Would the Deputies who intend leaving the House about now, please do so now?
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.)
Yesterday I was dealing with the impact of the increase in the price of petrol on the tourist industry. I was saying that I considered that this industry would be our largest by the end of the century. Its importance to the economy, its possibilities for job creation and the fact that it is a labour intensive industry should have meant that it would have got special attention from the Minister in this budget and that measures introduced would reflect a policy of paving the way to expedition of its development for the good of the country and for employment creation generally. While some of the measures introduced may be a help, others will be a severe hindrance to this development. I ask the Minister for Finance when the Finance Bill comes before the Dáil if he will look at this additional taxation which has been imposed on petrol and redress the serious situation obtaining.
Another matter of vital importance to the Louth constituency is the footwear industry. On budget day here it was announced that 370 jobs were to be lost in Clarks footwear manufactury in Dundalk, a town with a long and proud tradition in this industry. There were generations of the same families employed in that industry which is rapidly coming to a halt. Ninety per cent of our footwear needs are now being imported with just 10 per cent being manufactured at home, a most undesirable situation in view of the fact that this industry is labour-intensive and the possibilities it offers for job creation in a real, positive and lasting sense. This constitutes one area of our economy to which the Government should be looking with a view to the development and expansion of job creation. Footwear constitutes an essential commodity because young and old alike have an on going need.
We export anything up to 90 per cent of raw material, the hides that should be cured and developed for the industry leaving the country on a weekly or monthly basis. The Government cannot allow this practice to continue without establishing a task force to examine the possibilities obtaining at home. We cannot allow the indefinite export of our raw materials for the creation of jobs elsewhere. The skills obtaining in places like Dundalk, developed over many years of involvement in the industry, cannot be allowed to go for nought.
In Dundalk there is a very serious unemployment problem at present, 4,000 people being on the live register with a total of over 8,000 unemployed in the whole county of Louth. Louth must be one of the worst off counties so far as this problem is concerned. Deputy Faulkner and I put down a Private Notice Question to the Minister for Industry, Trade, Commerce and Tourism asking him to set up a special unit in his Department to embrace the different State agencies with responsibility in this area to tackle the unemployment problem obtaining in Dundalk, where the decrease in the numbers employed in manufacturing industry makes sorry reading. For example, in November 1982 there were a total of 4,510 employed in manufacturing industry and, in November 1984, that figure had dropped to 3,836 which figure will probably sink to something in the region of 3,000 before the end of the year. That is an indication of how things are going in what was once one of the most prosperous towns in the country, being a centre of gravity across into counties like Monaghan and Cavan where many people set up home and found useful employment with excellent education facilities for their families. Dundalk has been devastated by unemployment, a town where traditional industries are going to the wall with staff being laid off in their hundreds. We cannot allow that practice to continue. Surely the areas where jobs can be retained can be identified and the footwear industry constitutes a prime example. We cannot allow the export of our raw materials for the creation of jobs elsewhere while the industry at home grinds to a halt. That does not constitute good industrial policy. I would ask the Minister to give very serious consideration to our suggestion that a special unit be established in his Department to tackle the unemployment problem in the whole of the county of Louth. If this trend were to continue it would lead to serious social unrest.
Another area of grave concern as a result of this budget is the housebuilding industry in respect of which the Minister for Finance announced that there was to be an increase in the rate of value-added tax from 5 per cent to 10 per cent, a very serious imposition. It should be remembered that the cost of housebuilding is placing it beyond the capabilities of more and more people which means effectively that local authorities will have to shoulder greater responsibility with regard to the provision of housing. Given the allocations they are receiving from the Department of the Environment their task will not be an easy one. All of us subscribe to the view that as many people as possible should be encouraged to provide their own homes. An increase of the VAT rate from 5 per cent to 10 per cent will act as a positive disincentive to anybody contemplating taking on such responsibility.
In recent days there was the announcement that mortgage repayments will be increased, another serious development. More and more people making repayments on mortgages to local authorities, building societies and other lending institutions are finding themselves in grave financial difficulty. It can truly be said that they constitute the new poor, those who must meet repayments of perhaps £50, £60 or £70 per week. It would be impossible for such a family, without a husband and wife working, to meet those repayments. In many instances it is not a question of choice; husband and wife must continue to work to meet those commitments. I do not believe we can continue this practice indefinitely.
Yesterday in this House I asked the Minister of State at the Department of the Environment — under the provisions of the new house purchase scheme being introduced by his Department — if he would allow local authorities to buy houses from people who found themselves unable to meet repayments over a long period, so that those people could remain as tenants under the differential rents scheme, but he said he did not think such was feasible. I would ask the Taoiseach, now present, to consider the possibilities obtaining in this area. It is pointless having people bogged down continuously by mortgage repayments, bearing in mind the family upheaval, the social difficulties and the pressures it imposes on children in education. This house purchase scheme should allow the Government to effect that change. There are hundreds of people throughout the country who would be most appreciative if that were done.
The free fuel scheme has been very useful to pensioners, people living alone and people who are not in a good financial position. We have the urban fuel scheme and the national fuel scheme. There are serious anomalies in the operation of the scheme in the rural areas.
Matters of detail are more appropriate to the Estimate.
I do not want to dwell on this for very long. People in receipt of unemployment benefit and unemployment assistance in rural areas are not eligible for the free fuel vouchers. I ask the Minister for Social Welfare to remove the anomalies in the two schemes.
The increase in the price of diesel oil will have an impact on farming costs, on the horticultural industry and on transport costs of industries and services. Farm production costs have gone through the roof. They are pushing more and more people over the precipice. People borrowed money some years ago when there was a farming boom and a price boom for agricultural produce. The margin has now tightened to such an extent that they are being pushed out of business. Costs have escalated for the running of tractors and farm machinery generally. A huge investment is involved in tractors and machinery. In some cases given the size of the farms these costs may not be justified.
The ongoing increases in the price of diesel oil are creating untold problems. In the horticultural industry they depend on diesel oil to heat glasshouses and so on. The growing season particularly for tomatoes and cucumbers has been very restricted because early crops are not economic due to the price of heating oil. The impact on an already devastated industry of the increased cost of diesel oil will be even greater. I hope the Minister for Finance will look at this problem when he is introducing the Finance Bill and consider the damage which is being done in an area where the possibilities for job creation are considerable. This is one of the primary producing areas in our economy and the possibilities for imports substitution are very real. If we continue to pile on costs in this way we will stymie any attempt to develop and expand our produce in this area.
Transport costs for industry are very high. Firms who are some distance from the ports and the other outlets find that the increase in the price of diesel oil is imposing further burdens. It can mean anything up to £25,000 or £30,000 a year for an individual company in additional costs. That is not acceptable. Firms removed from the centre of economic activity are being pushed out of business. Because of these costs the remoter parts of the country will not be attractive locations for the setting up of industries. To introduce measures without considering their impact is very serious indeed.
In Dundalk the firm of P.J. Carroll has given very valuable employment to many people. They now find that their market for cigarettes is contracting. Every hike in the price of cigarettes means that more and more jobs are being threatened. There is a very serious unemployment position in Dundalk. The Minister should consider removing the increased 10p imposition from the price of 20 cigarettes to try to maintain the jobs that are already there. If any further pressure comes on industries like P.J. Carroll more and more people will be let go. Having regard to the serious reduction in the numbers employed in manufacturing industries in Dundalk that would be very serious.
I want to talk about the extension of natural gas to County Louth and its availability for the horticultural industry. This must be a top priority. Since the breakdown in the agreement between the Department of Energy and their counterpart in the North, people have been waiting with bated breath for an extension of the natural gas pipeline to Belfast. In towns like Drogheda and Dundalk, and in the horticultural belt in north County Dublin, people were looking forward to the availability of natural gas. So far there is no indication that the pipeline will be extended into County Louth.
I ask the Taoiseach and the Government to expedite the extension of the natural gas pipeline into County Louth. If natural gas were available to the IDA and the other agencies involved in industrial promotion, this would be an added attraction to people who wish to set up new industries. It would be part and parcel of the infrastructural development of the area. Given the serious decline in industrial production, and the very serious decline in the numbers employed in manufacturing industry, surely this must be given top priority by the Government. One industry in Drogheda is holding on in anticipation of natural gas being made available very quickly. The quicker a decision is made the better for everybody concerned.
Road tax is always likely to be increased in the budget, and this budget was no exception. Motor vehicles are carrying a very heavy burden of taxation. We have an increase of 50p per horse power up to eight horse power and £1 from nine horse power to 15 horse power. Taken in conjunction with the increase in the price of petrol, that means that more and more taxation is being taken out of the pockets of those who depend on their cars to get to work. More and more people will have to look at the many hidden costs involved in keeping a motor vehicle for work and for pleasure. The costs involved have become prohibitive, and this latest imposition is intolerable for those who need a car to go about their daily business.
We have had the long running saga of the super-levy. The impact of the super-levy on agriculture is very real and lasting. While there has been an over production of milk in the Community, it cannot be said that the farmers of Ireland have been responsible for that over production. Our dairying industry is underdeveloped when compared with other EC countries. The importation of substitute cereals into the Community has been a contributing factor to the over production of dairy products, yet we have had to take the rap. We have to curtail production because of the super-levy. This is creating very severe problems for many farmers who have no alternative but to expand their dairy production and to intensify. It is very wrong to penalise the man with a 35, 40 or 50 acre farm. There are no alternatives for this type of farmer. To tell him he should move into tillage, cereals or beef production is simply a nonstarter.
I believe that the impact of the super-levy has been underestimated. In a parliamentary question to the Taoiseach the other day we heard that the number of cows slaughtered in this country was greater in 1983 than 1984. This shows that when the farmers sat down and considered their position they found it impossible to cut back. D-Day will be coming up very soon for many people, because this 96p per gallon will have to be met by the creameries and the dairies. We are living in a state of uncertainty, and many people involved in the processing and distribution ends do not know what is going to happen. The sooner we get rid of this uncertainty the better, and then farmers can plan for the future.
The impact of the super-levy will be with us for a very long time. Come the end of March if people get a bill for this super-levy they must examine their position and many of them will be forced to cut back on the number of cows. This will result in a cut back in the number of cows in the country, and this will have implication for the beef industry. Without a cow there cannot be a calf to grow into the bullock which is needed for the meat factories and for export. This industry has been the backbone of our economy and has kept the economy ticking over.
Many people who invested heavily in machinery for tillage and cereal growing now find that production in this area may also be curtailed. This is a very bleak picture for the agricultural industry, and unless we get some leadership at this time our primary producers will go into a decline. This means more people will come on to the labour market because they will not be able to make a living on their small farms, and this will also have an effect on employment in the spin-off industries.
It is generally accepted that the development of our agricultural land is at the medium stage and there is still a great deal of work to be done. Yet the farm modernisation scheme is being curtailed. This is an admission that the Government are not as committed to the development of the agricultural industry as they should be. Any curtailment of this scheme must depress the industry further and lower the morale of those involved in the industry, because if the Minister for Agriculture and the Government do not have the necessary commitment to this industry, we cannot expect the man working on the land to have confidence in the future.
Some changes in the Farm Modernisation Scheme, crucial to the horticultural industry, were announced recently. Horticulture has been a tremendous growth area. In Monaghan, Wexford and other areas the growth in exports has been phenomenal. There is a projected 20 per cent increase in mushroom production for 1985. This is a real money spinner, because ready markets and cheap methods of production have been found and up to date processing facilities have been developed. Very valuable employment has been generated in areas which heretofore had low employment prospects. To curtail the farm modernisation scheme or the grant aid to this industry in any way would have very serious effects, because all the indications are that there is considerable room for expansion and for job creation in this area. I appeal to the Taoiseach to look at the impact of the curtailment of the farm modernisation scheme on the mushroom industry.
I would like to refer to the installation of thermal screens in glasshouses. There is a considerable saving in heat loss to be made by the installation of these screens, but if a sufficiently high grant is not made available for fuel conversion it will mean that those deeply committed in the horticultural industry will find themselves in a very serious position. The growing season for tomatoes has been severely curtailed in recent times because of very high energy costs. People in this industry were very glad to hear the Minister for Agriculture say some time ago that he intended to make grant aid available for conversion to solid fuel. So far as I am aware, no announcement has been made of the percentage grants which would be available, and I appeal to the Minister to make that announcement as quickly as possible so that the horticulture and glasshouse industries can plan for the future.
I would like to mention the position as regards research and development work in the areas of alternative sources of energy — biomass, methane gas, wind power and wave power. All have been identified as areas with some potential, but there is a feeling abroad that the commitment needed to research, develop and pursue this task is not there. Anybody who looks at our annual oil bill will realise that research and development work in this area is essential. The more alternative sources of energy we have the better to complement natural gas. Our energy costs have strangled the economy since the early seventies. We have no control over our oil prices because they are fixed outside this country, and that had an impact on our electricity charges, which are outrageous. Our electricity charges to industry can be anything from 20 per cent to 40 per cent higher than those paid by our competitors in the Community. That position cannot continue. There is no hope of developing or expanding our industrial base unless we can come to terms with electricity costs to industry and also to consumers. For those who borrow for investment of expansion, interest rates have been a major deterrent to the development of industry and agriculture. Money is being soaked up by the State which, in turn, pushes up interest rates.
I wish to make a number of other points but other Members wish to speak so I will yield gracefully to them.
I should like to make it clear at the outset that my absence during the speech of the Leader of the Opposition was due to the fact that I was unaware that his speech had been brought forward and, as I explained afterwards, as soon as my attention was drawn to the fact that he was speaking I left a party meeting to come here but, unfortunately, I was too late to hear his remarks. As he is aware, no discourtesy was intended by me.
In this debate the Opposition obviously have something of a task in that the budget has been well received by the public in general because of a recognition that because of the constrained circumstances in which we will find ourselves, it represents an imaginative attempt to do the maximum possible with limited resources. That poses a problem for the Opposition who have been floundering in their speeches since then. With all due respect to the Deputy who has just sat down, their speeches have been marked by a tendency to suggest other ways of spending money where it is required or thought to be required. With respect it is very easy to make speeches of that kind and I am not being unduly critical of the Opposition in that regard. When we were in Opposition, we also tended to place the emphasis on that but, at a time when constraints are so obvious and have been emphasised by the Leader of the Opposition in his speech in which he has been critical of the extent to which we have been borrowing, the current deficit and taxation, it is very difficult to understand the logic of proposing a whole range of additional forms of expenditure. The temptation to indulge in that inconsistency is always strong in opposition but, in this debate, it has been carried somewhat beyond the bounds of credibility.
The budget itself represents a watershed. It marks the end of the period of rising taxation and falling living standards forced on our people by the need to pay belatedly for the vast increase in public spending that occured between 1977 and 1981 and which has now been brought to a halt. It marks the end of the period when public service pay and numbers were allowed to rise without control. In the first year of office of the Leader of the Opposition as Taoiseach, the public service pay bill which had been kept within reasonable bounds by his predecessor was allowed to rise by 34 per cent in 1980.
Over the period from 1977 to 1982, the numbers in the public service were allowed by the two Fianna Fáil Taoisigh in question to increase by almost one-sixth. This year, the public service pay bill, including provision for increments and some special claims as well as the general pay increase provided for in the budget, will rise by a mere 5 per cent, that is one-seventh of the figure that existed when the Leader of the Opposition was in office. The numbers in the Civil Service which were allowed, even encouraged, to rise in an uncontrolled manner by no less than 14 per cent between 1977 and 1981 have been reduced by 7 per cent in the past 3½ years in a painful and difficult exercise. It is very easy to employ people and to add to the labour force in the public sector but reductions are always extremely difficult to achieve. It created problems in different Departments because of the fact that they had to be achieved by the operation of an embargo which is somewhat crude in its effects. The co-operation of the public service in this operation has been one of the striking features of this period and the Government and the public should be grateful for the willingness of the public service to accept that although there is no diminution in the volume of work to be done — in some areas the volume of work has steadily risen, especially in education and schemes for the unemployed — it has been possible to achieve this reduction in numbers. This is unique in the history of the State. I do not have statistics going back to 1922 but I cannot recall a period during which a sustained reduction in Civil Service numbers was achieved. This has made a major contribution to the control of public spending generally.
In the past eight years, paying for the Fianna Fáil spending spree has pushed the burden of taxation up by over one-third. When the National Coalition left office in 1977, taxation took 26.8 per cent of GNP. Last year, when we had restabilised the situation, painfully and with difficulty, the level of taxation reached 36.7 per cent. This enormous increase was necessary in order to pay for part of although by no means all of the increase in spending that took place under Fianna Fáil. Even this increase in taxation is insufficient to pay for their spending spree and this is evidenced by the fact that, even with that increase in taxation, we are still left with a current deficit of the order of £1,200 million which is about double what the deficit was in 1977. Even though we have been forced to increase taxation, partly under Fianna Fáil and partly under this Government, to pay for the bills they left behind, it is still not sufficient to cover the increase in spending for which Fianna Fáil were responsible during the period they were in office when they allowed Civil Service numbers to increase by leaps and bounds, 14 per cent in four years, and also allowed the public service pay bill to increase by as much as 34 per cent in a single year and expenditure under every heading to rise in a totally uncontrolled manner.
The result of those policies was a level of inflation which had only been reached once previously in the history of the State, in the immediate aftermath of the first oil crisis when inflation rose to unprecedented heights world wide. In mid-1982, when Fianna Fáil were briefly back in office, prices were rising by 21 per cent per annum. This year inflation is projected at 5¾ per cent, the lowest figure in almost 20 years. That means that inflation will have been reduced by three quarters in three years. That is a remarkable achievement and I am not sure that you can find an easy parallel for it in any other country. Of course inflation has been falling generally in recent years in other countries but there are very few industrialised countries in which it was allowed to reach a level of 21 per cent during the early eighties. It was from that level that we had to bring it down to a level in the current year which is around the average for EC countries as a whole. Our former figure was enormously higher than the EC average. That achievement alone identifies the Government as one which has the capacity to tackle the problems created and left behind by its predecessors.
Fianna Fáil's earlier period in office was marked by the start of a fall in employment that has taken us several years to halt. Between 1980 and 1984 the number at work fell by 41,000 on the best estimates we have and with some 15,000 young people a year seeking new jobs, over and above retirements, this has meant that unemployment has risen by over 100,000. Let us be clear why this has happened. An increase in the labour force of 15,000 each year would require an increase of something of the order of 1½ per cent or 2 per cent in non-agricultural employment to cater for that. Far from such an increase the numbers at work fell. That fall started under Fianna Fáil. It has been halted at present under this Government.
In fairness, part of the problem was related to the general world situation. Other countries have experienced similar difficulties but no economist would doubt that the results could have been significantly different if, instead of increasing spending by 40 per cent as a share of GNP over the period during which they were in, Government spending had been controlled and resources had been available to hold the level of employment and stave off some of the reductions that occurred. By using up the resources at a time when the economy was developing rapidly and when increased expenditure was neither necessary nor desirable, the resources that might have been used to reduce the fall in employment were not available for Fianna Fáil when in Government. They were not able to halt it during their period in office and it has taken four years for it to be brought under control to the point where we can look forward in the year ahead to some increase in the level of employment and a further reduction in the rise in unemployment to the point where with the special schemes introduced by the Government the level of unemployment will begin to fall. This will take some time.
The Government's special employment measures are already achieving significant results. The enterprise allowance scheme in its first year in operation provided self-employment for 5,000 people on the live register. It was an imaginative project introduced by this Government which has had a response of the most heartening kind. The response is continuing at such a rate that we can, with confidence, look forward to another 5,000 people being taken off the live register and becoming self-employed in the year ahead.
The social employment scheme will add to the reduction in the numbers on the live register. The type of response the Government have had from local authorities and community organisations to this scheme suggests that the assessment that it could provide employment for 10,000 people this year is realistic. It is obviously too soon to give firm figures. The scheme is only beginning to get under way. A further announcement of the provisions of the scheme will be made in the weeks ahead. Indications from the bodies who will be involved in taking these people into employment are encouraging and suggest our target can be achieved this year. That together with the other measures being taken and the reversal of the trend in the months ahead in unemployment will mean that employment will start to climb again.
We can take some heart from the fact that with certain fluctuations, including a bad patch in the past three months, unemployment is now rising at only half the rate when Fianna Fáil left office. We can also take heart from the fact that the number of school leavers who got jobs within a year of leaving school was higher for those who left in 1983 than for those who left in 1982 and that the proportion will clearly be higher again this year given the improved situation. Two out of three of those leaving who complete their education are now getting jobs within a year and the numbers emigrating after completing their education, contrary to some Opposition statements, remain low — an estimated 2,300 out of 62,200 in the case of those who left school in 1983, including a number who went for further education and training abroad. Those figures derive from the Department of Labour survey of school leavers which was recently published. These facts need to be emphasised to counter the gloom being spread by Opposition speakers, whose exaggerations of what is certainly still an unhappy employment situation is spreading despondency among our people on a scale not warranted by the facts.
From the speeches on the Opposition benches many people could derive the impression that there are no jobs for young people. There are not enough jobs for young people but two out of three young people get employment within a year. Our task is to resolve the problems of the remaining one-third and ensure that they too are employed. While that process is under way we must ensure that through the activities of the youth employment agency, work experience programmes and other agencies young people are not left in a position where they could lose the hope of or the will to work. I must emphasise the connection between education and employment. The figures available from the survey are significant. It is important that the message should be got across to young people: the level of education attained is very closely connected with the chances of getting a job. Of those who left school at primary level in 1983, no less than half were still jobless a year later. For those who left at Inter Cert/Group Cert level the proportion was about one third. For those who carried on to complete their secondary studies it was less than one fifth and over nine out of ten of those with higher education got jobs within a year of completing their studies.
This demonstrates the vital importance of education and of encouraging young people to continue with their education to the fullest extent possible. Ireland has a clear advantage here over its neighbour Britain. We are very bad at recognising our strengths and tend to pore over our weaknesses rather than note where we have achievements to our credit. Very few people realise that our educational system caters for a larger proportion of young people than that in Britain. In Britain GNP is much higher than here and the resources available for education are much greater. Yet in our system a 50 per cent higher proportion of boys and girls aged 16 are in secondary education than the same age group in Britain. That is a massive difference and few people appreciate this fact. The proportion of 19 and 20 years olds attending third level institutions here is over 25 per cent higher than in Britain. This is in a country with much lower resources. The provision of education by successive Governments has been on such a scale and the desire for education on the part of parents and young people is so strong that we have this extraordinary performance at second and third level and such a high proportion of young people in the educational system.
The cost of this is very high as a result of the fact that young people comprise 50 per cent of our population and that very many of them are in the educational system. This is not the case in Britain or other European countries. It is an area of spending on which we should be willing to concentrate resources. For this Government it has been and is a priority area, I would say even the priority area. This is evident from the policies in the national plan, from the financial provisions made for every level of education, both capital and current, and from the provision made to assist young people to remain at school. The Minister for Education has also made financial provision to enable young people to prepare for work and this has been done with the help of the EC. We have also improved student grants. That is a diversion from my main theme but it is one I do not regret. It is important that we be aware of our strengths and our achievements rather than ignore them or denigrate them.
The point I want to revert to is that this Government have brought our country successfully through the crisis we inherited in 1981 — not, of course, that this crisis has been resolved but that it has been brought under control. No longer do people have to fear that every budget will bring a further increase in an intolerable burden of taxation, as has been the situation since Fianna Fáil initiated their spending spree in 1977. No longer do they have to watch employment falling, as it began to do under Fianna Fáil, and unemployment accelerating out of control as it was at a rate of a 40,000 a year increase when Fianna Fáil left office. No longer do they have to face inflation rates of Latin American proportions that threatened to undermine our capacity to compete in world markets, as they did under Fianna Fáil.
We have stabilised public spending and taxation. We have reduced, with their loyal co-operation, the size of the Civil Service and we have brought inflation down to the level of our EC partners. The restoration of control is evidenced most clearly by our success in bringing the current budget deficit into line with budget projections. Fianna Fáil budgets understated the current budget deficit by over £1 billion between 1979 and 1982. In those years, over and above the excessive provisions made in budgets, there was over-expenditure on top of the budgets at a scale of £1 billion in a situation where there was no control whatever over public spending. The outturn overshot the budget projection by 60 per cent on average in those years. This is an extraordinary margin of error that would not be tolerated in any other country. Last year we brought the budget deficit in under target. It is in this way that we have restored and maintained our creditworthiness which, when we came into office, was under serious threat as a result of the policies of our predecessors.
It is even more than that. We have been able to move from the negative task of stopping the rift to the positive challenge of starting to reform the tax system. Beyond the expectations of the media, of public opinion, or — very visibly — those of the Opposition, we have at a stroke rationalised and simplified the tax system in respect of income tax and VAT. We have brought the people on higher tax rates down by one-sixth to the basic 35 per cent income tax rate. This was after a period during which the numbers on the higher tax rates had moved steadily upwards from a fractional figure to 40 per cent. We have reduced the top income tax rate which was hitting single people earning as little as £12,700 a year. We have eliminated the top 35 per cent VAT rate, where the most that had been expected was some selective reduction of individual items to 23 per cent. We have cut the excise duty on TV sets as we had already done on spirits, thus delivering a staggering blow to the drain of cross-Border trade, legal and illegal.
At the same time, social welfare benefits, which under this Government have already been raised up to one-third more in the period July 1983 to July 1985 than the expected price increase rate for this period, are being raised once again by amounts that will be slightly higher than the inflation rate. Thus, we are fully maintaining the enhanced purchasing power of this group and this is in contrast to what has happened in most of the rest of Europe. For instance, in Germany cuts of between 2 per cent and 5 per cent were imposed on unemployment benefit in 1984. In Denmark the half yearly cost of living adjustments were suspended during 1984 and in the Netherlands a 3 per cent cut in all social security benefits was imposed with effect from 1 January 1984. By contrast, our social welfare benefit increases have been one-third higher than price increases and the improved level of real purchasing power of social welfare benefits will be more than maintained in the period July 1985 to July 1986.
This progress in improving the conditions of the unemployed, retired people, widows, single mothers and other similar groups has been accompanied by the introduction of a family income supplement scheme designed to help for the first time those at work on low incomes who can secure no benefit from tax reforms because their levels of income leave them outside the tax net. This group have always been neglected by Fianna Fáil who never made any attempt to cope with the problem. The income of these people from work is so low that the incentive not to work and to live on unemployment benefit must be very high and it is a measure of the strength of character of many of them that they have continued to work when in many cases they might have been better off financially not to work. We have sought to reverse that by the introduction of the family income supplement scheme, the benefits of which will be strengthened further with the transformation of the child benefit scheme in 1986.
The social benefits, apart from the economic benefits, of removing that disincentive to work are clear. People on low incomes do not pay income tax and, thus, they cannot benefit from income tax remission. Up to now successive Governments have done their best to look after two groups — those who pay taxes for whom there are allowances for a range of items, such as mortgage interest relief, health and insurance provisions and so on. These have benefited people disproportionately if they are better off because of the way our tax allowances operate. Successive Governments have also looked after people in the social welfare categories but the people in between, those whose incomes are not liable to tax, who get no benefit from tax reform and who, if they continue to work get no benefit from social welfare, had been neglected until we came to office. For the first time they are being looked after.
The resolution of the hitherto intractable problem of devising a system of farmer taxation that will be simple and fair in application will yield from that community an equitable contribution to the total burden of taxation. This represents striking progress in a period in which the Government are still struggling with the task of restoring the economy that had been effectively wrecked by their predecessors in office.
This budget contains many other provisions which reflect the sensitivity of the Government to the many and varied needs of our society, needs which must be recognised and catered for even in a period of economic difficulty. The practice of making provision to provide once-off assistance to voluntary organisations who do invaluable work in the social services, a practice introduced by this Government, has not merely been maintained but the scale of that provision has been significantly increased in this budget by 30 per cent.
Aid to Irish welfare centres in Britain has also been increased substantially by this Government — we have trebled this aid since we came to office — and special provision has been made to enable us to celebrate both International Youth Year and European Music Year as well as to provide for the Special Olympics and to start preparing our athletes for the next Olympic Games in South Korea in 1988, something that has never been done previously, which previous Government have neglected. These measures together with the provisions for other sporting bodies: a grant to save the Dublin Zoo from insolvency; the provision for a new park development in Cork to mark the eighth centenary of that city; the provision for a new combat poverty organisation after Fianna Fáil's action to wreck the one we had established; action to deal with the injustice suffered by overseas volunteers who at present get no social welfare credit for their previous service; a new incentive for land leasing; extension of tax saving relief for old people; the exemption of theatres and live performances from VAT; the increase in the tax allowance for rent; the elimination of capital taxation on inheritances of spouses from each other; the abolition of the tax on oil used by sea fishermen — all in their different ways represent responses to real needs perceived by the parties in Government. Many of them arise indeed from suggestions made by Deputies from both parties to the Ministers constituting this Government. Within the back benches of these parties are the eyes and ears of the governmental system, enabling us to be sensitive to these different requirements in a way which has never previously been a feature of previous Governments who have not set out in the same way to tackle this type of individual problems consistently.
The tax reforms in the budget, involving such drastic simplification of the income tax and VAT systems, necessarily involve some disadvantages as well as some advantages. But in the case of income tax the simplification has been devised in such a way that everybody's income tax bill is being reduced and it also has the effect of reducing the marginal rate of tax for a much greater number than will find their marginal tax rate raised while still having their actual tax bill reduced. For those whose marginal tax rate has risen, the average rise is only one-third of the average fall in the marginal tax rate experienced by the 220,000 people whose marginal tax has been reduced, including the 15,000 who have been altogether relieved from income tax.
Similarly with the VAT system, although it was inevitable that the simplification of the system would involve increases in VAT for some categories, steps have been taken to alleviate significantly the impact of these increases. Clearly, we could not reduce the number of VAT rates from six to three, including the zero rate, without increasing the previous low 5 per cent rate which affects such items as construction and fuel. It was inevitable that simplification would require that rate to be touched.
However, deflation in the construction industry that might have resulted from that has been more than offset by other measures taken by the Government. The increase of over £100 million in the Exchequer provision for construction activity, much of it on roads and higher level education buildings, involves an increase of over 13 per cent on the 1984 outturn, which means that in real terms, even allowing fully for the impact of the increase in the VAT rate, the volume of construction activity to be financed by the Exchequer this year will be increased significantly. Moreover, in the case of private housing, the effect has been largely mitigated by the 75 per cent increase in the housing grant which will benefit about 60 per cent of house purchasers, halving the average price increase in these cases to 2 per cent. Whatever marginal effect this may have on demand for housing will be more than offset by the other innovative provision in the national plan — the introduction of the £5,000 grant for those living in local authority dwellings for three years or more who wish to buy private accommodation.
It was the Government's belief when this provision was proposed in the plan that it could in the first year induce some 800 local authority tenants to purchase private dwellings and the response to date through local authorities suggests that this forecast was well founded. This positive reaction together with the increased housing grant will ensure a strong demand for private housing this year, thus helping the construction industry, which will also be assisted by the new tax incentives for apartment blocks. The recent demand of 800 from that source alone is an increase of 4 per cent in the demand for private housing apart from anything else, which will be a very significant factor in maintaining private housing activity in the current year.
In response to genuine and severe transitional difficulties, implementation of the VAT increase for new houses sold to private individuals is being deferred to 1 May.
Similar measures have been taken to offset the adverse effect of the increase in VAT on fuel upon less well-off families. A 25 per cent increase in the value of fuel vouchers from £4 to £5 a week will far more than offset the increase in fuel prices resulting from the new VAT rate. Very simply, the scale of this social provision may be judged from the fact that five million such vouchers are issued every winter.
Finally, mitigation of the effects of the increase in the 5 per cent rate in vehicle repairs has been achieved by reducing the duty on motor vehicle parts from 25 per cent to 10 per cent.
It is not surprising that a budget containing so many radical and innovative measures has been generally well received by public opinion. The reactions from the Opposition benches have by contrast demonstrated the futility of Fianna Fáil's approach to the task in Opposition in this Dáil, a task they have never come to grips with. It is now perfectly clear to everyone that they have no alternative policy to offer. For the past two years they have sought to survive and to gain some public credibility by attacking the measures that this Government have been forced to take in order to undo the damage done by Fianna Fáil in Government during those disastrous years from 1977 to 1981. Because we had to increase taxes in order to bridge the gap left by Fianna Fáil's free-spending policies, they found an easy way out by attacking these tax increases. Because during their first two years the Government had little or no leeway, they criticised us for what they alleged to be a lack of imagination, and an unwillingness to undertake radical actions that would remove disincentives and stimulate growth and employment.
Now that this Government, having broken the back of the problem left to them by their predecessors, have been able in the national plan and in this budget to launch the process of recovery, Fianna Fáil have been floundering in their own ineptitude. The two years during which they might — and should — have reviewed their role as a political party and sought to prepare some rational policy stance that they might put to the people at the next election, have been wasted. The two years of constructive work by this Government have been paralleled by two years of futile negativism on the part of Fianna Fáil.
That party have never adapted themselves easily to opposition. They have always tended to rely on a swing of the political pendulum to bring them back into Government regardless of how little they may have to offer when they put themselves once again before the electorate. The days when that kind of ploy would succeed with the Irish people are rapidly drawing to a close. When the next election comes, the voters will want to know what Fianna Fáil have to offer to match the record of achievement of the present Government in resolving the problems which Fianna Fáil had created for our people during their disastrous term of office from 1977 to 1981. If, as on present form seems likely to be the case, the people are offered nothing but a barren slogan of "put them out" or "give us another chance", the electorate will have ready a conclusive answer to give them.
The Leader of the Opposition in his speech here yesterday made a halfhearted attempt for the first time to suggest policy measures. Welcome though such suggestions are, it is apparent that he has only just awoken to the need for policy as opposed to idle complaints, for he suggests as if they were new, policies which are already in place in a similar or preferable form. For instance, his proposal for building better links between higher education and industry and for more work in product identification has already been anticipated, as he ought to know, by the joint IDA/NBST programme for this announced last July in the White Paper on Industrial Policy and the special funding, included in this year's Estimates, of additional research and development by third level institutions, to mention only two specific initiatives. His suggestions for alleged new policies in Bord Fáilte mirror that body's existing policy, as he ought to know if he is in touch with reality.
On the co-ordination of hiring persons now on the live register, we have gone much further than the Deputy suggest by introducing the large-scale employment scheme, which will provide funding as well as institutional support for the hiring of 10,000 long term unemployed. This scheme will also be in a position to fund suitable local projects such as community social facilities to which he has referred.
One feature of his speech was an attack on the veracity of the figures in our budget. I do not need to dwell on that unduly because I do not think anybody has any doubts about the probability of this Government and the figures they put forward, whatever the Opposition may say, nor have they much doubt about the lack of probity of the Opposition when they were in Government.
The Opposition have asked for details about the cuts in non-capital expenditure which were effected by the Government several weeks before the budget was produced. They have been circulated and, as Deputies will see, the majority of the cuts arise out of the fact that in one or other area during the last year the level of demand turned out to be lower than anticipated when the Estimates were drawn up, as they have to be some time before the end of the year. A majority of the total of £23.6 million relates to revisions in the Estimates arising from the pattern of expenditure in 1984. The £5 million reduction arises from the fact that the Government's successful reduction of inflation has been greater even than anticipated when the national plan was produced. Projections of inflation now given to us by our experts are 0.5 per cent lower than at the time the plan was produced, therefore the cost of purchasing of goods and services by the Government provided from the Estimates can be reduced by 0.5 per cent. The details are set out in the document which has been circulated and people can see what is involved. As I said, these decisions were made several weeks before the budget was produced, contrary to the allegations of the Leader of the Opposition.
He has found out how it is done.
There is no need for the Deputy to demonstrate that he can add. We are aware of his capacity in that respect.
For revenue buoyancy there is a figure of £58 million, £30 million in respect of staff savings, £50 million by way of balances and now another £5 million. These are all very dubious figures.
Is that what the Deputy told the people of south-west Cork on Sunday last?
The meeting there was the biggest ever. People came from all over Deputy Sheehan's constituency to hear me. Obviously he is noticing the ripples of my visit.
I do not think we should dwell too much on the fence mending exercise of the Leader of the Opposition as he moves from constituency to constituency where there are Deputies and organisations who are unhappy with him. We should remain totally silent in that regard and let him get on with his attempt to mend those fences.
The buoyancy figure of £58 million was calculated by the experts in the Department of Finance on the basis of the effects of the budget in terms of stimulating the economy and through a marginal reduction in the net burden of taxation and by way of the increased provision for spending.
One question asked in all politeness: is it a pure coincidence that the £58 million and the £30 million add up to the £88 million needed for the public service pay?
Not only is it a coincidence but it is one that I had not noticed until the Deputy drew my attention to it.
There rests my case.
There could have been a temptation to fiddle the figure to £57 million or £56 million so as to avoid the appearance of a coincidence, but that was a temptation to which I would not have succumbed. As has been pointed out already, the revenue buoyancy figures are calculated by the experts in the Department of Finance. We take the figure they give and there is no attempt made to change any figure of that kind at any time. It is a matter for the experts to produce the figure. There are no fiddles in our budget.
I suppose the Taoiseach did not know either that the Minister for the Public Service was meeting the unions on the day before the budget. Did that not become obvious until the Tuesday?
So far as the balances are concerned, the Deputy must be aware that the figure is not a forecast. It is the figure furnished by the civil servants for the actual amount of the balances left at the end of the last year, a figure which is established by them in the early weeks of the year.
The local authorities would have know about it.
Whatever figure emerges is given as being the actual amount outstanding from the accounts as known at that time, and that figure is included in the budget. Deputy Haughey, as a former Minister for Finance, knows that well, and any attempt to suggest otherwise is not to his credit.
The Leader of the Opposition called for an additional £200 million by way of capital spending. This is an old chestnut that he has produced at the time of each budget and also frequently in between budgets. Obviously it is something to which the Deputy is deeply attached, but I am surprised that he could expect anyone to agree simultaneously with this and with his other view that borrowing is too high. He criticises the level of borrowing and the level of a deficit but yet he wants us to borrow another £200 million. May I inform him that policies of that kind have gone? It no longer cuts any ice. The Deputy should begin to realise that he is living in the Ireland of the eighties where people will not be fooled by that kind of codology. However, if he wishes to continue in Opposition for the next three years he should continue on that line. It will make us very happy. It suits us very well for him to pretend that we can spend more while taking less tax and borrowing less simultaneously. Our people are not so simple minded as to believe that. He is wasting his time in attempting to carry them along that path of irresponsibility.
At our end of December calculation the figure being called for by the people on the other side of the House was £570 million. I am not sure whether the £200 million is in addition to that £570 million. Perhaps somebody opposite will clarify that. Are we talking about a demand for an extra £570 million or for an extra £770 million to be achieved without extra taxation and without extra borrowing? Are we merely to print money?
These are the Government's figures.
We shall be happy to verify the figures from Fianna Fáil speeches. Perhaps we should publish a pamphlet and distribute it throughout the country so that people would know what Fianna Fáil policy is.
(Interruptions.)
Order, please.
Perhaps the Taoiseach would talk about the budget.
That is an example of the miraculous kind of Government we had between 1977 and 1981, and we know where they brought us to.
After three successive budgets of a radical and imaginative kind, after three years of low inflation rates and of rising employment, with unemployment beginning to fall again as the special measures being introduced by the Government begin to take effect, the electorate in 1987 will respond to good Government and to bad opposition.
When we go before the people then with our plans for the years from 1987 to the early nineties, based on our record of performance and achievement, we shall be doing so with confidence and with the conviction that the Irish people will respond to the leadership we have given.
After that rambling disjointed contribution from the Taoiseach one can envy him to some extent, because apparently he lives in a cosy lace curtained world which has no reality to the world in which the rest of our people live. I assure the Taoiseach that the rest of the people know the real problems of the country. The Taoiseach at the end of his speech referred to rising employment. After three successive budgets, with the unemployment figure at 234,000 today, what sort of reality are we talking about?
Think about 1987.
If the Taoiseach wants to question the public perception and the public credibility of Fianna Fáil — I am sorry to see the Taoiseach leave.
We might at least have a Minister.
We have a token Minister for females.
Why do you not make a full Minister? Come into the Front Bench.
Deputy Haughey.
The Taoiseach questions the public credibility of Fianna Fáil I would remind the Taoiseach that where the people had an opportunity to judge Fianna Fáil in the by-elections which we won and in the European elections where we won a majority and in the public opinion polls, their response reflected acceptance of Fianna Fáil and rejection of the Government. The Taoiseach's speech is incredible where he says that no longer have we to watch employment falling and unemployment accelerating out of control despite the fact that only two days after the budget the official figure for unemployment stood at 234,000. The Taoiseach says that we have stabilised public spending and taxation. The situation is that the current budget deficit stands at £1,234 million and our national debt rose from £12.7 billion to £18.5 billion in two years and this year will come to £21 billion. Our foreign debt two years ago was £5.2 billion and it is now practically £8 billion. The Taoiseach lives in a world of his own. This Government will eventually be dragged kicking before the electorate and, like their predecessors in Coalition governments, will be cast into political oblivion.
The Taoiseach dealt with education in the earlier part of his speech and spent the time contrasting our educational system with that of the British. The Taoiseach seems to be hypnotised with all things British even to the extent of comparing our economy with theirs although theirs is a bankrupt economy. If their economy was better it would help our export trade.
Before the last general election Fine Gael spokemen waxed lyrical about their intention to introduce each September the Estimates for the following year so that they could be fully debated and if necessary special committees of the House were to examine each expenditure proposal in detail to ensure that they passed the closest scrutiny. In the Programme for Government they again talked about this close examination of the figures in the autumn. Like so many other promises this was not fulfilled. Looking at this year's figures perhaps that is just as well, as it would have been a total waste of Dail time. The arithmetic used in this budget would do justice to some gin soaked half qualified bookkeeper from some sleazy back street in a tin town in the Cayman Islands.
We are asked to accept a budget for the Department of Social Welfare based on a figure of 217,000 unemployed, but two days later the CSO published unemployment statistics giving a figure of 234,000 unemployed. We are asked to accept a figure conveniently listed as £58 million for buoyancy when the economy is grinding to a halt. Yesterday we were presented with a list which purports to itemise the £28.6 million cuts announced on budget day. This list smacks of arbitrary alterations in the estimates bearing no relationship to the cuts in services. One of the few examples given relates to old age pension cuts. One of three things has happened all of which call for the resignation of the Minister for Social Welfare. The original estimate published was purposely untrue and has now been corrected, the original estimate was correct and is now being arbitrarily doctored for political bookkeeping purposes, or there has been a Government decision to reduce payments to non-contributory old age pensioners. The ghost of Ernest Blythe stalks the corridors of Leinster House. It is no coincidence that this Taoiseach who a week ago tried to besmirch the honoured name of Sean Lemass in this House would interfere with the old age pension just as the Government in which his father served with Ernest Blythe was the originator of the cuts in the old age pension. For interfering with the old age pension figures this Minister for Social Welfare should resign. I make that call for his resignation in hope rather than in expectation. The Minister who has gone about axing the health services with the crazed enthusiasm of the villain of the Texas chain gang massacre with blood dripping from his axe, will eventually be dragged before the electorate and will be cast into political oblivion. To treat the old age pensioners in this way is sick when it comes from a Government that carries its purported liberal concerned heart on its sleeve.
In normal years with normal Governments, the Minister for Finance received deputations from representative groups who made their cases for consideration in the budget. This year we have an innovation. We had the budget and then we had the farce of the Minister rushing from one deputation to another trying to correct the mistakes in the budget. Due to the calls from Fianna Fáil and from the building industry who are crippled with the increase in VAT the Minister has made a minor alteration up to 1 May next, though still the 10 per cent stays. We had the farce of the Minister introducing a crippling tax on the building society movement in relation to his borrowing strategy, and he is rushing from one meeting to another talking to the heads of the building societies. The Minister has also to meet the people in the theatre world because of his ham fisted handling of their VAT problem. This budget could have been produced by Alan Ackbourne rather than by Alan Dukes.
Where are the old nationalists in Fine Gael? Have they been completely swamped by the opportunist PR types who are more interested in holding on to their lucrative Government contracts than in the general national interest? In Liam Cosgrave's time no such dishonest exercise such as we have seen regarding the funding of the public service pay award would have been contemplated. None of the other twists and turns with regard to the budget figures would have been contemplated in Liam Cosgrave's time or in the old Fine Gael times. The public sector pay bill was to cost £108 million. On Monday of budget week the Minister for the Public Service met the unions and there was no money available for the public sector pay. On Tuesday the pressure was built up on the Labour Ministers from the trade union movement, who told them that this was the end of the road and that they would have to settle for the £108 million. The Government had only £20 million for this pay award, but on Wednesday the Minister came into the House having conveniently found £88 million to bring the figure up to £108 million. The Taoiseach said that the £88 million was found, by pure coincidence, by savings of £30 million and £58 million buoyancy, at a time when the country is grinding to a halt. That is the type of Government which we are asked to accept today.
What is really disconcerting and disturbing is that I must ask these questions. Where are the old reliable, strong Fine Gael Ministers and where are the old reliable, strong, Fine Gael backbenchers that were the heart of the Fine Gael Party of old? Over the years I have disagreed vehemently with the methods of Fine Gael, but I would never have questioned their basic national beliefs. I would never have believed that Fine Gael as a party would sink to the PR opportunists that we have in this Government. This is not the Fine Gael Party of old that people supported down through the years. They were then a party who put the nation first. Now they have sunk to the level, from Monday to Wednesday, of talking to the tune of £88 million, with no account as to where this is to be found. Where are the Paddy Cooneys of this world and what was he saying at that budget table? I ask this in sorrow and sadness, rather then in criticism. I am not talking about the John Wayne types of that Government. I am talking about the Paddy Cooneys and, as far as the national interest is concerned, the Peter Barrys——
Ministers please.
——Minister Paddy Cooney, Minister Peter Barry and others from whom I would have expected more. What have we seen in the last two years of this Government? We have seen the foreign debt go from £5.29 billion to £8 billion and the national debt from £12.7 billion to £18.5 billion and it will go to £21 billion by the end of this year.
Unemployment figures stand at 234,000. These are persons, not numbers and Fine Gael Ministers lend their support to this charade. Where are the John Kellys, who lectured Fianna Fáil about funny money, in relation to this budget and the farce which we have seen last week of running from one interest group to another? If these were in business, the Minister and this budget could be charged under the Trade Descriptions Act and the Sale of Goods Act, for attempting to sell a wrongly advertised product.
The well paid PR experts and consultants in Government, the national handlers with their PR contracts in the various Departments are the types which have hyped up this budget above and beyond anything that it deserves. This PR exercise has fallen flat on its face because every day since the budget there has been one dreadful headline after another with regard to unemployment, mortgage rates, crisis in the building industry and so forth.
On top of this hype from the PR people, on Friday we had an incredible piece from the Minister for the Public Service, reported in the Irish Independent. He had the decency to say that he hoped he did not sound unctuous. In the last paragraph he said “Ireland, you are looking good”. It might be looking good from the ministerial office in Kildare Street, but it does not look good from the homes of the 234,000 unemployed today. It does not look good from the point of view of the social welfare recipients, the old age pensioners, the children who are facing examinations this year and have no hope of getting a job. Their only worry is if they will get a visa to enter the United States to do some work and if they go in illegally and get injured if they will have to be flown home, because there will be no insurance. That sort of nonsense from that Minister does no justice to this Government, or to the country. If it were not so serious it would be laughable.
This budget, with some very minor exceptions such as the relief for the hotel industry and the change in excise rates on televisions, does nothing to solve the real problem facing the country, which is unemployment. The correcting of the mistake regarding VAT, which was increased from this Government to 35 per cent, bringing it down to 23 per cent, is called a radical reform. There is still an underlying disincentive to industry because of the VAT rates and VAT strategy of this Government. To talk about radical reform and a reduction of the number of VAT rates when the same Minister increased the number of VAT rates in previous budgets is bad enough. To say that he is saving VAT is worse. The actual figure on current revenue of VAT take in 1984 was £1,361.6 million. In 1985 after his budget proposals, by his figures, the VAT take will be £1,483.9 million — an increase of £122.3 million. That increase will be paid this year, and we are expected to accept that as a radical and dramatic reform of VAT rates.
What has this budget done to the building industry, for example? What it has done to that industry borders on the criminal. What would you expect from a Government led by a Taoiseach who in his last Ard Fheis speech talked about dusting off JCBs? I should like to give the Taoiseach a little lesson in the work of a JCB and what it stands for. These machines do not have lace curtains and do not have satin cushions. You do not dust them off like some livingroom in Dublin 4. You get a JCB dirty. That is the whole object of the exercise — to give it work to do, not dust it off. A Taoiseach who is so incredibly out of touch with the real world and the construction industry presided over this Cabinet which increased VAT on the building industry from 5 per cent to 10 per cent. He came in here this morning and told us about the great progress made in the construction industry. The reality is that since his Government came to office in December 1982, that industry has suffered over 25 per cent decline in activity. There are over 50,000 building workers on the unemployment register. As a result of this budget, the industry faces a further decline in activity in 1985. The Government introduced proposals in the budget to increase the VAT from 5 per cent to 10 per cent from 1 March. We immediately asked that the stupidity of that be realised and the decision changed.
Where contracts had been signed or deposits paid on houses the VAT rate — which was at 5 per cent at that time — would have been increased to 10 per cent and would have had to be carried by the construction industry, amounting to millions of pounds. We discovered the amount today when the CIF statement was issued — £6 million — as a result of the change decided by the Minister. The Minister should have realised this before last Wednesday when he made that announcement. It had not been thought out sufficiently, because this Government do not understand, and never have, the problems of the construction industry. My father served in this House for 29 years. One phrase more than any other was associated with him vis-á-vis the Coalition Government of the 1957 period, that phrase being that there was not a bob left for a bag of cement when they left office. If that was true in 1957 how much truer is it today?
The Construction Industry Federation at a meeting last evening decided to cancel all advertisements in the press for house sales until further notice. Because of the action of this Government they have decided to close all their showhouses until further notice, to march on Dáil Éireann from their headquarters next Wednesday and ahold a further meeting thereafter. Is this the action of a responsible group of men, if we are to take the Taoiseach's words as being correct? The Taoiseach says that the construction industry and housebuilding are thriving. Does the Taoiseach really think that this group of responsible builders in the construction industry, involved in house sales, would take this type of action unless they realised and could foresee the dangers to their industry and those employed in it? They would not. But this Taoiseach, in his lace-curtained Dublin 4, would not see it because his idea of a JCB is something with lace curtains and satin seats.
In addition to the damage this VAT increase is doing the housebuilding area of the construction industry it will dramatically reduce the moneys available for work to be undertaken under the public capital programme, such projects as roads, sanitary services, all of the local authority capital works and all of the other capital works to be undertaken in the health and other areas. The Government themselves are cutting back on their public capital programme, reducing employment in the construction industry because of this crazy decision to increase the rate of VAT from 5 per cent to 10 per cent. Already they have changed many of their decisions contained in their budget of last week. I call on the Minister to reexamine this decision because the construction industry has the greatest potential for job creation, more than any other sector of our economy and this Government are damaging that potential. I call on the Minister to reduce the level of VAT, at least to restore it to the 5 per cent and, if possible, to reduce it further because of the damage it will do. It is a cliché to say that the construction industry and its health is a barometer of the health of the whole economy.
The construction industry today is on its knees as a result of this Government's decisions. We must ask: do this Government and Minister realise that a shot in the arm can be given to this industry which would immediately employ many on the live register? Because of the nature of this industry here and their loyalty to Irish-produced materials, up to 80 per cent of the materials used are home-based, with a spin-off effect. Therefore any impetus given it has effects not merely directly on that industry but on ancillary ones also. I plead with the Minister to give that type of boost to the construction industry.
I call on the Government and Minister also to give the private sector encouragement and incentive to involve themselves in joint venture products with the Government on road and bridge construction and other projects which should be open to private financing. We have seen already the construction of the Tom Roche Bridge over the Liffey, a fine example of the private sector becoming involved in work normally undertaken by the Government from funds out of the public purse. I ask the Government and Minister for the Environment to encourage the private sector, private finance, to become involved in this type of road and bridge building project.
This budget attacked the building industry, families, young people who want to buy houses and those people already in houses when they interfered with the building society movement. Increasing the composite rate of tax on building societies — with the considered insult the Minister then included in his speech to the building society movement, the sort of snide remark one would expect from the Coalition in regard to the financial institutions: well, if the building societies were not happy with the composite rate they could open their books to the Revenue Commissioners for examination — does nothing to encourage investment or initiative. The same Minister by that decision and his borrowing strategy over the past 12 months — through some ideological hang-up when he was borrowing at home, soaking up available funds from the private sector, driving interest rates up to the tune of at least 1½ per cent in December — has brought about an inevitable increase in building societies' interest rates. Since that announcement on Wednesday last the Minister has been scurrying from meeting to meeting with his colleague, the Minister for the Environment, endeavouring to persuade the building society movement not to increase their rates by 2 per cent. The Minister did not recognise that the building society movement has been suffering unfair competition vis-à-vis the single premium bonds in the insurance world — moneys taken from available funds for investment that would normally go to the building society movement having been siphoned off in this financial manoeuvre, called a single premium bond — and has further antagonised the building society movement.
What will be the effect of all these decisions of the Minister on the building society movement? Because of the lack of funds in building societies — funds siphoned off into the insurance world — the Minister has rendered it more difficult for young couples to obtain loans. He also renders it more difficult for them, when they get a loan, to repay it because, on a £20,000 mortgage — if the rates are increased by the 2 per cent being talked about — that will amount to a £28 per month increase in mortgage repayments. For those with existing loans that £28 per month is an impossible burden.
The Minister and the Government are totally out of touch with the people. The real problem they face is this. Many people with mortgages took them out in good faith when they had what they thought was secure employment in the State sector or in industry. Like the employees of Irish Shipping, or like the employees of any private companies, many of them have lost their jobs. They are trying to pay their mortgages to keep a roof over the heads of their wives and children. They are trying to struggle on and repay their mortgages rather than have their homes repossessed. The Minister and the Government do not seem to be aware of these problems.
I want to pay tribute to the building societies who have been very understanding and very lenient about the question of repossession. Because of the decline in the economy dragging on and on they have now started to repossess homes. I do not want to be an alarmist, but, if this increase in the mortgage goes through, many more homes will be repossessed and those people will have to be rehoused in local authority housing, throwing a further burden onto the State purse. The whole vicious circle is ludicrous. It is appalling that the Minister and the Government cannot see what they are doing. It is incredible that they are so out of touch with the real world.
On Wednesday on behalf of the Government and supported by his back benchers in Fine Gael and Labour, a Minister introduced an increased VAT rate on footwear on the same day that one of our oldest footwear companies went to the wall, that is Clark's. I am reluctant to single out a back bencher. There is one Labour back bencher who is a very nice man and works hard for his constituents in his own way. Deputy Bell, wearing his other hat, is secretary of the branches dealing with the footwear industry on behalf of the Irish Transport and General Worker's Union. With the other Labour members he traipsed up that central aisle and voted for a VAT increase on footwear and clothing. We have the spectacle of one Government back bencher after another making statements decrying some Government decision and saying the Government should not have done this or that. When it comes to voting in this House they would do anything to avoid facing the people in a general election. Like mice they follow the whip and vote it through no matter how obnoxious the proposal is. They are like pet mice.
What about this Government and their attack on the old? On budget day we had a budget that morning before the Minister got to his feet in this House. That was the increase in the price of coal, which is being further increased by the decision of the Minister to increase VAT on fuel. VAT has been increased on fuel for the horticultural industry. Admittedly they get it back after about a two month period, but the cash flow problems which are so horrendous in that industry are further exacerbated by the decision to increase VAT on fuel, that at a time when we hear various Ministers spouting about doing something about food imports.
We have the further increase of 10p on the price of a gallon of petrol which more than negatives any benefit achieved by the TV price reductions and the VAT alterations. Everybody who knows anything about the cross-Border trade knows that the first incentive is the differential in the price of a gallon of petrol. There is a difference of 75p in the price of petrol on one side of the Border as against the other. That is enough to make people cross the Border, and when they are there they do their shopping. The Government live in a totally unreal world and are not aware of that.
We have the damage caused to the motor industry with the increase of VAT on repairs. We also have the problem of car tax increases. All of these are chipping away at any benefits which there might have been in the budget. They are depressing employment further in an already strained motor industry. I call on the Government to take remedial action as they have done for some other interest groups over the past few days since the budget was introduced. They should think again about the damage they are doing to the motor industry.
I will give one example of the damage being done to the motor trade. It goes right across the board in industry in Ireland generally. In 1982, 80 per cent of all car batteries sold in Ireland were manufactured in the State. By 1984 that figure had been reduced to 2 per cent to 3 per cent. In 1982 there were seven major manufacturers of batteries in Ireland. Now two independent operators are sharing that 2 per cent to 3 per cent between them. The companies who were operating here have pulled back into England and are now supplying the Irish market from their English factories and from the spare capacity within their English factories. This is the course of our industrial base today. The Government are doing nothing about it.
The income tax changes have been hyped up as being radical changes and major changes. In a previous budget the Minister introduced a tax rate of 65 per cent. There were cries from every sensible person in the country, including the Opposition, to the Minister to reconsider the stupid decision he had made. The Minister reduced it to 60 per cent, which does not go half far enough to undo his own damage, and then described that as a radical change in the taxation structure. The actual turn out of income tax changes will be that the Minister will gain another £164.7 million this year. His outturn for 1984 was £1.966 billion. The outturn for 1985 — and these are his own figures — will be £2.131 billion, an increase of £164.7 million, and that is supposed to be a radical reform.
As I asked the Taoiseach earlier, do the members of this Government live in the same world as the rest of us? What is needed is a real radical reform, based on the proposals of the Commission on Taxation, which would come to grips with the income tax burden being carried by the PAYE sector and which would give a real incentive to employment and to those in employment to do overtime and shift work, because there is no incentive there today. To try to sell this as a radical reform, which is merely tinkering with the existing system, is not sufficient and has been seen for what it really is over the last few days.
Other speakers will deal with the other measures in this budget, but I want to come to what I call the "altar list of the dead" which was handed out yesterday and which purported to contain the cuts of £28.6 million. There can be only three reasons why the budget figures should be changed. First, the original figures were wrong and are now being corrected; second they were correct but there has been a political book-keeping exercise, or third actual cuts have taken place. This list does not specify any of those reasons except I notice old age pensioners will suffer.
For example, the Central Statistics Office show a reduction in non-capital expenditure of £620,000. I do not want to be too critical of the Central Statistics Office, but they are the same people who lost £500 million, together with their Government, last year. In my view this country can do without that £620,000 mentioned here. The Revenue Commissioners are being cut by £1.874 million. It is not specified where these cuts will be made but we do not get any explanation of how this figure of £1.847 was reached. This is the Government who talk about catching tax evaders and putting extra customs men on the Border, but they are taking £1.847 million from this Vote. This is another political book-keeping exercise. They are cutting public works and buildings by £1.68 million, again no explanation. There are many jobs in the Office of Public Works because they have many contracts to fulfil. One would not have expected that Vote to be touched. A cut of £500,000 will be made in the Vote for the Stationery Office. We will all be writing on smaller paper. This smacks of political book-keeping with no touch of reality about it.
At a time when law and order is on the tongue of every person, when insurance companies are increasing premiums on household insurance because of the number of burglaries, when more and more old people are being attacked, the Garda Síochána are taking a cut of £847,000. If there is one area in the country which should not be touched it is the Garda Síochána budget. This is the Government which introduced one stage of the Criminal Justice Bill last year and since then have introduced the Animal Bill and others which put extra work on the Garda. Yet they are cutting the force by £847,000. They do not specify where these cuts will be made.
The Department of the Environment will be cut by £3,084,000. Again we are not told where the cuts will be made. This Department has been short of funds for the last two years. The potholes on our roads are a national joke. Every local authority is in debt. County managers do not know which way to turn to keep their operations going and this Government decided to cut the Department of the Environment by £3,084,000. They do not say which services will be cut.
Agriculture is being cut by £2.194 million. We are swamped with food imports. Our farmers have been faced with the problem of the super-levy because of the mishandling of this project by the Minister for Agriculture. Instead of helping agriculture the Vote is being cut by £2.194 million. The Department of Labour is nothing short of a scandal. Here £7 million is being raided from the levy designed for youth employment projects and handed over to the Department of Education. This from a Government who set up the Youth Employment Agency and who now unscrupulously raid the fund to the tune of £7 million. This Government are anti those in need and have reduced social welfare by £7.368 million. They have done that at a time when social welfare payments failed to keep pace with inflation, and the damage this will do to families is incredible.
This budget is a farce; it is a comedy of errors produced by a theatre of comics. This budget is to provide the funds for the operation of the Government on a yearly basis. They have underestimated their figures, but that will come out later in the year when we have the August budget and the members of the Government have gone to Spain, France and other places, but they will probably leave a sucker of a Labour Minister behind to try to sell it, if they are still in power, which I doubt. When one looks at this Government one wonders why they want to stay together. Everybody I meet asks me when are we going to get them out.
Let us look at this Government. Take the Taoiseach with his lace-curtained JCBs. He is hypnotised by all things British, from its education to its other system. In two years during the operation of our Anglo-Irish relations, he had attempted to cosy-up to the British Prime Minister and has been rejected even from that questionable source on the pre-Christmas summit.
The Leader of the Labour Party heads a rabble who, like mice, follow their Fine Gael masters into the lobbies of the House no matter what anti-social or anti-family legislation is introduced. The Minister for Foreign Affairs is so incompetent that, even at a time when we held the Presidency of the EC, he delayed the only country who ever wanted to leave the EC from leaving for another month because he could not organise his business in this House efficiently. He also seems to spend most of his time making speeches which are aimed at securing the leadership of Fine Gael from the Taoiseach and, as was seen in the debate last night and the vote which followed, has shown a total disregard of the position of the Irish in Great Britain.
The Minister for Industry, Trade, Commerce and Tourism presided over the single largest rise in unemployment in the history of the State. The Minister for Defence thinks we should abandon our neutral status and join NATO. The Minister for the Environment has left local authorities broke and is in the process of crippling the building industry to such an extent that they will march next week in protest. The Minister for the Public Service laughingly calls on the people to work a day for Ireland and then, through his rose-tinted glasses, tells us on the same day as the announcement that there were 234,000 people unemployed —"Ireland, you are looking good". The Minister for Agriculture must get the award as mathematician of the year in the EC for his carry on in regard to the super-levy——
The Deputy should relate his remarks to the effects of taxation policy.
I am entitled to relate my remarks to the budget which purports to give effect to the Estimates of the various Departments and I am entitled to talk about the office holders in the Departments concerned. The Minister for Justice has flattered to deceive. His halo has slipped and his influence in Cabinet is demonstrated by the fact that we have a cut in the Vote for the Garda Síochána at a time when law and order are falling apart. We have a Minister for Social Welfare who has gone like a mad butcher at the Department of Health. The Texas chain saw massacre has nothing on him. The Minister for Communications, described in the House the other day as John Wayne, interfered in a vital area with a comment which was totally inappropriate on a recent tragedy in Ballyfermot. I leave our youth to judge the Minister for Education. The Minister for Labour allowed his levy fund to be raided and also allowed one man pickets to practically close down industries. There is no action or reform, and his only aim seems to be to take the leadership of the Labour Party from the present incumbent.
We have a national fishing fleet of 400 boats but last year 12 of those were repossessed and BIM have taken a decision to repossess 40 more this year. The Minister for Fisheries and Forestry does not seem to care, and he has not protected our fleet from the Spanish invasion. Of course, by the time the Spaniards arrive there will not be a fleet left to keep them out. Lastly we come to the Minister for Finance, "the Duke of Hazard," who has produced a budget a day since last Wednesday. It is time to call a halt to the charade that we have seen over the last two years of a Government clinging by their fingernails to power, ready to twist and turn, to duck and weave, to avoid facing the people. There are 234,000 people unemployed and the Government are doing nothing about them. It is unfortunate that they did not have an opportunity to read the full rambling text of the speech which the Taoiseach made today because it would show them how out of touch he and the Government are with the real problems facing us. It is time they got out to give the people an opportunity to elect a single party, Fianna Fáil Government to take the problems in hand and to solve them, showing concern for our people.
I welcome some of the items in the budget. Many problems face us in relation to business and unemployment which, unfortunately, has grown. However, the Government recognise the problems which we face and are taking steps to correct them. The Government also recognise that the income tax structure must be changed and are doing this as well as reorganising the VAT system. There are also improvements in social welfare. I have called for certain action and changes as a result of representations from constituents who are going through difficult times and seek a boost and stimulant in order to generate more business. It is very easy for Opposition speakers to make glib speeches about the economy. We have made changes which they called for and which they did not implement when they had the power to do so. The Government recognise that they cannot give in to easy pressure to borrow more money or to raise further taxation in order to pay for certain items. When we campaigned in 1982 we said that these practices would have to stop. The people gave us a mandate then and we are now well set on a course of recovery. It is a difficult task and will continue to be so, but the Government are committed to seeking reform and to gradually bringing about an improvement in the situation. What have the Opposition proposed? They have criticised most items in the budget, but where do they think the money should come from for some of their proposals. Do they want to borrow more money or go back to the catch all policies of 1977 when every voter was bombarded by the giveaway attitude which is largely the cause of most of our present problems?
I must ensure that the facile solutions and easy options which Fianna Fáil are all too familiar with and which they will put to the people are rejected. This Government made definite innovations in the budget in relation to income tax and went some way towards meeting the recommendations in the report of the Commission on Taxation. That commission was set up in 1980 following complaints and dissatisfaction. It recommended a single rate. Unfortunately it is not possible to have such a system but we have taken steps in that direction. We have increased the allowance under the 35 per cent rate and reduced the number of tax bands to three. The crippling rate of 65 per cent has been reduced to 60 per cent but more must be done in this area.
I welcome the fact that many allowances have been increased. However, the dependent relative allowance of £110 has remained static. Considering that many people take an elderly relative or parent into their home and look after them perhaps an extra allowance could be given in this area. If elderly people are put into homes it costs the State extra money.
The VAT system has been restructured. The reduction in the rate from 35 per cent to 23 per cent represents a positive boost for business. I hope this will go some way towards reducing the large numbers of people who go across the Border to buy goods. Perhaps the changes introduced in the budget will make such trips less rewarding. The advantages of the reduction in and restructuring of the rates are immense. We all know that VAT on television sets and other electrical goods was penal. I hope the changes in relation to point of entry will help traders.
The VAT rate on newspapers was also reduced. We have a large number of newspapers, both local and national. The reduction in the rate for the hotel industry will prove a tremendous boost to tourism. People who come here on holiday spend money here. We must ensure that they get good value. They will then spread the word about how good Ireland is for a holiday. I know that hoteliers are delighted about the change and will respond by giving good value and service. This is what people remember. However, if, for example, they get good food which is badly served they will remember the country for the wrong reasons. It was not possible to have a single rate but the changes in the system will go some way towards restructuring it and make for easier administration.
As regards the construction industry it must be remembered that while VAT has been increased on certain items, over the next three years £420 million will be invested in roads. This represents a major injection of public money and will result in work being provided with follow-on benefits for industry and so on. As regards housing, a further grant of £750 has been allocated to first-time buyers. This brings to nearly £5,000 the money available to first-time purchasers of new houses. I hope that at some future date the subsidy will be given to people buying secondhand houses. Many people are prepared to make an effort to buy their own house. Perhaps some system can be devised to reduce mortgage payments in the early years when people are finding it most difficult to cope.
A person who surrenders his local authority house after three years will be given a sum of £5,000 to help him purchase a house. This was an imaginative step and it will reduce the local authority housing lists. It will also help the construction industry. A person who is prepared to surrender a local authority house may receive a total sum of £9,750 to purchase another house. Other groups in industry would be very glad if such encouragement were given to consumers to purchase their goods. It is very easy for speakers to come into this House and call blandly for the abolition of VAT or a reduction of the rates, but they do not say where the Government will get the money other than further increasing the taxation burden. In this budget the Government have lived up to their commitment to put more money into people's pockets.
The abolition of the threshold for inheritance from one spouse to the other has not received as much publicity as it might have received. What the Government are proposing is a significant move. Up to now many people found themselves faced with a massive tax bill, often at a time of distress to their family, and in many cases they have had to sell businesses or other assets to pay the tax. What is being proposed will be of particular benefit to people whose spouse dies and who inherit pensions. When pensions are capitalised and are taken into consideration with assets such as housing and other property, the total amount may be quite considerable. What the Government have done in this area is valuable.
I am glad that pensions have been increased for our senior citizens, and I hope that improvements will continue in future budgets. While we have made considerable progress in the area of inflation we have to go further. I welcome the provision to increase the amount of interest that can be earned tax free, and I hope this will be an encouragement to people to lodge money with building societies, banks and the post office. They may do so now, secure in the knowledge that they can earn £100 interest without any tax being charged. Perhaps in future the Government may be able to go further and help other investors. In the recent past there have been attacks on old people in their homes and it appears that those guilty of such attacks knew in many instances that money had been kept in such houses. I hope that citizens will keep only the minimum amount of money in their homes and will but the remainder in any of our financial institutions. Apart from the safety factor, they will also earn interest on money lodged.
A study has been completed on the proposed national lottery, and this will be considered shortly by the Cabinet. I hope that the lottery will be a success and that it will get off the ground without too much delay. I am not sure who will run it: probably it will be a combination of groups who will ensure it is run efficiently. A successful lottery could raise large sums of money to benefit sport and to provide recreational facilities. We must ensure that the country gets the major benefit. I hope that the people employed in the Hospitals Trust will be considered. They have the expertise and they have the necessary outlets. Despite adverse and incorrect comment, hospitals have benefited from the Hospitals Trust. I am concerned about the 200 people involved, some of whom have approached me and who are anxious about their jobs. I hope they will be considered in relation to the introduction of the new lottery. There is little point in our introducing a national lottery while at the same time put those people in the unemployment queue. I hope that the combination of interests, including the group I have mentioned, will get the lottery underway and benefit many people, particularly the young, in the matter of providing recreational facilities and so on.
The racing industry and the related horse industry are major businesses that generate much employment. I hope that the reduction for 20 per cent to 10 per cent will ensure that fewer people will be betting without paying the tax. That will probably include a few of my colleagues here who, I am sure, will respond appropriately and pay what is due. Important also is the reduction from 7.5 per cent to 6 per cent in the tax taken on the race track. I hope that in the light of the forthcoming Killanin report the Minister will give consideration to where changes can be made in relation to this industry which involves large amounts of money and which might produce an even greater return in the years to come. The racing board have recently been urging the computerisation of the tote, for example.
Despite the major tax reform in this budget, we cannot be satisfied with the growing number of people who are unemployed. We must look at all the bodies who are at present involved in getting people to work and back to work. We must consider our education system and the various bodies who provide courses to see if we can make better use of them. Some school leavers have made up their minds to go to university or to some of our other colleges and are able to get places there, but some are not too clear about what they want to do. We all know people who have ideas and who would like to get some training or to get a job. We must look at the courses we are providing and at the follow-on to try to ensure that people who have completed courses can gain experience and find jobs. Liaison between AnCO and the IDA and other bodies must be furthered. A person should not just be walked through an AnCO course and then told he has done his course and he must go out and find a job. We must assist people to make contact with firms who can give them employment. At times people become frustrated when, having attained a certain level of education, they find that there are no jobs for them.
Just as important are people who have lost their jobs. Such people have probably a greater commitment than the young school leaver. They are married, they have young children, and possibly a mortgage is hanging over their heads. We must look hard at what we are doing to ensure that as far as possible the difficulties in which they find themselves are alleviated. At all times we must keep watch on what is happening to people who have been let go from their jobs. I have in mind particularly people who worked in Irish Shipping. The State has a duty to see that if possible they receive alternative employment. I understand that there is a proposal for some sort of co-operative movement providing a service related to shipping, to marine life and to other matters in which those people would have certain expertise. I hope that the IDA can assist here. In some cases pensions have been affected. I hope that as a result of the development of the national pension plan what has happened in relation to Irish Shipping in this regard will not be repeated. People who have paid over many years into a pension fund found that fund was frittered away overnight. I hope that despite legal technicalities and a liquidator being in charge——
I must remind the Deputy that it would be more a matter for the Estimate. It is not a detail to be dealt with in the budget.
Is it all right if I stray momentarily on it?
A passing reference is all right, but to go into it in detail would not be so.
I hope that something can be done in relation to this. I am glad that the excise duties on most of what are known as the old reliables remain unchanged. Referring to the innovative decision regarding whiskey I am glad that the Government recognise that the beer drinker had been left worse off vis-á-vis the spirit drinker. I hope that the reduction in excise duty on whiskey has stopped money from going over the Border and also that it has been implemented without loss of revenue.
The motorists have been hit in this budget by the increase in the price of petrol and by the road tax. Many people depend on cars for many things and I hope that the motorist stands to gain the next benefit. As I have said, it was not possible in this budget to have reductions all round because money must be found for the services the Government provide. It is easy to pick out a few items in the budget which satisfy and to criticise all the other items. I welcome the provision of money for what I would call special items such as the establishment of the organisation to combat poverty.
I am not 100 per cent sure what is intended in relation to that. The proposal is that money be provided for research into the cause of poverty and other related items. I would prefer to see the bulk of the money going directly to the poor and to the many voluntary organisations. If a group are to be set up I trust that the majority of the members will be practical people, people who will be aware of the problems as opposed to theorists. We must ensure that any money spent in the area of combating poverty is channelled into those areas where the need is greatest. Most of us know what the problem is and we must do our best to alleviate it. We must assist to the greatest extent possible those voluntary organisations working in the area. One thinks especially of the Simon Community and the Society of Saint Vincent de Paul in that regard as well as the many other groups who bring so much help to the poor.
The Minister has introduced some radical reform in the area of taxation, but that is not as far as we intend going in that direction. It is a start on the road to progress, to ensuring that people have more money to spend. We had to devise a budget that would give a generous boost to the economy so that more jobs could be made available especially for our young people.
All we have had from the Opposition is a negative and hypocritical response, but that is not surprising. No doubt in the run up to the local elections in June, Fianna Fáil will produce some magical solution to the problems in the area of local government. Prior to the 1982 election they abolished rates but now they do not agree with people having to pay water rates. By the time of the next general election in 1987 we can be sure that the Opposition will produce some nice little publication which they might entitle The Way Forward but which we may expect will be the way backward for them, a publication on the lines perhaps of the economic plan announced by their leader yesterday, but in any event we may expect from them nothing more than simple and facile solutions. We must be on our guard in respect of such soft options, of the easy money or the phoney money.
I welcome the budget. While much more will have to be done, the budget provides a major boost to the economy, but this Government intend doing a lot more.
It will be difficult to analyse every detail of the various asspects of the budget but we can say that it represents many minuses but few pluses. I regard it as a clinical budget, one arranged by those who have become known as the famous or, depending on one's point of view, the infamous handlers. The budget is designed for the purpose of soothing the electorate. In recent months the popularity of the Coalition has fallen by between 13 to 16 points below the Fianna Fáil rating in that respect. However, while the budget was framed to soothe the electorate a study of it indicates that instead of giving, it takes away very subtly.
The immediate media reaction to the budget was good, but since then the figures have been checked and the glitter removed with the result that the euphoria has faded in one short week. The budget will not help anyone and it will not be of any benefit to the economy.
Having said that, I welcome the reorganisation of the VAT system. During the past two years particularly general dissatisfaction was expressed with the VAT system, and it was clear that its impact on the economy was devastating, especially in the terms of the loss of trade. The black economy has been thriving on a scale never witnessed before and the extent of spending by our people outside the State has left in its wake a trail of devastated traders.
I welcome the abolition of the 35 per cent rate, but I would remind the House that the higher level was introduced by the Minister in the previous budget. At that time we emphasised the repercussions that we foresaw that high rate having on the economy, and during the past year we have been proved right. The abolition of the high rate is an admission on the part of the Minister that it was a mistake in the first place. However, it is not honest for speakers on the Government side to claim credit for the abolition of something that was imposed by their Minister.
I am concerned about the increase in the 5 per cent VAT rate, bringing that figure to 10 per cent. This is relevant particularly to the construction industry, which we know is experiencing a disastrous time. The VAT increase in this respect will have further devastating effects on that sector.
I am appalled that the Minister did not give more favourable consideration to the various submissions he received from the construction industry. Not only has the VAT on construction been doubled but in the two years since 1983, the VAT rate has increased from 3 to 10 per cent. That represents a shattering increase. The increase will seriously affect the cost of building schools, hospitals, roads and general infrastructure.
In recent years there has been a significant fall off in house building activity. This decline has been much more significant in the urban areas. For example, the Dublin region has been very badly hit as a glance at the figures will show. Private house building in 1983 in Dublin was at its lowest level since 1971. There were a number of reasons for that decline, and these include a fall in the level of disposable incomes. Disposable incomes have been falling considerably since 1981 particularly and there is no indication that this trend will be reversed this year. Indeed there is no indication that it will be reversed in the future, a view put forward by the Government in terms of their national plan. The fall in the real level of tax benefits and housing subsidies and the decline in the real value of tax relief on mortgage interest are other areas that have contributed greatly to the fall off in private house building.
Such factors, too, as the widening gap between loans available and house prices, a factor attributable to such items as cost increases as a result of VAT, levies on development, electricity costs, PRSI and so on, have all contributed to the fall off in moneys available and consequently to the fall off in house building.
On the basis of the Government's current policy as outlined in the budget, the future for the building and construction industry is very bleak.
The NESC have forecast a need for between 26,000 and 32,000 new houses each year between the years 1981 and 1999, but it is forecast now that due to a declining demand and increasing cost factors, the supply of private sector housing is likely to fall further and could be as low as 15,000 per annum in the future. This will create greater problems and a greater demand for local authority housing not only in the urban areas but in the rural areas. The current level of local government house building would have to be increased by at least 3,500 units a year to accommodate that demand. This would mean additional public capital expenditure of a sum in the region of over £100 million on local authority housing alone.
The building industry is in a deplorable state. Almost 60,000 workers have lost their jobs in the past few years and the possibility of a levelling off in unemployment in that industry is now remote. I do not understand why the Minister did not put more capital into that industry rather than imposing further penalties which will result in less activity in that industry with the prospect of greater unemployment. If current policies continue the decline in investment and in employment will continue in 1985 and the prospects of recovery in subsequent years are bleak.
In looking at this budget we must consider the Government's approach to fiscal policies on which they came into office in 1982. It will be recalled that the Coalition Government were elected on the basis of fiscal rectitude, a four year plan was introduced and the deficit was to be phased down to £750 million. We were also told that the Government would provide a climate in which there would be a greater incentive to work, that they would strengthen the value of the pound and at the same time reduce the burden of excess Government spending. It is relevant to reflect on the present circumstances in the light of those promises made in the autumn of 1982. When campaigning around the country the Taoiseach was portrayed as the honest broker, the man who would be the saviour of the economy. We were told that borrowings had been so high that the country was on the brink of financial collapse, that our creditors were seriously concerned and that foreign bankers could not extend further credit to us. The Coalition Government were elected on that platform. It must not be forgotton that the major plank of that platform has miserably collapsed.
Since then we were presented with Building on Reality, 1985-87. That document was presented only a few months ago and already it is totally out of date. The forecast contained in that document has gone totally astray and the financial targets have been abandoned. It will only be a short time before the average person realises that he has been conned by this Government. The so called imaginative reform budget has been bought with increased foreign borrowing. The current budget deficit will represent 7.9 per cent of national income in the year ahead compared with 7.1 per cent of last year's. That represents almost 11 per cent off target. That is a serious reflection on the three year strategy announced in the document Building on Reality, which also forecast that the deficit would fall to 5 per cent of GNP by 1987. It is now clear that the target cannot be achieved despite all the penny pinching, the belt tightening, the sacrifices imposed on the workers, and the massive unemployment. During the past few months there has been an increase of about 9,500 people unemployed. Foreign borrowing has not been reduced as promised but has increased.
From this perspective the budget must be regarded as a failure. A newspaper editorial after the budget last week claimed that the Minister was stretching it too far when he said that this budget had been designed to have the maximum possible beneficial effect on unemployment. Within 24 hours of the budget the latest unemployment figures were released. There was a staggering increase in the numbers unemployed of 9,600 people in one month. The official unemployment figure is now 234,000. That is a national disgrace, a scandal. If the Government were really concerned about unemployment an emergency would be proclaimed and action would be seen to be taken.
The first and most important priority of any Government is the creation and maintenance of jobs. This will be a formidable task as we have a very young population and between 15,000 and 20,000 new jobs will be required each year during the eighties and to the next decade simply to prevent unemployment rising. This task must be tackled. It is a tragedy that this budget has done nothing to tackle it in a serious manner. The consequences of this budget will create further unemployment in the building and construction industry, the motor industry and in many other firms that are already on the brink of collapse.
Many business are being forced into closure by severe tax demands and the unrelenting attitude of the Revenue Commissioners in their pursuit of too many firms in the private sector. That is continuing to be a major factor in more closures. What has the Minister offered as compensation to those who are out of work? In his budget speech in relation to unemployment the Minister said that although it is projected that given moderation in pay developments employment should begin to pick up this year, special Government measures are needed to stop the growth in unemployment. That was the understatement of the year.
That is the understatement of the year. We all know that special measures are required and must be introduced if unemployment is to be solved, but what measures were provided in the budget? There is no reference whatever to plans to create jobs or to assist companies in distress. Indeed the Minister said that provision had already been made for major new employment and training schemes "which will soon be under way".
Since the Government came to office in 1982 they have been placing all their emphasis on training schemes for employment. Such schemes are useless unless firm, permanent employment lies ahead on completion of training. Training schemes have proved to be totally illusory and frustrating to many young people after three to six months in training. Then they find themselves again out in the streets with no jobs or prospects, no hope.
It would be more beneficial if the Government were to concentrate some of their efforts on providing permanent employment not only for young people but for those who lost their jobs due to redundancies, men with families, with mortgages and other commitments. Now, the man aged 35 years or younger who loses his job has very little chance of obtaining alternative employment. It is a sad reflection on society but first of all on the Government of the day. There is no substitute for work, but the least the unemployed can expect is some financial recognition from the Government if they cannot provide jobs.
What has the budget done for the unemployed? An unemployed man with a wife in receipt of £61.40 a week from 11 July next will receive the very princely increase of £3.70, £1,85 per person. If he has a child he will receive an extra 55p per week. A man in the same circumstances but on unemployment assistance will receive £1.60 extra per week and an additional 45p per child. We are told the budget will put money into everybody's pocket, but let us have a look at the increased expenditure for the type of person I have just referred to.
First of all, we have VAT on footwear for the first time — an attempt was made in 1981 to do so but the Government collapsed on that issue. Now they have introduced 10 per cent VAT on footwear and the VAT on clothing has been increased from 8 per cent to 10 per cent. Coal, electricity and gas will all be dearer because of the VAT increase from 5 per cent to 10 per cent. Indeed, 24 hours before the budget was introduced there was a price increase of 55p on a bag of coal. If a mother has to buy a pair of shoes for a child, at a probable cost of £15, she will pay an extra £1.50 because of VAT.
For those lucky enough to have jobs the increased income resulting from the so-called income tax reforms will not mean any saving for lower paid workers. A family man earning less than £140 per week will not gain anything at all because it is more than likely that he is not paying tax because of various allowances. However, he will have to pay the additional taxation on clothing, footwear, electricity, gas and other fuels. If he is fortunate enough to be the owner of a car, which is necessary to take him to and from work, he will be caught by the extra 10p per gallon on petrol and the increased road tax. We must bear in mind that nowadays a car is a necessity, not a luxury. Therefore, the new taxes on the motorist is a further penalty on employment, on those who are working.
According to the Minister, he will collect £155 million more from the PAYE sector this year. Yet we are told that all taxpayers will pay less tax. If full allowance is made for inflation in the next 12 months fewer people will be better off financially. If anybody will benefit it will be those with higher incomes. The lower paid workers are again caught for everything because they end up paying more and more.
The number of U-turns by the Government increases daily. In future, supposedly positive statements by the Taoiseach or his Ministers cannot be taken seriously. It is common knowledge that the Government will do anything to hold on to office, that they will yield to any pressures in order to stay in power for as long as they can. The policy outlined by the Minister for Finance in his 1983 budget has been buried well and truly. The policy in 1985 is to keep the Government afloat at all costs, irrespective of the cost to the economy or the people.
The Government promised discipline, firm management, placing special emphasis on State finance, eliminating current budget deficits by 1987. Two years later we have more than 60,000 extra people unemployed, the national debt has grown to £18.5 billion and we owe foreign banks £2 billion more than two years ago. The total now owed is about £8 billion. Arising from a two-year policy of huge tax increases and belt-tightening, the end result is a bigger mess than ever before. The attempts to camouflage that mess can be seen easily by the public as a PR exercise. It will not create the environment to increase employment. The only proposed solution to the jobs crisis is the new VAT structure.
I have already welcomed the VAT structure because it will make the system less difficult than the old complicated one. It will be more beneficial to business people in particular. It will be less expensive to administer. The reduction in the VAT rate from 35 per cent to 23 per cent will help to stem the flow of consumer money across the Border to only a very small extent.
The Minister saw fit to increase the duty on petrol rather than to decrease it. This will inevitably give even more encouragement to motorists, especially those living near the Border, to cross the Border and fill their tanks. They will also be given the opportunity to do their shopping. Unfortunately, that will continue the present difficulties and problems, with a resultant loss of trade and jobs in the State. Businesses close to the Border, particularly, are seriously affected. I must emphasise that anybody in business within a distance of from 20 to 30 miles of the Border is at a distinct disadvantage and has gained no benefits whatever. They are there for the take, as far as the tax collector is concerned, but there is nothing to be gained from the potential shoppers who daily pass them by. It is deplorable that in the month of December something in the region of £3 million to £4 million per day was spent by shoppers outside this State.
Unemployment is our greatest problem, and I cannot see any improvement whatever in the prospects of providing jobs for the 234,000 people now unemployed. On the contrary, many thousands more will be joining the job queues later this year, school leavers and those who will lose their jobs between now and then. We must provide jobs in the present climate and on the face of what has been produced by this budget, there is very little hope of this.
Last Wednesday, when the Minister was reading his speech to the House, there was a great demonstration of euphoria on the part of the backbenchers on the far side of the House. This is very understandable, particularly in view of the deep depression that they had been in for some time now. The Government backbenchers, as we all know, have been groping for some straw in the wind which would suggest a more favourable response to the Government from the electorate. That euphoria has dissipated very rapidly, particularly over the weekend, when we had articles written by the various commentators, economic and financial, and also table showing the very minute savings as far as the PAYE sector were concerned. It was clearly seen that the tax bands were just juggled about and the savings as far as PAYE workers were concerned were very minimal. When one takes inflation into consideration there is absolutely no saving whatever. Indeed, allowing for the anticipated inflation and the additional indirect taxation and so on, the worker will be worse off in 1985 than he or she was in 1984.
As far as the latest unemployment figures are concerned, the Government must be shocked at the dramatic deterioration there. The Minister will have to reconsider his whole attitude to the building and construction industry, as this is the area in which can be created the foundation, not only for halting the slide, but for starting to get people back to work again in large numbers. It is incredible that the Minister should treat so badly the two sectors most seriously affected by rising unemployment — the construction and the motor industries. Before it is too late, he must move to rectify the irresponsible action of taxing their jobs even further.
The Minister in the budget has provided for a reduction in the Public Estimate, totalling £28.6 million. This is shown in a table under the heading "Other". This table was published yesterday, and it is obvious that at the time of the preparation of the budget either it had not been decided where those reductions would come from, or the Minister did not wish to show his hand at that stage as to which Departments the particular cutbacks would apply to.
Major cutbacks during the last couple of years have caused severe hardship to many, particularly the less well-off, old and sick. Hospitals all over the country are in dire distress, many now being forced to close down wards. Essential services are seriously affected because of a shortage of money. Many hospitals, particularly in the Dublin area, are sending sick patients home for weekends because there are not sufficient funds to pay for heating, lighting, food and medical care. That is a dreadful situation to find oneself in.
among a number of different Departments. As far as Social Welfare is concerned, there is provision here for a saving of £7.3 million. What aspect of social welfare will be affected there? Where will those cutbacks come from? There is a major cutback in the Department of Justice, the Garda Síochána, prisons and the courts. There is a major cutback on public works and buildings and on labour. These are all areas which have suffered very seriously during the past two years. If there are to be further cutbacks which the Minister had indicated in this document, will there be any hope whatever that these Departments can carry on? We are faced in 1985 with further misery, hardship and unemployment and a state of hopelessness that will not do anybody any good. This could have dire consequences of a nature which might not be reparable.
Our health services are facing a major crisis and the taxpayers are at present paying over £950 million for a health service which is much less efficient and caring than it should be. Health care here is very expensive because our system has inclined to be concentrated on reacting to illness by hospitalisation and drugs. The health service should be based very much on preventive care and the promotion of good health. The Department should be developing a plan to meet the threats which are causing widespread illness. We should also be developing our occupational health services, proper child care services and an overall programme to meet the specific needs and requirements of this period, to ensure greater health for everybody. Particularly we should be educating people to look after their health and safety.
It is also very significant that the cost of drugs has risen very much in recent years. Some of the contributing factors are the higher prescribing rate by doctors and the introduction by drug companies of new, high priced medicine and drugs. Since the Minister for Health introduced severe cutbacks in the health services and disqualified the supply of certain drugs and Will this £28.6 million come out of the Health Estimates? It has been divided medicines to medical card holders, doctors have been getting around that problem prescribing more expensive drugs for minor illnesses and complaints. The Minister's policy, as have been most of his policies, is disastrous and very shortsighted. It has resulted in greater cost to his Department. When one considers also the envisaged further cuts in the various Departments, it is very difficult to visualise how they will be in a position to continue during 1985. The bigger Departments must be on the verge of collapse, and further cutbacks and further inflation during the year may make it absolutely impossible for them to function to the end of the year.
This budget has dealt a servere blow to education. As a result, primary schools in particular, which have been on the verge of bankruptcy, in many cases will be unable to continue to maintain their present standards. Most primary schools are now kept going by voluntary contributions by parents. Many parents, in financial difficulties themselves, now contribute in greater numbers and amounts than ever before in order to ease the financial strain of primary schools.
While there have been some good points in this budget there are many negative ones. From the outset its presentation has amounted to a very large public relations exercise in an effort to regain popularity for this ailing Government. The Government should realise that they have failed the country miserably since coming into office and have not fulfilled any of their promises. One must ask: how long can this be allowed to continue? One must ask also has the national plan introduced some months ago being buried. I believe this budget has killed that plan published three months ago only and which set targets for the budget deficit and Exchequer borrowing requirements up to 1987. The budget deficit was to fall to 5 per cent of GNP in two years time while Exchequer borrowing was scheduled to decline to 9.7 per cent of GNP. In themselves these targets represented the scrapping of those contained in the 1982 Programme for Government under which the deficit was to be phased out altogether. It is now clear that this latest national plan will follow the same path of previous documents and plans. No doubt there will be a new plan presented, that is, if this Government remain in office for a further length of time, which I doubt. But if they do I anticipate another plan being presented which we will be told will constitute the solution of all our problems, such solution more than likely involving an additional year or two, the Government hoping to win in a general election in the meantime. Three months only after the publication of their national plan Government figures have drifted from their planned targets. One does not have to be an economist to ascertain that the figures outlined in that document were totally unrealisable, that there is absolutely no way its targets can be achieved or even nearly achieved.
It is a short two and a half years since the Fine Gael and Labour Parties expressed horror at the state of the country's foreign debts and borrowings which at that time amounted to only half their present level. We were assured then that the country was about to be taken over by foreign banks, that as far as credit worthiness was concerned Ireland's name was black in the eyes of international bankers and creditors. Of course Fianna Fáil were then in office, hence the claims by the parties now in Government. Borrowings and deficits are now the norm, are perfectly natural and respectable, constituting another of those U-turns by this Government. The people will not be fooled by this public relations exercise of this Government who take the country from one serious situation into another without bringing about any solutions, leading to crisis after crisis, one piling on top of the other. As long as the Government can stick together, hold on to the reins of office, they are determined to put the country's interests behind them.
It will not be too long before the Government face the electorate, when they will have to place their lack of achievement before the people for perusal. When that time comes about it will be seen that, while this Government have endeavoured to purchase the electorate in this budget, they have reneged on all of their targets and figures. Figures and targets appear to matter not at all, they are merely figures thrown in from time to time by the Taoiseach and Government in an effort to blind the ordinary person. I can assure them that exercise will not work. It has been my experience moving among the people at present that there is a fierce determination on their part, as they say, to get this crowd out. I am constantly being asked "When are you coming back into office? When will we be given an opportunity to throw this Government out?" This is the type of feeling around the country and particularly in Dublin city.
These budgetary provisions have fooled nobody. They have merely worsened the overall situation. Within a very short time people will see, from experience, that they are even worse off than they were before. Nothing is being done for unemployment, the prospects are bleak, little or nothing being done for the PAYE taxpayer, merely fiddling around with tax bands and allowances. That will not work because in the final analysis people are gaining nothing, they continue to lose and, when they are given an opportunity, I can assure the Government that the loser on that occasion will be the Labour Party and Fine Gael, probably in that order. It is sad to see the Labour Party stick so rigidly to the monetarist policies of this Government. The Labour Party always had a very respectable name, always had the reputation — perhaps not quite true at times but nevertheless it existed — as a party who worked in the interests of the working classes. We must ask: what has happened over the past two years? Fine Gael monetarist policies have been latched onto by the Labour Party to the detriment of the working classes. When the next election takes place I have no doubt but that there will be a change of Government, indeed a huge change with numbers sitting on this side of the House very much fewer in comparison with the situation obtaining.
I might reiterate that this budget has done nothing whatsoever for the unemployed, for the taxpayer, the business sector and, above all and most seriously, nothing for our economy. We continue to move backwards, and the sooner we have a change of Government and policies that Fianna Fáil only can introduce the better for the country and its people.
Listening to Deputy V. Brady I was almost convinced that he believed some of the things he was telling us, especially with regard to the call he claims he has from his constituents that there be a general election shortly, that this Government should be thrown out and that that would constitute the resolution of all the country's problems. I should hate to disillusion Deputy V. Brady or anybody, but I would hazard a guess that the electorate are hardly convinced themselves that what he tells the House is true. Past experience will enable the electorate to look back to what happened on previous occasions and come up with a logical answer, that while everything in the garden may not be as rosy as we would all like, while everything might not go as we would want, that times generally are hard, by and large people will be prepared to give recognition to effort and to support a Government attempting to do the best possible job under very difficult circumstances. I have said before—and this applies to all Members of this House — we should set some kind of realistic level of anticipation or expectation in the minds of the electorate. There is no sense in deluding them or ourselves into believing that situations can be changed overnight by spurious suggestions as to how our problems might be solved. Deputy Brady said the Government were determined to hold on to the reins of office at any cost. I do not think any Government can hold on to the reins of office at any cost. I do not think they would be thanked by the electorate for attempting to do that. It is totally unfair and ridiculous for anybody to suggest that.
Over the past few months we heard calls for extra expenditure, lower taxation, selective tax cuts and borrowing for productive purposes. We heard calls for an extra £200 million to be spent on capital works. These are all very laudable and they are the kind of things the Government would like to be able to do at any given time. How many of those targets are attainable? How many of them are realistic? We should explain to the electorate in unemotional terms the facts as they are and the difficulties facing the country, the difficulties facing not only the people but also the politicians in getting the message across to the electorate as we see it. We are not doing justice to ourselves or to the people we represent if we try to misrepresent the case.
I should like to make a passing reference to some of the passing references which have already been made. We must not attempt to build up people's expectations. That does nothing for politics and it does nothing for the people to whom we make promises. We would be doing more for ourselves if, instead of building up expectations, we united to tell the people the true position and let them make up their own minds as to where they think the country is going and where we should be going.
On the question of charges about national handlers presenting good PR cases and so on, I was a bit alarmed of late to hear sounds coming from the Opposition benches to the effect that we might reconsider our position within the EC. I sincerely hope that is not about to be trotted out to placate the electors in times of financial stringency. We would not be doing ourselves any great service by doing that. Our colleagues in the EC would not thank us for those kind of antics. It is not sufficient to say other member states successfully or otherwise renegotiated their terms of accession. I hope we will not be treated to that kind of public debate at election time which might seek to suggest to an unsuspecting public that there were other ways of getting funds apart from taxation, or borrowing, or hard work, or addressing ourselves to the task in hand.
I welcome the budget. It is progressive. It is incentive-based. It is the kind of budget that is required if we are to pick ourselves up and move along the road to economic recovery. It is the kind of budget many people on the Opposition benches have been calling for over the past number of months without going to the extremes they were suggesting. The Government and the Minister for Finance have done a very difficult job, that of balancing the books on the one hand and, on the other hand, giving to the workers and the business sector some recognition for their efforts, and pointing out the road forward. I did not say the way forward. The budget gives recognition for effort and it proposes to chart a course which is carefully costed. That is very important. We have had too many experiences in the past where courses were charted and were not accurately costed.
Such as gallons of milk.
When it was found that they were not accurately costed they tried to blame somebody else, to blame the Opposition, to blame changes in Government, to blame the fickleness of public opinion. The Government had to get the national finances in order and to establish a trend, which I think they did. This was very difficult to do. Obviously these are not policies to which the public will respond with wild enthusiasm. No one would expect them to do that. The Government persisted in their task and they have now reached a juncture where they can safely say that they are moving forward positively and progressively in an effort to provide for all the people economic and social stability. Those elements are important.
The budget is linked directly to the plan Building on Reality. The next budget and the one after it will also be linked to that plan. It is very good from the point of view of the country that the Government decided to produce a medium term plan, to produce facts and figures which people can look at and examine over a period of two, three or four years, and make up their own minds as to whether or not the targets are attainable and the plan is feasible. In the past plans have been put before the people and the people have looked at them. At first sight they seemed plausible enough but, under closer scrutiny, they failed miserably. This is a vast departure from that type of planning.
We should try to get away from the theme of many speeches emanating from the Opposition side of the House over the past few days and months expounding the theory of continued doom and gloom. It was necessary to impart to the people these stark realities. That was the Government's responsibility. It is not necessary to go on endlessly beating our breast and tearing our hair and talking about how bad the situation is and how bad it will be. We must become a little more positive. Instead of saying how bad things are, we should ask the question: could they have been much worse? They would have been much worse had the corrective measures not been taken when they were.
It is one thing to put forward proposals for changing the course of economic policy. It is another thing to provide the people for whom we speak with a ray of hope which is necessary if we are to encourage them to support the institutions of the State. I want to dwell on that for a moment. This is very important particularly from the point of view of young people. There is no sense in telling young people: "There is nothing in this country for you. We cannot save you. We can do nothing whatever for you." If we tell them that, they will desert us and they will desert the institutions of the State. They will desert this House and everything we stand for. We will do ourselves irreparable damage if we pursue that course. People need hope. They need to be able to rely on the institutions of the State to provide for them what they regard as being necessary to ensure their future.
Debate adjourned.