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Dáil Éireann debate -
Wednesday, 6 Feb 1985

Vol. 355 No. 8

Financial Resolutions, 1985 - Financial Resolution No. 9: General (Resumed).

Debate resumed on the following motion:
That it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision in connection with finance.
—(Minister for Finance.)

Before lunch I had drawn the attention of the House to the fact that the budget is a fine example of surrogate politics in that the Government were incapable of producing any worthwhile policies and had simply borrowed some Fianna Fáil initiatives and used a very extensive PR arrangement to sell their programme by utilising the telephone sales mechanism and also the Civil Service as their selling agency for Government mismanagement.

The budget penalises the construction industry, industrial development programmes, the motorist and the entire family in terms of their family budget. It will lead to increased levels of emigration, to increased participation in the black economy and to greater levels of violence on our streets. I concluded at that time by saying that the budget aftermath was the shortest lived example of political euphoria ever witnessed and that it had led to new depths of despair in all sections of the community. What should have been an opportunity for the Government for a confidence boosting initiative for the people has turned out to be a huge confidence trick. The fall guys are the needy, the less well-off and the hard pressed middle income groups. I had referred also to the question of the creative accounting which has now taken over the corridors of economic thinking in the Department of Finance. It is well to bear in mind that the cuts amounting to £28.6 million, details of which I understand are to be announced today, are a typical example of giving the bad news in a lump sum figure so that certain Deputies, particularly the backbench Labour Deputies, will be persuaded to regard in good faith the measures to be brought in subsequently, because once those Deputies have marched through the division lobbies in support of the overall package they cannot subsequently opt out.

There is the question also of the £30 million pay settlement with the public service being renegotiated. Would anyone with an ounce of wit be prepared to suggest that it is possible to renegotiate downwards £30 million in terms of pay when a settlement of that amount has been agreed? Would any responsible trade union accept such an attitude on behalf of their hard-pressed members?

There is the question also of the tax buoyancy of £58 million which we are told will result from budgetary measures. How can one expect a buoyancy of £58 million when the total VAT changes, for example, are estimated at £9.2 million? We are talking about a budget of more than £7 billion. I cannot imagine that extra consumer spending of any great quantity will result from a reduction of £9.2 million out of a total budget of £7 billion. It is extraordinary that the budget would show these matters up in this light. However, it is only another example of the creative accounting of which the budget is full. It contains dubious statistics and aspirations which the Government know well cannot be achieved. But the same applies to the national plan. That document is now discredited and we understand that it has been virtually withdrawn from the economics of the Department of Finance.

Last year on the question of interest rates the Minister for Finance, by way of the sales of Government securities to banks and to the public, raised £830 million; but the raising of that money starved the money markets and during the period of deep recession kept interest rate at around 16 per cent when inflation was of the order of 8.6 per cent. What entrepreneur will take risks at such high levels of interest rates? the result is that we are not getting the investment and the job opportunities are not being provided. This is leading to further unemployment. We have not made the climate right for investment. Consequently, businessmen are not prepared to take on any extra accommodation with the banks and so there is continuing unemployment. The unemployment figures are now in excess of what we were told they would be at the end of the three years of the Government plan. Obviously, the Minister does not understand how the creators of wealth work. He will probably go for another £1,000 million from the home investment market this year. That is not the way to create the climate that is necessary for further investment and for more jobs.

The building societies know that the Minister will borrow again this year on the home market and that is why they have decided they must seek compensation to protect their interest and to maintain their cash flow. If there was the slightest hope that the Minister, instead of satisfying the ideology of the Fine Gael practice of reducing foreign borrowing, would undertake borrowing where preferential rates are available to him and leave the native money in the economy so that Irish interest rates could be kept at lower levels thereby providing further investment opportunities for those willing to take up investment, he would be doing a good days work and would not be criticised for that policy by Fianna Fáil.

We must remember that the devaluation situation added £1,3000 million to our national debt. This has been exacerbated by borrowing at home. These increased mortgage interest rates of 2 per cent will make life intolerable for the many people living on marginal incomes. The Minister has robbed the economy of the money which would make such a difference had he left it to those willing to invest here. The Minister borrowed in the dollar and in the yen. The Minister should have borrowed in the EMS currencies where there is virtually no fluctuation and the Minister was told this by our spokesman on Finance and by all the economic commentators. We should benefit from the EMS rather than place our reliance on foreign currency borrowing which is not stable at this time. All the international commentators have made it quite clear that they cannot guarantee stability in those two borrowing markets for the next 12 months.

We have to take note of the change that is taking place in the rate of exchange with sterling, up to 11 per cent over the past six weeks. There is no doubt that that change in the exchange rate has been aggravating the North of Ireland trading situation and has contributed to cross-Border smuggling. The new reliefs that were announced in the VAT charges will not take up the slack in relation to cross-Border trading. While the Minister reduced some articles by 12 or ten per cent because of VAT reductions the money is already swallowed up by the differential in the exchange rate and by the increase in the cost of petrol. The measures taken will not give relief to the hard pressed businessman. That and the exchange rate difficulties are murdering our exports to Britain. The budget last week did not give any consideration to those hard pressed exporters. the Government will have to change their borrowing policies and they will have to do something about reducing interest rates. The Government must alter their borrowing tactics and do something about the essential service costs if we are to avoid a total collapse of manufacturing. We have seen the start of that collapse over the past few years but it seems that the Minister is either unmindful or uncaring as to the consequences and he is happy to allow the dole queue to extend itself until breaking point is reached and breaking point in so far as it has been expressed in violence on the streets has been virtually reached.

There was a very big underestimation of unemployment levels and of the extent of transfers under the social welfare code that would be needed to deal with those levels. From all the projections in the plan and from Government statements we had expected an average of 217,000 unemployed this year and we understood that there would be budgeting for that figure. The plan has been totally discredited in that the figure has far outstripped the projections. We have to bear in mind that every 1,000 extra unemployed costs an extra £5 million so that if the levels of unemployment persist at the end of this year £100 million extra will be required by the Minister for Health and Social Welfare to satisfy the transfers necessary to deal with it. If that kind of extra money is required we will also require a supplementary estimate. The Minister should come clean now and say that the money required to satisfy the social welfare demand has not been adequately catered for in the budget I assume we can look forward to a supplementary estimate as soon as the June local elections are over. We can be quite sure that it will not happen before June.

It is a nonsense for people to say that the figures in the budget or in the national plan can be substantiated. The plan according to all economic commentators was built on false assumptions and dubious statistics which have now been transferred into the budget arrangements. The current budget deficit is not in line with what was agreed in the Joint Programme for Government Action. It is not in line with the programme laid out in the national plan. It seems that the Government are quite satisfied to adjust their figures to suit their requirements whenever necessary. We know that Government borrowing has been greater in the past 12 months than in any other year since the foundation of the State. We know that the national debt has increased from £12 billion and will more than likely be £20 billion at the end of this year. We also know that every one billion extra on the national debt is the equivalent of £150 million extra on our backs. It is extraordinary that while that is being preached here and while every body is talking about it, it somehow has not yet been taken up by the media. But it will, because it is coming home to roost now that the Government, when they came into office, came in on falsehoods and they have not lived up to their commitments or to the Joint Programme for Action.

The Budget has had a serious impact on the construction industry in more ways than one. Apart altogether from the reduced activity in the industry we must bear in mind that many skilled people are now emigrating. These people were trained at considerable expense and would have been regarded as a national asset. We are reaching a situation where there are no apprentices in training here. All our best skilled people are being spirited away to places like Australia and America and the Irish dream of building one's own home has been blown for ever and no matter what we do we will not be able to attract back the engineers, architects, tradesmen and skilled people who are leaving the country now in their thousands seeking work abroad. We will not be able to attract these people back unless we take corrective action immediately. Our country will be left without the skilled workforce that was painstakingly built up over the years, a workforce that has been provided by the Government for our competitors.

Let us take a look at some of the torpedoes that were shot into the building industry since 1977 by this regime. The VAT rate for architects and engineers' fees was increased from 10 per cent to the present 23 per cent; planning permission charges were introduced and are about to be increased again this month; the duration of the mortgage subsidy payments was stretched from three to five years without any increase in the total amount being paid; income tax was levied by this Government on that mortgage subsidy; new VAT rates for builders increased from 5 per cent to 10 per cent. Planning appeal delays are still as long as ever despite the Minister's promise when he sacked the last board that the setting up of the new board would result in increased movement of applications. There has been increased tax on the sale of land; corporation tax has been increased, PRSI levels increased; there is a youth levy on builders' workers; tax relief on mortgages for the second house was abolished in last year's budget and there is a threat to withdraw the tax relief introduced by Fianna Fáil for apartment and flat development; removal of the tax relief on personal borrowings and so on. The whole package when it is put together is an assault on a vital traditional industry if the country is to undertake any worthwhile job creation projects. The Government responded in their budget simply by trying to pick holes in what can be regarded as a leaky bucket, or leaky budget. The difference in so far as the building industry and new house purchase or building are concerned is that in the United Kingdom no VAT whatsoever is imposed on any individual who decides to build or buy his own first house or home. Then we say that we are ahead of all European countries in our building programme.

Motorists again suffered the blunt edge of the Minister's tax axe, with increases in the cost of petrol, road tax, maintenance and repairs. The change in VAT which was supposed to have such a great advantage as regards tourism and car, van and boat hire is reduced virtually to nil by the Minister's insatiable appetite for taxing the old reliables, even when it is obvious to everybody in the street that diminishing returns have already overtaken the revenue source.

In 1981, 106,000 new cars were purchased here; in 1983, 61,000; in 1984, 56,000. The number of new cars in these three years halved. Last year, 63,000 people stopped motoring completely. More people could not afford to stay in motoring than bought new cars last year. Then we hear talk about Ministers of the Coalition Government being proud of what they have done to maintain the standards of living of our people.

The number of uninsured motorists on our roads today is one out of every five. Insufficient care is being taken by those using our roads. Two out of three people currently driving here are breaking the law, if in only one simple aspect of road safety — that they are not wearing their safety belts. As yet, we have seen no positive response to end the uninsured driving, bad driving techniques, and badly maintained "bangers" on the road.

We do not hear any talk about better security with regard to our cars, or mention from the Minister of making it mandatory to have certain devices to protect our property. Since the safety belt legislation came into operation in 1979, six times more people are likely to die in a collision because they are not wearing their safety belts. This is of great consequence for insurers, the Garda force and the Government alike. It is costing £1 million a day in claims for injuries suffered in car accidents. There is carnage on the roads — 219 people died last year and 4,630 were injured. Two thirds of these, according to statistics, were not wearing safety belts. I am making the comment concerning safety belts here because a new campaign is being organised by the Road Safety Association. It should have the full support of everybody in this House. It is not just the costs involved to those who are paying their insurance and the claims that have to be met, but the level of human suffering and misery brought about to so many as a result of road accidents, not to mention the drain on the resources of the State so far as ambulance and medical services and the police force are concerned.

In the United Kingdom, nine out of every ten people wear their safety belts. There has been a reduction, since the legislation became operative there, of 25 per cent in the number of deaths and serious injuries suffered since 1983. If it requires greater surveillance and greater effectiveness in law enforcement, that should be applied so as to reduce the need to meet those claims and also to reduce the pressure on the services of the Minister for Health — or those which are left when he has finished.

The tourism industry is supposed to have got a shot in the arm from the provisions in this budget. That industry, despite repeated requests from this side of the House, has not been given the recognition of its potential to play a worth while part in our economy and in the provision of jobs. There has been a piecemeal response, both in the national plan and in the budget, towards the industry. There must be a complete revision of the total tax system as it applies to that industry. We must organise ourselves to market specialised tourism. Over and above that, why did the Minister not take the opportunity to refer to the amount of venture capital that could be applied to the tourist industry if he would only change his mind and see the industry for what it is — a major exporter and a revenue generator and creator in our economy?

Why would he not indicate that he would alter the daft VAT system for purchases by out of State visitors introduced last year at this time? This has not worked and is the laugh of international tourism. Why do we not hear about new arrangements about access transport? Why do we have to be preaching all the time and trying to get the Minister to listen to the need for proper car ferry services, for proper air charter arrangements? Why do the Government not recognise that, as an island economy, a second location tourist stop, we need an enlightened access transport policy by air and sea if we are going to get the market share that the industry can create for itself. These are matters to which the Government must attend.

We hear no talk about environmental control, or renewals, or refurbishing policies. We do not see the industry treated for the value it is to the economy and could be by way of generation of job opportunity. For that reason, unfortunately, the small step forward taken, of the reduction of VAT on hire and hotel accommodation, while welcome, will not go the distance in bringing about the potential. It is a shame that the Minister would not recognise his responsibilities in that area.

Indigenous industries are battling for their lives on the home market, where consumer spending is so depressed at present. The smallest adverse shift in the money market can close hundreds of native industries and may result in the loss of thousands of jobs. This can be avoided by a relaxed Government interference in the money market, which would result in cheaper money and more of it available in the market place.

They talk about growth in the gross national product. That talk is misleading. It is basing revenue from buoyancy on growth figures, which is wishful thinking. Any growth will come from expanded export performance in the high technology, health care and pharmaceutical industries. Most of their profits, as we well know from the debate last year, will be repatriated to their base companies. With the recent difficulties in the multinational sector, there is great danger of our over-dependence on such industries and new ground rules will have to be devised if we are to protect our market share and employment levels in these industries.

The Travenol experience underlines the problem. It shows that multinationals are vulnerable, that the IDA and the Government have no say whatever in boardroom decisions affecting their future. Sentiment with regard to job creation in Ireland plays no part in the decision making process. Consequently tighter controls will have to be built into start-up grant agreements if job losses are to be minimised. For our part unit costs of production, productivity levels, wastage, energy costs, transport costs, industrial relations, absenteeism levels will have to be just right if our industries are to have a chance to compete. The proper environment is essential if we are to continue to be a suitable location for the attraction of prestigious foreign investment. Our essential costs are noncompetitive, our interests rates and personal taxation levels out of line with those of our competitors and constitute an active disincentive. Not only are we failing to attract new investment but an increasing amount of money is being moved abroad helping to strengthen the economies of our competitors and, worse still, our finest executives, technical and administrative, are moving out to escape the tax trap that has flattened any incentive to work. These are matters directly under Government control. It is futile for the Government to preach competitiveness and stricter management controls to the private sector when they themselves will not respond by an enlightened, realistic basic cost policy.

The marketing, research and development of many products produced by the multinationals is organised outside the State. This means that these companies are simply shipping to order with no involvement by Irish production units in the protection of their market place. There needs to be a greater link-up between the marketing of products by multinationals and our national marketing agency, CTT. It is totally unacceptable that the IDA are not aware of the financial well-being or otherwise of the multinationals that have been grantaided in the first instance and that CTT are not involved in the market place of multinational products. One of the greatest disabilities of multinationals is when their product enters the mature bracket. It is essential that new products become available to take up the slack. This means that more research and development facilities must become part of an ongoing industrial strategy. Technology is a fickle thing. We are over-dependent on outside technology. Increasingly we should be developing indigenous technological research and development programmes. I suggest it would not be unreasonable that existing and future high technological industries should contribute just a little from their not inconsiderable profits to new home-developed technological programmes.

Science and technology in Ireland have not received the attention and support they deserve. With manufacturing industry the main generator of exports and employment opportunities so dependent on technological advance, we must recognise that increased resources should be made available now to guarantee our future market share and reduce our dependency on out-of-State research. There is concern that there is unfair play at present in the area of international competition. We are always over concerned with keeping the rules while other EC countries please themselves and protect their interests irrespective of the consequences. There is the example in France that they will not allow to be used in their network, whether that be in the health care area, in telecommunications or electronics, any products not produced in their country. We regard this as unfair competition. It is against the spirit and letter of the Treaty of Rome. The Competition Commissioner should be put on notice by the Government that treaty rules are being infringed and that consequently we are being disadvantaged.

We must face up to the fact that nobody owes us a living, that multinationals will take commercial decisions based on computer analyses of the marketing of their products and will set up shop in preferential locations. This can be to our mutual advantage, but to benefit we must get our industrial environment act together, rendering Ireland the soughtafter location. We have the skills, educational institutions and willing workforce. The country is crying out for leadership, but all it is getting is rhetoric. The reality of Fine Gael policy is that the so called disciplined financial management, which was to restore State solvency, improve our competitiveness and create jobs, has collapsed. We have all witnessed the 700 closures and liquidations on average that have taken place over the past two years and the statistics must be put on the record — 50,000 people have lost their jobs in the last two years.

The current budget deficit, the reduction of which brought the Coalition into Government, has grown to over £1.2 billion. We owe foreign banks more now than at any time in the past — and all of this has taken place in just two years. The hypocrisy of it all is that the Taoiseach and Government Ministers have the audacity to suggest that the bad times are over. I put it to them that there has been unprecedented hardship over the past two years with no tangible results on the employment front.

Prudent reflation was sneered at in this House, jibed at by Government Ministers right up to a week before the Budget Statement, when the Minister for Finance came into this House on the unemployment motion, jibed and jeered at the Fianna Fáil people for suggesting that there should be any kind of prudent reflation of the economy. There must have been a road to Damascus conversion of the Minister for Finance, whose backbenchers avidly and loudly clapped him when he took his U-turn here last week. But the partial, eleventh hour conversion, with the great U-turn the Government have taken, at least proved one point: that financial rectitude is a failed formula for the solution of small, open economies.

The National Development Corporation was mentioned in the Budget Statement, being advanced as a panacea for all our ills. Would the Minister give the National Development corporation a rest because it has been overworked before it even begins, and the internal wrangling of Ministers over its funding and remit adds to the national cynicism that is all about. There have been sufficient committees, consultancies and so on identifying our problems. They have been well identified. The investment areas have long since been identified as well, where the money is most needed. Instead we need a little action now. Unfortunately the only response we have had is that the Government in their Budget Statement last week quenched the last candle at the end of the tunnel. Our people deserve a better response at this time.

I wish to refer first to social welfare matters and secondly to the health services. I want to devote most of this part of my contribution to a number of current issues in the social welfare area which are relevant to the overall budget strategy. I want to remind the House of some of the main features of social welfare expenditure which are often lost in the welter of detail and comment which normally surround such an emotive subject.

Our social welfare budget is quite enormous. It is fast heading towards £2½ billion a year. Over 96 per cent of that budget goes straight into the economy in the form of cash transfers or subsidies of one sort or another to individuals and caring organisations. Less than 4 per cent is spent on staff and operating costs.

The social welfare expenditure programmes amount in total to the single largest bloc of Government expenditures — about 25 per cent of total gross current expenditure. In 1984 total expenditure on social welfare amounted to over £2.1 billion of which the Exchequer met almost £1.3 billion or about 62.1 per cent. Almost all of the balance came from the PRSI contributions of employers and employees. On a a post budget basis in 1985 the total provision for social welfare is over £2¼ billion of which the Exchequer will provide over £1.3 billion. It is not so long since the Department of Social Welfare were being criticised for the low level of their expenditure as a percentage of gross national product. Expenditure on social welfare has, however, been taking up an increasing share of GNP. Ten years ago about 10 per cent of GNP was devoted to social welfare. By 1981 it had risen to 11.6 per cent and in 1984 it exceeded 14.8 per cent.

Unemployment-related expenditure is the biggest element of overall social welfare expenditure and now accounts for 27 per cent of the total budget of the Department of Social Welfare. In 1984 it amounted to £519 million excluding smallholders, an increase of 15 per cent over the 1983 figure.

In 1985 the Government have made provision for expenditure of £579 million, an increase of 11.5 per cent over 1984. This takes account of increased rates of payment as well as the anticipated increase in numbers of claimants. It also takes account of the likely impact of the social employment scheme and the alternance scheme in 1985.

One of the main concerns is the rise in the numbers of the long term unemployed. There are now 94,600, including 17,000 small holders, in the long term unemployment assistance category. That is why, in keeping with the commitment in the Programme for Government to provide additional help over and above the standard increases for especially disadvantaged groups, special permanent increases for the long term unemployed were provided in October 1983, a premium of 5 per cent, and in July 1984, a premium of 1 per cent. Again in July next the long term unemployed will receive a 6.5 per cent increase in their weekly payments as against 6 per cent for other unemployed persons. By July next the long term unemployed will have received an overall increase of 33 per cent in the period June 1983 to July 1985. The cost of payments to the 95,000 long term unemployed in 1985 will be over £200 million.

When this Government came into office they gave a firm commitment, despite the gravity of the recession and its impact on social welfare expenditure, to endeavour to maintain the living standards of all people who depend on social welfare for their needs. The national plan Building on Reality 1985-1987 reiterated the Government's commitment to “keep long-term payments at least in line with inflation and short-term unemployment and disability payments in line with takehome pay”. Government action helped to reduce inflation to about 7 per cent in 1984 with a fall to below 6 per cent in prospect for 1985.

Social welfare increases in the period June 1983 to July 1985, including this year's budget increases, represent a compound increase of 25 per cent for those in receipt of short term payments, 28 per cent for those in receipt of long term payments and, as I have said, 33 per cent for the long term unemployed. The compound increase expected in the consumer price index for the period mid-1983 to mid-1986 is of the order of 20 per cent. In the same period the increase in net take home pay is expected to average about 23 per cent.

Thus, this budget has ensured that the living standards of social welfare recipients will not only continue to be protected until mid-1986, but it has also protected the real improvement in their living standards which has been brought about by this Government in office. The House, and those groups who keep calling for more without having the responsibility of worrying about where the necessary resources can be found, should take due note of this achievement. It is an achievement of which I am proud at a time when the budgetary constraints within which the Government have to operate have been far greater than at any time in this generation.

Apart from the fundamental objectives of protecting the living standards of social welfare recipients the Government have continued to look for ways of improving the level of services or extending them to high priority groups to the extent that very limited resources permit.

Last week's budget saw several such innovations, in addition to the £1 increase in the free fuel voucher. In the first place, there will be an important extension of the treatment benefit scheme next July. This scheme at present provides dental, optical and aural benefits for insured persons and will now be extended to all pregnant women whose husbands are fully insured. This will increase the potential catchment of the treatment benefit scheme by up to 30,000 married women in any given year.

I must confess that I was disturbed when I read the observations made by the Leader of the Opposition. He said women applying for benefit would finish up paying a doctor for a certificate to enable them to avail of the benefit. As the Deputy well knows, under the maternity scheme a great many women do not have to pay for a pre-natal examination. They will go to their doctor in the ordinary course of events and present him with an application form for dental, optical or aural benefit and the form will be signed. I do not expect that the medical profession will charge those women. That observation shows yet again the chagrin of the Leader of the Opposition because of the fact that we have introduced such a scheme. He said that the cost of visiting a doctor to get a certificate of pregnancy would be almost as much as the women would save. That is absolute nonsense. The average dental benefit claim is around £40. Surely the women of Ireland do not have to pay a doctor £40 to be informed that they are pregnant. Pregnancy testing does not fall within that category of charge. I do not know what the Leader of Opposition was talking about, unless he was trying to find some way to denigrate a valuable extension of benefit to a particular category of women. As far as I am concerned, the next category should be children between the ages of 12 and 16 years. These are obviously a group at risk who need particular benefit. That is the kind of approach I think is possible and which a government would endeavour to introduce.

On budget day I invited the relevant professional bodies for an early discussion on the practical arrangements for implementing the decision in relation to the extension of the treatment benefit scheme and I hope to have that meeting within the next week or so.

The second innovation to which I wish to refer is the decision to protect the insurance position of Irish volunteer development workers who go to developing countries. The Government were very concerned that a number of workers who had gone abroad for several years, who were, in Irish terms, being paid pocket money rather than a wage, were on their return not entitled to benefits such as unemployment benefit, disability benefit or treatment benefit for dental and optical care, because no PRSI contributions were payable nor could credited contributions be awarded while they were abroad.

Broadly speaking, the voluntary workers fall into two categories: those who have no history of employment before their departure, and consequently no social insurance entitlements; and those who have an employment history and social insurance entitlements prior to going abroad, but who at present lose those entitlements because they are not entitled to credited contributions while abroad.

Different arrangements will have to be made to safeguard the position of each of those two groups, after consultation with the different bodies who have an interest in the problem. I will make the necessary statutory provision in this year's Social Welfare Bill.

I am glad that this move has been welcomed as a practical demonstration of the Government's desire to encourage and facilitate as far as possible the workers concerned.

On the question of social insurance financing, I am glad to say that for the third year in a row there has been no increase in the percentage rate of social insurance contribution for employers or employees. In times of recession that is a considerable achievement. However, the contribution ceiling will be raised from £13,000 to £13,800 next April. This change is simply in line with expected earnings increases over the coming year.

There will be a very small extra contribution of 0.1 per cent levied on employers following the establishment of the redundancy and employers' insolvency fund, in place of the previous redundancy fund. This fund is managed by the Department of Labour, but the contributions to it by employers are collected through the PRSI system for convenience.

The composite PRSI rate for employees insured at Class A rates will remain at 8.5 per cent, while the corresponding employers' rate will increase by 0.1 per cent to 12.2 per cent. These rates include the various health, youth employment and temporary income levies on the employees side, and redundancy, insolvency and occupational injuries funds contribution by employers. The rates for social insurance alone remains the same — 5.5 per cent for employees and 11.3 per cent for employers — payable on employee earnings up to £13,800 in the 1985-86 contribution year.

I want to refer now to the effects of unemployment. Because contributions are pay-related and because the ceiling is indexed to pay, income to the social insurance fund should increase at the rate of growth in employee earnings. However, a major pressure on social insurance financing is the still extremely high unemployment rate. Apart from the individual hardship caused for people by unemployment, it has a double-edged impact on social insurance financing — reducing the contribution income and increasing the expenditure on unemployment and pay-related benefits. The continuing Exchequer commitment to social insurance, now running at over a quarter of the income to the fund, is playing a vital role in absorbing this pressure. The Exchequer subvention will largely cushion employees and employers from increased social insurance costs in 1985.

The pay-related social insurance — or PRSI — contribution system has drawn considerable comment, and indeed criticism, in recent times. A great deal of the comment is misinformed. I think it essential to set out the basic purpose of PRSI and social insurance generally so that any debate can concentrate on real issues and not on sectional self interest.

The purpose of social insurance is to protect workers and their families against loss of income due to risks such as illness, unemployment or death of a breadwinner. It also provides income support as of right in retirement and old age. Social insurance is the first level of a two-tier system of social security. The second is social assistance, which acts as a safety net for those who have exhausted their social insurance entitlement or who otherwise have not the means to support themselves at a minimum living standard.

Social insurance is a contractual bond between the insured person on the one hand, and the State as the provider of benefits on the other. This is an insurance system, not simply another tax. I want to reiterate that. It is a social insurance system because it entails more horizontal and vertical redistribution among participants than would be the case in a commercial system where benefits are more strictly related to individual contributions and risks. Insured persons' contributions are clearly earmarked for specific benefits and paid into a statutory fund for this purpose. Furthermore, their entitlement to those benefits is related directly to the number of contributions paid.

In addition to the insured person and the State, there is a third agent — the employer — in this social insurance arrangement. Employers' contributions to social insurance through PRSI reflect two basic purposes. The first is to ensure that employers, as one of the social partners in the community, contribute to the general welfare and protection of those who need support and those they employ. The second purpose is to ensure that employers make adequate provision for the protection of their workers. This is in keeping with internationally accepted standards of occupational protection for contingencies such as occupational injury, sickness, maternity, unemployment and retirement. A co-ordinated national system such as ours helps to spread the risks of these and other contingencies between all employers in direct relation to the size and wage structure of their workforce. This is an accepted obligation on employers who produce and profit through the use of labour; there are comparable, though obviously different, overheads for capital—intensive enterprises.

There have been repeated calls recently for some abatement of employers' PRSI contributions on the basis that they appear to act as a disincentive to job creation and job retention. These calls have suggested, for example, that there should be differential rates for different sectors, or that there should be a greater obligation on capital-intensive firms to relieve some of the contribution made by labour-intensive enterprises. It is sometimes difficult, when listening to these calls, to distinguish whether they reflect genuine interest in social and economic equity or narrow self-interest.

The whole system of pay-related social insurance and health contributions and its effects on the provision of social security and employment is being examined by the Commission on Social Welfare. The commission are due to report to me later this year. Their recommendations in this issue will give a major input to the debate on change. There will be no restructuring of the PRSI system until I and the Minister for Finance have fully considered these recommendations and their implications.

In the meantime, in view of continuing high levels of job losses and slow pick-up in employment, the issue of the PRSI system as a labour market regulator has been examined by my Department. Several clear factors were identified in this examination which strongly suggested that tampering with PRSI — and particularly the employer component — would be neither economically efficient nor lead to any significant job creation. These conclusions tend to be borne out in a number of similar studies which have been carried out in other countries notably France, Belgium and the Netherlands. Any analysis of the employment effects of changing the basis for the employers' contribution must take account of the fact that statutory employer contributions in Ireland are low by comparison with most European and OECD countries. As far as the PRSI element of wage costs is concerned, therefore, Irish firms do not suffer any loss of competitiveness because of this. If the aim is to reduce State-induced cost factors, then surely the first priority is to attack those which are out of line with those in other countries. That is what the Government are doing, for instance, in the case of electricity prices. Secondly, the Exchequer already provides significant support for all wage costs, including PRSI contribution, through corporate tax relief. Third, the decision by employers to hire and retain workers is much more likely to be influenced by market demand in the first instance and by the prevailing redundancy, dismissal and equality legislation than by the relatively marginal effect of PRSI on their overall cost structure. Fourth, if employers' PRSI liability was to be modified in some way so as to reduce the overall contribution income yeild, then the increased social insurance deficit would have to be made good in some other way. Assuming that nobody would advocate increased borrowing, what would be involved is either an increased Exchequer contribution to be financed through increased taxation or a higher PRSI levy on employees. Since PAYE workers contribute very heavily already to Exchequer tax revenue, either alternative would reduce workers' disposable income. The Government are committed to not increasing the burden of personal taxation; if it was to be increased as a result of PRSI changes, this would undoubtedly result in compensatory wage demands which would negate any possible employment gains which might result from the original reduction for employers. Therefore, I have, admittedly circuitously, advanced an argument against a reduction.

Finally any reduction in PRSI for employers would be made in the hope of additional employment or job retention, not just increased profits for employers. In practice, it would be futile to attempt to control the use to which employers put any increased cash flow from a cut in their PRSI. Thus, from the point of view of targeting resouces precisely on increasing employment direct job-subsidy schemes such as the enhanced employment incentive scheme would be more efficient than a cut in employers' PRSI, the effects of which would be impossible to monitor.

There has been some pressure recently, particularly from local authorities, to pay a subvention from the social insurance fund to employers to retain workers who would otherwise be let go, for example, from local authorities. Apart from the fact that every job could be considered marginal and in need of support, who is to judge what jobs are at risk? Every employer in the country could argue for support in this way.

I have already mentioned that the Commission on Social Welfare will be making recommendations on the future development of social insurance. However, far from cutting back on social insurance in the way suggested by its critics with vested interests, I consider that the whole base of social insurance should be extended as widely as possible to include the only major group now left out — the self-employed.

The self-employed at present rely on social assistance schemes paid for out of general taxation. I think it is time they contributed to the social insurance system by making an appropriate level of contribution in return for which they will qualify for the various pensions of that system.

Social insurance coverage for the self-employed would improve the equity of the financing of their pensions. At present, social assistance pensions are financed through taxation mainly by the PAYE workers who are already contributing significantly to the cost of their own social insurance pensions through the PRSI system. The inequity of the present situation in which insured persons and employers pay 70 per cent of the cost of their own benefits and most of the cost of non-contributory pensions from which they hardly benefit, is unquestionable.

In 1985 the various social insurance pensions will cost about £620 million, while non-contributory pensions will cost half as much again at about £310 million. These non-contributory pensions benefit mainly the self-employed and others outside the work force, who have made very little contribution to this cost.

As stated in the national plan the Government will publish a framework for a national pension plan extending social insurance pensions coverage to the self-employed as an essential starting point for the pensions plan and one which this framework will deal with. This is a priority within overall pensions development for the community. It will improve the quality of coverage for the self-employed as well as increasing the equity of pensions financing. The funding of this scheme will be based on the social insurance contribution principle and it will cover for the first time self-employed workers as well as employed workers.

A major issue in seeking contributions from the self-employed and farmers is the actual collection method. This method has to be fair and comparable in incidence with that of other sectors, but it must also produce the required revenue. I am concerned with this issue not only from the social insurance point of view but also because of the child benefit scheme I will be introducing next year.

The purpose of this major development in family support is to ensure significant extra assistance for parents and also a redistribution of resources from high to low income families. Unless the self-employed generally, and farmers in particular, are involved in this redistribution, an undue share of the benefits will move to them. I am considering the aspect of the child benefit proposal at present. It is, of course, tied up with the broader issue of farmer taxation and contribution to health and youth employment levies. My aim will be to ensure that such groups gain fairly but not disproportionately from the new child benefit scheme.

I would now like to outline the basis of the child benefit scheme, which will be introduced in 1986. Pending the final design of the child benefit scheme, the Government have decided that children's allowances should be kept at their current level in 1985. One of the main drawbacks of the present monthly children's allowances scheme is that it gives the same amount to rich and poor alike, while tax allowances for children are of more value to those paying high marginal tax rates. The new child benefit scheme will subsume the existing monthly children's allowances scheme, the tax allowances for children, the family income supplement scheme and part of the weekly allowances paid for children under the various social welfare schemes. Instead of all these schemes it will make available a single monthly cash payment to mothers in respect of their children. This payment will be taxable as part of normal family income. Existing social welfare payments to single parents such as widows, deserted wives, or unmarried mothers will, of course, continue, and they will receive child benefit as well in the same way as existing children's allowance.

There has been a certain amount of misunderstanding of the purpose of making the child benefit taxable. One of the aims of the new scheme is to give more assistance to the less well off than to the better off. This can best be achieved by making the payments taxable, but it is important to remember that the yield from taxing the benefit is being ploughed back into the scheme in the form of a higher basic level of payment than would otherwise be possible. It is not my intention that the Exchequer should gain from this scheme at the expense of families. That is why we keep using the phrase "a neutral cost basis" and say that we will introduce the scheme on a neutral cost basis.

A considerable amount of analytical and preparatory work on this scheme will be done in the coming months, in the light of the income tax and social welfare changes announced in the budget. It is vital if the scheme is to work as intended that a fair proportion of the child benefit payment is received back in tax from the self-employed sector as well as from the employee sector.

Another question is that of employers paying for disability benefit when employees are out sick. This has been put forward as a solution to this difficult problem. At present nearly 300,000 disability benefit claims a year are handled by my Department, requiring a very extensive computer and clerical administrative structure to deal with the payment of benefit within a reasonable time.

At the moment, under social insurance arrangements, insured employees are entitled to disability benefit from my Department after three days of illness. This benefit is pay-related. It removes any direct onus on employers to support their workers during illness. However, many employers do maintain a pay during illness, in many cases "topping-up" disability benefit to the normal pay level for the worker concerned. About 80 per cent of firms provide some such arrangement for their workers already.

In view of the apparently considerable overlap between social insurance and occupational sick pay coverage, the question could be asked whether money is being paid out unnecessarily through social insurance for protection where employers already assume at least partial responsibility through sick pay. Most EC countries have now an arrangement whereby employers support their workers fully for the initial period of illness, typically one to two months. The State scheme would only then step in to give support.

I have an open mind on this. I am not making a formal proposal but it has been suggested that this system of involving an employer has some advantage. First, it removes an unnecessary degree of administrative overlap between employers and the State. Second, it means that sick pay is directly related to normal income in a way that is difficult to achieve with a State benefit which varies with family size and is non-taxable at present.

Just as important, however, is the manner in which any new arrangement might be financed. For instance, employers could be asked to bear the full cost of the liability for initial employee illness, with some compensation from existing social insurance funds by way of a general reduction in the rate of employers' PRSI.

This would reduce administrative overlap considerably and reduce the workload of my Department. It would, however, leave some employers better off and some worse off than under the existing arrangements. The alternative of a system of individual refunds to employers of sickness payments made to employees for an initial period of illness would be much less attractive to me as it would entail continuing administrative involvement by my Department in each sickness pay claim.

The matter has and will continue to receive careful consideration by my Department. I expect that the Commission on Social Welfare will have some recommendations in this area also.

The leader of the Opposition referred to the low level of take-up of the family income supplement scheme. Some of the comment has been wide of the mark. For instance, it has been said that the scheme was not adequately publicised. That is just not so. The scheme was advertised intensively over a period of weeks in five Sunday papers, three evening papers, provincial papers, Dublin local newspapers as well as on radio and television.

My Department will be publicising the scheme again within the next few weeks and I will be reassessing the situation in the light of the response.

Any family supplement scheme introduced in other countries had a very low take-up rate initially. However that will not deter me from ensuring that as many families as possible will benefit in 1985. That will be subsumed into the new child benefit scheme in 1986.

Before dealing with the health area I should like to pay particular tribute to the staff in the Department of Social Welfare for their outstanding work in recent years servicing a large number of schemes and very often, particularly in employment exchanges, working in overcrowded conditions and under considerable pressure. There is a staff of about 3,500 people. It galls me when I hear articulate and well heeled television personalities making global criticisms of the Civil Service and when I see such criticism made in newspaper columns. That criticism has ranged from suggestions that civil servants are lazy, are a privileged class, are wasteful and have suffered from corruption. That was suggested in the Evening Herald. They have made the accusation that civil servants work unnecessary overtime. That was in the Irish Independent. If I referred to some of the spurious criticism which daily comes from programmes such as “The Late Late Show”, the Mr. Peelos and others who observe wasters all over the place in the public sector I might be tempted to indulge in expletives. They are always giving the impression that every single person working anywhere in the public sector has high wages, massive pensions, all inflation proofed, which they are not, has absolute permanency of employment which they do not have and that, as a class, they are all a crowd of wasters.

It is only right, particularly as the largest employer in the public service — I am responsible for 3,500 employees on the social welfare side and 60,000 in the health area — to put that kind of criticism in a proper context. I accept that everyone in the public sector, politicians included, must be open to freely express criticisms by any citizen or taxpayer. That is their democratic right. We are all servants of the public. However, it is important that criticisms made are accurate and are supported by the facts. Unfortunately this cannot be said of some of the superficial comments which have been made, particularly in the media, in recent times. It is a worrying feature of our present grave economic crisis that instead of uniting everyone and trying to find a way out of our difficulties it appears to exacerbate conflict and to create a kind of class division. We have enough divisions between the PAYE sector and the farming community and between the self-employed and the PAYE sector. We do not want to add to that a division as between public servants and society. That would be a serious deterioration in the quality of life.

I get sick to death of self-professed and self-employed accountants and their alleged representatives on the media who call on the Minister for Health, the Minister for Social Welfare and the Government to cut back on public expenditure. The daily cry goes out, why we are called upon to pay much in taxation, but if the gardaí are not on the streets, if the nurses are not in the hospitals, if the ambulances are not running, if the fire brigades are not available, if the Army is not on the Border and if civil servants are not in their offices to deal with income tax inquiries they go berserk. We are great in this country at demanding the highest possible level of service, whether it be in regard to the local authorities, health, social services and education but very few of us are prepared to stand up and be counted and to say that such services must be paid for. If we are a high tax country it is because we have a high level of social services. If the people who make these superficial demands for a reduction in public expenditure had to face decisions of eliminating whole programmes of services which they demand they would be the last to demand such a reduction.

I make this point in defence of those with whom I work in the Civil Service and because I have become increasingly concerned about these criticisms. The public service is not perfect; it is true there are weaknesses in many areas and that there is potential for improvement. When I came into this House in 1969 we had the first Devlin review group on the organisation of the public service and I will quote from that report. I agree with what it states in the following comment:

For all the charges made against it, the Civil Service has worked with reasonable efficiency. It has served different Governments loyally and with regard to the national interest. In its long established traditions it operates impartially. It has tried as best it could within the framework of its organisation and resources to promote the development of the nation. It has given its advice to Ministers fairly and honestly and, when given the final decisions of the Government, it has implemented them without reservation. The Civil Service has contributed much to what is progressive in our national life.

That was written in 1969 and admittedly it may be gilding the lily a little but on balance and on reflection I consider it a reasonable assessment of the contribution of public servants, and in particular of civil servants.

If the Civil Service has had to suffer anything it is that it has had to suffer from a succession of indecisive Governments and of Ministers and Ministers of State who were more preoccupied with getting re-elected than with doing work in their Departments. It has had to suffer from opportunistic party manifestos and has had to cope with all of that. The Devlin report recognised the need for continuing reform in the public sector as conditions changed. I am very pleased to be in the Department of Health who were among the first of the Departments to implement the Devlin idea of an aireacht responsible for policy formation and for general direction and control, separated from the day-to-day executive functions of the Department. This was set up in 1979 in the Department of Health. Despite the enormous pressures of the unemployment situation, in the Department of Social Welfare we have responded by introducing new technology and we are trying to computerise the working of the Department.

I accept there is a considerable need for change. I would be the first to criticise the excessive number of grades in the Civil Service. I have yet to understand why we need clerical assistants, clerical officers, executive officers, staff officers, higher executive officers, assistant principals, principal officers and assistant secretaries. Files go up through that layer of bureaucracy and I have yet to understand the system. I know what I would like to do with it, what I intend to suggest should be done and I will be making my suggestions to my colleagues. I intend to seek reforms in that area.

With regard to the health services, the non-capital budget provisions for 1985 will, taking income into account, support an overall expenditure level of approximately £1,195 million. This represents an increase of £65,500,000 on the corresponding 1984 spending level and it represents 7.6 per cent of GNP. To listen to the howls of anguish, particularly from some notorious health boards, one would imagine the money had been cut back. In 1985 another £65,500,000 is being pumped into the health services as compared with the money spent in 1984. The budget allocation for health services includes provision for increases in health allowances in line with the 6½ per cent increase in long term social welfare benefits with effect from July. Therefore I want to announce a number of increases in the health area and put them on the record because it is essential at this stage that we proceed with payments.

There will be an extra £2.35 a week in the personal rate of the disabled person's maintenance allowance, bringing the maximum rate to £41.55 a week. An extra £4 a week will be given in the maximum rate for a disabled person with an adult dependant, bringing the maximum rate up to £65.15 a week. We will have increases in the allowances for child dependants of disabled persons ranging from 35p to 60p a week, bringing the range of these allowances from £5.90 to £9.55 a week. We will have an increase in July of 85p per week in the rate of the supplementary allowance to pension, bringing the receipt of a blind pension, bringing the weekly rate to £14.25. The rate for a blind married couple will be £28.50, an increase of £1.70 per week. An increase of 15p per week will apply in respect of each child dependant. Persons in receipt of the infectious disease maintenance allowance will receive an increase of £2.55 per week from July, giving a new weekly rate of £41.85. The rate in respect of a person with a dependant spouse will be increased to £75.95 per week. The new rates for child dependants will range from £8.45 to £10.30 per week for each child.

Other health allowances are also being increased as follows. The domiciliary care allowance in respect of mentally handicapped children will be increased from £66 to £70 per month from July. The mobility allowance will be increased by £20 to £320 annually. The capitation rates for persons in special training centres will be increased from £785 to £835 per annum from July, while the rate in respect of community workshops will be increased by £45 to £755 per annum. The pocket money allowance payable to persons in long stay institutions who have no means of their own will be increased by 50p to an average of £7 per week.

It is proposed to introduce a uniform schedule of rates nationwide in respect of children boarded out under the Health Act, 1953. At present health boards pay 16 different rates depending on the age of the child and the length of stay. It is proposed to have a uniform number of rates of four in all. Long term rates for children up to five years vary from £24.15 to £27.30 per week. The latter rate will become the standard from July. Short term rates for older children currently vary from £28 to £31.80 per week. The latter rate will be standard also from July. From July the driver training fee payable to the Irish Wheelchair Association and the Disabled Drivers Association Centre in respect of disabled drivers is also being increased by £21 to £342.

In relation to the health care services generally I emphasise that we enjoy an excellent level of health care in this country. We have succeeded in bringing our health services and health indicators broadly into line with those prevailing in other developed countries. The scope of our health services is unusually wide, more so than in other European countries. It includes sophisticated medical equipment in hospitals, family medicine in the home and in the doctor's surgery, long term care for the elderly and handicapped and a wide range of services to assist people with physical, mental and social disabilities. In recent decades the range and depth of our services has grown rapidly, embracing many technological advances as well as a considerable expansion into the area of personal social service. Not unexpectedly, these improvements were achieved at considerable cost. The numbers of persons employed in the health services showed quite a dramatic growth during the seventies, and the period up to 1982 saw a steady growth in the level of resources allocated to the health services, both in absolute and relative terms. Net non-capital expenditure grew from £143 million or 5.2 per cent of GNP in 1973-74 to £948 million or 8 per cent of GNP in 1982.

While the growth in health spending and the improvements in services thus brought about are a mark of the caring nature of our society, there has been a necessity to restore order to our public finances and, therefore, some curbs on spending in the health services had of necessity to be introduced. The health services absorb about 20 per cent of total non-capital expenditure on public services. It is inevitable that the health services would have to bear some share, I might say a very small share, in the reductions in public expenditure in recent years. Therefore, we have introduced a new strategy, broadly speaking, involving a shift in resources from institutional to the community care area as our resources permit. While there may be a modest decline in real terms in the resources available for health services over the period of the national plan, I am confident that we will be able not only to preserve the essential fabric of our services but also to redeploy resources to develop some other essential services and at the same time deliver in each of the years 1985 to 1987 a more cost-effective service directly to the public.

Some agencies experienced difficulty in managing within their budgets in 1984. Some of them are just playing pure party politics with their budgets. For example, people in the Southern Health Board were saying that they were short £9.6 million. Yesterday, having had another look at it, they said it was £8.4 million. I have no doubt that it will keep dropping as the months go by and it will probably end up as £2 million or £3 million. Last year they said it would be £5.6 million and at the end of the day it was £2.4 million. Needless to remark, the local elections are coming up. Politicians on health boards regard health as a good old bit of political horseplay for gaining votes and they put the fear of God into every patient in sight and, therefore, they want additional resources.

The health boards for 1985 have sufficient resources to continue to deliver their services without in any way affecting their essential services. The vast bulk of our voluntary hospitals lived within their budgets comfortably in 1983 and 1984 and this year they are also doing so, but they have not shafts of local politicians on their board who decide that the Minister of the day who is trying to achieve various changes is a choice target and, of course, it is good for newpaper publicity. The same applies in respect of some consultants. A consultant in the Western Health Board recently alleged that people were going to die. This kind of outrageous nonsense is going on, but the more it is stated, the more it is exaggerated the more unhelpful it becomes in terms of delivering our services, and the more that kind of spurious criticism will appear to be what it is, namely very special pleading which has no basis in reality. Therefore, I assure the House that I do not countenance any action which would imperil lives in any health board area. I am heartened by the constructive approach of a number of health broads who have already drawn up detailed budgets. They are quite capable and they will live within their approved expenditure limits in 1985.

As I have indicated, the health services are changing from a very traditional, highly professionalised, institutionalised, tight structure into a community based, preventive medicine oriented structure, and that will continue during 1985. I have no doubt that we will bring about those changes and that the services will be of major benefit in that regard.

I want to thank the Members of the House for their patience in dealing with many of the difficulties that I have put before them in the health and social welfare areas in 1984 and 1985. They have been most helpful, co-operative and understanding of the difficulties facing the Department.

On behalf of Members of the House it is appropriate that I thank particularly the former Secretary of the Department of Health, Mr. Dermot Condon, who retired a few weeks ago after a lifetime of service in the health area. He made an enormous contribution in that area. On behalf of the Government and on behalf of those Members of the Oireachtas who served in the Department with Mr. Condon, I wish to put on record our formal appreciation of his outstanding contribution.

It is difficult to know where to begin to comment on this trick-of-the-loop budget. During my time in this House it has been understood that budget time gave to the Minister for Finance of the day the opportunity to come into the House and deliver his state of the nation address in terms of the finances of the country. We accept that any Minister for Finance, being also a politician, would be likely to present his statement in as colourful and attractive a package as possible but the presentation of this year's budget is as fraudulent a presentation of the true account of our finances as I have ever heard. In so far as the budget overlooks the many problems besetting the country, I must describe it again as a trick-of-the-loop budget.

I understand that there is a cosmetic used by the ladies and which is known as blusher, its purpose being to highlight certain features of the face. Fortunately for the ladies they can remove the blusher at night but it is not possible for the Minister for Finance to remove the blusher he chose to put on his budget statement. Within a week every member of the Government is embarking on some method of attempting to divert the interest of the people so that the extent of the fraudulence, of the hypocrisy and of the Government distancing themselves from what they have always referred to as financial rectitude is apparent to all.

This morning we witnessed a perfect example of that attitude by no less a person than the Taoiseach. During the time that I have had the honour to be a Member of this House, I do not recollect any other budget debate when the Taoiseach of the day failed to honour the Leader of the Opposition by not being present for his statement. However, this morning we witnessed what I regard as a calculated insult by the Taoiseach, this Taoiseach who with his aides and with the slush money made available has had himself put on a pedestal as being the great exponent of good behaviour, of rectitude, propriety and everything that was right while we on this side of the House were regarded by him as the poor menial peasants who knew very little about anything, good manners included. This is the Taoiseach who will accuse this side of the House of having no contribution to make or of being destructive or non co-operative but this morning during a statement that outlined our financial position more correctly and more honestly than did the statement either of the Minister for Finance or of the Taoiseach, he did not consider it worthwhile to be present.

Poppycock.

On a point of order, would the Deputy not take into account the fact that because one of his party colleagues did not show up to use the 57 minutes remaining to him, the Leader of the Opposition chose to speak an hour earlier than the time at which he was expected to speak?

That is not a point of order.

The young Minister of State has given me an opportunity to confirm to the House that it was well known that the Leader of the Opposition was speaking at that time. I thought the Minister was about to make the excuse that his able Leader was at the specially convened meeting of the Government, a meeting called by himself, to deal apparently with a matter he considers much more important than the matter of the address on the budget of the Leader of the Opposition. Was that meeting to deal with a subject that has been given new and wonderful top priority, the question of whether young people should have condoms, whether they should be made available to those still in subsidised shoe leather, whether they should be available to 16 or 18 years olds? This is another example of the attempts by the Government to deflect interest from the budget. Apart from the calculated insult offered to the Leader of the Opposition and to the House, the Taoiseach obviously regarded the important issue to be the preparation of that legislation which to the parties in Government represents the all-pervading matter of family planning but which they reduce to the question of the provision of contraceptives at the age of 16, 18 or 21.

The Government remind me of an unfortunate man who lived in the village in which I was reared and who because of a problem he had in the matter of alcohol neglected his wife and family. That man, on the way home to his wife and children, would throw out to the children of his neighbours whatever pennies he had in his pocket, leaving his own family to bear the brunt of his irresponsibility and carelessness. Here we are looking at a Government who, we are given to understand, are the keepers of financial rectitude and who would remind us that a former Leader of this party said that when the unemployment figure exceeded 100,000, it should be a matter of "out, out, out" for any government. There has been a 60 per cent increase in unemployment since the Government came into office. This brings the figure to 235,000, that is 11,000 in excess of the figure visualised by the Government by the time of the expiry of their national plan. It is not my intention to follow the example of the Minister for Health and Social Welfare and to attack the press. Recently a very able presentation of the true financial state made by my colleague, Deputy Albert Reynolds, was referred to by a press commentator who implied that every time we are hard up for a case or hard up for lies we send in poor Albert. The true position as stated specifically by Deputy Reynolds is that the budget deficit has risen from £900 million to £1.2 billion, that the national debt has risen by 50 per cent from £12 billion to £18 billion. These people are still masquerading as people who are achieving and are moving towards the plan. They have destroyed our whole financial structure and I shudder to think when it will be put in order. I do not oppose borrowing in accordance with a capacity to repay, such as the fashion in which my wife and family would indulge in a certain amount of HP that we knew we could contain but the finances of this country are in such a state that allowing myself a certain lifespan they will not be put in order in my time.

In that statement which was supposed to give a global picture we have a drunken approach. I am not suggesting that the Minister was inebriated when he delivered his budget speech but I am staying with the anology. The alcoholic Minister for Finance throws out £10,000 to the junior jazz orchestra and throws £300,000 to the zoological gardens and he makes that a feature of his budget. Those items should be contained under the subhead of miscellaneous items. I acknowledge that due to the kicking of the junior Minister, Deputy Donal Creed, we are getting some recognition for youth and sport but it should not be a feature in a budget that illustrates the appalling economic state of this country although the main figures to which I referred are suitably covered up.

People in Fine Gael branches throughout the country believed in the Government but their disbelief is mounting day by day. When the next speaker for the Government speaks I hope they will address themselves to what I am saying and say "Deputy Tunney was telling lies". I will not mind being accused of that if it is true. I am inviting that challenge because I know it cannot be taken up. I want the Government to take the Opposition into their confidence because the situation that has arisen is far too serious for trick acting or drunken behaviour by the Minister for Finance or bad manners by the Taoiseach. Unless all sides of the House apply themselves to first of all giving leadership, which the Taoiseach is not capable of giving, and restoring the confidence of the people the receivers will step in. Those receivers will not be qualified auditors or chartered accountants. They will be like the people who step in in other countries when the country reaches bankruptcy — instead of the Government or the manager or man or women of the house accepting his plight, he moves down to the local pub.

I am sorry that the Minister for Health and Minister for Social Welfare, having delivered himself among other things of his attack on the press, on politicians and on anybody who dared criticise him or his Department, has left.

That is not so. Informed criticism is what the Minister asked for.

I will give it to him and to you. Before he left the Minister announced that it was possible for him to increase the disabled person's allowance to a maximum of £41.55 per week and that he was also happy to announce that he, the custodian of this great purse of £2,000 billion, was increasing the mobility allowance by £20 to £320 annually. When the amount is small one talks about what it represents annually. The Minister reminded the House of his preparedness to listen to reason as presented to him here. I would remind the Minister, in his absence, of a case I made to him a month ago about a young man in Finglas who was in receipt of mobility allowance and the disability allowance and who had the good fortune to fall in love and get married. The man was 29 years old living with his father, an old age pensioner, in a local authority house. The Eastern Health Board representative representing the Minister called on him and said that because he was now married and because his wife was working he was not entitled to that allowance. I raised that matter here in the House and the only defence the Minister could make was that Terry Boland and his new wife lived with Terry's father and that Terry's father was the tenant of the house and paid a very small rent. I asked the Minister was he, the man who controls that budget of £2 billion, the man who was so critical of anybody who dares criticise him, telling me that out of £2 billion he expected Terry's wife Margaret to report into Downes factory every morning at 7 o'clock and work until 4 o'clock and keep Terry?

Leave aside Terry's disappointment that he is now the responsibility of his young wife who has to go out to work. Leave aside how he will feel and how the great elation of being married is now being transformed into the depression which understandably he is experiencing. The Minister has told me that his circumstances are not so bad, that he is living with his father and does not have to pay any great rent. What happened a fortnight ago? Dublin Corporation raised the rent of the house from £1 to £16. That rent is now being calculated on Margaret's earnings. The girl did not marry him for any reasons of charity. She was genuinely in love with and married this young man in a wheelchair who was living with his father who paid £1 rent. The result of that true, non-contraceptive, non-condom love — and perhaps what the Minister wants is that Margaret would come and live with him so that everything would be all right — is that Terry loses about £42 a week and the father's rent is increased from £1 to £16. That is not theory. That is not a case about which the Minister does not know. It has been brought to his notice.

The Minister is masquerading as the great Minister with the great social conscience and soft heart. He has not told us how because of the cutbacks to the health board old aged pensioners who are institutionalised and who generally give up the book to the administrator of the institution, being handed back what is called "comfort money", for the first time last year had no increase in that "comfort money". Because of the Minister's cutbacks the Eastern Health Board gobbled up the total increase of about £3 and will do the same this year. Normally those people should have got perhaps £1 to try to make up for the increase in the cost of the commodities which they buy for themselves — the newspaper, the telephone call, the shave, the new shirt, the clothing. They would certainly need more, but they got no increase at all.

The Minister expects me to genuflect to the wonderful manner in which he and his civil servants are administering to the needs of the nation in respect of social welfare. I have made repeated representations to him on behalf of married women, some of whom have been contributing to the fund for the last 15 years but are now unemployed. They had a baby perhaps a year ago, opted out of employment, but when they go to the employment exchange they are told that they are not available for work. Therefore, they are not getting their entitlements in the matter of unemployment assistance. I have written to the Minister about countless cases of this kind. I am not talking about the unfortunate category described as being on the dole and a terrible weight around our necks. I am talking about someone who since she left school has been contributing to the social welfare fund. She is now denied her entitlements because some civil servant or inspector, who is being lauded to the skies by the Minister, decides that, even though the baby is a year old and the mother is living with her mother, who would be happy to look after the baby, and living close to a sister, who would also be happy to look after the baby, she is not available for work. Even though she can show that I have made representations to the Department of Labour recommending her to anybody who might be prepared or anxious or free to employ her and even though she can show 20 negative replies, the Minister decides that she should be looking after her baby. He cannot blame the civil servants. He is responsible.

We move to another side, the professional side of things, where you have a much praised civil servant, or a teacher, who is married and has a baby. She is obliged to return to work after seven or eight weeks. There is nothing at all thought about her baby. It is no excuse for her to say that in another section of this Department a woman who has a baby a year old will be denied her unemployment benefit because in the opinion of that Department and of that Minister she is not available for work. They are asking the professional girl to return to work even though her baby is only seven weeks old. The position is ludicrous in the extreme. The Minister, who defends the civil servants who make those decisions, is not in tune with the needs of the people and has moved a long way from the days when he would preach to all his concern for the downtrodden, the weak and the poorer.

I did not come into this House masquerading on the backs of people who have the misfortune to be poor, but I recognise injustice when I see it. I recognise two-facedness when I see it. The decisions are being made by those people on behalf of the Minister so that he will attain that great position he thinks the Lord has made him for, to keep cutting back money and manage his budget with the least money possible. He is getting a repeat £2 billion, not of his money. He pays as little to the fund as I do, and what we pay is very little. This money belongs to the PAYE sector. He does not want any disagreement brought in between those paying PAYE and the rural people, the farmers.

I make no apology for saying that according to my assessment of the situation, the PAYE sector are very badly done by. Perhaps over the years there has been an attitude here that somebody who went out working to earn his livelihood by the sweat of his brow, even though he was far more intelligent, far more enlightened than those who call themselves professionals, must lie down. Everyone of us is obliged to speak on injustice when we see it. We are obliged to bring to the attention of this House injustice such as is being done to that unfortunate person in the wheelchair in Finglas. I have made representations to the health board, the Department and the Minister, but they said that there must be a means test. The board said they had not the money and that the Minister was telling them that they must work within certain limits. They said they have not the money for Terry, or for the comfort of the old people. I ask what are they using the money for? Where is it going? Let them show me some deserving area to which it is going and I shall believe them, but I do not see it.

We had in this political alcoholic's budget another throw to the neighbour's child, the great day for the women of Ireland — the breakthrough in dental treatment. The first condition was that one's husband be an insured worker, the second condition being that the wife be pregnant. I am saying nothing new in this — leaving politicians aside, they might be accused of saying anything to suit their argument — it has been said by medical people that those of us who have the good fortune to be married and whose wives have had babies know little about it. The recollection I have of my wife in that happy state was that she could not have X rays, she could not have her teeth attended to. Perhaps something has occurred in the make-up of women in the last ten years which renders it possible for them to survive such examinations and have their teeth attended to. If it has, well and good, I would accept that the Minister has done something.

The same conditions apply to optical treatment which is confined to the wives of insured workers. I have talked to opticians who tell me that ordinarily the need for glasses in the case of somebody who has not had a weakness attended to in the earlier part of their life, commences around the age of 37 or 38 onwards. This is the age at which most married women have decided they may have had sufficient pregnancies and will not be looking for glasses. But, if they do want glasses, they will have to become pregnant. I am assuming that Deputy Avril Doyle will not accuse me of being sexist if I say that she would be better able to articulate the special position of the ladies in that regard, but I do not think she will be able to contradict the two points I have been making.

Every married woman looks forward to the day she will have a baby. Traditionally in this State — and I should say my late father was a Member of these two Houses — we have prided ourselves on the fact that we gave recognition to the contribution the woman made — however inadequate was that recognition — which she regarded as the State's recognition of her being as attentive as she was, acting as nurse, doctor, physician, psychologist, protector and teacher to that child, and she got children's allowance. Apart from the actual amount, which under any Government — including ours — was never adequate, there was its psychological effect on that woman in that to some extent she was correct in thinking that this was the recognition of the community, the State, of her role, of her importance in that it was she who made this exceptional, unique contribution to society.

Has there been any increase in the children's allowances this year? There has been none at all. No, the money has been set aside for medical card holders, who probably will get condoms if they are over 18 years of age. There is nothing at all; money is needed for something more urgent. With a budget deficit now of £1.2 billion and national indebtedness of £18 billion it is too much to expect that the State would acknowledge the contribution of the stay-at-home wife, whatever that means. We still live with the effrontery to married women, who used to be described as those who did not work. Years ago one would hear people ask: "Are you married?" the answer would be "Yes"; then the question: "Are you working?" when the reply would be "No, I am a housewife". Unfortunately, that tradition was carried on over many years not through any malice but because their role was not recognised. This year there is money for the Zoo, for the jazz orchestra, but none for children's allowances.

The Minister spoke earlier of the special income tax allowance for children — something in the region of £130 a year for a child, which would not get them into a disco or buy them ice cream. Apparently that is the reason they cannot be given any special children's allowance. We must be mindful of the times.

The last comment I shall make in regard to social welfare in this budget concerns figures contained in the tables presented to me by the Minister for Finance, tables from which I was to gather there were great benefits accruing to people arising from this adjustment of the income tax bands. I looked in one column and took what I thought to be a salary representative of those people I represent — a man and wife, married, earning £13,000 per annum where it shows an income tax saving of £124 per annum. Then I moved across to the other column showing man, wife and one child earning £13,000 per annum, who will save £111 per annum under this budget £12 less for the man and wife with the child than for the man and wife who are childless.

That man, woman and child, if they are the industrious and thrifty people I would like them to be, will have a mortgage on their house. We know that as a result of the Minister's decision to raise the composite rate of tax on building societies the repayments on their £30,000 will be increased unless the Minister does what he should do and not be asking building societies to act as tax gatherers. That is what he is doing, he is taxing people through the building societies because he has not the courage to do it himself. Anybody here who is as good at mathematics as I am will know that for that family with their £30,000 house it will mean an extra 2 per cent. Deputy A. Doyle is good at mathematics. She will know what that amounts to: it will amount to more than the reduction the husband will receive in his income tax. In that respect the Minister for Finance is forcing the building societies to implement his new taxation. That is another reason I contend this is a trick of the loop budget, a blusher budget which has been exposed inside of the week.

Moving on to unemployment, that terrible blight that has hit this country, if we are to take the projections contained in the national plan, the unemployment figure will be 11,000 fewer in 1987. Having created interest in the document, with your permission, Sir, I will read from an article entitled "Plans for everything except jobs". I will leave aside for the moment the name of the person who wrote the article lest somebody might think he was a TD or a Senator or a member of the Fianna Fáil Party. I will provide the article for the Official Report later on, mindful of the requirements in the matter of reading from any article in this House. The article says:

There is now one-in-six of the workforce out of work. One-in-twelve is drawing only the basic means tested unemployment assistance. A total of 225,445——

That gives the House an idea of when the article was written, about three weeks ago. The figure is now 235,000. The article goes on:

A total of 225,445 people were signing on at the unemployment exchanges....

The trouble is that the Government is offering no hope of any improvement over the next three years. On the basis of the projections in its economic plan Building On Reality there will be 226,500 people out of work at the end of 1987....

There are plans for trimming public spending; there are plans for reducing State borrowing; there are plans for cutting the number of civil servants. But there are no plans for reducing the number out of work.

We have a Minister for Labour. If you asked ten people who he is they would not know. For reasons best known to himself he does not want to be identified with that Department. In any of the many industrial problems I had in my constituency I could not encourage the Minister for Labour to intervene even though when he was in Opposition he pointed out their functions to Ministers. The week the unemployment figure moved from 225,135 our Minister for Labour was in Massachusetts, or someplace like that, solving the Northern Ireland problem. I see the benefit of Members of this House going to any venue where they could take part in anything which would be beneficial to the people. I have always spoken against people who accuse us of perks or junkets. To me it is essential that politicians should move around and see what is happening elsewhere.

The week when we had an unprecedented increase in unemployment I had occasion to ring up the Department of Labour and I was told the Minister was in America at some old jaded conference on the problems of Northern Ireland. I said to myself that he was throwing in the towel and putting distance between himself and the problems. I am not saying this on any personal level. From the time I was on Dublin Corporation my relations with him have been good. I am criticising the holder of an office, the Minister for Labour. I am thinking in terms of the young people who are demented at the fact that they have nothing to do notwithstanding their education and academic qualifications. A man who is supposed to give leadership regards it as highly important for him to represent this country at some old jaded spurious conference in America. If it were not tragic it would be a joke.

I will read an extract from the annual report of the FUE:

The year ended without any sign of the proposals for industrial relations reform promised by the Minister for Labour. There appears to be little appreciation of the extent to which our legislation and practices have fallen behind competing countries, and of the serious effect which a poor industrial relations environment can have on investment.

We are in urgent need of a reassessment of our whole attitude to work and a need for everybody to jettison the old sacred slogans which had to be used by people like my late father and mother who were exploited when they worked in this city. However irrelevant today, those slogans are still being used. I suppose it is characteristic of many Irish people, myself included perhaps, to be so spineless that we are prepared to see employment put at risk because one selfish person decides to stand outside an industrial unit into which State investment has been put and hold up some old placard because he is not getting what he wants. We will never be able to supply full employment in the traditional industries.

We will never have full employment and a five day week for everybody. There is a mechanism through which we can provide gainful occupation for our people by introducing new flexibility and giving a new meaning to the word "employment". We all know that with the advances in technology it will be impossible to provide full employment. The great virtue of technology is that it demonstrates that man can live and earn his living without physical exertion, although it will then be necessary to provide an opportunity for him to indulge in physical exercise for his own well-being. It is possible for us to make every person in Ireland feel important because he or she is performing a duty but we still labour on in the same old ways.

When people refuse to work and to make their contribution to industry we call it industrial action when everybody knows it is industrial inaction. It is a refusal by people to perform certain duties but we give it the grandiose title of industrial action. The investment of millions of pounds is put at risk. I know the Irish worker is as good a worker as anybody else and that we are competing with all the other nations in the world. We cannot sit back and use old slogans and pay homage to slogans which were relevant 50 years ago. They are not relevant today and they are not relevant to survival. People say: "Let somebody else do it." I will not be the one to say there are too many trade unionists. I will not be the one to say you cannot give a salary or a wage beyond that which is possible. I will not be the one to allow for inflation and handing out paper money. Shove it under the carpet. "Let somebody else do it."

Any responsible Minister for Labour would be trying to remedy the present situation. I would like to pay a tribute to AnCO because they do the job required of them. We give them a lot of money so that they can provide opportunities for young people to acquire skills. When I was headmaster in Blanchardstown we were always happy to direct students into the motor trade to be trained as motor mechanics. For the last two years the number of apprentices to this trade has dropped. It was hoped that this year the budget might encourage garage owners to take on new apprentices but what did the Minister do? He increased the cost of labour in garages by 5 per cent thus guaranteeing that no extra apprentices would be taken on.

Traditionally we gave an impetus to the motor trade by giving allowances to representatives who had to travel throughout the country discharging their duties. They had free cars to help them perform their duties more efficiently and this in turn created a need for new cars. What has the Minister done? He has given an allowance of £3,500 but any amount over that is liable to tax. I am not critical of those who ask me if the Minister, Deputy Dukes, could survive on that money even though he has a salary and the usual perks. At one time we were told we were supplied with a car for security reasons because we might be taken as hostages, but that has changed now. This Government are doing away with State cars, but they are giving an allowance to the people who use their own cars. Why not allow the full price of a car to the company representative who must travel five or five and a half days a week doing his job? Decisions like that increase cynicism among the people.

I am trying to remember instructions I got when I was studying economics at college. We were told about costs, opportunity costs, investments and prudence. I believe one should never invest in anything unless one can be guaranteed a very good profit. We invest £240 million in the Garda. I am not going to talk about investments in the courts and ancillary matters, nor will I discuss the amount we invest in the Army or how much they spend when co-operating with the Garda, because that is money well spent. In spite of the prevailing fashion, I have never been critical of the Garda. The force are as good a body of men and women as you will find anywhere but like all institutions run by humans they have their imperfections. We are investing a considerable amount in the Garda. We should get the maximum benefit from our investment but we are not, because we delayed many years introducing the Criminal Justice Bill. Then we spent weeks discussing it, but it is still not in force.

I would like to refer to the establishment of a committee, sought by members of the Garda and Members of this House, to deal with the training and retraining of gardaí, because we were not maximising on our investment and, bearing in mind the demands made on them, there was a great need for definition training. This committee was set up two and a half years ago to study these matters, but excluding recruitment training. That committee very wisely accepted a representative from the general body of the Garda and from the Association of Garda Sergeants and Inspectors. That committee is no longer in existence and a new committee has been set up. The Minister may say the commissioner set up this committee but in the opinion of the Minister and the commissioner there is no room on that committee for a representative of the Garda or the Association of Garda Sergeants and Inspectors.

I spoke earlier about the Taoiseach's calculated insult to our leader, but was there ever anything more calculated to insult those 11,000 people than setting up a committee to look into their affairs but excluding any representative of the Garda, or the Association of Garda Sergeants and Inspectors? I am talking about getting value for money, getting value for the £250 million the people are happy to invest in our Garda. Imagine that I am a teacher and the Government set up a committee to look into the training and retraining of teachers, but I am told the ASTI or the TUI will not be represented on that committee. I am told the committee will consist of academics, personnel experts and a civil servant. To some people that may seem relatively unimportant but to me it is the most dangerous decision ever made. How can we expect this body of people to co-operate as the Garda have always done when we are not giving them a representative on the committee set up to look into the running of the Garda Síochána? Because my time is limited I must leave this point undeveloped.

I hoped I could say a few words about education and the unfortunate PAYE workers who keep the ship moving but who get very little from it. I note with regret that the Minister for Education has identified sexism in education as one of the pressing needs of the day. To me that ranks at the very bottom of priorities especially when we have no remedial teachers. The Minister is worried that the children will not receive any sex instruction. What about the thousands of young children whose parents cannot compensate for the lack of teaching in Irish, English, mathematics, history and geography? There is a ratio of one teacher to 45 students. There is a need for remedial teachers but the Minister cannot make provision for those either. This is another example of the double think and of the ineptitude of the Government and the Taoiseach. Would the Taoiseach, in God's name, consider offering his position as leader to somebody else?

I welcome the direction of the budget delivered by the Minister last week. I will refrain from taking up the invitation of Deputy Tunney, however graciously offered, to respond in detail to some of the points he made. I can arrange at a later date, even later today, to have the difference between sex education and sexism explained to the Deputy. It has no part in this debate.

There is no doubt that the tax measures in the budget are designed to stimulate growth in economic activity and these, together with other Government strategy and action, will have a tremendous part to play in helping our appalling unemployment problem. These tax measures, taken in tandem with the tremendous success of the enterprise allowance scheme over the last 12 months, have ensured that 5,000 people have already been helped to set up on their own. Applications are still coming in to the Department at the rate of 100 per week. These various tax measures combined, for example, with the social employment scheme announced in Building on Reality— I am delighted that Wexford is included and Wexford County Council are about to employ 200 people under this scheme with a further 300 being taken on in a matter of weeks — will insure that the target of 10,000 jobs is feasible under this scheme. We also have the employment incentive scheme which subsidises newly hired workers. In the last four months of 1984, the rate was running at about 50 per cent over the previous year and totalled about 7,000. The Government are reviewing the possibilities of improvements under this scheme.

When we take the budget in the context of the many other measures, including the few I have just mentioned, it is clear that a real effort is being made and that there is true recognition of the appalling problem of our unemployment figures. We need a climate in which the risk taker is adequately rewarded, in which there is an incentive to work and in which the economic activity will have a natural momentum.

The rationalisation of VAT bands and the move towards more uniformity as recommended by the first report of the Joint Committee on Small Businesses are most welcome to all sectors of business. Since 1980, VAT rates have been increased on an annual basis. The low rate has gone up by as much as 130 per cent, thus exacerbating the problem of inflation and capital outflow. With the reduction of VAT bands from six to three and the abolition of the 35 per cent rate, we hope to see a tremendous turnaround in the economy in specific areas. The tax rate on many essential groceries will be reduced shortly which is of tremendous interest to the consumer generally who will also see an easing of the very difficult situation that has existed in cross-Border traffic. The brown goods industry has at last got relief and a reprieve with a future in sight. The VAT relief is also very good news for those businesses caught up in a cash flow crisis because of the bank guarantee aspect of VAT at the point of entry.

I had hoped that the Minister could have gone some way down the road of removing the severe imposition on the commercial and industrial sector by exempting capital goods and components from the bank guarantee of the VAT at the point of entry and replacing it with a first warning system where any defaulters would have the guarantee replaced. Never having supported the introduction of VAT at the point of entry I understand, however, that to remove it in one year at the stroke of a pen would cost the Exchequer in the region of £190 million. We have made a small start along this road and I urge the Minister to continue in this direction. What we are doing in this area is in accordance with an EC directive towards the day when VAT at the point of entry will be fully replaced.

When one talks about the reduction in VAT levels, it must be remembered what a bonus it will be to certain sectors of the economy. It is essential that we recognise that there are also problems as a result, particularly, of the removal of the 5 per cent VAT band. On the one hand we have the problems of the construction industry. The Minister had the option of exempting them altogether, which is not on because of the benefits of being rated for VAT, albeit at a low level, in terms of repayments and rebates, or increasing the rate to 10 per cent. If he had exempted them, the construction industry would have fallen into what has been perceived as a problem, for example, for live theatre. They were rated at 5 per cent and have now been exempted. Under EC legislation, the Minister cannot introduce any more zero rates for goods and services. Indeed, the Government have been taken to court in Luxembourg because of the many items and services which are on zero rating. Therefore, it is not an option any more. It is out of our hands and the Government have no choice. The construction industry, because exemption was not a consideration in view of the way that business operates, have had to go to the 10 per cent band. This will cause difficulties and I applaud the announcement today by the Minister for Finance in his recognition of the difficulties that the increase from 5 per cent to 10 per cent on new houses will cause. He announced the deferral of the increase of 5 per cent on new houses to 1 May so that those who have already signed contracts or are committed to mortgages and who have applied for the first time grant of £1,000 will be able to see that the building is completed, that they can pay and are in their houses by 1 May.

I applaud the Minister's recognition of the particular difficulty which this would have caused to new house buyers and I ask him to look at the possible extension of his announcement today to the subcontracting end of building. Many other companies were VAT rated at 5 per cent and are now in the 10 per cent rate. This includes window suppliers and various other suppliers to the building industry. They are not so much criticising the increase to 10 per cent but there is a very difficult interim period in changing over to the higher rate, especially for those who pay VAT on a cash receipt basis. Perhaps the work is already done and the contractors have contracted for a price inclusive of 5 per cent VAT. Unless that money can be got in before 1 March, the companies will have to bear an increase of 5 per cent. For many companies this could be intolerable. I urge the Minister to look at this point and see if he can handle it in the same way as he has dealt with the question of new houses. I fully recognise that there is little room for manoeuvre when it comes to budgetary decisions of this kind. We are always inclined to take the goodies but when it comes to paying for them we all squeal. That is part of human nature.

The reduction in the VAT bands and of the top rate from 35 per cent to 23 per cent will have to paid for. It appears that this will cause some difficulty for certain sectors. However, we can trust the Minister to investigate any difficulties that will be caused, particularly interim difficulties in the changeover, and to come up with satisfactory solutions for the sectors involved.

The tourist industry has benefitted tremendously from the reduction in the VAT bands. The potential of this industry cannot be overestimated. For far too long successive Governments have failed to get their teeth into the potential of this industry. It is a job intensive industry and is price sensitive. The VAT changes announced should immediately translate into jobs. We will have to have a linkage programme between this industry and other sectors of the economy and deepen the penetration of the tourist industry into all aspects of the economy.

I welcome the decision to reduce VAT to 10 per cent on hotel accommodation, car hire and other aspects of the tourist industry which go to make up a successful holiday. I regret that the Minister was unable to accommodate the cry for the reduction of VAT to 10 per cent for the catering and food end of the industry. Coming from an area which depends heavily on tourism I see the difficulty this is causing to restaurants and hotel owners. On the other hand, when the cost of this is explained to us it is easy to understand why that option was not available in the budget. If the Minister decided to reduce the VAT on food in restaurants and hotels to 10 per cent and even if take-aways which are exempt from VAT, were brought into the 10 per cent band, it would still have cost the Exchequer £50 million to give such a reduction. That money was not available. I hope the industry will respond to the reduction of VAT on accommodation, car hire and so on and that more jobs will be created. I have no doubt but that will be so.

The Minister introduced treatment benefits for the wives of insured workers during pregnancy. There has been much criticism and political play made of this point. There is no doubt but that the ideal and optimum solution would be for the wives of all insured workers, regardless of their position, to benefit from optical, dental and aural treatment. However, it is a small beginning and what we can afford. For far too long we have failed to recognise the contribution made to the economy by the wife and mother who stays at home to rear her children. The most important role of any woman who chooses to marry and have children is to rear those children. It is not her only role, and it never will be, but if she chooses to do so it will always be her most important role. I applaud the Minister for recognising this and for recognising that it is their hard-earned right to have benefits under their husband's insurance. I urge the Minister to keep in mind for next year's budget the extension of this treatment to all women who are married to insured workers.

I welcome the 25 per cent increase in the free fuel scheme. An increase of £1 may not seem a lot on the face of it. I accept it will only go part of the way in paying the fuel bills for those involved in the scheme. At the same time it is a scheme which, if monitored carefully, will have tremendous benefit for people, particularly in urban areas where fuel and timber are not readily available. Social welfare increases were in line with inflation and with the Government's commitment to give a helping hand to those who need it in this area.

The continuing imposition of a bank levy will always be a vexed question. However, in arguing against it, it is often forgotten that bank services are not subject to VAT and so the levy can be construed as an alternative to that. The banks do a bad public relations job in placing before the public the reasons — they are good reasons — why the levy might not be in the nation's best interests. The banks do not wish to have the confidence of their shareholders eroded. Being public companies it is in their interest to keep share prices up. However, being Irish owned banks and servicing every sector of the economy, not least investors, it is in all our interests that the return on shareholders' investments is sufficiently buoyant to enable them to remain Irish owned. The banks have felt the draught since deposit interest was taxed at over £50 per investor. In the budget the Minister doubled that limit for people over 66 years of age, but the benefit should have been extended to all.

I would encourage savings by increasing the ceiling for tax relief to £500 per individual. The present situation is forcing money into areas of non-disclosure and into the black economy instead of being put to productive use.

As regards the measures taken in relation to personal taxation, the broadening of the tax bands for PAYE workers and the reduction of the highest level to 60 per cent is most welcome in our penal taxation system. The tragedy of the brain drain has continued for far too long. Highly educated young people, funded through third level education by the taxpayer, have gone abroad in their thousands to find reward elsewhere for their endeavours. This outflow has served only to improve the economies of our competitors, as Deputy Flynn said this morning. It is to be hoped that the Minister's very welcome move will stem this flow. As a result of broadening the tax bands and the general improvement in that area no one will be worse off and many groups will get a modest relief.

I welcome and again applaud the tax concession in relation to the first £2,000 of lease income for farmers retiring from active farming. Far too large a proportion of our land is in the hands of people who through age, infirmity or indolence are not in a position to maximise the return from it. We have paid lip service to this problem for a long time. The Minister has now introduced an incentive for this land to be leased to young productive farmers. With the recent legislation and this budgetary provision no obstacle remains in the way of this master scheme. No landowner need fear that his constitutional property rights will be eroded by leasing his hand on a long term contract. The implications of this scheme are enormous. Land will be properly looked after, fenced and fertilised and optimum return will be achieved from this great natural asset for us all.

The Minister referred to the tax exemption on stallion fees being confined to income from stallions at stud in this country. This is to ensure that the relief benefits the domestic bloodstock industry only. This scheme is extremely important in attracting the top sires to stand here and to keep Ireland to the fore in bloodstock breeding circles. Our good grassland and temperate climate confer a natural advantage on this industry.

However, there is one matter to which I should like to draw the attention of the Minister and one that needs immediate action. Many farmers are earning a small income from stallions where the covering fees are in the region of only £100 and they are not exempt under the tax exemption for stallion fees while their neighbours running large stud farms where the covering fees are in excess of £10,000 are exempt from the tax. I am talking about stallions leased by farmers from Bord na gCapall. To date the system has served the half-bred bloodstock industry well and has put it in the forefront so far as showjumping is concerned. During the years it has been a valuable export trade. There can be no doubt that the stallion fee exemption was meant to include this category and I urge the Minister to rectify the matter, perhaps with one exception. The recent proposal to introduce Hanoverian blood into Irish bloodstock has been greeted by such dismay by those who have the long term interests of the industry at heart — they do not view it merely from short term financial expediency — that this makes me suggest to the Minister that there should not be any tax exemption in respect of stud fees for such stallions. I will avail of another opportunity to ventilate my views on this subject and of the damage that is being done to one of our premier industries by some of those into whose hands we have entrusted it.

Many companies have been under-capitalised since their establishment and because of low profitability and lack of further equity investment this state continues during the lifetime of the company. The venture capital scheme announced in last year's budget has not perhaps been as successful as it should be, even though it is early days yet. The basic approach was correct but I ask the Minister to turn his attention to minor amendments that could turn a good idea into a very successful one. For instance, it is essential that it be made clear that the terms of the general unit trust legislation do not apply to funds set up under this scheme as they are so restrictive few people would take the risk. Also, the 5 per cent commission or limit on fees is too restrictive in view of the expenses involved in setting up, advising and monitoring progress of such a scheme. I favour no limit being set and let the market forces dictate the appropriate level.

Perhaps the cost to investors could be reduced if promoters were allowed to take shares in the companies to which they are directing funds. This is precluded under present legislation. There are also restrictions on disposal which are considered by many to be too restrictive. Companies should be allowed to buy their own shares. This system operates in the United States very successfully under the SBICs — the small business investment corporations. In directing money to business which benefits the investor, as is proposed under our scheme from the tax allowance against the investment, we are helping the economy. As the economy picks up and business becomes more sound the employment situation will improve automatically. I look forward to a positive reaction from the Minister in the Finance Bill on the points I have raised in relation to the business expansion scheme as announced in last year's budget.

Recently the Minister announced changes in relation to the writing-off of development expenditure of the oil companies from the existing 10 per cent per annum over ten years to allowing a writeoff of 40 per cent per annum on a declining balance, which effectively is over four years. This was heralded by all concerned, not least the Government, as a major concession but quite frankly it was not. With the third licensing round now on, immediate clarification is needed in relation to royalties and Government participation which remain discretionary. It is this discretion that is hindering development. Ahead of appraisal, all oil fields are potentially marginal or sub-economic and some codification and clarification is needed to judge investment possibilities.

No one is asking for softer licensing terms — I cannot over-emphasise that in case we get caught up in an ideological battle between different viewpoints. It is not softer licensing terms that are wanted. The ongoing prevarication means that potential exploration is being deterred. The Government have nothing to lose and have all to gain. Under the 1975 Act we have not got a single producing oil field. The Act states that the Minister can take up to 50 per cent unless he is satisfied that the licensees will not get reasonable return. Section 29 (2) of the 1975 Act needs to be addressed immediately and urgently. The oil industry must be informed what would be "a reasonable return" in the Government's view. After all, 50 per cent of nothing remains nothing.

I wonder why the deadline for applications for the third round has been extended from 15 February to June? Is it lack of interest? This question needs an answer. In other countries the exploration companies know exactly where they stand. They have a formula in advance and they know what will be demanded of them by the country in question. In 1984 some 116 exploration or appraisal wells were drilled in the UK section of the North Sea. In the same year off our shores only six appraisal or exploration wells were drilled — 116 in the North Sea under English jurisdiction and six here under our jurisdiction. I ask why? Bankers have clients on their books waiting to invest in our economy once we become an oil producing nation within the EC and in the EMS. No Government should or could allow themselves to remain in a position where future generations may point their finger at the missed opportunity of enormous potential. The confidence factor and the psychological boost, as well as the upturn in our economy, cannot be over-estimated if we join the oil producing nations.

There is another aspect that has important political implications. At the moment there is room for different treatment of individual companies and consortia as well as different treatment of different fields. The Minister has this discretion under the Act. In my view this is politically extremely dangerous and open to all sorts of interpretation. As the economics of individual fields are confidential, the Minister would never be in a position to justify publicly any stand or decision he takes. I cannot emphasise often enough or sufficiently the importance of immediate codification and clarification of the discretionary terms that exist now in relation to Government participation in oilfields.

A matter more parochial but extremely important not alone to County Wexford but to the south-east region is the announcement of the ongoing commitment of this Government to Rosslare Harbour, and I applaud it. This year an increase of 66 per cent is being invested in the improvement of the facilities of the terminal at Rosslare Harbour. Last year the Government allocated £300,000 to these improvements and this year for the ongoing development works there an additional £500,000 is being allocated, along with another £132,000 for the lifeboat mooring pen, to the RNLI. I welcome this £632,000 because it underlines the commitment of this Government to the very important natural and national asset which is Rosslare Harbour, the nearest non-tidal port to Europe. Its throughput figures for classical and passenger traffic are a testament to the economic importance of this facility. Despite the lack of attention of many Governments before this one, Rosslare Harbour figures continued to increase. Really we do not know the potential of this port. When it is developed to the full and maximised, only then will we realise the asset that has always been there.

The Minister, Deputy Mitchell, promised to press ahead with proposed legislation in relation to the Rosslare Harbour Authority. As this also requires British legislation and as the queue in relation to that is quite long, he is examining the possibility of an alternative for local involvement for running the port as an interim measure pending the enactment of British legislation. I welcome this announcement, but I urge the Minister to involve the local people in the running of the port in consultation with them. I feel that many hard working and interested bodies in County Wexford who are committed to the future of this port have in-depth knowledge and have studied at great length where we should be going. I recommend that, as an interim measure, the Minister consult with them before any final decisions are made regarding local involvement in the running of our port as an interim measure.

As I have said, there is little room to manoeuvre in relation to the budget of this year. The overall criteria must continue to ensure that we try to instil in our economy some natural momentum. This, together with Government aid and the State support system for those who are unemployed, in initiating employment, increasing incentive to work and increasing reward for the risk taken will go a long way towards solving what remains and will be with us for some time as our great national problem, unemployment. Until we have an attitude that profit is no longer a dirty word, until we cease to have a begrudging mentality, it will always be difficult. But I welcome the measures announced in the budget by the Minister and, with some of the provisos I have mentioned here today, I applaud what he is doing for our country for 1985.

I welcome this opportunity to speak on the budget for 1985. On the Opposition benches and throughout the country people anticipated that the Government and particularly the Minister for Finance in that budget would take the opportunity to introduce measures to tackle the most serious problem confronting the economy and the people. The figure for unemployment is pushing hard towards 250,000 people, and it was not unreasonable to anticipate that the Minister would consider introducing measures to improve the environment for job creation. One would have thought that this would have been given sufficient priority, but it was not to be.

In terms of measures and mechanisms to tackle the unemployment problem this budget must be regarded as a dismal failure. Taxation, PRSI payments and VAT all remain at an excessively high level and are a disincentive to anybody who would wish to start an industry or open up opportunities for employment creation. Our very high production costs are also a disincentive. Our electricity charges to industry are between 25 per cent and 40 per cent higher than those of any of our competitors in other member states of the EC. Our transport costs are the highest in the EC. The 10p per gallon increase on petrol, the increase on diesel, the high insurance levels and the cost of repair and maintenance to the motor industry in this budget do absolutely nothing to reduce the costs of our all so necessary transport system. Most areas in the country are not so far away from the various ports and outlets but the transport costs of bringing goods to these points are the highest per mile anywhere in the EC. In addition to that the condition of our roads means that repair and maintenance costs of vehicles are higher than they would be on a properly surfaced road infrastructure or network.

Problems arise from very high insurance claims which in turn mean that insurance premiums for industry and for individuals are excessively high. Our interest rates mean that money borrowed from our financial institutions is too expensive to encourage people to put it to work for the benefit of the country and of the people. Regarding rates on industrial buildings, in my constituency of Louth I can identify many buildings that are lying vacant because potential entrepreneurs or people with enterprise or innovation who might think seriously of acquiring them and starting up different enterprises and industries are precluded or frightened off from doing so because of the level of rates payable on those buildings. Unless we are prepared to tackle these areas we will not expand the industrial base to absorb the 250,000 unemployed. The budget fails dismally in that respect.

Many local authorities on current account are perhaps in the red to the extent of up to £2 million. This leaves them paralysed in terms of undertaking any works. Necessary work programmes and infrastructural development are stymied because of the lack of finance. Unless the Government are prepared to recognise the importance of local authorities instead of merely paying lip service to their role, the position of local authorities will deteriorate gradually but surely in the coming years. In my local authority area the level of outdoor staff is at an all-time low. Consequently, the volume of work undertaken by engineering staff must be restricted.

I have always claimed that the opportunity for job creation in the local authority area is considerable but it is a question of the money being put up front so that the infrastructural development work can proceed, work that is so necessary for the development of the economy.

Looking at the end of the year returns one finds that last year £85 million was collected by way of the youth employment levy. It may be opportune to ask at this time whether that money is being well spent. Would it not be preferable that the various training programmmes being undertaken by the different agencies involved be channelled through our local authorities where there is the outlet and the possibility where the benefit of the programmes would be for the good of the community and where the work could be assisted and supervised by the trained technical staff who in many cases are working in an under-capacity situation in many local authority areas? This is a matter the Government must give consideration to.

The Minister saw fit to give some impetus to the land leasing legislation that was introduced before Christmas by way of providing for some tax relief. When that legislation was going through the House I expressed reservations about it. I expressed the opinion that the arrangement, praiseworthy though it might be, had many obvious shortcomings. One of the basic problems is the matter of the fertility of the land being leased. Whether the period of leasing is for seven or 12 years, one can recognise the attractiveness to the lessee of allowing the condition of the land to deteriorate towards the end of the leasing period. During the debate on that legislation I suggested that a system of annuity repayment be introduced to cover the cost of fertiliser and lime requirements during the period of the lease. I am asking the Minister again to consider that proposal because it is one sure way of having a mechanism that will go a long way to ensuring the maintenance of the fertility levels of the land. This would mean that the person leasing the land would be responsible for the repayments for the fertiliser and lime. In that way there would be a net benefit not only to the agricultural industry but to the entire economy. I think Members on all sides recognise the unacceptability of having large tracts of land under-utilised because of low fertility levels. We must keep in mind always the desirability of expanding production generally in the primary producing areas in our economy.

Many business people in the Border areas were hoping that the budget would bring some relief so far as they were concerned. We are talking of businesses that have been ravished in the past number of years because of excessive levels of VAT. While many changes that are overdue and desirable are being introduced, there remains the problem of petrol prices that are far too high, so that it is still an attractive proposition for people from constituencies close to the Border and even from areas much further removed from the Border to travel to towns in Northern Ireland to buy tankfuls of petrol and, of course, while they are there they buy their groceries and other requirements also. Many businesses in my constituency have gone to the wall because of this situation.

I have said here before that Dundalk, which is the biggest provincial town in the country, is effectively for sale. I am far from convinced that the measures introduced in the budget will reverse the undesirable position that has obtained in that town for far too long. Very valuable and useful employment was provided in Dundalk in the services and commercial industries, but now every other shop in the town is for sale but with very little by way of offers forthcoming for the premises.

I appeal to the Minister that in the context of the Finance Bill he will reconsider his decision on the imposition of additional taxation on petrol. The high cost of this commodity is reflected in transport costs generally and in the transportation of goods and materials. The cost of running a car has become intolerable in recent years and this extra tax on petrol is a crippling blow to the motorist whether his journey to work is five, ten or more miles.

In addition, the extra tax on petrol will affect the tourist industry. People who have been looking for potential areas of development in the economy have identified tourism as an area of tremendous potential. It is being said that this industry may be the biggest industry in the world by the end of the century. Mobility involves travel costs and this will be a factor in tourists deciding whether to spend their holidays here, whether they are coming from the dollar, the sterling or any other area. In these times, when people are so cost conscience, they will consider different locations in deciding where to spend their holidays and transport costs must feature highly in their decisions.

Debate adjourned.
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