level of taxation cannot be allowed to rise any further, and then introduce changes, remove food subsidies and introduce further levies. These may not be called taxation but, in effect, they are taxation. This is money taken out of the pockets of people who are earning money and put into the Exchequer. To the people who have to pay these charges they are all taxation. The Government should tell the people what they intend to do.

I want to deal with the effect of this plan on the health services. The Joint Programme for Government was idealistic compared with this document. It states:

We recognise that there is a need for a radical review of the operation of Health Boards and that a shift in emphasis from hospital to community services is necessary both to provide the type of service most appropriate to the needs of patients and to reduce the wasteful use of scarce resources. In carrying through this programme of reform we shall ensure that the existing level and quality of health care will be maintained.

In particular, care must be taken to ensure that any adjustments do not militate against the less well off.

They abandoned that when they took office.

If we read the new document carefully we see that it contains a different policy and that it is intended to reduce the level of services and to cut back the financial allocations. Before they took office they did not tell us that. Unfortunately the less well off are suffering and they continue to suffer. The less well off have not got dental, or ophthalmic services, or transport. They are suffering at this very moment as a result of the cutbacks of the past two years. As predicted in the document, the future is very bleak. Paragraph 5.6 spells this out. I quote:

...it is important that everyone in the community — whether those in the public sector administering the social services or the recipients of the services, or all taxpayers' financing the services — should be prepared to accept changes over the years.

In the document we are told that there will be an increase in allocation in current expenditure of 5½ per cent next year, 5½ per cent in 1986 and 4 per cent in 1987, which effectively means a further cut of 4 per cent to 5 per cent in the allocation in each of the next three years, assuming that inflation will be somewhere around 7 per cent and having regard to the increased demand for services as a result of the increased population.

The capital allocation will be reduced even further. In the document there is an emphasis all the time on the percentage of GNP that is spent on health services and how this must be reduced, but it would be much more appropriate if the Government were to look at the per capita spending on health services and find out that we are the second lowest in Europe. If we go any lower in our spending on health services, then we must ask what level of care we want to provide for the people. Do we want to provide an acceptable level of care? If not, tell the people. I have no doubt that as a result of the Government's policies lives will be lost if we continue on the downward spiral we have been on for the last two years.

I ask the Taoiseach or the Minister of State who is here to state when replying if it is true that further cuts are envisaged that are not included in this document. Is it true that there will be a further 1 per cent cut in the allocation for pay next year? Is it true that the allocation for student nurses will be cut to the extent that nurses will not be taken into training? Already in the Ceann Comhairle's and my constituency the nursing school at Saint Davnets Hospital has not been able to take in student nurses for the last two years. That is serious for the health services. Over the last two years, and particularly in the current year, the cutbacks have reduced services to an unacceptable level. If this is to continue the consequences will be disastrous. It will dismantle the health services that have taken many years and much hard work to build — health services, I might add, which we can be justly proud of. The Government and the Minister are responsible for these cutbacks but they do not want to know the effect of their cutbacks on the health services. That is a very serious indictment of both the Minister and the Government, particularly as they are preparing the people for further savage cutbacks in the next three years.

The reason I make that statement is that when I asked the Minister two questions here in the House last week about the list of equipment purchased by each health board which is not in operation due to insufficient funds and the list of health care buildings in each health board area which are not being used due to insufficient funds, the reply I got from the Minister was that they had not got that information. He said, as recorded in the Official Report, 10 October 1984, column 1995, Volume 352:

The information requested by the Deputy is not collected in my Department on a routine basis. The Deputy may get the information he requires by addressing an appropriate inquiry to the chief executive officers of the health boards who are in a position to provide the information requested.

That a Minister or a Government who have been responsible for these cutbacks over the last two years are not sufficiently interested in the effects of their cutbacks is a very serious indictment. Presumably they are unaware that buildings around the country are closed down for want of staff. In Cootehill the hospital for mentally handicapped, ready since May 1983, cannot be started because of insufficient funds. Cheeverstown in the Eastern Health Board area and Kiltimagh, County Mayo, are only a few such instances. I have not yet got back the information from the CEOs of the health boards because I would have expected that the Government who were so concerned about cutting back on the health services would at least try to find out what effect the cutbacks were having and that that information would have been readily and freely available to the Minister and to Members of this House when they requested it.

On the basis of the figures provided in this document there will be a loss of 6,000 jobs in the health services over the next three years. In the Department itself there were established posts for three nurse advisers, but when two of those posts became vacant they were not filled because of the embargo on public service recruitment introduced by the previous Coalition Government in 1981. In other words, that is two out of three. There were only three posts altogether and there is only one nurse adviser in the Department now. If this is an indication of what is coming in the health services one can see how they are to be dismantled as a result of this Government's policy.

The cutbacks are having a serious effect in each health board area. Wards are closed, some fully, some for long periods during the summer, some for week-ends. There is a lower level of service for accidents and emergencies. Staff are not being replaced. Staff are not being employed for buildings and new equipment. There are no substitutes for staff sick, on leave or on maternity leave. The Cork Examiner on 11 October, last week, carried an advertisement by the Southern Health Board telling the public that:

No substitute will be recruited in respect of staff absences on annual leave, sick leave and maternity leave occurring after 1 October 1984. Emergency situations will have to be dealt with by staff redeployment. This will result in the closure of beds and curtailment of other hospital services in some of the board's hospitals with consequent delays in the admission of patients.

That is an advertisement in a newspaper telling the public that a health board are unable to provide the level of service which anyone would consider necessary to ensure that there will not be tragic loss of life. That is in the current year, 1984. Yet we are told that for current expenditure next year there will be just a 5½ per cent increase, 2 per cent below inflation, and it will not take account of increased demands for services as a result of increased population. Next year what is the situation to be? Also we are told that next year there will be a reduction of £10 million in the payroll cost which will result in further reductions of staff in the institutions of the health boards. It is obvious that if the Southern Health Board put in an advertisement this year that they are unable to provide services, the situation will be critical next year. It is time for the Government to sit down, look at the situation carefully and decide on and tell the people what level of services they intend to provide for them. Paragraph 7.53 of the plan states:

Projects now under construction, when complete, will afford opportunity for improved care in modern, up-to-date surroundings. Such new facilities will be treated, largely, as replacements for existing out-dated institutions rather than as additions to the overall system. In the process of rationalisation, hospitals and other institutions which are redundant to the essential requirement of the services will be closed. This will be a major factor in the programme to secure reductions in the overall staffing levels.

I should like to know what hidden meaning is in that paragraph, because elsewhere in the document it is stated that redundant buildings will be sold. What has the Minister in mind, particularly as he hopes to achieve a reduction in overall staffing levels? Does that mean that he is going to close more hospitals? Does it mean that once again he is going to reverse his decision about Monaghan hospital? Originally he decided to close and sell that hospital — indeed, to sell Lisdarn with it — and then he partially reversed that decision and decided to keep the medical and surgical facilities in Monaghan but to close the maternity facilities there. That displayed a total lack of understanding of the position in our constituency, an area that the Ceann Comhairle and I know well. We are both aware of the long distance between Cavan and Monaghan and the bad roads that people have to travel on. It is essential that we have adequate and proper medical, surgical and maternity facilities in both counties.

The health boards are in a serious position this year. Some of those boards will have a deficit of more than £2 million. In the health board governing my constituency the deficit will be very low, but the Southern Health Board will have a deficit of more than £2 million. The Secretary of the Department of Health, in his capacity as Accounting Officer, wrote to the health boards on 18 June pointing out that any over-expenditure this year will become the first charge on the 1985 allocation, which is likely to be more restricted than the allocation for the current year, as he stated. What are the health boards to do? In the last three or four years the health boards have made a major effort to reduce costs with savings on energy, maintenance, the amount of stock held, in the community care and transport areas. There have been savage cuts in the dental and ophthalmic services.

The Minister wrote to the health boards pointing out that he was unable to reach agreement with the consultants about charges for consultants. He told the boards that he wants to collect £6 million next year between increased charges for private care in hospitals and to collect money from the consultants for the use of equipment in private hospitals, In effect, in the course of that second letter to the health boards, the Minister is admitting that he was unable to reach agreement with the consultants and was passing the buck to the boards. He is asking the boards, at a critical time, to get involved in confrontation with the consultants and collect this money from them. Eventually, that money will have to be collected from the consumer resulting in further taxes being imposed, either through increased VHI charges or whatever. The Minister is trying to provoke a confrontation at a time when all those involved in the health services are doing their utmost to exist within reduced allocations.

The reduction in the food subsidies is costing health boards a lot of money. It is costing the Southern Health Board, £85,000, the Western Health Board, £73,000 and the Eastern Health Board, £80,000. In the course of a reply to a question the Minister informed me that he would not be giving an increased allocation to the health boards to cover that loss, which means that the money must come from the allocation for services for the less well off in our community. Those people will suffer in that they will have to put up with a reduced level of service so that the Government can save on food subsidies. I understand the Government will be saving in the region of £300,000 in this area.

We were informed that the Children Bill would come before us in three stages with fostering and adopting to be dealt with separately. I appeal to the Minister to bring in one comprehensive Bill. The section on juvenile justice is an important one and the Minister should do something about it.

I should like to draw attention to the family income supplement which was brought back two months because of the decision on food subsidies. That will not help those who are unemployed, the self-employed, those on social welfare benefits or those in part-time employment. The social policy sketched in the plan — it is not dealt with in detail — is at variance with the promise of the Government when they came to office. It is totally unacceptable to the people and inadequate to deal with the needs and problems of the people. I have no doubt that it will be rejected by the people at the first opportunity they get.

Mr. Coveney

At the outset I should like to make a comment about the speech of the Leader of the Opposition last Wednesday in the House and about his performance on television the evening the plan was launched. I watched Deputy Haughey on television with interest because, first of all, he is a professional accountant, a successful businessman in his own right and the most experienced politician in the House in terms of the ministerial portfolios he has held. I expected a contribution which would be constructive and interesting. But, I am sorry to say, what he said — it is being re-echoed by other speakers from the Opposition benches — was a repeat of the make-believe and inconsistent logic which seems to form so much part of the things he has been saying about the economy in recent years. I should like to refer to a number of his statements. If I understand him correctly, Deputy Haughey is calling for a higher level of State investment, particularly in capital projects, while at the same time criticising the plan for failing to reduce the level of taxation and borrowing. Deputy Haughey also attacked the Government for an undue emphasis on financial rectitude but at the same time he criticised the failure to include a plan for the total elimination of the current budget deficit by 1987.

On television, when Deputy Haughey was asked how he would get the additional revenue for the extra investment we would all like, he seemed to find a very convenient answer that it would come from additional buoyancy resulting from Fianna Fáil policy and not from borrowing or extra taxation. Deputy Haughey was very critical of many of the public expenditure cuts but at the same time called for tax cuts and criticised the failure to eliminate the current budget deficit by 1987. These positions in their totality are irreconcilable. Though I do not want to devote my entire contribution to commenting on Deputy Haughey's contribution I would make the point that we should look at what he has said and what he has done. Therefore, I will refer to his celebrated television address to the nation early in 1980 in which he gave one of the best and most succinct analyses of our economic ills and the measures needed to address them. Despite that clear analysis he has never seemed to follow the logic of his own arguments by any concrete action. Instead, it is common knowledge that he presided over a worsening economic debacle, the worst effects of which are still with us. His contribution to this debate was characterised by the same illogical double think type of statement.

I had been hoping for a constructive contribution from Deputy Haughey which would help to bring about some kind of consensus in the House about the steps needed to plan and work our way out of the present difficulty. My views about the plan are that though it is not perfect it is factual in its analysis, correct in its priorities and broad strategies, realistic in its objectives, and has reasonable prospects of success. It is necessary to understand and emphasise the broad financial climate in which the plan will have to operate.

I strongly agree that public expenditure must be cut in order to reduce dependence on borrowing and ultimately to permit cuts in taxation which are so desperately needed and deserved. There is no way out of that fundamental proposition. The economy cannot expand or create the jobs we so desperately need unless we can stimulate enterprise based on incentives. One of the greatest incentives of all is the prospect of taking home more of one's gross pay or retaining more of one's profit. My most serious concern about the plan is that it has not gone far enough to cut public expenditure in order to bring about some real reduction in taxation by 1987. People will accept expenditure cuts more readily if they can see them in the context of paying less taxation. I am certain that the vast majority of people, if given the choice, would opt for lower taxation and a lesser level of public service. What they object to are increasing taxation and reducing levels of public service.

People should be given that choice — it is their money, not ours. This philosophy is often described in clichés about monetarism, Thatcherism and financial rectitude. It is interesting to note that the Social Alliance of the Left in France have adopted the self-same policy. They announced recently an 8 per cent cut in taxation and a 10 per cent cut in public expenditure. The need to take less tax from the people is no longer a matter of ideology or political philosophy but plain common sense. It is not a uniquely Irish problem but at the very minimum a European one.

It is not coincidence that growth rates and the ability to create jobs in the US and the countries of the Pacific Basin are quite different from the performance of the EEC and other European countries. It is no coincidence that in Europe more and more of the national cake is being spent in public expenditure leaving less and less available for investment for productive purposes. There is a realisation in Europe these days about the inhibiting and dampening effects on growth of high levels of public expenditure funded by high levels of taxation and borrowing.

The performance of the US economy and that of Japan and other countries is dramatically more active and that must be one of the major reasons. Therefore, one of the greatest single contributions the Government could make for the restoration of real growth, confidence and job creation would be to undertake cuts in personal taxation levels, particulary in the PAYE and business sectors. I am conscious of the difficulty of making expenditure cuts, particularly in an economy like ours which in the past decade has seen spiralling levels of public expenditure funded by high levels of borrowing and high taxation.

Still we must raise our objectives a little higher than the provisions of the plan. Instead of aiming to ensure that tax levels do not increase in real terms — it would be a significant achievement in itself — we should decide to begin to reduce taxation levels by 1987 and then face up to the consequent and inevitable further expenditure cuts which such a decision would entail.

I will refer to a number of specific proposals in the plan. One of our great dilemmas is how to allocate scarce resources. It is in that context that public service recruitment and pay must be viewed because there is the central plank in the whole plan. Taxation and borrowing are already too high and the Government simply have no choice but to restrict current expenditure and, because public servants and their remuneration form a major proportion of most public expenditure, there is no escaping the logic of having to confront that problem. Any other approach is blatantly dishonest and is doomed to failure.

It is very important that this part of the plan should not be viewed as an attack on the public service, and it is being portrayed in many quarters as being just that. Far from it: in my view it is the very reverse. If we fail in this crucial aspect of the plan and allow public expenditure to escalate beyond the limits specified, inevitably our national finances must deteriorate still further, taxation will rise and unemployment will increase. If we go down that slippery slope again it will not be possible to guarantee indefinitely anyone's job whether they are in the public or private sector. For that reason it can honestly be stated to public servants that this plank of the plan is not only in the national interest but ultimately in their interest as well.

Those who call for more public expenditure and more and more services and in the next breath call for reduction in taxation are deluding themselves and those they seek to influence. I appeal to public servants to see through the make-belief, hollowness and charade of that argument and see where their real interests lie, interests which in the end can only be guaranteed when founded on the rock of national solvency. This plan offers public servants that guarantee. Any plan which does not confront the issue of public expenditure cannot give that guarantee and is a delusion.

The measures proposed for the construction industry are welcome. They were primarily taken not for the reconstuction industry as such but for the provision for capital investment which will be of undoubted value to the nation. The side effect of that will benefit the construction industry. It is right that those priorities should be stated. The roads programme as proposed in the plan will bring great benefit to the country. One has only to look at the Naas by-pass. One does not have to be very clever to know that that is giving a return. The grant of £5,000 to local authority house dwellers is innovative and will bring many local authority tenants into private housing. This will benefit the construction industry also.

As regards buildings for third level education, the large investment which was made in the first and second level over the last decade has put pressure on third level. It is important that the Government go ahead with these proposals. The plan of major educational buildings is a long process and the sooner decisions are taken about what is to be built the better.

The reduction of VAT on newspapers is only a start but it is an important commitment to assist the severely pressured Irish newspaper industry. The high levels of VAT compounded by the dumping policy of a number of British tabloids put enormous pressure on the newspaper industry at a time when, due to the recession, its advertising income was under severe strain. I ask the Government to proceed as soon as possible to reduce the VAT rate further, as the plan undertakes to do, so that we will have a viable newspaper industry which in terms of national sovereignty is most important.

I should like to see a greater sense of urgency about offshore oil and gas exploration. The plan refers to promised legislation on a comprehensive taxation system for oil and gas production. It would have been better to insert a date for this legislation. I say this because the date for submission of applications for the third Irish offshore licensing round closes in mid-February. I would have thought it a prerequisite for major international companies to know what the terms were, good, bad, or indifferent. Without that we will not have the same level of interest. The message should go out loud and clear that we are determined to accelerate our offshore exploration programme. Most people within the industry and outside believe that there is oil in commercial quantities and that it is simply a matter of time. In reality, time means the number of people who are prepared to go out, put their money where their mouth is and look for oil.

We should have an accelerated policy of attracting in the maximum investment over the next few years. I am not talking about giving any more than we should but of having a balanced approach to maximise the return to the nation while at the same time providing clear-cut incentives to bring people in here. I cannot think of any other single factor which would so dramatically engender confidence and investment through the economy than the announcement of one or more significant commerical oil finds. It might take four or five years but the certainty of its existence would create a new image for the country and would have significant and incalculable beneficial effects on investment in a wide range of industries and so on. That would all have a spin-off effect as regards employment.

I should like to see stronger emphasis on tourism as a potential creator of wealth and jobs. There are some proposals in the plan which will benefit tourism but there should be a greater commitment to the development of this sector which has far greater potential than has been recognised by successive Governments over the years. The significant reduction in the duty on spirits has been broadly welcomed. If it makes the contribution that is expected towards the elimination or reduction of smuggling across the Border while producing a return to the Exchequer it will be good. The thinking on that came from both sides of the House.

Seen from the perspective of somebody living where I do, there are some worrying aspects in relation to the brewing industry. Two of our remaining traditional shining lights in Cork are Murphys and Beamish and Crawford. They had meetings recently with the Minister for Finance and made some constructive proposals concerning the inevitable effects on their business and ability to create profits for reinvestment, expansion, job creation and so on. I hope it will be possible for the Minister to respond favourably to some or all of the proposals they made to him. If the innovating proposal about the reduction in the duty on spirits works in terms of the return to the Exchequer, then I hope the proposal in the plan to consider other similar schemes will be accelerated. I refer in particular to the electrical trade. That trade has been devastated by cross-Border smuggling as a result of the enormous VAT differentials between North and South. I recommend to the Minister for Finance that he take note of that issue and of other similar issues in the same courageous way as he has dealt with the duty on spirits. This would give a major boost to the electrical trade which is under extreme pressure.

It would be impossible for anyone to devise a perfect plan and the plan we are discussing, like any other, has its faults. If each of us were to prepare an individual plan we would have 166 different plans. However, the Government plan has been well researched and prepared. It is realistic and, as the title implies, it is built on reality. The plan is similar in many respects to the broad thrust of The Way Forward. The House would be doing a good day's work if it were to arrive at a broad consensus on the issues which the plan covers. The people are crying out for such a consensus. They are looking for a message of hope from this House. What they are witnessing is a divided House, but perhaps that is inevitable in a democracy. Fianna Fáil do not differ fundamentally from us in their broad philosophy, so it would be to the benefit of the country generally it they could reach with us a broad consensus on the plan.

Despite some shortcomings, I am confident that the plan contains a message of hope and is an indication of the Government's seriousness in the matter of rebuilding the economy and putting our people back to work. The plan does not contain exaggerated or false promises, especially in relation to employment. It would be an insult and a tragedy if it were to contain such promises. The plan sets out objectives that are attainable by 1987. Given a reasonable international climate, it should turn the economy around and instil confidence in our people for the future. The plan is a challenge to all of us to put Ireland before self interest. Its outcome will be determined by the response of each of us to that challenge.

Mr. B. Ahern

Deputy Coveney suggested that there should be some acceptance of the plan by those of us on this side of the House. While there are a number of items in the plan with which one would agree, on the political side there are a couple of points to be made.

The plan was produced after months of waiting and of talks. Obviously, the Government have spent some months considering the various targets set out in the document and we now have before us projections which the Government consider to represent the right approach at this stage. However, I must take issue with the Government in so far as some of these projections are concerned. The many months during which this plan was being discussed by the Government represented, on the Taoiseach's admission, a bad time for his party. It was a period of indecision and in action, with one crisis after another for the Government. There was the question of the handling of the food subsidies. There were crises in regard to various pieces of legislation. The broadcasting legislation which we have been hearing about for two years has still not materialised. In the week before the plan was published we witnessed the debacle between the two parties in Government on the whole issue of the land tax. In these circumstances it can be said that at least we have a document to debate now.

Bad as the situation is it would have been worse if the Government had taken the advice of the Governor of the Central Bank and opted for eliminating the budget deficit by 1987 instead of reducing it to 5 per cent of GNP. For those people who are unemployed or who for whatever reason are on the breadline the adoption of the lines suggested by the Governor of the Central Bank would have made matters worse. However, the plan is still inflationary in terms of policy regardless of the small attempts that have been made to move away from such a policy.

I do not have sufficient time at my disposal to deal with the public relations exercise that surrounded the releasing of the plan. I shall confine myself to commenting on the objectives of the plan, objectives that are set out without our being given any indication of how they are to be attained. What is before us is a list of aspirations rather than projections that can be examined.

While we must wait until the budget to hear how the various aspects of the plan are to be put into effect, there appears to be no real effort to generate resources so as to tackle the job crisis, despite the fact that throughout the plan we are reminded that the whole challenge is the question with the unemployment problem.

The plan seems to challenge many of the issues associated with collective bargaining and do very little to extend workers' influence on decisions which affect them at a time of recession such as this and when so many decisions are expected from them. The plan does not contain a strategy for job creation in the area of industrial development though such a strategy has been advocated for months by various interests.

We would be making a grave error if we were to ignore industry in any attempt at job creation. State expenditure and assistance for industrial development must be linked to job creation targets, but the plan provides no such link. If anything, it could be argued that the plan will be the means of reducing employment. It contains very little apart from references to deficits and borrowings and to what may happen in respect of American interest rates. I appreciate the problems that can arise in that area but we must realise that there are 210,000 people out of work and that 66,000 of those are under 25. The unemployment figures represent almost 18 per cent of our people. In addition, there is increasing emigration and a great deal of hardship. Despite this we have excessive taxation which is stifling growth in the economy. There is no proposal in the plan to take any action on that front. This plan, which has absorbed so much Government time as well as the time of civil servants, does not contain the guidelines within which it can be operated. For most people all it offers is a continuation of dismal depression. At best, after three years we will be lucky to be able to contain unemployment at present levels, so far as this plan is concerned. I submit that the plan will result in further hardship for the poor and the underprivileged because of the proposed cutbacks in the years ahead.

I think everybody accepts that the biggest social evil today stems from the serious economic and social problems arising from unemployment. Luckily the kind of social and political unrest that can result from such problems has not arisen. However, there is always the danger that that could happen. If unemployment is not to remain at a high level, imaginative steps must be taken. We must use the vast numbers out of work in a productive way. Because of the problems associated with unemployment the State has a huge financial obligation to them. The Government must work to create an environment where there will be opportunities to create employment, but the plan does nothing on that front. All the obstacles still remain, as do all the disincentives for employers and employees. PRSI contributions, the high cost of redundancies and proposals regarding unfair dismissals make it almost impossible for employers to create new jobs and the country continues to suffer from high unemployment.

The public capital programme has been reduced in real terms. If what is in the plan is carried out, redundancies in State companies, in particular CIE, will affect very severely city areas. I should like the Minister for Communications to spell out for the workers what exactly is meant in this connection in the plan. In this industry people have lived with fear and this fear has been intensified now. They do not know what are their future prospects in the industry. The previous speaker referred to road-building but the construction industry have said that a maximum of 500 jobs will be created and that is on the basis that the Minister for Finance will not take money from the capital side in the event of changes in oil rates or interest rates. On the current side the cutbacks in the public service will involve 5,000 jobs.

The policy in the plan seems to be to keep manufacturing jobs at their present level. There is nothing by way of increasing job opportunities for the unemployed or for those about to enter the labour force. The plan does nothing about creating jobs in industry and it forecasts an increase of only 3,000 extra jobs in manufacturing. The industrial plan spoke about 6,000 jobs, but that has been reduced to 3,000 in the national plan and there are fears in union circles that the figure may be only 1,000 jobs. We had that debate during Question Time today and I will not go into it again.

Even though the Government mentioned that 7,000 jobs could be got from private services, in their plan they have not given any further information. Neither have they stated in which sector they will inject money to create those jobs. All of it is left to "market forces", as it is called in the plan. If we are to create and to maintain jobs there must be aggressive policies with regard to agriculture, the food industry, tourism, fisheries and forestry. However, tourism, fisheries and forestry merit only a few lines in the plan. We import food to the value of £700 million, but that industry gets very little coverage in the plan. Nothing is said about the encouragement needed to improve our marketing strategy and to co-ordinate an approach for the Irish food industry as a whole. The IDA and others are doing their best but, having regard to our huge import bill, far more could be done. We must improve the quality and the continuity of our food products and processing plants must also be improved. If we do not achieve that, our food bill will get to the £1 billion mark in the near future.

Other speakers have referred to our natural resources and the way they should be used. It appears that nowadays people do not want to mention the "Buy Irish campaign" because it has been a failure to some extent. If the State and semi-State bodies made it an absolute policy to buy Irish products that would help home-based industries. There is massive potential in the tourist industry if it is handled properly. However, we must improve our standards and the services available. The tourist season here is short and if the proper services are not available during that time we lose out very badly. There is potential in all the areas I have mentioned to create employment and this will carry through to, for example, the craft industry and other undertakings.

It has been stated that the farm tax at £10 per adjusted acre will yield £60 million in 1986, double the yield from farmers this year. I have seen a figure quoted — I do not know if it is correct — that farmers will pay 6 per cent of their net income after interest payments. In 1980, when Fianna Fáil were in Government, there were marches to protest against taxation. There was dissatisfaction with the situation where farmers paid £25 million in income tax and £39 million in agricultural rates. In current levels that would be approximately £130 million but it appears that only half that amount will be taken from farmers in 1986. The workers see in this the rejection by the Government of the better features of the report of the Commission on Taxation. There is no replacing of tax allowances with credits and there is no proposal that tax allowances and tax bands be indexed in line with inflation. The farm tax system will not make any significant contribution towards alleviating the burden of the PAYE sector and it will be seen as such. It will be seen that the larger farmers have got away with it. There is no objection to small farmers not paying because they have not got the income.

What has been proposed in the plan will mean that from 1986 there will be fewer farmers in the tax net than at any time in the past five years. The system may have some advantages for small farmers but it will not be seen as fair a system as that based on income. I realise there are difficultues in this area but it is the only way to have a fair system. When it comes to the Finance Bill the public will see that the anomalies and injustices in the tax system, particularly as regards the PAYE sector, have continued. The farmers will be open to arbitrary increases in taxation in years to come which would not be possible if there were a proper income-related system.

The Government have suggested that if real earnings fall the adjustments and allowances will be in line only with earning movements and will fail to match inflation. That is a real worry for those on the breadline and for those on small salaries. The tax inequities will continue during the years this plan is in operation. Child tax allowances are to be replaced by a child benefits scheme. That is to be welcomed in theory but I wonder if it will work out in practice. The Minister for Social Welfare has stated clearly that what is intended is a rearrangement of Government funds with no further demands on the Exchequer. The poorer sections will rightly benefit but those with little more than average earnings will lose.

In a statement over the past weekend the Minister said that under the system at present obtaining — under the children's allowance scheme — 460,000 families benefit, under the child tax allowance scheme almost 300,000 families benefit, under the child dependant allowance scheme 150,000 families benefit and the family supplement scheme which is to be introduced will benefit 35,000 families. The Minister maintains that the system as it obtains — in regard to those dependent solely on social welfare payments — will gain, those below the tax threshold will gain as will those on the standard rate of income tax. But with 40 per cent on the standard rate of income tax, if we are to have a new definition of rich and poor, if it is maintained that the rich are people who are not paying above the standard rate of income tax that would constitute a new definition because it is those people, in the middle classes, who are paying mortgages, endeavouring to pay their way in society, who in my book are already in the poor category. If they are to lose out on the children's allowance scheme it will further aggravate their problems.

There is another question the Minister for Social Welfare might clarify: if people at present below the tax threshold receive benefits and payments, could those benefits or payments place them above the tax threshold, or what will be the proposed adjustment to be effected in order to keep them out of the net?

The Government have continuously admitted throughout the plan that social welfare payments for long-term dependants represent an income close to subsistence only. In the two-year term of this Government they have taxed shoes, clothes, all of the things affecting people at the subsistence level.

The proposed cuts in the health services have already occasioned the elimination of 3,000 jobs which will add further to the numbers unemployed. It would appear from some recent statements on the part of the Minister for Health and from some of the proposals contained in the plan that in the short-term, in the national health service, he will endeavour to gain whatever he can by reinstating therein a payments system. It will be interesting to hear in ensuing months how he will achieve his targets if he does not do so.

In the health area there is a cut of 5 per cent in real terms on the current side and more on the capital side, both affecting the lower paid people. There is the elimination of repairs and maintenance of local authority housing, bringing their rents into line with the costs of local authority housing, again affecting the vulnerable sections of society. If anybody can argue to the contrary I shall be glad to know.

In regard to public service pay the Government's restrictive policy, in line with the recommendations of the National Planning Board, means there will be little nominal change in pay in 1985, followed by a moderate increase over the remaining period of the plan. The Government state that the most critical assumption is that the evolution of Irish costs will be in line with the objectives outlined by the National Planning Board. Therefore it will be seen that the Government are embarking straightaway on the road to industrial relations problems. They maintain that the whole plank on which their plan is based is encompassed in what they can achieve in the public service. It would appear to be an unusual way of entering into an industrial relations battle right from the initiation of a plan in respect of which they are seeking acceptance. For example, they ask people to accept that work practices are changing, that technology is advancing. I agree with those contentions but I am puzzled as to how a Government who wish to implement a national plan automatically seem to be entering into an industrial relations battle. That is certainly what the Minister for the Public service has done through his, what might be described as almost an attack on the public service.

I know it is the Minister for Finance present who must be responsible for every 1 per cent increase in the public service bill which creates huge budgetary problems. But they are budgetary problems, matters to be discussed and negotiated. It is not prudent to threaten people who have served the country well that their pension may go, that their job may go, that they should not do anything that would effect this plan, or which would destabilise some of its projections; to ask them to remain silent, be nice people, is somewhat unrealistic and unreasonable. The system of collective bargaining has operated reasonably well. Granted there have been arguments and disputes. But to endeavour to brow-beat the public sector by the tactic of stating what will be the position in advance of any negotiations seems to me to be eminently imprudent. It is my view that the Government will first engage in a public relations exercise, with public servants being told they will lose their pension rights and so on, ensuring that when eventually a percentage settlement is reached the same people will be persuaded that they have done reasonably well. That is an unreasonable way of dealing with the public sector.

I am sure the Minister for Finance and his colleagues realise that the vast majority of those people in the public service, those who educate our children, who run the health services, the Garda, other people engaged in community and local services, are the people on whom we must depend in a modern society in order to underpin the whole of our economic and social structures. Any endeavour to enforce confrontation with them is totally wrong. I would appeal to the Minister for the Public Service to desist from the line he has adopted, rather entering into negotiations with a view to reaching satisfactory agreement. It should be realised that they are sensible, reasonable people. The public service is comprised of the ordinary, middle-class of society who pay their way as far as possible. They should not be made the plank of any plan or be blamed for its failure through seeking wage rates to keep them in line with those paid to other sectors or with inflation. I do not understand that that should be regarded as an unreasonable approach. It is contended that it is the only way for the thousands of people employed in the public service in the clerical assistant, clerical officer and executive officer grades. It is wrong to contend that they are some kind of privileged class because they barely survive. It should be remembered that there are other classes not taxed who operate freely within the black economy. Why not make the plank of the plan the breaking of the black economy rather than the public sector workers and unions?

It is my view that the public services are essential, many constituting social services serving all sections of our community, that they do not constitute parasites around the neck of the nation. It is totally wrong for the Government to persist with that kind of attitude. If the day arrived when the public services came to a standstill the Government would realise very quickly where they stood. Therefore why embark on that kind of confrontation in the first place? Why not deal with reasonable people in a reasonable way?

I welcome some proposals of the plan to overcome the many unemployment problems. I welcome the Comtec approach in trying to bring together AnCO, the National Manpower Service and the Youth Employment Agency. This should not be done on a trial basis. In 1981 when the legislation setting up the YEA was going through this House I, as spokesman for youth affairs, said that the whole set-up should be rationalised under one State body instead of having a multiplicity of schemes administered by several different bodies. That is the correct policy. Vast amounts of money which are available for youth employment are lost because of bureaucracy and lack of streamlining, through no fault of the people working in the system. Streamlining is urgently necessary and I am glad that the plan makes a small move in that direction.

If a plan is to work there must be discussion and agreement between employees, employers and trade unions. The worker participation element should be futher emphasised. The plan is silent on this matter, perhaps because a White Paper on industrial relations is to be published shortly. I would encourage the Government to work with the trade unions and not against them. Worker participation and job sharing are now accepted by the unions. Perhaps we should look at the area of legislation. A relaxation of some of the provisions relating to unfair dismissals and redundancy payments would encourage many employers to take on more people. The Government should try to come to some agreement with the trade unions since the youth document states that young people are prepared to make almost any arrangement in order to get a job. The Department of Labour when producing their document on industrial relations should try to get in advance the greatest possible measure of agreement with the trade unions. It would be far better to have young people working than to have people already in employment doing excessive overtime, at very little gain to themselves due to the taxation position. Worker participation, job sharing and changes in the present legislation, which protects workers in one way but precludes others from the workforce in another way, would help many people.

Minister for Finance (Mr. Dukes)

I hope we have an opportunity in the House to take up some of the points made by Deputy Ahern at the end of his remarks because they represent a very constructive approach and one which gets away from some traditions which have become rooted in our system and which are turning out to have the opposite effect to what was intended.

Deputy Coveney wondered whether there was a possibility of getting consensus within this House on what the content, aims and objectives of a national plan should be. Having listened to Deputy Ahern I am not sure that there is any great prospect of getting consensus. If I have heard correctly over the past few days when other Members of the Opposition have been speaking, I doubt if there is any great prospect of reaching consensus on the matter with, for example, Deputy Reynolds and other people on that side of the House. We should look at why that is the case.

Deputy Ahern supposed that this plan could have been worse. He said it was still deflationary and a statement of aspirations. I suppose those are some of the reasons Deputy Ahern would not give his full agreement. Why will he not give full agreement? I suspect it is because he did not pay much attention to the document called The Way Forward published in October 1982. I suspect that having gone through the process of producing this document, and particularly the analysis that underlies it, the Opposition, finding themselves in Opposition, decided to run away as fast as they could from the analysis they themselves made. If there is one reason we will not get consensus, that is it. The Opposition, following the publication of their plan, during the following election campaign and ever since have decided to run away from the analysis contained in the plan. I wonder what happened to it. I would not find a great deal of fault with much of the analysis in that document. What was wrong was something completely different. A lot of the analysis has much common ground with what is contained in our plan. The world has not changed all that much since October 1982. The problems we face and the answers to them have not changed all that much. What does seem to have changed is the preparedness of Deputies opposite to follow the logic of their own position, taken up both in Government and in Opposition.

The plan we have published has two simple objectives. The first is to increase employment, especially sustainable employment, and the second is to halt the rise in taxation, both direct and indirect. Consistent with those two principal objectives, the plan has a number of complementary objectives which must be achieved if the central objectives are to be attained.

Improved competitiveness, and especially labour cost competitiveness, is an obvious complementary objective which must first be achieved if sustainable employment is to be increased. We must take the international trading environment as given. I am not aware of any economy, or economic theory, which enables sustainable employment prospects to be improved without first improving competitiveness. This logical basis underlies the Government's plan. It also underlays The Way Forward and underlies the plans and strategies being used in all successful economies.

The Government's pay objective is that increases in average pay in the private sector should not exceed those in competitor countries. This average is expected to grow by under 7 per cent a year. By comparison, The Way Forward expected that average pay increases in the private sector in Ireland would be moderated to achieve a 4 per cent gain in unit wage cost competitiveness each year. This implied a differential in the growth in wage costs with our competitors of 2-3 per cent in Ireland's favour. It is curious to note that Deputy Haughey now seems to have abandoned this line. Why is he still not proposing it? Perhaps it is because he agrees with me that in today's circumstances the realism of what the Government have put forward in this plan is self-evident. If we can do better than the conditions which we have put forward as the basis of this plan, then we will have an added bonus which will be reflected in an improved economic performance. We are not going to assume this better outcome because we do not think the conditions now justify making a more favourable assumption in relation to cost competitiveness than we have included in the plan.

Increasing sustainable employment depends not only on improving the competitiveness of labour costs but also on improving market share. There are many factors which influence the share of world trade that Irish enterprises can capture. Two are especially influential in current circumstances — industrial expansion, especially in new technologically-based industries, and marketing. Their importance is recognised by the Government and exceptional provision has been made for both in the planned Departmental allocations set out in the plan. I refer, of course, to the substantially increased provisions which we have made for industrial grants and for the development of CTT activities along the lines set out in the White Paper on Industrial Policy.

Complementary to the second central objective of halting the rise in taxation is the need to restore balance to the public finances and especially to reduce the cost of servicing the national debt. Debt service costs can be reduced only if borrowing, particularly borrowing for unproductive purposes, is restrained. Total Exchequer borrowing in 1981 amounted to some 16¼ per cent of GNP. This Government has reduced it to 12¾ per cent of GNP for 1984 and plan to bring it down to under 10 per cent of GNP in 1987. These key figures are in themselves enough to show clearly the hollowness of Deputy Haughey's really extraordinary claim that no progress has been made in putting the public finances right: nothing could be further from the truth. Part of this reduction in Exchequer borrowing will come about autonomously as large scale capital projects are concluded, or, in some cases, removed from the Exchequer borrowing requirement, but part involves the scaling down of borrowing for current spending. If taxation is not to be increased, some curtailment of current spending programmes is inevitable. This inescapable fact of life is nevertheless now being disputed by the Opposition, in spite of the fact that they recognised it in The Way Forward. That document in planning to eliminate the current budget deficit by 1986, planned to reduce Exchequer current expenditure, other than debt service, from 38½ per cent of GNP in 1982 to about 30 per cent by 1987. Our target is just below 33 per cent of GNP in 1987, again underlining the realism which underlies our plan, and the rather two-faced approach of the Opposition to that kind of budgeting target.

These figures show very clearly the incoherence and inconsistency of the Opposition's criticism, not only of this plan but also of the Government's economic policy since December 1982. As I have said, Deputy Haughey's professed aim when in Government was to reduce Exchequer current supply expenditure to a level substantially below our 1987 target as a proportion of GNP. Yet he and his colleagues on the Opposition benches criticise Government current expenditure policy as being too restrictive, although they were taking a far more restrictive view in October 1982. Deputy Haughey wrongly claims that no progress has been made in putting the public finances right, yet he criticises every measure taken with notable success by this Government to secure that aim.

No wonder Deputy Reynolds spoke last week of "quicksand and fantasy"— he and his Opposition colleagues are up to their oxters in them, if not a bit further up. I want to discuss the objectives and aims of this plan in a constructive manner and I would like to be able to discuss the Opposition's criticisms and counter-proposals in the same way, but I have been unable to find the necessary coherence in the Opposition's contributions and I have been totally unable to find. since December 1982, any counter-proposals from the Opposition. I will, however, deal with their main criticisms one by one in so far as my time allows.

The first group of criticisms concern the framework and assumptions underpinning the plan. Deputy Haughey has stated that there are "a number of very dubious assumptions and suspicious figures". Deputy Reynolds stated that the figures underpinning the plan "are highly speculative, built on quicksand and fantasy". Let us look at a few of the key assumptions and forecasts.

The growth rates forecast in the plan have been accepted by professional economists both nationally and internationally as broadly realistic and not based on wishful thinking. I understand that one group of consultants, not noted for an uncritical approach to Government policy, have gone so far as to state that the "projections covering growth, external balance, employment and inflation are broadly right".

We have forecast GDP growth of 2½ per cent per annum over the three years 1985-87, at a time when we are reducing the Exchequer borrowing requirement as a percentage of GNP by an average of 1 per cent per annum. The projections underlying The Way Forward showed an average increase in GDP of 5 per cent per annum, while at the same time reducing the Exchequer borrowing requirement as a percentage of GNP by 2 per cent per annum. It takes very little thinking about those two sets of forecasts to determine where realism lies.

There has been a fair amount of comment on the assumptions concerning interest and exchange rates in the plan. For those who have an interest in history, I will refer them to the assumptions in The Way Forward. It is very instructive reading, although I have the impression the Opposition want to write this out of the history books because they act as if it had never been published.

The plan must be based on some assumptions concerning interest and exchange rates. They are not guarantees — I heard that phrase before, in October 1982. I can assure the House that if I could guarantee how United States interest and exchange rates would move over the next few years I would not be here. I would be working as a foreign exchange dealer making a killing, as a number of people might well have done if their hindsight of recent weeks had been in operation in 1979 or 1980. But they have not.

To be useful, assumptions must be as realistic as we can reasonably make them. The assumptions we have used are based on the views of many international organisations and the considered opinion of leading world bankers. Over the last two years I have spent a good deal of time exploring and examining the state of financial opinion and these assumptions are informed by that work. They are also accepted as realistic by domestic economic commentators.

Some play has been made here in the last few days of the fact that there was last week a tendency for US interest rates to firm up. This was advanced as another reason for being sceptical about the assumptions in the plan. Had we been having this discussion two weeks ago, I could perhaps have pointed to events on the US market showing a tendency for interest rates to weaken. Even today there is talk of a weakening in US prime rates. All one has to do is read today's Financial Times and one will see the latest buzz of speculation in that regard. I must say, however, that the opportunistic seizing on short-term movements in interest rates is no substitute for longerterm analysis and I would not for a moment claim that a slight weakening in the US prime rate today is another reason for having more confidence in the assumptions in the plan. For what it is worth, I would remind the House that in recent days two independent and respected economists, neither of whom is particularly reticent in criticising Government policy, have indicated that our assumptions in relation to interest rate movements and exchange rates are well founded.

Having said that, I have no doubt that I will still be berated for accepting the advice, however well founded, of outsiders and rejecting the partisan criticisms of the Opposition. In this regard it might be useful to reflect on what Deputy Haughey said on introducing The Way Forward on 27 October 1982, column 150 of the Official Report. He said:

It is based firmly on the skilled advice of all relevant Government Departments, including in particular the Department of Finance and of the Central Bank and independent economic experts.

Since December 1982 he has criticised Government policy for being, in his view, excessively influenced by such advice. Why has he now changed his approach? Let him tell us. The House and the electorate are entitled to know. If he has had some blinding revelation or insight which means we can dispense with that kind of advice, let us hear it. But let us not have a situation where the Leader of the Opposition praises all that kind of advice when he is putting forward a plan and rejects it out of hand when he is not.

I want to refer briefly to some remarks made in the House earlier today by Deputy Haughey concerning the movement of officials out of my Department. Deputy Haughey suggested that a number of people had left the Department of Finance — and I think I am quoting him right —"because they could not take the lies any longer". I know the Opposition are stuck for arguments and counter-proposals, but to make that kind of statement in this House without the slightest foundation for it is nothing short of scandalous. The facts belie it. A number of the people in question left the Department of Finance on promotion to go to other Departments, a couple have gone to the private sector and another is on a career break. To seize on that as a reason for suggesting that people, some of whom would be in a position to give the kind of advice that Deputy Haughey criticises the Government for taking, are leaving the Department and as being in some way an argument against the kind of economic policies the Government are following is really a council of desperation and is scraping the bottom of the barrel. It is a pathetic sight.

To expand further on the assumptions concerning external developments, I would say that they assume

basically a slow, not spectacular recovery in demand, continued moderation in international inflation and stable exchange rate developments. The assumptions are neither unduly optimistic or pessimistic. They represent moderate assumptions now being made by international agencies.

This may sound familiar. There is every reason why it should. It is a quotation from Deputy Haughey's speech introducing The Way Forward to this House — column 154 of the Official Report of 27 October 1982. This approach was, in his view, in order for The Way Forward but is evidently not so for Building on Reality where we used a similar procedure. I wonder why. Is it because it does not suit the kind of prejudgment which he would bring to a plan that carries the analysis that he had made further forward and makes decisions about it?

Another criticism which has been raised in this House concerns the labour force projections underpinning the plan. This is quite a complex area. Assumptions must be made concerning mortality rates, net external migration, proportion of females married and single, fertility rates, labour force participation rates and so on. In view of the complexities involved the Government set up a working group from the relevant Departments and the two foremost demographic experts in the country, one from the ESRI and the other from NESC. This independent group, using the most up-to-date data available, produced independent estimates of the likely increase in the labour force over the period of the plan. The range in their forecast was 10,000 to 15,000 per annum, depending on assumptions made concerning the variables which I have mentioned. This is the source of the labour force projections. We used the upper bound of their estimate so as to highlight the maximum employment needs of the economy. If we had accepted the lower bound, we would have had 15,000 fewer jobs to create over the period of the plan. We took the upper bound in order to be sure we had the most comprehensive view possible of job creation needs. We did not have the results of the work of that group until after the White Paper on industrial policy had been finalised. That was a matter of some discussion earlier on in the House today.

I turn now to a second group of criticisms concerning the public finance objectives in the plan. Here again the "Tadhg an dá thaobh" syndrome has been rampant among the Opposition. In October 1982 Deputy Haughey stated that "there is now widespread recognition of the need to limit the increasing cost to the Exchequer of the total amount of the public service pay bill if balance is to be restored to the public finances"—column 151, Official Report of 27 October 1982.

Why is his view now different on both public sector pay and balance in the finances? Why did Deputy Ahern act as if he had never heard what Deputy Haughey said last October?

In columns 151-152 of the Official Report of 27 October 1982 Deputy Haughey also said:

We will, following this debate, present to the House the Estimates and the Public Capital Programme for 1983 which will give effect to the commitments made in the plan relating to the public finances.

The 1983 Estimates published during the November 1982 General Election campaign were in many respects not underpinned by firm policy decisions. The present plan, in marked contrast, is based on decisions made as part of the preparation of the plan. I would refer the House to table 7-1 on page 136 of the plan where Members will see, set out by each departmental group, what the expenditure plans are for the period covered.

Deputy Haughey also had some things to say in October 1982 about expenditure control upon which he seems to have turned his back in the meantime. In that regard the Government's track record is far better than that of any Fianna Fáil Government in recent years. What is the response of the Opposition to that? The Opposition when in power and publishing their own national plan quite rightly made a virtue of their attempts to control public expenditure. We are now getting the usual cant about monetarism, bookkeepers and other words like that. They are nothing more than a smoke-screen to obscure the fact that the Opposition have not the courage to make any other proposals or even to follow up the logic of their own proposals in 1982.

Indeed, so bereft are the Opposition of constructive ideas that Deputy Reynolds was reduced to quoting from what he called "an influential magazine, World Business”. Deputy Reynolds misquoted from the last paragraph and I think he fell into a trap which was unwittingly set for him by some kind of back room guru because there is no magazine of that name. I suspect he saw a photocopy of an article in The Economist of 6 October. It shows just how much checking Deputies on the opposite side have done if they base their comments on that kind of misreading of what I regard in that article as a fly piece of rushed writing by the Dublin correspondent who does not seem to have worried too much about facts but got a nice racy little article together.

Deputy Haughey also selectively quoted from a speech made by my colleague, the Minister for Industry, Trade, Commerce and Tourism, Deputy Bruton, in October 1982. In quoting from Deputy Bruton's speech he missed the point of the criticism made at that time. Speaking about The Way Forward, in column 178 of the Official Report of 27 October 1982, Deputy Bruton said:

What is wrong with the assumptions is not that they are too optimistic but that decisions are not taken in the plan to achieve them.

As I have already stated, our plan is based on decisions. The results are clearly and unequivocally set out in the document in the tables on current expenditure, in the table on the capital programme and in the chapters that deal with the public finances and which set out clearly what we are doing, in so far as it is within the Government's power, to make sure that the budgetary, social, financial and employment targets are realised. This is a key consideration in the assessment of what the Opposition have said, both in opposition and in Government. In Government, they assume too much and in opposition they forget their own analyses. There is a great deal more that I could say but, unfortunately, I have not time to go into detail with regard to the taxation aspects of these proposals. I know that some of my colleagues who will speak in the debate after me will comment on them.

An Ceann Comhairle

Deputy O'Kennedy is now butting in on Deputy Noonan's time.

Mr. G. Mitchell

The Opposition were very quiet on the farm taxation.

Mr. Noonan

(Limerick West): If the Deputy will listen, we shall talk to him about it. Deputy Mitchell is confused, like the Minister for Finance. If the Minister feels that in this document there is hope for the future, surely that underlines very clearly that it is the Minister and his Government who are running away from reality, not the party on this side of the House.

I reiterate what Deputy O'Kennedy has said, that more than half the Minister's time — and he is the Minister who is responsible to the Government for economic planning — was spent criticising speeches made by the leader of this party and criticising the document, The Way Forward. Surely the public are entitled to some indication of the Government's programme for the future? Our people who are under 25 years of age are looking to the Minister and his Government for their prospects in the future. Judging by the speech which he has made, there is certainly no hope.

Mr. O'Kennedy

Hear, hear.

Mr. Noonan

(Limerick West): There is no hope for these young people who are growing up, looking to him and his Taoiseach for some hope for the future. He commenced by saying that the Government have two central objectives, the first of which is to increase employment, especially sustainable employment. In this regard the plan falls flat. The plan itself states that at the end of the period of the plan there will be no increase in employment. It states specifically that it will just hold the present rate of employment. In that one objective the plan can be faulted. The second objective was to halt the rise in taxation, both direct and indirect. Again, I have the greatest doubts that this will happen, seeing the record of the Government over the past two years. The Minister says that consistent with these two central objectives the Government's plan has a number of complementary objectives. Again, I fail to see them.

I refuse to call this document a plan. The title, Building on Reality. is very apt. The reality is that our economy is now on quicksand. It is all increased Government take from all sectors and no Government give. As a result of the Government's blundering as regards agricultural development both at home and in Europe, the Minister and the Government are slowly but surely strangling the Irish farming sector. This plan is further evidence of the Government's retreat from rural Ireland. There is very little to say about this plan as there is very little in it for the farming community. The significant point is that farmer's incomes will drop at least 7 per cent in real terms in 1984 and the prospects for 1985 are even worse.

Our memory is haunted by the problems caused in 1974 under a previous Labour-Fine Gael Government. The overall effect of the national plan will be seriously detrimental to the agricultural sector. This becomes obvious when the many vague aspirations contained in the plan are stripped away and we look at the very few concrete decisions affecting agriculture. Extra money will be taken out of the industry in various guises such as the new land tax, increased disease eradication levies and new ACOT charges.

While I welcome the increase in the beef-cow grant in the disadvantaged areas in 1986, the net effect is that millions of pounds will be taken out of farming. An industry whose progress is already restricted by lack of investment will not be able to sustain this added burden. Farmers are entitled to feel aggrieved that theirs, the only productive sector of the economy, is to be singled out for such harsh treatment. Extra taxation which takes no account of personal circumstances or financial commitments cannot be regarded as equitable. Those least able to bear this tax will be paying the cost of the complexities and inefficiencies of the present tax collecting system.

The document is full of generalities, exhortations, sermons and statements of the obvious. It is very short on specifics, that is, concrete measures to achieve the objectives or, indeed, the many pious hopes with which it is littered. Many chapters read like an answer to a university examination paper rather than a strategy for development. The paragraphs relating to agriculture are typical of this rather than the product of a mind that understands agriculture.

The section on agriculture in chapter 2 opens by saying rightly that significant growth will be much more difficult to achieve if there is not sustained growth in this sector. It then lapses into a series of generalities, vague objectives and pious aspirations with little or no hard and fast means of attaining them. The growth scenario presented for agriculture of a 10 per cent increase in output in the years 1984 to 1987, inclusive, seems reasonable at first glance. However, a major contributor to growth, the dairying sector, is now constrained by the super-levy. Attainment of an overall increase of 10 per cent will have to rely on a performance by the beef sector considerably higher than its recent record. New emphasis must be given to the expansion of cattle numbers and particularly to increasing the beef breeding herd.

Growth in every sector of the economy depends on investment. In this sector there must be a willingness and a capacity to invest. The former depends on confidence and the latter on spare resources available for investment. Save for the beef cow owner in the disadvantaged areas, there is little or nothing in the plan to encourage farmers to invest in higher output. Capacity to invest is being reduced by the doubling of the amount of money taken out of farming in taxation.

There are some good points in the plan, I must admit. I welcome the steps proposed for the elimination of bovine diseases, especially TB. I promise the Minister for Agriculture my full support in the implementation of these measures. What a pity that the decision to take this forward step has been negatived by doubling the disease eradication levy paid by farmers and taking a further £7 million out of farmer's pockets.

In dealing with disease eradication what a pity that the impression is given that only the Government are seriously concerned about the progress and efficiency of our TB eradication programme. It needs to be stated again and again that nobody is more disturbed about the progress or lack of progress than the farmers. Not only do they contribute indirectly to the cost of this scheme like everybody else, but they also contribute directly in milk and livestock levies. These are now to be doubled and farmers rightly will be more critical than ever of how this programme is managed.

There are dangers in imposing such levies for specific purposes. At first glance £3.80p may seem a small deduction from the price of a bullock, but it could be a substantial proportion of the profit on fattening the animal. The same can apply to the milk levy. The farmer's livelihood is threatened by disease in his herd. Naturally it is in his own best interest to see that everything possible is done to secure its eradication.

At best this plan pays lip service only to a small part of the four year plan for agriculture which contained many sensible proposals to encourage confidence and investment in agriculture. The four year plan was allowed to gather dust. While the Government continue to introduce incentives, levies and taxes on an ad hoc basis the present climate of uncertainty in farming will persist. Milk farmers will have to live with the realities of the super-levy. Cattlemen and grain growers are also suffering from its widening effects. Because of this, it is all the more important that the Government should do nothing to worsen the situation.

Despite all the reports, all the examinations and all the promises, there is still no land policy. We have the old clichés about land ownership, land mobility, leasing, and so on, with no single concrete proposal to promote land mobility and to improve access to land for aspiring young farmers. Over the past few years the conventional wisdom among many in agriculture was that the end of the Irish Land Commission could not come quickly enough. These calls were of tremendous benefit to the Government who are very keen to eliminate all national aids to agriculture. For that reason I was not in the least surprised by the recent Government announcement. Undoubtedly changes were needed in the whole area of land use and distribution, but I seriously question the motives behind the Government's recent decision. I am convinced that the sole reason for implementing this cutback is to reduce expenditure on farming.

If one examines the actions of the Minister and his colleagues over the past couple of years, their intentions are as obvious as they are despicable. There have been cutbacks all along the line. The farm modernisation scheme was axed. Lime subsidies were dropped. The Al subsidy was halved and all other aids were withdrawn. We had increases in the different levies and new charges for farm advice and visits. All these have had a chain reaction in farming.

We were promised a land leasing Bill which would make a significant impact on land transfer and use. If such a Bill had been introduced the scaling down of the Land Commission might have made some sense if its objectives were to be attained by other means. The Bill put before the Dáil by the Government was an absolute disgrace. It was an insult to all who heard and believed what the Minister and his junior Minister had promised. I do not believe the Bill as drafted will help land mobility in any way.

In this context the Land Commission must be considered. In effect, there is now no mechanism for thousands of progressive small farmers to acquire additional land. What I find equally disturbing in the plan is the fact that there is no awareness at Government level of the serious implications of such a gap in our farming infrastructure. Large tracts of land will now be purchased by big farmers, businessmen and generally speculators at the expense of the small and medium-sized family farm. I doubt that the Minister can be satisfied with the present situation. If he has been pressurised by other Government Ministers into conceding a sop to the Labour Party, he should do something urgent to retrieve his position.

When seeking significant growth in agricultural output, we must look to the dairying sector which has always given a lead. The dairy farmer is now prevented from continuing to give this lead. The super-levy and the quota system place a ceiling on milk output. This will begin to bite next year. He cannot participate in a farm modernisation scheme and the land tax will withdraw more money from him. The quota system prevents him from increasing his output of milk to meet the new tax.

The future for the dairying sector is not bright and, unfortunately, the prospects of achieving a higher contribution from agriculture to the national economy in the years ahead are very dim. The Minister could relieve the position of the dairy men by negotiating a relaxation of the farm modernisation scheme to allow them to participate in that scheme. This would be particularly important in the case of new entrants or somebody taking over an undeveloped dairy farm.

A new element of uncertainty has now entered the dairying industry with the decision of the EC Commission to reduce Ireland's quota by 58,000 tonnes, 13 million gallons of milk. I dealt with this last week, nevertheless it is worth repeating that the present Minister for Agriculture, Deputy Deasy, is guilty of the greatest bungling of all time by any Minister for Agriculture since the foundation of this State, not alone now but at the negotiations of the super-levy deal earlier this year when quotas were imposed for the first time on milk production. This is a national issue. Ireland is entitled to its rightful quota, and I call on the Minister to take all necessary action and go to the very limit to secure the country's rights. The milk quota for the coming years will be crucial to this country. I hope that the Minister can redeem himself now, and if this is not possible I repeat my call to the Government and the Minister to compensate the dairy farmers for the incompetent handling of the Minister of this super-levy deal which is a devastating blow to the Irish dairy farmers. The loss of 13 million gallons of milk will reduce our national quota from 4.65 per cent to 3.5 per cent, resulting in a tax on Irish dairy farmers in the region of £10 million. This reduction will condemn thousands of dairy farmers to financial ruin. This loss is an unbearable and unfair burden on the farmers, not alone the dairy farmers, because the super-levy has now a chain reaction in so far as it has affected all other sectors, most noticeable the grain and beef sectors. The Minister has a responsibility to compensate the farmers for this great national scandal.

It is incomprehensible that the political head of a Government Department can blame his officials when he himself, the Minister for Agriculture, Deputy Deasy in this case, made a complete mess of the super-levy negotiations from the very beginning. A Minister is responsible for his actions and there is no point in attacking his own officials. It is constitutionally improper as these officials are not in a position to answer for themselves. This never happened before in any company, State, semi-State or otherwise. The boss takes the rap and, unlike the Minister, does not hide behind his officials or employees of the company.

I said last week that the Minister misled this House because when he was answering the question I was sure he was aware of the decision by the Commission. I repeat what I said last week that the Minister for Agriculture should now consider his position very seriously. Again I call on him to resign because of the stand he has adopted with regard to this super-levy bungling not alone now but over the past eight or ten months. This is not good enough because of the importance of agriculture to the economy. This country's economy is based on agriculture and will continue to be based on this sector in the foreseeable future. Therefore, it is vital that this Government get their act together with regard to agriculture before it sinks to a situation where it will be impossible to recover, and the only way this can be done is by replacing the present Minister for Agriculture. Again I ask him to resign because of what has happened.

I want to deal briefly with other sectors mentioned in the agricultural chapter of the plan. Livestock and breeding herds as outlined in the Fianna Fáil document The Way Forward represent still the greatest single economic need for agriculture. It is vital to increase the livestock breeding herd, particularly the beef cow numbers which fell from over 700,000 to slightly over 400,000 within the last decade. It is necessary to give financial incentives to increase these as, for example, given by Fianna Fáil Governments in the calved heifer scheme introduced in the sixties. A financial incentive must be provided so that extra numbers can be kept. Tillage and pigs were left to their own devices, particularly the pigs sector at a time it faces considerable difficulties.

I wish to deal briefly with the section dealing with the advisory services. It is a backward step to charge farmers for an advisory service tailored to their individual needs as is outlined in the plan. All too few farmers already see an agricultural adviser and, as the plan says, the recent change in Irish agriculture emphasises the need for greater efficiency in the industry to secure that its competitiveness is improved and farm profitability is maximised. Neither do I like the idea of ACOT being asked to concentrate their advisory services on those farmers who have the resource and motivation to achieve development. All farmers above 20 acres will be called upon to pay the land tax, and the revenue collected from charging for advice will be very small compared to the damage done to farmers not availing of the services of an adviser because of the charge.

It is now some time since a number of Ministers of State formed a committee to look after the food processing industry. I would like to see the result of their deliberations. This is absent from the plan and there is no indication as to how we are to move into the future with regard to the food processing industry.

The only productive sector of the economy which is going to be left significantly worse off if and when the national plan is implemented is the farming community. Some farmers on hearing the news of this Government's plan were relieved to hear about farm taxation of £10 per acre. Of course, this Government's handlers also ensured that the statement spread that the farmers got off lightly. On another look the farmers will have second thoughts as a tax on Irish land is now being introduced by a native Government for the first time and the not-so-fine print makes it clear that there will be future adjustments of the rate of farm tax. The door is open for increasing the rate whenever the Government wish. The principle of a land tax is both unwise and inequitable. It is unwise because it will lead to a whole series of anomalies and disputes as to what constitutes an adjusted acre. I wonder why this concept was not defined in the publication. A land tax is inequitable because the only way to tax farmers is by way of a tax on income which will take into account family circumstances, expenses and depreciation as in the case of the rest of society. Also it should be so structured as to promote development particularly on mediumsized farms and on buildings recently taken over by a son, for example. The Labour-Fine Gael plan for government left no doubt as to the amount of money the new tax will withdraw from farmers — about twice the amount produced at present. At a time when farm income will not keep pace with inflation, to remove such an amount is to guarantee at best stagnation in agriculture and at worst a fall in output and in the standard of living of most farming families.

An Ceann Comhairle

The Deputy has three minutes left, and the Chair wishes to draw the Deputy's attention to the fact that during his contribution he said that the Minister for Agriculture knew when he was answering a question in the House of the EEC Commission's decision on a certain matter. To the Chair's knowledge because he was in the Chair when this matter was last raised, the Minister for Agriculture denied that he knew that and it is customary in the House to accept a Member's denial.

Mr. Noonan

(Limerick West): If the Minister denied it I accept that but that does not prevent me from having my own thoughts. I can have my secret thoughts.

An Ceann Comhairle

I take it that the Deputy is withdrawing his statement?

Mr. Noonan

(Limerick West): I do. The new system is to be based on the adjusted acre as determined by the Land Commission but the document does not attempt to define the Land Commission's formula for converting land areas to adjusted acres. I doubt very much if such a formula, based on scientific information, exists. If it does the House should be told about it.

The document indicates that the legislation will provide for the right of appeal against the adjusted acreage. The House can rest assured that there will be so many appeals that instead of abolishing the Land Commission the number of staff of that body will have to be doubled to deal with appeals. I am opposed, and my party are opposed, in principle to a land tax. The only fair way to tax farmers is on their actual income taking into account family circumstances and so on. It is interesting to note that the Labour-Fine Gael plan for Government published in 1982 stated specifically that both parties were totally opposed to the implementation of a land tax. According to a report in the Irish Independent in November 1982 Deputy Dukes, then spokesman for his party on Agriculture, declared Fine Gael's opposition to any new form of capital taxation on farmers to replace agricultural rates. In that area we have witnessed another of the U-turns by Fine Gael.

It is difficult to see how the Government can seriously believe that there is some vast amount of surplus money in farming. I suggest that the motive behind the extra taxation is political. Like so much of the plan it is being introduced to keep the Government in office for a few more months. It is unfortunate that our farmers must form part of the glue for this purpose. Our farmers, particularly those involved in the dairy industry, will have to live with the reality of the super-levy. Cattlemen and grain growers are also suffering from its wide affects. It is because of that that it is very important that the Government do not do anything further to worsen the drastic reduction that has taken place in farm investment.

Mr. G. Mitchell

The objectives of the plan have not been stressed too often during the debate. The first objective is to come to terms with the unemployment problem, a problem which is not created by the world recession only but which is being contributed to by the worst, or biggest, depending on how one looks at this, silent transformation of industry since the industrial revolution. Even newspapers can be printed now with a relatively small number of staff compared with the numbers required some years ago. Fewer people are needed to operate petrol pumps and a whole range of machinery is now replacing manpower. That has contributed to our unemployment problem and, with the recession, has given the Government an enormous problem to deal with. The objectives in regard to unemployment set by the Government are the kernel of the plan. The National Planning Board who advised the Government, in spite of suggesting some very stringent rules such as the restriction on mortgage interest relief and mortgage subsidies which the Government did not accept, projected an unemployment figure at the end of the planning period of 259,000. The Government have stated that the figure will be in the region of 50,000 less than that number. That will be an achievement when one considers the extent of the world recession, the silent industrial revolution and other difficulties we have gone through. The way that is to be achieved is outlined clearly and in a realistic manner in the plan. The plan does not refer to a 7 per cent growth as suggested by Senator Martin O'Donoghue some years ago but to a realistic figure of 3 per cent growth. That figure can be substantiated and relied on.

There is little point in referring to massive improvements overnight when they are not possible. People who build on misleading information very soon become disillusioned and the whole objective goes by the board.

The second objective in the plan deals with taxation, one we should all be concerned about. Fianna Fáil got off very lightly in the media, and in the House, in regard to their attitude to taxation. Hundreds of thousands of people have marched throughout the country in protest at the outrageous imposition of PAYE on their salaries. The system is a disincentive to work and an incentive to go sick and live off the State. People do not want that incentive and have been protesting about the system. However, we have been ignoring them but on the first occasion the Government move to do something about PAYE taxation they are met with blanket opposition by Fianna Fáil. There was no mention of the Government's proposals in regard to taxation in the media and it was seldom referred to in the House. The reality is that if the Government keep taxation at its present level of 36.5 per cent and double the take from farmer taxation, which is the objective in 1986, it will be possible to start down the road towards reducing the burden on the PAYE sector. The latter is unfair, unjust and an improper burden. It is one which has been carried in a responsible manner by the people who could have put on a lot more pressure than any farming organisation or other group but who chose proper democratic protestations to put forward their case. However, they were largely ignored until the plan was produced.

It is an affront to the PAYE sector that Fianna Fáil should be objecting to farmers being asked to contribute more to the national coffers so that the PAYE sector can get a reduction in their contribution. Such a reduction is long overdue because the PAYE sector have been carrying many sections of the community for years. I am pleased that in spite of the difficult economic climate, most of which appears to be behind us now, we can now start down the road towards a reduction in PAYE. That is central to the commitment to keep taxation at the present level of 36.5 per cent while increasing contributions from the farming sector.

The plan clearly outlines where the Government are going and the state of the public finances at different stages during the years covered by the plan and at the end of it. It has put paid to the suggestions that the Government should eradicate the current budget deficit completely by 1987. Instead the Government have substituted an objective to go for 5 per cent, a very sensible move. We are advised continuously by the Central Bank, and other economic commentators, that the Government must eliminate the current budget deficit entirely over a three or four year period. That has been the cry for a long time. The Government have said that this will be the state of the economy, this will be the state of public borrowing, this will be the state of the national debt, this will be the state of the budget deficit. Everybody knows.

The international investors who lend to Governments recently had a glowing article in their magazine about the position of our public borrowing. We know things will be difficult and will continue to be difficult but, largely, the plan sets out objectives to be achieved in the national interest. It may make dull reading for people who are interested in titillation or in magic wands, but everybody in the House knows that anything that will be achieved will be attained by hard work, by dedication, by planning and by commitment. That is what the plan provides for. It does not provide any magic wand or overnight solution, no statement of affection for the population. The Government's objectives are achievable if these realities are faced.

Everybody knows where we are going in the next three and a half years because it is set out in the plan. Given any sort of favourable improvement in the international economy the figures in the plan can be exceeded. One of the difficulties we have is that despite our best efforts a large number of people, particularly elderly people, will be out of work. We must ask ourselves what objectives are we setting to absorb the leisure time those people will have. What are we offering to them to replace the therapeutic value of work? The Government are offering to contribute help in that regard but it is something we must address ourselves to because there is no point in pretending it will not be there.

By and large, interest groups are knocking these objectives. The farmers, the Opposition, the trade unions, the teachers have all been knocking them. The public servants, in well paid secure employment, do not want to make any sacrifices at all to achieve the objectives. Of course the experts are divided. John Kennedy's comment on experts in regard to Cuba is something we should be thinking about. We Deputies are experts in knowing the problems of our people. We meet them day in, day out. Some of the experts, some of our big businessmen who have been very vociferous in the newspapers, are the so-called experts who would not know how to read a set of figures in relation to public finance if put down in front of them by a paid person. Some of those experts have described the Government between 1973 and 1977 as promoting rampant socialism and threatened to leave the country because the Government then were addressing themselves to a very difficult situation. Those people have to give leadership and play their role. Those of us in constant touch with our communities can see the hardship there is, the sacrifices they have to make; but those people I have been talking about do not give two damns about them because they can go to their villas in California when the chips are down. It is not good enough that they can pick the cream and then moan and complain when asked to contribute to the national economy.

It is significant that these commentators' criticisms have been confined to this Government when Fianna Fáil have been in Opposition. There has not been one word from them while Fianna Fáil were in power. It is quite clear that they have not even a slight notion about what our policies should be. They want us to do what they would not do themselves in their own businesses because they would be out of business with strikes. If people want a good business climate there must be leadership and sharing and sacrifice.

On farmers' taxation, I was interested to hear Deputy Noonan from Limerick West talking about the terrible hardship about to be imposed on farmers. The same farmers, many of whom I acknowledge are in great difficulty and do not have great incomes — all of them work very hard — but they are not contributing their fair share. Many farmers contribute substantially without any whingeing or crying, but the fact is that less than 5 per cent of farmers' incomes last year was contributed to the Exchequer in income tax. We can take another gauge, the figure of taxation from farmers as a percentage of what the Government gave directly to agriculture. In 1980, the farmers contributed something like 30.8 per cent of the Government subsidies, but in 1984 the figure was as low as 13.2 per cent, down by almost one third. So the moaning and the groaning and the whining and the grieving for the wealthier farmers who are well able to contribute are unacceptable. There is no justice here, no case for it. It cannot be defended, it is a totally improper argument to put forward.

I welcome the introduction of farmer taxation. I am sorry we will have to wait until 1986 before it is implemented. I understand there are problems but I would like to see it introduced in 1985 if possible. I know there is a strong farming lobby in the House. It is time that those of us who represent urban constituencies should be more vocal as regards protecting the interests of those who are paying more than their fair share of taxation. There is a reluctance to do that in case we create a division between the urban and rural communities but the way to avoid that is to be fair and just not to bully, harass, or blackguard. Anyone who is committed to fairness and justice must welcome farmer taxation.

I welcome the increased contribution which the Government are making to road construction. This will generate employment and give the economy a necessary lift. I should like to see a more extensive use of toll roads. It is possible to invest in toll roads without the Government having to borrow.

There is one essential difference between Fianna Fáil's economic utterances and the plan put forward by us. There is an objection on this side of the House to borrowing for day to day purposes because it is unproductive and there is no return. However, we have no problem about borrowing for productive purposes because the interest repayments can be met by the return on that production. Toll roads would pay for themselves and create in the region of 13,000 jobs. This is something we should examine and target for. It can be achieved and has the advantage of adding to the infrastructure which would improve our economic opportunities for employment in the west which in turn would result in a better distribution of the population.

The national lottery is a good idea. Since 1979 I have been chairman of the Dublin Corporation finance committee. I have been raising this matter for five years. Two years ago it was at an advanced stage. People came from America and Australia to act as agents. They were told that they wanted to run a raffle and had to listen to other such abuse. Most modern European countries and most American states have lotteries which are run very successfully. The Government intend to give part of the income from the lottery to sport. That is a welcome move. I hope they might consider giving part of the income to local authorities. They will act as agents for the Government in running the lottery. The three local authorities in Dublin have made specific proposals in relation to the Dublin lottery.

I welcome the Government's commitment to education. One of the difficulties is that 60 per cent of expenditure on education is fixed expenditure, that is it goes on salaries and overheads. Any pruning that must be done has to be in the non-salary area and that is very difficult. I hope the Minister will look at the suggestion of having integrated education for mildly mentally handicapped and normal children. To this end I made a proposal, which I think is achievable, for the implementation of a pilot scheme in the Dublin area in a school which is in the vicinity of a mentally handicapped institution. With the funds available under the plan I hope the Minister will consider the integrated education of mildly mentally handicapped and normal children.

As regards housing, we should be considering 100 per cent loans for housing. People say this is a bad idea because it does not give people an incentive to save a deposit and makes them enter into commitments they cannot meet. That is a load of balderdash. Houses are being built in Dublin city at the rate of 2,000 a year. People are given these houses for nominal fixed rents, in some cases, comparative to their income. The question of 100 per cent loans does not enter into it. If they decide to buy their houses we give them 100 per cent loans with discounts. The argument that there will be no incentive is dead, nailed by that policy. The argument about people entering into commitments they cannot meet is not sustainable. That might have been the case before the introduction of the Housing Finance Agency, They introduced a scheme whereby income and repayments were related. If a person's income went up so did the repayments but if it fell the repayments were lower. There are many people who would gladly buy their own houses rather than wait on a corporation housing list if they knew that a fixed percentage of their income would go on repayments. They could choose where they would live and so get away from the stigma of a local authority housing estate. They could choose their neighbours. In a local authority housing estate one or two families can cause problems for everyone else. There are some cases of that in my own constituency.

It could be funded out of the funds that are already committed to building houses. Local authorities build houses which cost the Exchequer substantially more than they cost private builders. We are not getting value for money. Everything indicates that a 100 per cent loan scheme is achievable. We seem to have a hang-up about ensuring that everyone pays a deposit and makes repayments. We do not ask people about that when we give them the key to a £50,000 house in the inner city. I would argue strongly for the extension of the Housing Finance Agency scheme. I welcome the commitment to housing and the £5,000 grant for local authority dwellers who wish to purchase a private house.

The Government should govern, Parliament should legislate and hold the executive responsible for how they govern. That should be done without apology or looking over our shoulders to see who we are displeasing or pleasing. If the Government are committed to this plan — I believe they are — they should go after it with guts, steel, resolve and avoid doing U-turns. They should stand up to interest groups and not be afraid of controversy. Nobody wants controversy for the sake of it but it is time politicians took a stand on issues and were not afraid to be controversial when they believe in something. The Government should go after this plan, dedicate themsleves to its implementation, steel themselves to the calls of vested interest groups and depart from the process of managing the economy. This is not a management team per se. It is a Government. They should govern and decide where they are going and implement their objectives. They should lead the people and convince them by their arguments. I am confident that there is a big market among the people generally for leadership that takes on the problems facing us and which puts forward genuine plans for solving those problems. In other words, the people are looking for tough and strong Government action to deal with our problems.

I will be one of those Deputies who in the coming years will be monitoring closely the progress of the plan and having regard to the steps being taken at the various stages to implement its objectives. Monitoring of the plan is not something we should leave to the Opposition. I wish the Government well in implementing the plan. I hope it succeeds and that it may even exceed some of its objectives.

Mr. Lyons

My initial reaction to this plan which was presented to us as an economic document was one of complete disappointment. Having regard to the hopes that were raised for the plan and to the amount of publicity that surrounded its presentation, it falls far short of our expectations. I described the plan at the time of its presentation as a super-glue job and after further examination of the document I have not found any reason for altering that description. I consider the plan to be a super-glue job in that it pulled together the differing views in the two parties to Government and healed the rift that was obvious between the two.

It is more apt to talk of what the plan does not contain rather than what it contains especially in so far as the whole area of employment is concerned. If the Government consider that they have survived the embarrassment of their poor performance in the past couple of years, they are very naive; but they are even more naive if they think that this document will satisfy the people. It appears also that the Government are of the opinion that in this publication they have superseded the separate policy statements and commitments which emanted from Fine Gael and Labour before the last general election. We must add to those the putting together of a joint programme for Government, the introduction of so many advisers along the way and the many reports that have been commissioned. Various task forces were set up. There was the one at Government level and the one who, to be fair, did tremendous work in preparing for the Government a report on the Cork area. It must be a source of great sadness to that task force, which I might add, did not include a representative of the trade union movement, that their report has not seen the light of day since its presentation to Government. Despite the many calls from TDs from the Cork area, we have not been made aware of what is in that report. The Government will need to have a rethink if they are of the opinion that these failures will be overlooked by the electorate.

The Cork area has suffered most in terms of the loss of jobs because of the demise of a number of large industries there as well as the loss of many smaller businesses and industries who were engaged in servicing and supporting roles. Despite the continuous representations of Cork Deputies, and in particular of the Fianna Fáil Deputies from the area, the Government have not responded to the appalling situation in Cork. By nature we in Cork are a resilient people. We do not expect a great deal from this Government but we would like at least the minimum of encouragement and an appreciation on the part of the Government of how serious the situation there is. We still have many traditional industries operating in Cork and giving good employment, but I fear that because of the policies being pursued by the Government and because of the lack of economic planning as evidenced in the document under discussion, we may find that more employment in the Cork area and indeed throughout the country will be put in jeopardy. When we talk of employment we are talking about the greatest single problem facing our people. However, let me offer some ray of hope. I am confident that with encouragement from me personally as spokesman on industry and employment and from Fianna Fáil in general, Cork will be helped to overcome its problems. But the Government will have to do much better in the area of job creation than has been the case up to now.

To take agriculture, for instance, the potential for employment in industries related to that area is enormous but we must create the proper environment and we must have a commitment from the Government on the creation of these jobs. Unfortunately there has been a serious lack of encouragement on the part of the Government in respect of agriculture and of the spin-off industries. Surely it is unacceptable that we import food of up to £800 million in value. At least 50 per cent of that food could be produced at home. It is time we heard from those Ministers of State who were given the task of examining how the State could support services in the agricultural industry and how these services could be made more efficient.

There should be a greater co-ordination of food strategy at national level. The country is too small for the present situation of disjointed effort by a number of bodies. I would support the Minister and the Government in giving a lead in this direction.

We have the potential for development in forestry and fisheries. The possibilities in the development of fisheries are enormous yet in the much vaunted plan before us the Government allocated a mere seven lines to the industry. There is a clear need for innovative ideas to make use of our natural resources in the best way possible. We know from experience the number of jobs that have been and that can be created in forestry. When the Government were setting out what they purported to be a plan for the next four or five years, why in God's name did they not give that industry the attention it deserves and thus provide thousands of jobs? Surely we can no longer accept importing timber that could be grown successfully at home. We know that the growth rate of timber here is twice the European average. However, when we realise what the Government did to the timber industry when they pulled the plug on Scarriff, we should not be surprised that they are not paying any attention to developing our natural resources, thus providing much needed employment.

It is interesting to recall the first sentence of the contribution of the Minister for Finance this evening when he said that the Government plan has two central objectives, the first being to increase employment and especially sustainable employment. That rings very hollow when we consider what has happened with regard to our natural resources. The Government party members may consider that this plan will supersede all the failed promises and commitments given in the past two years. It is no harm to put on the record an indication of the apathy in Fine Gael which was reflected in the extraordinary attendance at the opening night of their recent Ard-Fheis when only 100 people were present. That says a lot for the apathy and the credence that exists with regard to this Government even among their own. The plan admits that unemployment will be higher in 1987 than it is now. When we consider that more than 216,000 people are idle now, the credibility of which we have heard so much will be replaced by reality, but not the reality intended in the title of the document before us.

This Government came to power promising to reverse the unemployment trend. Yet, since 1982 unemployment has increased by 47,000 and that is equivalent to 100 jobs lost every day. The plan does nothing for the unemployed. It ignores them and it does nothing to alleviate the social consequences of that unacceptably high level of unemployment. In the budget last February we indicated to the Government that their imposition of direct and indirect taxes and the raising of customs duties would soon reach the stage of diminishing returns. At long last the Government in their plan have acknowledged their error and they have indicated a reduction of customs duty on spirits. Why stop at spirits? A great deal of the spirits consumed here is imported. What about the breweries? There are two in my constituency, the firms of Murphy and Beamish. Is it the intention of this Government to put more people in the Cork area out of work and to decimate it to an even greater extent? I said earlier, and I repeat it now, the people of Cork do not need a lot from this Government: we need just a little and we will survive. However, the Government have ignored the presentation and the submissions made by the firms of Murphy and Beamish to safeguard existing employment in their businesses and also in the breweries in Dublin and throughout the country.

Last February during the debate on the budget we indicated that the rate of VAT on newsprint was unacceptably high. We realised that advanced technology in the production of newspapers would cause some adjustment of staff but we pointed out repeatedly that the high rate of VAT on newsprint was a greater danger to the survival of jobs in that industry. It has taken the Government just a few months to realise that what we said then was correct. I am sorry they did not adopt the proposal by Fianna Fáil: we promised that in Government we would reduce VAT on newsprint to 5 per cent.

In a policy statement by the Youth Employment Agency in December 1982 they stated that programmes for young people based only on concepts of temporary employment should be replaced by an approach which addresses itself to young persons employment problems. Yet the document continues to promote the concept of temporary employment in its social employment scheme. The setting up of Comtecs is but another temporary measure which fails to tackle the real problem.

The plan has done absolutely nothing for the over-burdened PAYE sector, whose burden will not be reduced one iota. Still existing is the lack of incentives to employ people. The plan, supported by the Labour Party, will abolish food subsidies, tax children's allowances, levy more local charges, increase third level fees and school transport charges, cause cutbacks in health services, reduce employment in local authorities, health boards and State bodies in general. That is some plan, some programme.

Another area in which employment can be created is that of tourism, the south-west region being the most popular in this respect. The Government will not be allowed abrogate their responsibilities to the cross-channel ferry to our second largest city, to the greatest tourist-earning region. There are the semi-State shipping bodies, the B&I and the Irish Continental Line along with the wholly-owned State body, Irish Shipping Limited. There were tremendous efforts made by individual firms and statutory bodies in Cork prepared to take a 49 per cent share in the provision of a ferry to Britain, an indication of Cork's determination to help itself, to which the response from the Government and State bodies was negative. Time is expiring, brochures must be printed and preparations made for visitors next year. I am now calling on the Government to take the necessary effort to implement a cross-channel service generating employment directly and indirectly. There is no doubt that 1984 was a disastrous season with regard to tourism. There is a moral obligation on the Government to step in and ensure that there is in being a ferry from the port of Cork to Britain during 1985, and to do so now. It is curious that the Government can make available £30 million for a new runway at Dublin Airport while at the same time offering little or no support to a vital cross-channel ferry between Cork and Swansea. Our city, devastated by unemployment at present, is being offered only palliatives by our present legislators. They should do something to help.

Some months ago in this House I and three of my colleagues asked the Government to establish immediately an emergency job creation task force for the Cork region headed by a Government Minister and a representative of all interests in an effort to counter the huge job losses in the area. That was a parliamentary question of Tuesday 29 May, 1984. Part of the reply to that question read:

In relation to the second part of the Deputies' question, the House will be aware that the Government established a high level expert working group to advise on the impact of measures being taken to provide jobs in the Cork area, the action needed to provide additional new jobs and all action possible to safeguard existing viable jobs. The decisions of the Government on the recommendations of the working group were announced on Friday, 11 May 1984. The principal decisions related to the designation of Ringaskiddy Port and Industrial Estate as a free zone, the designation of Ringaskiddy Industrial Estate and three Cork city industrial estates for higher IDA grants...

When I asked the Taoiseach today when that legislation would be introduced so that those commitments could be honoured, the answer was that he did not know.

Must we continue to borrow money to pay people out of work while refusing to borrow money in order to put people back to work? It is my contention that the Thatcherite and short-sighted policies of this Government will leave this country in an unending spiral of unemployment. This is not a plan for the future. It is, at best, a standstill plan to keep the Coalition in power, prevent Fianna Fáil from forming a Government, one that would inspire confidence in our people and get the country back to work.

It is fully accepted that unemployment is the country's most serious and pressing problem. It is unacceptable to have unused resources with the cost of assisting those unemployed constituting an enormous burden on those at work. In addition, there are the human and social costs associated with having a large group of disillusioned people, daily becoming more numerous, carrying a high risk of political and social unrest. Is it not true to say that crucial to the creation of a business environment, conducive to enterprise, is a coherent, national strategy, co-ordinating the development of public and private sector enterprises in such a way as to ensure the maximum benefit to our economy? Such is not the position obtaining under this Government.

I have a message for this Government: ease taxation and provide the kind of expenditure which will stimulate our stifled economy, giving back to our people the incentive to work and to create work.

Another industrial area that appears to be receiving little attention from this Government is the construction industry. Each time Coalition Governments are in power the construction industry falls to the ground. It is now rated at being at its lowest level since the period of Coalition Government between 1954 and 1957. It is easy to understand why. The first thing this Government did on assuming office was to take £200 million out of the public capital programme Fianna Fáil had prepared in their document The Way Forward. I appeal to the Government to pay attention to the construction industry. The quickest way to create work and downstream employment, after agriculture and tourism, is through the construction industry. Why does it follow with Coalition Governments that the building trade — and the trade will confirm this — are fearful of them because they ruin their industry? It must be remembered that much of the available materials, beginning with the gravel to make the blocks, the water to produce the cement — boosting downstream employment for everybody right down to the finisher, the man who puts on the last daub of paint — are indigenous. Nevertheless we have a Government whose record of inefficiency and downright neglect of the construction industry is being maintained.

In regard to the third largest industry about to suffer a demise in the Cork area — Cork Verolme Dockyard, in which there is a 48 per cent State involvement — I should say that last week we wrote to the Minister appealing to him in every way we could to indicate to us what the Government proposed doing with regard to that situation. We were told we could not blame the Government when Ford and Dunlops closed down but we can lay the blame on this Government if they do not see to it that the skills and efficiency of the workforce at Verolme are put to the best use for the country. The generations coming after us will remember that neglect by this Government. It is very difficult not to be emotional about the situation in which we are trying to exist in the southern area. I urge this Government to take action.

Minister for Industry, Trade, Commerce and Tourism (Mr. J. Bruton)

I congratulate Deputy Lyons on his promotion within his party and on the very important spokesmanship he now holds. I wish him well as Opposition spokesman.

Mr. Lyons

Go raibh maith agat.

Mr. J. Bruton

I should like to speak about some matters on which Deputy Lyons will not agree with me, but the facts are there. We have had quite a remarkable recovery in industrial production this year and I will give some figures to demonstrate this. In the first six months of this year the index of manufacturing production was 12.9 per cent above the corresponding period in 1983 and it is expected that for 1984 as a whole it will be around 12 per cent over 1983 as a whole. It will be pointed out that to some extent this is concentrated in a few sectors. Obviously the computer or data processing sector has been very successful. There has been a 50 per cent increase this year in output from that sector, but even taking that into account the Economic and Social Research Institute have stated:

Although the size of the increase owes much to the rise of over 50 per cent in the output of office and data processing machinery, the broadening base of the industrial recovery can be seen in the fact that seven out of the ten industry groups contained in the index showed an improvement over the corresponding period of 1983, as did 17 out of the 28 sub-groups. Traditional labour intensive industries such as knitting and clothing have been experiencing a significant increase in output over 1983.

I have noticed during some of my visits abroad, both to the United States and elsewhere, an increasing presence by Irish clothing manufactures in the marketplace, based not just on price advantage which we clearly have in the dollar area but also on a much more aggressive marketing strategy on the part of individual firms working together through the Irish Fashion Group, for example, to market their products effectively. This industrial recovery is of very great significance and although we have had a decline since 1979 in the number employed in manufacturing I am confident that during the remainder of this year we will begin to see a turnaround and numbers in manufacturing will begin to increase.

Manufacturing generally has gone through a major productivity shake-out all over the world due to increased automation. For instance, although industrial output in Japan has continued to grow at huge rates throughout the seventies, at no time during the seventies or the early eighties has manufacturing employment in Japan been as high as it was in 1970. They have been able to have an increase in output while having fewer jobs in manufacturing. Ireland has performed by that standard very well indeed, in so far as we continued up to 1979 to have an increase in the number employed in manufacturing despite technological changes which were tending to reduce the amount of labour for a given amount of output. Since 1979 there has been a decline but I am hopeful that during this year we will begin to see manufacturing employment rise.

It is the target of the Government in their White Paper on Industrial Policy to have an increase over a ten-year period of between 30,000 and 60,000 in the net number of people employed directly in manufacturing, in addition to the numbers employed in various service industries which increasingly represent the way manufacturing contributes to employment. There are bought-in services of all kinds. That is a highly ambitious target. Some commentators have tended to suggest that we are not as ambitious as we should be in terms of the direct number of jobs to be created in manufacturing. When you compare it with the experience I have described in Japan and the fact that in almost every country in the industrialised world they are predicting increased output but reduced numbers employed directly in manufacturing, this Government's aim for an increase of the magnitude described over a ten-year period, an annual rate of between 3,000 and 6,000, is a highly ambitious programme for job creation.

The Government's programme is showing considerable signs of success in getting the national finances back under control, even if the underlying problem is not solved. The September Quarterly Economic Commentary published by the ESRI states:

On the evidence of the mid-year figures, Government spending on supply services appears to be running fairly close to budgeted levels. Moreover, it seems increasingly unlikely that 1984 pay levels in the direct public service will be drastically above those allowed for in the estimates.

Those two sentences indicate what I would regard as a very important success on the part of the Government in two related areas. First of all, our budgets are now running on target. The experience of the early eighties under the previous Government was of budget estimates which simply were not adhered to. The figures proved to be completely inadequate and supplementary budgets had to be introduced. The then Government had to admit that their original figures were not achieved or even achievable at the time they were set. That has all changed. We are now working on a budget for 1984 that will be well within its target and it has changed for two reasons. First, the Estimates have been genuine and accurate, unlike the 1981 Estimates of the previous Government where we had figures that were fantasy rather than reality. Second and more importantly, this matter has been brought under control because the Government have been successful in pursuing their pay strategy. One of the major reasons why Government Estimates and public expenditure targets went awry in the early part of this decade was that the Government were not able to stick to their pay targets. As the ESRI indicated, it seems unlikely that the 1984 pay levels in the direct public service will be drastically above those allowed for in the Estimates. The success of the Government's pay strategy in this area in relation to the public finances and the example they give to other sections of the economy is a major success for Government economic strategy.

There have been conflicting criticisms of the plan and this is understandable but the main criticism emanating from the Opposition suggests that the Government have been unduly concerned with financial matters and that they should relax and spend more. The prevalence of that view on the Opposition benches — and it is a view which is found not only on the Opposition benches but among some distinguished people — shows that they do not realise the extent of the problem so far as our national debt, and in particular our foreign debt, is concerned. In their Quarterly Economic Commentary the ESRI said:

Despite the recent publicity given to the subject it still appears that the external debt problem is not fully appreciated by the public at large. Although the sheer size of existing debt is acknowledged the cumulative nature of the borrowing process is less understood.

This is something which needs to be dwelt upon. Once you have got on to a path of borrowing substantial sums of money over a period of years, it is difficult to get off that path. Every year that passes it is increasingly difficult to get off that path. The ESRI said:

If exchange and interest rates remain constant, each year of continued borrowing pushes up the level of interest payments, making the following years' current budget deficit harder to balance thus leading to a need for further borrowing.

There was further borrowing simply to pay the interest on the money borrowed last year because the gap had to be closed. Every year we fail to close the gap more is added to the interest bill in the following year. Every year that passes makes it harder to close this gap. This is the very difficult problem with which the Government are grappling. We have indicated how we propose to reduce to a significant extent the current budget deficit as a proportion of GNP in 1987. However, it would be wrong to say that the problem of our public finances will be solved in 1987. It will still remain at quite a high level and the factors I mentioned will still remain because even if we have a current budget deficit of say, 5 per cent of GNP in 1987, that 5 per cent will be financed by borrowing which will be adding still further interest to the 1988 bill. This means we will still have this cumulative effect in operation albeit at a less severe level than it is at the moment. As I said, the problem will not be solved in 1987 and that is why I think in a debate like this we should have a longer term perspective than is customary in political debates.

One of the ideas contained in the national plan which might exercise Deputies' minds is the suggestion that there should be an economic and social committee of the Dáil to look at longer term social, financial and economic trends in this country looking five to ten years hence rather than looking at those problems which are likely to arise within the term of the Government in power. Many of our problems will still be with us in years to come.

One of the great failures of planning in this country was that we did not take a long term view of unemployment. In the mid-seventies it was clear that we would have a major employment crisis in the eighties because of the number of children in schools between the ages of eight and 11 years at that time who would be looking for jobs in the mid-eighties. We could see that that number was far greater than the numbers entering the labour force in the mid-seventies, but what did we do in the mid-seventies? When we should have been setting aside money for the eighties to deal with what we could see as an exceptional employment problem, from 1977 we went into a succession of substantial budget deficits at a time when we did not really need them, using up options that should be available to us now. In other words, because of the exceptional employment problems, we are facing in the eighties, we should be able to do now what we did in the seventies. Instead, we spent the money in the seventies and now, in the eighties, we do not have the money we need. A huge proportion of any revenue we get is spent repaying interest. It is dead money because we did not take a longer term view of our national problems. We simply looked four or five years ahead. Of course, there was an unemployment problem in the mid-seventies but it was nothing when compared with the problems we face today and we spent money which should be available now. I think that was a very serious mistake.

I do not want to get involved in attributing political blame for this because that argument has been well and truly gone over and nobody is entirely blameless, although I would regard the 1977 manifesto and what followed as the worst excess in this area. What the fiscal, economic and social policy mistakes in the seventies indicates more than anything else is that we in this House have not had any means of seeing beyond four or five years ahead. As I said, we need to set up, as is mentioned in the National Economic and Social Plan some forum where problems of a longer term nature which will transcend one or more Governments of different political complexions would be addressed by Members of this House. Obviously I would not wish to set up yet another committee without seeing one or more existing committees reported and finished, because we could not man another committee, but in mid-1985 I hope that will be the case. I hope it will be possible to draft terms of reference for that committee that will not involve cutting across the Public Expenditure Committee or the Committee of Public Accounts, but will give it a much longer term perspective that will be beyond the term of the Dáil, looking five to ten years ahead.

Debate adjourned.

The Dáil adjourned at 8.30 p.m. until 10.30 a.m. on Wednesday, 17 October 1984.

Dáil Éireann debate - Tuesday, 16 Oct 1984

National Economic and Social Plan: Motion (Resumed).

Dáil Éireann debate -
Tuesday, 16 Oct 1984