It is difficult to understand what the Coalition strategy is with regard to the management of the economy. They say one thing and then do something which completely contradicts what they say. In the Financial Statement on 30 January the Minister for Finance said that the Government's aims were to improve the environment to increase employment——
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.)
We must have order.
——and to protect those on low incomes from the impact of the recession. To take the first of these points, how can one say one is improving the environment to increase employment when the fundamentals of one's strategy will cause substantial loss of employment which one then tries to alleviate to some limited extent by tinkering around with peripheral changes? The administration and cost of these peripheral changes is met by increased borrowing. Increased borrowing causes interest rates to rise and this inhibits the investment which could create the new employment.
The VAT increases applied to the construction industry will mean a direct loss of over 5,000 jobs to which will have to be added the loss of indirect employment. The action directed towards the building societies, which in turn will cause mortgage rates to rise, will affect the available spending power of approximately 500,000 families. Increased VAT on clothes and the introduction of VAT on footwear adds to the ever-increasing burden on the family. Money spent on shoes and clothes for children is spent out of necessity. It is unfortunate that we have the immediate evidence of the closure of Clarks shoe factory in Dundalk as proof of the link which exists between lack of demand and lack of job creation or job maintenance. This is not economic management. It might more accurately be described as economic vandalism. The consequence of this vandalism has to be reduced and not increased employment.
Reform of the taxation system is an everyday cry from all quarters. Those who call for reform do so because they feel they are paying too high a part of their income in taxation of every description. They do not mean that one can juggle about with the optics to appear to be reducing what they pay when the sum total of what is taken from them continues to grow.
As regards the protection of those on low incomes, the largest number of people who fall within this category are the old, the sick, the unemployed and families with three or more children. What has the budget done for them? The Minister has given them some statistics to chew on. He told them that the increases provided by the last three budgets are still ahead of inflation. There was a French queen who suggested that the French eat cake. The Coalition propose that the Irish chew on some figures. This is both dishonest and unjust. Wide ranging statistical configurations do not reflect the damaging effects of the budget increases suffered by those on subsistence incomes or on social security. The time has well passed for statistical tomfoolery of that kind.
There is no evidence that there is any appreciation on the part of the Government of the real factors that affect the day to day living of more than half the population. I regret that, in addition to the evidence of non-realism displayed with regard to the everyday problems of people, the tables contained at columns 1123 and 1124 of the Official Report of 30 January show the most disturbing evidence of mismanagement of the national finances. A provision for interest payments on public debt is shown at table 3. The figure for 1981 is £795 million. In 1982 it was £1,143 million; in 1983 it was £1,330 million; in 1984 it was £1,566 million and the estimated figure for 1985 is £1,841 million. The level of mismanagement indicated by those figures is an absolute scandal. The scandal is compounded when the Government insist on placing the blame on previous Fianna Fáil Governments. The year 1981 was the last time a Fianna Fáil Government were in a position to control the strategy of budget policy. Coalition mismanagement has cost an extra £275 million for interest on the national debt in 1985. Coalition mismanagement has cost an extra £236 million for interest on the national debt in 1984 and an extra £187 million in 1983.
In those three years taxpayers have had to pay for interest, or have had borrowed in their name to pay interest, a total of £1,330 million in 1983, £1,566 million in 1984 and £1,841 million in 1985. This gives a grand total for the three years of £4,737 million in interest on debt incurred or managed by Coalition strategy.
All the exhortations seem to be for the purpose of appearing to do something to prevent a slide into economic and social chaos. The reality is something altogether different. A significant part of the existing public debt and the consequent currency mix in interest liability arises from the incorrect policy of borrowing on a US dollar related basis. This mistaken strategy had increased the level of public debt by approximately IR£2 billion in addition to costing hundreds of millions of pounds each year in interest payments.
Perhaps the most damaging act of all which has affected the State, the taxpayer, every mortgage holder and every business was the declaration during 1984 that the Government intended to look to the domestic market to provide a substantial part of their loan requirements.
The effect of this mistaken policy has raised the basis plateau of domestic interest rates by between 2 per cent and 3 per cent, from 12 per cent to 14 to 15 per cent. At these higher levels State borrowings cost more but, even more damaging, interest rates at this level act as a deterrent for any realistic industrial investment with a consequent effect on unemployment. In the past two years by these policies the Government have destroyed many businesses. More previously healthy businesses are now extremely hard pressed to stay in existence and almost any prospective new initiatives are rapidly being killed off and never come to fruition.
The scenario I have drawn has to be seen in the context of a worldwide reduction in inflation that imposes a similar need on Irish industry if our economy is to survive. Future inflation will not get us out of this economic cul-de-sac into which Government policy in the past two years has led us. Unfortunately these are the realities that face us. They cannot be compensated for by schemes of short term social effect if they do nothing to improve the underlying tenor of the economy, if they do nothing to restore confidence where it does not exist now and if they do nothing to cause people to make investments and to take risks where they are loath to do it at the present time.
While one might see some short term social advantage in many of the schemes that are constantly being advertised by agencies such an AnCO, the Youth Employment Agency and others whose greatest anxiety seems to be to ensure that they are able to spend the rather lavish funds made available to them, they do nothing to improve the basic situation and they can do nothing in the long or even the medium term to improve the economy. It is misleading young people very seriously to suggest that such schemes are of real benefit to them. Young or old people who seek employment will not get it from that kind of ad hoc means: rather will they get it from a proper approach to restoring a buoyant economy in which those who work hard and who succeed are no longer penalised but get some fair reward for their efforts as they do in other countries.
The society of envy in which we live today is, unfortunately, very much coloured by that kind of situation. It is brought about in no small way by the degree of deprivation of so many people who have no jobs or many who have them but who find that the taxation system under which they operate, which is not significantly changed by this budget and which will result in the payment of an extra £100 million in tax as compared with last year — so deprives them of what they see as a just reward that they wonder if it is worth making the effort.
These matters on which I spoke last week and briefly today are the real problems that face us. It saddens me to see growing up particularly in the past week an awful series of divisions again in our society, where the emotions and the energy of so many people in the coming weeks or months will be devoted to a topic that is really irrevelant to what counts, to what matters and to what is needed here today. It is a tragedy to see this happen. It is a tragedy to think that 90 per cent of national energy in terms of political discussion in the next few months will not be devoted to matters that should properly be discussed in relation to the budget and to economic policies where this country is falling down so badly. Rather will it be devoted to things that are totally peripheral to the real concerns of this country and where, unfortunately, an already divided community will be forced still further apart by the emotions and the attitudes that will be taken up on all sides in relation to a matter that is of little importance in reality.
I am pleased to be afforded an opportunity of contributing to the budget debate. I propose to contain the majority of my remarks to the area of sport, for which I have responsibility, and which, for the second year running has benefited substantially in the budget.
Deputies on all sides of the House will be aware that in recent years there has been a massive upsurge in interest in sport. From the point of view of the individual, sport and physical activity can lead to an improved life style, a sense of well-being and an increased awareness and confidence in oneself. Participation in sport provides enjoyment and also opportunities for social interaction and strengthening and development of character. Thus, sport can be a major factor in improving the quality of life.
In particular, it is wise to recognise that sport provides a viable and realistic alternative to misguided and anti-social behaviour among our people. At a time when Irish society is faced with many challenges in providing suitable outlets for the energies of its large young population, an increasing number of whom may never pursue employment in the traditional sense, as we know it, it is important that in educating these people, both in the school and in the out-of-school context, we should provide them with the capacity to create for themselves a sense of self-esteem and fulfilment whether at work or out of work.
Aptitudes and positive attitudes which can be acquired through sport can contribute significantly towards this goal. In order to achieve this, an environment must be created within which the value of sport and physical recreation is held in high esteem. I am not suggesting that sport and physical recreation are cures for all the ills that beset our nation. However, it is accepted that people who are involved in sport and physical recreation are seldom, if ever, involved in anti-social behaviour.
For many years sport was an activity which was left very much to its own devices with little or no State assistance provided for its development. It was regarded as an activity which should be financed after all the demands on State funds have been met. This, of course, meant that sport became `the poor relation' where State funding was concerned. I am pleased that since this Government took office the position has changed considerably. It should be recorded that in the Budget in 1984 a special provision of £300,000 was made resulting in the total provision for sport in 1984 of £1.196 million. This was the first time ever that the allocation for sport exceeded £1 million and contrasts very favourably with the allocation for 1983 which was £719,000. For 1985, the provision for sport in the Book of Estimates was £1.085 million. This has now been supplemented by a further allocation of £275,000 in the budget bringing the total provision for sport in 1985 to £1.36 million and representing an increase of 13.7 per cent over the 1984 allocation which, as the House will be aware, included an element of £250,000 which is non-recurrent in 1985.
For the information of the House, I would like to explain that non-recurrent expenditure related to (a) £140,000 which was provided in last year's budget to the Olympic Council of Ireland towards the preparation and sending of the Irish team to the Olympics in Los Angeles; (b) £100,000 which was also provided in last year's budget to the GAA to honour its centenary year and (c) £10,000 also provided in last year's budget to the Irish Wheelchair Association.
Having regard to the current economic situation in which we find ourselves I am extremely satisfied that the total allocation to sport of £1.36 million in 1985 is an extremely generous one. This shows once again that this Government are committed to the development of sport and physical recreation activity.
I would like now to outline the development which will take place arising out of this additional allocation. The main source of revenue for the Olympic Council of Ireland is the annual grant-in-aid which is paid by my Department each year. In Olympic year this grant-aid is supplemented by commercial sponsorship. However in the three years preceding each Olympic year, such commercial sponsorship is not easily achieved. My experience of the 1984 Olympics at first hand and some of the results which were achieved by the Irish team led me to the conclusion that (a) Ireland has potential Olympic champion resources and (b) this potential will not be realised without adequate investment aimed at producing a rationale to develop Olympic talent to its higest standard possible.
In previous years the level of Government investment in Olympic sport was such that it had little or no effect whatever on Ireland's prospects of developing athletes capable of Olympic distinction. I believe that the Government have an obligation to promote international sport together with the promotion of sport under the sport-for-all concept.
Ireland, has since the modern Olympic Games were established in 1896, contributed substantially to the Olympic movement. The inspiration provided by such men as Dr. Pat O'Callaghan and Bob Tisdell and by other great athletes such as Ronnie Delany, Eamonn Coughlan, John Treacy and Ray Flynn is vital to our national life. In their efforts to emulate their sporting heroes thousands of our young men and women embody the spirit of the original Olympic ideal. The success of John Treacy in the 1984 Olympic Games in Los Angeles was a source of great national pride, shared by everyone in Ireland. Such a performance demonstrates to a world in which less admirable values sometimes prevail that self-discipline, dedication and imagination will be rewarded.
On my return from the Olympic Games I requested the Olympic Council of Ireland and Cospóir to submit to me recommendations as to the means which should be adopted to achieve a greater level of success at the Olympic Games through the raising of our sporting standards at international level. The report which is now being prepared defines the following requirements as being essential for future development.
(a) Competitive preparation at a level comparative to that of other developed nations.
(b) Coaching, monitoring and assessment of athletes.
(c) The establishment of an efficient administrative set up.
(d) Financial investment.
The report clearly draws attention to the lack of top-class coaching for our young athletes preparing for the Olympic Games and the need for selective programmes for competition aimed at producing world class performances in the right places at the right time, a long term junior programme, an on-going physiological and psychological monitoring and assessment programme and full time administrative unit. I am of the opinion that we have reached a stage in international athletics in this country at which there is no alternative to adequate State investment in sport at Olympic level. We can no longer afford to treat sport as a poor relation. The grant of £150,000 which was made available in the budget together with the annual grant-in-aid which the Olympic Council will receive from my Department will ensure that in co-operation we will be able to take major initiatives which will benefit Ireland's participation at international competitions.
In my two years of responsibility for sport this is a major step forward to assist the voluntary organisations particularly those organisations engaged in preparing athletes for the Olympic Games in 1988. This is the first year of the four-year cycle. Heretofore we concentrated on the Olympic Games in the final year because the resources were not available. We have now created and established a fund which will enable the organisations and governing bodies of sport to segregate, prepare and train in advance the young athletes who will do justice to this country at the Olympic Games in Seoul, in 1988, This £150,000 was provided by the Government on the basis of the report which was made available to me at my request from the Olympic Council of Ireland and from Cospóir on my return from the Olympic Games in Los Angeles. This fund of £150,000 for the first year can be supported and promoted further from the proceeds of the State lottery which I hope will be in operation about this time 12 months. If we are to take the Olympic Games seriously I hope that over the four years the State will at least be seen to be involved and to participate in and support the preparation of those athletes, and also to support the tremendous voluntary organisation available, the thousands of people who year in year out, week in week out give of their time, money and energies to prepare and assist our many young people to provide outlets for their energy. I have said many times that the State should be there in supportive fashion. If the State were to take over tomorrow morning the entire financing of sporting organisations then sport would die a natural death. It is necessary that the State be there in a supportive fashion, that further grant-in-aid and State support financially be available. Let me put on record my appreciation also of the very generous sponsorship available to sporting organisations.
Rightly so. The Minister of State is very wise. I do not intend to interrupt him, but did he refer to the lottery? I did not catch what he said on the lottery. Would he mind clarifying it?
To oblige the Deputy, I have no hesitation in repeating what I said about the lottery. The proposals from Cospóir were on my desk when I came into office. I examined them and saw in them a bright prospect for sport. I had some difficulty. Now the Government have accepted that the lottery is on and I hope that by this time 12 months the lottery will be in operation. The fund that was created this year from Government——
How much of the lottery will go to sport? I thought the Minister of State said it, that is why I was looking for clarification.
I did not say it. I said that I hoped that next year the lottery would take up the fund which I have established and for which this year I have provided £150,000.
Will it be £150,000 out of the lottery?
It is £150,000 this year to set up the Olympic fund which will enable the governing bodies in sport to prepare athletes and provide what is very necessary in preparation for the first year of the four-year cycle. I hope that the lottery will take this up next year.
It is necessary occasionally to deal with some of the criticisms. I was rather surprised when I came back from the Olympic Games at which I had the honour to represent this country. Were it not for the fact that I had the experience there and I had the information at first hand I would have certain doubts about this fund being established today. However, I saw it as a very necessary thing to do. I had discussions on this with Cospóir and with the Olympic Council of Ireland and we agreed that it was necessary to start immediately.
I want to refer to the Evening Herald of Tuesday, 28 August 1984. The article I am referring to is rather long and I will mention an extract from it. It refers to junketing and expenditure on the Olympic Games from the point of view of my office and myself. It states: “Fianna Fáil are not happy about this situation and the former Minister for Sport, Jim Tunney, told me yesterday that he would ask the party spokesman on sport, Denis Lyons, to put down a question on the Department's expenses for a discussion at Dáil level as soon as possible.” The article went on to express disappointment that so much money should be spent on those of us who went to the Los Angeles games. I want to put the record straight and this is the first time I have had the opportunity to do so. I decided, with the permission of the Government, that I would attend the Olympic Games in Los Angeles. I selected one official in my Department to accompany me to Los Angeles. I had many other commitments there including meetings. I met a number of Irish societies. I had a very busy two weeks. It was a great experience and I was glad to have the opportunity of going there. I invited also the Chairman of Cospóir, who is a former Olympian, and I said that I considered it necessary that the Sports Council should be represented particularly because of the chairman's experience at Olympic Games so I was happy to invite him. However I was amazed at the criticism levelled at me in that regard. When I looked at the files I found that the very person who criticised me had arranged for four officials and a member of the National Sports Council to accompany him to the games in Moscow. Presumably they would have gone to Moscow if it had not been for our not participating in those games. I refer to Deputy Tunney who spoke of my trip to Los Angeles as a junket. That sort of contribution from a former Minister is not helpful either to the sporting organisations or to the development of sport. Neither is it in any way complimentary to the many thousands of people, especially those on the Olympic Council and others who do so much to promote sport. But there are always the knockers and I am glad of the opportunity to put the record straight.
The grant of £50,000 to Ireland Special Olympics is being provided to ensure that the hosting of the European Special Olympics in Dublin next July will be a successful undertaking. This gesture has been favourably received in many quarters. Indeed, last week I received a telex from Mrs. Eunice Kennedy-Shriver and her husband, Sargent Shriver, who are the promoters of the concept of Olympics for Mentally Handicapped Children. I should like, with your permission, a Cheann Comhairle, to put the contents of the telex on the record of the House. It is:
We are delighted by the good news that the Government of Ireland has approved a grant of £50,000 to the 1985 European Summer Special Olympic Games scheduled for Dublin in July.
We are deeply indebted to you for this extraordinary evidence of Irish support for the Special Olympics and the 1985 European Games.
We look forward to the honour of being with you this July and assure you that we are doing everything we can to ensure that the 1985 European Special Olympics will be a distinguished and memorable event.
With deepest gratitude,
Eunice Kennedy-Shriver and Sargent Shriver.
The remaining £75,000 which was provided in the budget will be allocated to six national sporting organisations to enable them to undertake special developments:
(a) Irish Amateur Boxing Association, £15,000 — they make a major contribution to young people particularly; (b) National Finance Committee for Amateur Football, £15,000; (c) Irish Basketball Association, £15,000 (d) National Community Games, £10,000 — they do a tremendous amount for children in the area of sport; (e) Irish Amateur Rowing Union, £10,000; (f) Irish Wheelchair Association, £10,000.
These special allocations are in addition to the normal grant-aid which the national sports organisations in question will also receive from my Department. It will enable them to undertake special developments for the improvement of their sports which will, in the long term, mean that the services they provide in relation to individual sports will ensure that greater opportunities for participation are provided. The ultimate responsibility for the expenditure of the moneys will rest with the individual organisation. However, in the near future, my Department will be having discussions with these organisations in relation to the expenditure of this additional finance.
As a nation we are extremely sport conscious. We follow with interest the fortunes of all our international representatives. We like to share in their success and are sometimes reluctant to be sympathetic when they are not successful. This additional boost for sport will ensure greater success at international level and will provide for extended opportunities for participation in sport by people who at present are not so involved.
There is a long tradition of sport in Ireland as can be shown by historical evidence and as adverted to even in our mythology and legends. Sport has a very high place in the affections of the Irish people and the ordinary man in the street takes an interest in many forms of sport. Sport itself in Ireland has developed its structures, its administration and so on in the same manner as in most western countries.
The evolution of modern sport in Ireland in the current century is such that we have a proliferation of sports bodies, each independent of the other. My Department now provide grant-in-aid for 62 national governing bodies of sport.
In providing grant-aid to these sports bodies, there are specific areas such as coaching, equipment and administration, in which the grant may be used. The Government, however, shares the view that the role of the State in the area of sport should be supportive; the Government respects the independence of the sports body to conduct their own affairs independent of bureaucratic and State institutions and I think all parts of the House will agree that in a free democracy there should be no attempt to inhibit the freedom of the sports bodies.
While the sports organisations have each developed their own forms and structures, with some bodies catering for huge participation and vice versa, there is one aspect of these unrelated developments which gives cause for reflection, that is, there would appear to be little affinity or interaction between many bodies. This can be evidenced by the reluctance of sports bodies to accept the concept of integrated facilities. How often, for instance, do we see in our towns separate sports facilities built by two, three or four bodies, when an integrated policy could provide a far wider range of facilities? This, I think, is a pity. The sports advisory bodies, which operate under the vocational education committees, and work in close co-operation with Cospóir, the National Sports Council, have made some progress in this area, comprised as they are of representatives of the different local sports organisations.
The National Community Games is another example of different sports operating in co-operation with each other for the development of our young children. In a small country such as ours I would welcome a warmer liaison between the organisations, particularly the larger ones. I would like the funding from the national lottery proposed by the Government to allow for the provision of a national sports centre, which should bring the bodies together more than has been the case up to now.
In the context of community games I should like to refer to the sports for all day at our primary schools. This concept was introduced two years ago and I take this opportunity of thanking the INO for the great contribution they have made in this matter. This is one way in which we can extend the whole idea of sports into deprived areas. The sports for all day has been very successful in the two years since its inception.
There is one sport, however, whose division has caused anguish and disillusion among genuine sports people all over Ireland. I refer to athletics, track and field sports, which have a long and rich tradition in both rural and urban Ireland. I do not wish to delve into the history of discontent which gave rise to the division in athletics. I will be the first to admit that some of the nuances which underlie the causes of disunity elude me. I have, since taking office as Minister with responsibility for sport, in particular, met many sports persons who are personally wounded by the scar of divisiveness in athletics, who yearn for an ending of a situation which obstructs a unified approach to athletics.
As Minister for sport I have met many splendid people from the two athletic organisations. I have nothing but praise for their unceasing voluntary contribution to the development of athletics. The question of re-unification of sport has been brought up from time to time in the course of conversation. At this point there are strong forces which are conducive more than ever to creating the right mood for breaking down barriers and constructing a unified approach to athletics. In saying this, I am heartened by the present leadership in both organisations, by their integrity and sincerity. I understand that there have been positive moves in the hopeful, eventual direction of unity and that some development has been attempted which would allow for joint participation not only by the bodies in this jurisdiction but also the bodies in the North. I welcome these moves very much.
I feel that we have reached a watershed because for the first time in our history we can look forward to very substantial funding for sport from the national lottery which will do much to improve our atheltic standards. With such a bright future for us in sport, I would ask our athletic bodies to be of one purpose in restoring unity. Our children growing up can only benefit from a unified concept. The people of Ireland, north, south, east and west, yearn for it.
For my own part, I would say to these sporting bodies: if there is any way in which they feel I can use my office to bring about better relations, I would ask them to come to me. For my part I will endeavour to do all in my power to help both bodies. If they feel that I should mediate by setting up some form of commission or appoint a mediator, I would welcome such an approach. As the old Irish proverb has it: Ní neart go cur le chéile.
While I and the various sporting organisations and the sporting public in general are pleased about the increased allocation for sport in 1985, it is agreed that increased funding will be required if we are to develop what might be termed as the infrastructure for sport — the facilities, both at local and national level, the administrative services, the information services, the medical services, sports research and coaching schemes.
It would be foolish to suggest that, in the current economic climate, the extent of funding required could be made available from Exchequer resources alone. I am indeed pleased that a proposal from Cospóir, the National Sports Council, for the introduction of a sports lottery which will provide substantial funding for sport on a regular basis has been accepted by the Government. I am pleased also that it is this Government who have decided to introduce such a lottery, when the previous administration chose not to go ahead with the proposal which was made many years ago. The Government are considering what the appropriate form and structure of the lottery should be. There are people who would be doubtful about the commitment that part of the proceeds of a national lottery will go to sport. I would like to state categorically that as far as I am concerned substantial increased funding will be provided for sport on the introduction of a national lottery.
The national school building programme is of great antiquity dating back over 150 years to when the system of State grants for the provision of national schools was first introduced. The programme provides for the building of new schools, extension of existing schools and for improving, furnishing and equipping schools which are within the national school system. The programme imposes a considerable burden not alone on the Exchequer but on the local community which has traditionally borne a significant share of the building and other costs.
The programme gives high priority to the provision of new schools in developing housing areas and of additional classrooms in existing schools which are under pressure or which require extra accommodation. Other areas of priority are the replacement of unsuitable school accommodation, including the upgrading of facilities to meet modern requirements, and the replacement as soon as possible of prefabricated accommodation which had been provided in the short term to service immediate needs.
The 1985 allocation from Exchequer funds for all of this activity is £30.33 million. In terms of pupil places, 18,500 it is estimated will be provided in 1985, which will maintain the level achieved in 1984. In terms of actual members of major building projects, it is expected that 175 schemes will receive grants during the course of 1985, and that at any one time there will be approximately 140 major jobs in progress.
To put these figures into further perspective, I might add that overall we hope to maintain recent averages of approximately 600 major projects coming into the pipeline — on the drawing board, so to speak — of which about one-third or 200 would be at feasibility study or site investigation stage, and the balance at any of the architectural planning stages from sketch scheme to tender action. We are thus in a position as one series of projects reaches completion to release further numbers of projects to contract stage.
A small but significant part of the overall allocation is paid out in respect of schemes of minor improvement, which are also regarded as areas of priority. My Department would expect to deal with between 800 and 1,000 applications annually for grant assistance for such improvements. These minor schemes rarely involve the provision of additional pupil places, but make an important contribution towards improving conditions for pupils and teachers.
I would also like to make a brief reference to special education, the programme being pursued in this regard and the particular aims of the programme. Educational provision for different kinds of handicapped children has been growing steadily since the early fifties. Today, some 12,000 children are being provided with special education in special schools and classes throughout the country in comparison with 1,500 20 or so years ago.
Special schools and classes operate within the general framework of the system of national education. There are special provisions by way of lower teacher-pupil ratios, larger grants, a flexible transport system and adaptable curriculum. Home tution is provided for those children whose handicap prevents their travelling to school or who, because of illness, miss long periods at school.
Present thinking is to encourage and facilitate, as far as possible, handicapped children to attend ordinary schools. Every effort is made to enable them have as normal a school life as possible. There is a growing acceptance by school authorities that this should be so.
Adequate provision is being made for those with a single handicap at primary level. Attention is now being concentrated on those with multiple handicaps and on the provision of suitable post-primary facilities for mildly mentally handicapped children.
With regard to moderately mentally handicapped children, the main concern up to recently was the provision of primary education for this category of child. However, a number of training centres have been set up around the country to equip these children with skills and social training which enable them to work either in sheltered workshops or in open employment. Experience has shown that this project is beneficial to the trainees.
In 1984, the report of a working party to the Ministers for Education and Health and Social Welfare, on the Education and Training of Severely and Profoundly Mentally Handicapped Children in Ireland, was published. My Department are examining that report to see how best its recommendations can be implemented.
Arrangements are also being promoted to help the children of travelling families to be integrated in the general school population, as recommended first in the report of the Travelling People Review Body and then by the Working Party of Ministers of State. Where a sufficient number of travelling children can be brought together, special classes in national schools are set up. The capitation grant for these children is the same as would be paid if they were in special schools. The Department also pay 90 per cent grants towards the cost of pre-school classes for travelling children which are organised by voluntary bodies. In 1984, special grants were made available to help set up new pre-schools and to provide equipment for those already in existence.
Since 1979, the Department of Education have funded the employment of child care assistants in a number of special schools. They carry out duties of a nonteaching nature as assigned to them by the school's principal teacher.
I would like to conclude by assuring the House that every effort will continue to be made to maintain and if possible, as resources permit, improve the present high level of facilities for handicapped children.
Briefly, I wish to deal with a few other matters. I should like to speak about local authorities particularly because of the large numbers of unemployed people in the country. I was a member of the largest local authority, Cork County Council, for 23 years and I found that at this time of year a regular feature was the demand for more and more money from the Exchequer to be spent on roads, housing and other needs. Nowadays it is becoming more and more necessary to have more money. In Cork we have been very careful to see returns annually for the huge sums of money given each year. At the moment I am saying to the Minister for the Environment that, though we spend large sums on county and secondary roads as well as on main roads, all our efforts, energies and resources are concentrated on national primary and secondary routes. If more available resources were diverted to country roads much more employment could be provided. I am also concerned about the huge amount of machinery held by local authorities sometimes lying idle and costing a considerable amount of money. Local authorities should play a greater part in the provision of jobs within the resources available to them.
I want to refer briefly to one other aspect of local authority activity and a statement made by me recently which was replied to by the media, by some Members of this House and some people outside it. I made a statement to the effect that I had received a bill for the refuse collection service. I am aware of the Act which laid down charges for services of that kind. It was said in this House and outside it that I refused to pay a water rate and a service charge. I want to state categorically that there never was a question of a water rate because I never had a water supply. Cork County Council sent bills in a minority of cases for refuse collection, a service which could not reasonably be availed of in many instances. Therefore such people were not liable to charges. Since I made that statement publicly I did not mention it either at a council meeting or on radio. That statement referred specifically to refuse collection service charges. The secretary of Cork County Council said that my statement had been blown out of all proportion and that the minority of cases to which I referred which had been billed should not have been and that the matter had been rectified. I am glad to have had the opportunity of putting the record straight in that regard.
Let us get the record straight. Did the Minister actually state that he was not proposing to pay these charges?
I reported it because I was one of those minority cases mentioned by the secretary who could not avail of the service, that the service was not available to me within reason——
And, therefore, the Minister was not going to pay the charges.
No, because I did not feel obliged to pay.
That is all we need. That is the record clear and everybody else around the country can take that example——
I referred the Deputy to the statement made by the secretary of Cork County Council that in the minority of cases to which I referred the bills had been withdrawn because they could not avail of the service.
I want to have it clear. Is it now the position, as stated by this Minister, that some people who apparently cannot avail of the services, not just in Cork but nationwide, or who do not avail of the facilities, are not obliged to pay? Is that the position?
I would refer the Deputy to the statement made by the secretary of Cork County Council that the cases I mentioned, including my own, had had their bills withdrawn because they should never have been sent out.
But he is not in Government.
He is secretary of Cork County Council.
What do we do in Tipperary — the same thing?
I will have to request Deputies to cease arguing.
I have made the position quite clear.
That is fair enough. Follow the Minister's example — as long as we know what the Minister is saying.
I know that Deputy Molloy is very concerned about Ministers on this side of the House. He inquires about their expenses, about their cost to the State. Perhaps he would now put his own claim for expenses on the record of the House.
It is quite clear that the Minister is not going to pay these charges.
I want to deal briefly with one aspect of the agricultural industry. I welcome the land tax — I want to put that on record here — because the present income taxation of farmers militates considerably against the progressive farmer. If we are to tackle the unemployment problem, which is of great importance, then it should be remembered that agriculture has great potential for job creation. Therefore there should be incentives given to increase production. With regard to the land tax, a farmer will know exactly what he must pay at the beginning of a year; such a farmer working long hours, particularly in the dairying sector, will produce more. The majority of progressive farmers will welcome it and I support it also.
It is less than two weeks since the Minister introduced his budget and since I stood up immediately thereafter to reply to that budget, which, it has to be said, was well presented. In that short space of time it has become quite clear that its reality falls far short of its presentation. It is for that reason I intervene unusually at this stage. Normally the Opposition spokesman on Finance would not intervene until much later in the debate, which may perhaps continue for another few weeks, if not months.
It is important to record now what has already clearly emerged since the budget was presented to the House less than two weeks ago. In recording these realities I shall rely on statements made to me by the Minister for Finance in reply to questions I put to him in the weeks before the budget. One question, No. 270, I had addressed to the Minister for Finance was transferred for reply to the Minister for Social Welfare and read as follows, at column 671 of the Official Report of 24 January 1985:
Mr. O'Kennedy asked the Minister for Social Welfare the average number of unemployed provided for in the 1985 Estimates for unemployment benefit and assistance.
The reply reads as follows:
The 1985 Estimates for unemployment benefit and assistance are based on a projected average live register of 217,600 in the year. This projection makes allowance for the impact of the new employment schemes to assist the long duration unemployed announced in the national plan.
Therefore in the week before the budget the Government were projecting an average of 217,600 on the live register for the year 1985. Within one week of the budget being presented the figure on the live register had already exceeded 234,000, an increase of 16,500 in the first month of the year over the projected average provided for by the Minister for Finance in his Estimates, as confirmed by his colleague, the Minister for Social Welfare, to whom he transferred the question. This, it should be remembered, emanated from a Government that prided themselves not only on building on reality but on confronting reality, a Government who tried to create the impression as the Taoiseach said, that they would be the last to project any false figures. That Government have ignored the fact that, even as they presented their budget, as is clear from the background document to the budget, the average provision for unemployment had already exceeded the figure on which the Minister for Finance relied in his budget.
Let me reduce facts to pounds on a basis that might be kind to the Minister and the Government in terms of their financial projections this year. If the numbers on the live register are not to exceed the numbers reached already at the end of January, 234,000, let us give the benefit of the doubt to this Government. Let us assume that, unlike last year and the previous year, there will be a fall in the numbers unemployed — although even the experience of the past couple of weeks is sufficient to demonstrate that that is a false assumption — but let us make that assumption. We would then have at best an average of 234,000 on the live register for the year, with this Government providing for an average of 217,600. To get some idea of how much the budget is out of kilter let us provide the lowest possible figure. Let us assume that none of them is married with dependants. Let us provide the lowest possible figure by way of unemployment benefit or unemployment assistance, say, £50 per week, which is about the lowest figure which could arise in the circumstances of unemployment benefit or assistance. As we all know, the average would be considerably higher. Even on those optimistic assessments the Government have under-provided to the tune of £43 million in their expenditure estimates for unemployment benefit for 1985.
If either of those two optimistic assumptions is not realised and we find that the average to be paid in unemployment benefit or assistance will be £70 or £80, that figure becomes £55 million or £60 million as distinct from £43 million. Even as we speak there are further closures and the major closures announced since budget day are not included in those figures. The reality is that in this area alone the budget provisions will be at least £60 million out. The deficit of £1,234 million is already way in excess of anything the Government have in the document Building on Reality much less in the joint Programme for Government. It will be £1,234 million plus £43 million, £50 million or £60 million — take your pick — depending on the exact extent of the growth in unemployment in the year we now face.
In a week or two after the budget we can already state that the basis for the projections by the Minister for Finance has been undermined. That would call for a review of the whole budget strategy apart from the fact that, of all budgets introduced in recent times, this budget relies more on vague hopes, expectations, savings, unidentified, unspecified and unwarranted and balances of a kind which are unprecedented. I challenge anyone in the House to go back over the budgets introduced by any Ministers, Fianna Fáil or Fine Gael, and find a budget based on assumptions which are vague hopes and expectations and not in any way calculations based on accurate assessments of expenditure for the year.
I have figures now which were not available when I got up to speak on budget day. Part of this was included in the Minister's statement but the detailed tabulations were not available. The impact of the budget on tax revenue buoyancy, we are told, will be £58 million. No Minister for Finance has ever given such an optimistic assessment of tax revenue buoyancy as this Minister has provided in his budget's explanatory table this year. This expectation of buoyancy is totally and utterly unwarranted in the economic conditions in which we find ourselves.
In addition £30 million is to be deducted on the expenditure side from a budget which conceded an extra £108 million in public service pay, wherever it is to be found. Late last week we were given a figure of £28.6 million and there is also a figure of £50 million for estimated departmental balances. Taking those four elements alone into account the budget is based on vague hopes and unwarranted expectations of savings and buoyancy of £166 million. This is an unprecedented basis on which to present a budget.
From time to time charges are made by one side of the House against the other, charges that one side of the House is irresponsible and that the other side would be responsible. Charges were made against Fianna Fáil Governments that they actually cooked the books and that was undermining respect for the budgetary process, that Fianna Fáil had ignored the realities in presenting their projections for expenditure and had presented a false basis for their budget in at least one case, if not two. I challenge any member of the Government to indicate when any previous Government — including Coalition Governments to their credit — ever presented a budget based on such unwarranted and unspecified projections in respect of the accumulation of buoyancy, savings and departmental balances to the tune of £168 million.
When we add to that a figure of £43 million under-provided for unemployment payments, we see that this budget can be in the order of £200 million out of line. I am not saying it will be that much out of line, but it could fall short by £200 million. It might work out at £100 million, or £60 million. Within a short time of the presentation of the budget it is clear that the discrepancy will be somewhere between £40 million and £200 million. At this moment the Opposition cannot indicate precisely the extent of the discrepancy which will emerge.
This has come from a Minister who presented himself as having one fixed priority: to eliminate the budget deficit within four years. Then those words did not mean what they said and we were told it would be phased out gradually. Now we find those words did not mean what they said either and gradually phasing out now seems to come within the definition of increasing the budget deficit in real terms and as a percentage of GNP to the point where this year it has reached the highest level we have ever experienced at £1,234 million. Building on Reality was built on a very shaky foundation and this budget which appears to have been superimposed on the same foundation is shakier still.
Let me show the House how some of these projects for revenue buoyancy are without any foundation or expectation. This budget proposes to increase total taxation to £5,704 million, or about 38 per cent of GNP, an extra £400 million over last year's figure of £5,303 million. The total taxation as a percentage of GNP last year was 36 per cent; this information was given to me in reply to a question a week before the budget. I am talking about taxes duties, corporation tax, and youth employment levies, but excluding all other charges. Can anybody explain how taking an extra £400 million out of the economy by way of taxation the Minister can provide for revenue buoyancy which has always been based on economic activity? To put it simply, because of tax reliefs in a budget there would be a consequent buoyancy in the economy. The Minister has presumed to rely on the biggest buoyancy factor ever relied on, £58 million, while, at the same time, he is taking out an extra £400 million from the economy.
The Minister is relying on departmental balances of £50 million. Let us put this in simple terms. As we know from our experience in Government, departmental balances mean that either the money provided by the Government is not necessary for the running of those Departments, or if it is, it will not be spent for one reason or another. If £50 million is "slack" in the Estimates for public expenditure provided by this Government before Christmas, that is an indictment of the Minister. Estimates should be presented after at least three months of the most searching examination in every Department between the officials and the Minister and, when each Minister has gone through his Estimate with a fine comb, then the Cabinet determine the Estimates. We all acknowledge that the examination of the Estimates to determine the priorities of Government is the most important and fundamental role of Government.
This Government have come here and within a month provided balances of £50 million as a basis to bridge the deficit of the Minister for Finance. This is unprecedented. I would like someone on behalf of the Government to explain how this Government reached a figure of £58 million for buoyancy when they are taking so much more out of the economy by way of taxation, and why they are relying on balances of £50 million.
If balances of that order are available at the end of this year then it follows that either the Departments who presented those figures to the Government are scandalously out in their projections of expenditure and should be disciplined, or there is no reality in the expectations of the Minister for Finance that £50 million will be available at the end of the day. It has to be one of these options. Someone has misrepresented the position — I do not want to say deliberately because I do not know — or else somebody was so careless in his calculations and presentation that the Minister came here on budget day and relied on a balance of that kind in addition to the vague expectations which have no basis in reality.
The third element of vain dreams and foolish hopes are the details of the savings we are told will be achieved over and above those indicted on budget day. The Minister described these savings in a table supplied to me last Wednesday evening after we demanded the details of these savings. The figure involved was £28.6 million and I propose to go into it in some detail. If there is any base for these provisions it is demonstrated in some instances that either the money provided by the Government a month earlier was unnecessary or what is now being done is a total reversal of policy.
In relation to the youth employment levy expenditure, could someone say that it is possible, within a month of the publication of the Estimates of expenditure, to reduce that figure by £7 million? How do this Government operate? This is one of the savings we are told about. Either the Ministers have a programme in respect of which that levy is to be applied, they have a use and purpose for funds providing for the consumption of this extra £7 million, or they do not. As recently as six weeks ago they must have been satisfied that that £7 million was necessary to fund the programmes of the Youth Employment Agency, the Manpower institutes and the AnCO training programmes under the Department of Labour.
When it comes to finding savings to balance the budget they have no difficulty whatsoever. They transferred the sum of £7 million for Exchequer funds to the education post-primary Vote which means that there will be no reduction in the level of post-primary activity. From the information I have, it seems that the Department of Education Vote, post-primary section, has been reduced by £7 million. Everybody knows that could not be done without an immediate and dramatic impact on the whole post-primary education programme. The sum of £7 million which they transferred was apparently lying around in the Department of Labour unused — or if it was, not being specifically directed at any particular target — and transferred to the Department of Education which resulted in a £7 million savings. Savings from what? It is a saving from the unwarranted, mistaken Estimates provided by the Government a short six weeks before that. Can that, in any circumstances, be termed a saving? It is a total policy switch, if the Government are honest enough to admit it, or an acknowledgement that the youth employment and income levies will not be used for youth employment but for current expenditure of Government in whatever Department the Government feel it needs to be applied to balance the books.
It is not surprising that the economic adviser to the Congress of Trade Unions and many others have been demanding an explanation from the Government as to what effect this will have on the Youth Employment Agency and training programmes. Will the Government please explain how they could reconcile the inclusion of a figure of that order six weeks to two months ago and then extract the same figure just after budget day on the basis of savings announced in the budget?
I will give further examples of the savings which will be achieved. Of course we have no details but we are told they will be reflected in the revised Estimates. There will be a saving of £1.618 million in the Social Insurance Fund. The Minister for Finance or the Minister for Social Welfare should come in here immediately to explain this in more detail because the indications are that the demands on that fund are growing and that it is under considerable pressure. There will also be a saving of £2 million on the provision for old age non-contributory pensions. There is always one way of saving on a provision of this kind and I hope that is not what the Government have in mind, which is to reduce the number of people who are qualified to receive this pension by bureaucratic determination in that people who would normally qualify and who were originally provided for will now be disqualified in order to achieve a saving of £2 million — a nice, round figure in the Vote for the Department of Social Welfare. There has never been a provision of this kind except, as Deputy Ray Burke pointed out, almost 60 years ago when the Taoiseach's family were directly involved in Government. One would imagine that the party to which the Minister of State now present belongs would not, in any circumstances, tolerate a cutback in the rights of old age non-contributory pensioners to balance the books. How can they stand over a cutback of £2 million?
I am sure every Deputy is aware that the number of old age pensioners whose pensions are being reduced is quite significant. Many who think they qualify for old age pensions — and probably, in normal circumstances, would qualify — are now being disqualified. This is an interesting coincidence and if a couple of thousand people who might otherwise have old age pensions are deprived of them or receiving reduced entitlements, the Government will save £2 million. At whose expense? If the original figures were right, they should be adhered to and not adjusted at the expense of those who have no way of defending themselves against a Government revision of this kind.
The Government intend to reduce miscellaneous grants in the Department of Social Welfare by £1.25 million. That is the area which provides for necessary extra expenditure which arises during the course of the year. I do not think the original published Estimate of £13 million from a total Vote in excess of £600 million is excessive. We do not know where the Government will achieve this saving. We have been told that a scheme which has not even got underway, the family income supplement scheme, on which the Government rely to such a considerable extent to solve all their problems and for which £13 million is provided in the Estimates, will be reduced by £2.5 million. In the normal examination of Government policy and consistency, can anyone justify a saving of almost 25 per cent on a programme that has not got under way but which has, nonetheless, been presented to all as a basic element of the Government's policy? All these savings constitute a total of £7.368 million to add to the £7 million "savings" from the Department of Labour Vote which gives us a so-called saving of £14.4 million.
There are many other detailed savings and I am amazed that they were not made available to the press as, normally, the Government are pretty sharp in their press relations. I had an informal discussion with financial correspondents on Friday last and I assumed that they had these details which had been passed to me on the previous Wednesday night. I was amazed to find that they had none of these details which is surprising coming from a Government who are adept at communicating with the media.
Perhaps it is not surprising because when the financial correspondents cast their beady eyes over this list they will have very serious questions to ask. The Government have serious questions to answer. Among other savings the Government proposed to save £1.85 million in the current estimate for the Revenue Commissioners. I thought if there was one area which, we would all agree, in the interest of equity in taxation should be more efficient in terms of tax collection, particularly from sectors which might not be paying the same share as the PAYE sector, it is the Revenue Commissioners. No one would have said that was an area where the Government should cut back in terms of the expenditure required to run that office. However, that was not the position of the Minister for Finance. Within six weeks of an estimate for that Department being submitted, they find a "saving" of £1.847 million. That requires to be explained, and the sooner the better.
Those who already feel overburdened in the amount of tax they pay will want to know if the consequences of this saving will result in further delays in payments from those who are not paying the same proportionate share or in incapacity on the part of the Revenue Commissioners to issue assessments. The farmer's organisation pointed out that the amount of tax paid by the farming community should not be a matter for criticism of farmers because it is a consequence of the fact that assessments to the farming community were either not issued or the collection of tax was not efficient. I wonder what the saving represents. In a system which seems less than efficient it is hard to understand how it is justified.
There is so much to explain that perhaps it is better not to explain anything. Where within the short time of submitting the estimate did the Minister find a saving on the current Vote for Public Works and Buildings of £1.689 million? Can the Minister explain how what was sanctioned a little less than six weeks ago can be reduced by that amount? Is it because the Committee on Public Expenditure has got through to the Office of Public Works? Perhaps as a result of that they find they are able to save money. Whatever the reason, it must be explained.
There is a saving of £3 million on the Department of the Environment with no indication of where that saving will be made apart from the fact that it is on the current side. There is a saving in the Department of Defence, which does not have a particularly major current budget allocation, of £1 million. It is time for the Minister for Finance to explain to the House and the people how savings which he requires to balance his books can be made within about six weeks of the original figures being presented. That is on top of the buoyancy which is unwarranted, the balances which will not be realised and the savings on public sector pay of £30 million which no one can understand having regard to the fact that public sector pay will take up much more than the Government originally provided for.
Another aspect which emerges in the budget is the borrowing requirement. The Government will have to fund an Exchequer borrowing requirement of at least £1,234 million this year. Unfortunately, it will be considerably in excess of that. That is from a Government who were to tackle our borrowing requirement as a major priority. That and the current budget deficit represented the major justification for voting for this "responsible" Government and ridding the country of an "irresponsible" Fianna Fáil Government as we were represented by the Coalition. In the week before the budget, I asked the Minister for Finance about the extent of the foreign debt and the increase in the last four years. In 1980 it was £3,217 million; in 1981 it was £5,100 million; at the end of 1982 it was £6,959 million; at the end of 1983, the first year of this Government, it was £9,049 million; at the end of 1984 it was estimated at £10,105 million. Within two years the total Exchequer foreign debt had risen from under £7,000 million to over £10,000 million, and that from a Government which prided themselves on their determination to tackle foreign borrowing.
That is not the full picture. In the same period the total national debt, which includes domestic debt as well as foreign debt, has risen from £12.5 billion to £18.5 billion, an increase of £6 billion. These facts are not presented by me as spokesman for the Opposition but rather are the facts acknowledged by the Minister of Finance to me in the week before the budget. There has been almost a 50 per cent increase in total national debt in the two years since this Government came into office — and all for what? This is the depressing state into which our economy and our citizens have been thrust.
On 22 January I asked the Minister the amount of Exchequer foreign borrowing in dollars in respect of the years 1980 to 1984 inclusive. In 1980 I was Minister for Finance and I was conscious of the need to maintain a mix in the foreign borrowing portfolio. The total amount drawn that year in dollar borrowings, when the exchange and interest rates were much more favourable than they are now, was $221 million. In 1983 that figure had increased to $450 million — again, these are the figures of the Minister for Finance. In 1984, despite all the arguments I had with the Minister on this issue that he was going bald-headed for dollar borrowings which would have disastrous consequences, he borrowed $725 million. That was three and a half times what was borrowed four years ago and was 80 per cent more than was borrowed in 1983.
Even as we talk we know that the appreciation of the dollar and its strength as a petro-currency is one of the major factors that is posing problems for us and that is putting unnecessary burdens on the Exchequer programme and consequently on the taxpayers. Before we even start to provide services so much is required to fund our borrowing programme that this Minister stands indicted on the figures he presented to us in the week before the budget. Either in terms of total foreign debt or in increased US dollars, he stands indicted for adding immeasurably to this burden. Because of the appreciation of the dollar against our currency, even since the budget, we have to add more to the extra cost each day. If we were to repay now what we have borrowed in dollars the cost for 1984 alone, merely in respect of the depreciation of our currency against the dollar, would be an extra $375 million over and above what we have borrowed. In reply to that question the Minister said that that may not necessarily be the amount we will repay because it is the exchange rate on repayment date that determines the extra appreciation of the dollar against our currency. Fair enough, but if the pattern continues as it has been since the Minister went on his splurge of dollar borrowing, the sum of $375 million will be less than the extra cost we will have to pay.
If the Government and the Minister for Finance are determined to stay on this course it is time that we, as legislators, said that we want to know the basis on which the decisions have been taken. We want to know why there has been such a sudden switch to dollars and we want to guard against that continuing trend. We want to know why we have turned away from EMS currencies and EIB loans and have switched to US dollars. If this Parliament has to raise the taxation and vote on the Finance Bill all of us have a right and an obligation to review this borrowing programme.
When I was Minister for Finance I was often conscious of the fact that the Minister was not sufficiently informed before sanctioning decisions to draw on borrowings in various currencies, although I do not say this was a deliberate decision on the part of that section of the Department of Finance. On many occasions I asked questions before I was prepared to sanction or to sign on the dotted line of what I was told were the details of sophisticated negotiations. I have become more convinced, not just from my own experience but from our experience with this Minister, that it is time that section in the Department of Finance should no longer be left to their own devices. I know they cannot come to the Dáil and tell us that they propose to raise a loan on a certain market. I know they cannot disclose all their hand but, equally, it is time the Minister came here with those officials to tell us the basis of the strategy or the reason for the mix of currencies in the foreign borrowing portfolio. It is time they told us the general strategy so that at least we could debate the general outlines. I have called for such a debate on many occasions but the Government have refused to respond. We are answerable to the taxpayers who are being asked to pay more each year. The amount provided by the PAYE sector will be increased by 8 or 9 per cent over last year but that is barely sufficient to meet the servicing of our debt. The taxpayers are entitled to demand of us, if we are going to heap those extra expenses on them, that we justify the borrowing policies of the Government.
I want to underline what we said at the beginning of 1984 and in 1983. I am on record here and I also made statements outside this House warning the Minister against moving in this direction. The Minister has the answer to every question but has not the answer to any problem and he always dismissed my suggestions as unfounded and unwarranted. With the modesty for which he is noted he always implied that if I knew a shade of what he knew I would not make such unfounded suggestions. The facts have spoken and we see the consequences of those decisions. It is time we had such a debate. Otherwise the taxpayers will be entitled to say to us and to the Minister that they cannot keep paying extra taxation if these matters are not sanctioned in this house.
There is a case for differentiating between borrowings in EMS and Euro currencies and other foreign borrowings. That stands to reason. One of the failings of the EMS is that sterling is not in the system even though in their nice cosy, comfortable way the British have managed to negotiate that they can contribute to the weighting of the basket without actually participating in the system. Despite that fact and also the fact that the ECU has not emerged yet as a European unit of currency, the system guarantees stability. It has guaranteed stability since the last time our Government mistakenly realigned our currency within the system in March 1983. There has been no read-justment in the system since then. When one is in a system where the margins are 1½ per cent plus or minus above the middle band it stands to reason that one's borrowings in those currencies are guaranteed against fluctuations of the kind we have seen with the dollar and where there are consultations in relation to interest rates one is guaranteed in a way that cannot be done in respect of the dollar.
Despite that, the Government have switched away from borrowing in EMS currencies and have taken the big leap into the dollar currency. Even our European partners would acknowledge that in this sense a new pattern of borrowing is emerging which we could call quasi-domestic borrowing which, if not quite akin to borrowing domestically, is not of the same nature as borrowing externally outside that system in Japanese yen or US dollars. Within the system we must contribute to the stability of the system. We draw from the system, we guarantee exchange stability in the system, and surely it is now opportune for the Government to review the borrowing they have in the system and try to develop a programme which will ensure that the impact of exchange rate fluctuations on us will be minimised particularly in terms of the funding of the service debt.
I am trying to be relatively objective and that is not easy at such a critical time. I am not dwelling on the crushing impact of growing unemployment on these matters, but I want to deal with the basis of this budget. This Government did not think through to the consequences of the various decisions. They did not think clearly through the consequences of tying themselves into a straitjacket last year and saying that they were going to borrow so much domestically. I took issue with the Minister and said to him that they could not tie themselves in like that, that no businessmen would do it and at least they should try to run the country as if it were also a business. However, they did what they did and we all know the impact of that on the money market with the consequent increase in interest rates. The Government did not think through to the consequences of the decision to increase VAT on the building industry. I will not go into that in detail here because it will be a matter for Private Members' Business tonight.
Were the Government aware that effectively they had set cash limits on the capital programme? I often wonder what it must be like to sit around that table. Can any practical, hard-headed person there say, "I was talking to such-and-such a builder, and before we go down this road let us consider the impact"? I believe that they did all of this without being conscious of what the consequences would be, and that is no compliment to them as a Government. If you have cash limits in your capital programme as the Government have determined, then there can be only one consequence of raising VAT levels payable by those being funded by that capital programme for building schools, hospitals and anything else. By raising the level of VAT by 5 per cent you reduce effectively the capital programme by that amount. Independent analysts from some bodies not so remote from State agencies have indicated that the consequence of that one decision was effectively, because of the cash limits, to reduce the capital programme by £50 million — I do not think the Government were aware of that — to be transferred to VAT payments to the Revenue. It was already reduced below the commitment the Government gave initially on coming into office but this is a pretty conservative estimate. By so doing they ensured, when unemployment is our greatest single critical problem, that at least 2,500 jobs that otherwise would have been provided by the capital programme would not now be provided.
I have two points to make by way of summary. The Government should have the honesty — a virtue none of us has to the extent we should have it — to tell us how they propose to make all the savings, balances and so on, on which this budget is based and which makes the most fictitious presentation we have had here in the last 20 years since I have been around this House and probably longer. Secondly, it is time that they realised what we all realised, that unemployment is the big issue. Unemployment has undermined the basis of our society and it is growing to a point where it cannot be tolerated. As I said on budget day, this Government's programme has done nothing to provide even one extra job. It has done quite the opposite in relation to these matters, particularly in not creating the proper climate by reducing overall tax levels. As long as we find the tax levels as they are in this country, the highest in Europe, then the only road for money to go is the road out. Also, I regret to say the only road for people to go is the road out. Perhaps the Government are relying on that in estimating the figures for unemployment next year. If this Government approach their responsibilities on the basis that we can solve problems on the backs of those who leave, by ensuring that people who have the right to dignity of work in their own country clear out at the rate they did last year to the US, then they had better tell us so. In 1984 the US embassy issued 55,000 visas plus 800 permanent work permits to people here. Not all of the 55,000 remained outside this country, but many of them did so.
I know the Government have a difficult job, but at least let us get them to face it on the basis of reality. Maybe if we had discussions of the kind I have mentioned in terms of borrowing, of the capital programme and of priorities for development, then even for the short life left to them in Government we can contribute something to improve the position. It cannot be done on the basis of the budget presentation which, unfortunately, has proved to be too near a farce or even a tragedy.
Let me start where Deputy O'Kennedy left off. The budget ensures that the life left to the Government will not be short. It is the first step in ensuring that we stay here for our full term. The Deputy said that this budget did not provide one extra job. The business community do not seem to think so. In a poll reported in the magazine Business and Finance of 7 February——
The day after the budget.
Yes. Does the Deputy mean that they did not know about it at the time?
I met the director of the CII last night. The Deputy had better ask his opinion now.
That fairly well coloured the budget on the next day. Many of these business people are very pleased with the budget. If I were a follower of opinion polls I would be quite happy, but I do not like the slanted questions involved. Like the Deputy's leader, I do not put too much credence on them. However, I am confident that at the end of the next three years the situation will be different from what it is now. In that survey even at such an early stage in response to the question, "If there was to be a general election tomorrow to which party would you give your first preference vote?" Fianna Fáil got 29 per cent and Fine Gael got 44 per cent. People expressed great confidence in that poll.
The Deputy is being comic.
The general thinking is evident in the answers to a couple of the questions. For example, asked if they thought the budget was right in the main, 84 per cent said they did. What would they have said a couple of weeks previously? Some people said that it did not go far enough and 50 per cent thought it was largely right. We have made progress as far as the business community are concerned because they, through the CII and their associations, have been expressing for a long time the constraints imposed on them by the taxation system in both personal and business taxation.
There are three steps that could be taken to bring about an overall improvement in the budget. These are three areas we should work towards during the remainder of this Dáil in order to put the economy on a better footing. First, we must tackle the jobs problem in the short term and, secondly, we must consider the risk money that is available to business.
The Minister referred in his speech to the long term unemployed. I expect to hear more in that regard when the Minister for Labour addresses the House but I was very interested in the making available of money for the 10,000 who are in the long term unemployed category. With a little imagination the scheme in question could be extended to include up to 50,000. A scheme of that type in every parish which would be linked to high technology, to computers in a central control area, would enable us to provide up to 50,000 jobs without having to spend a lot of money. That in itself would be a tremendous morale boost to the long term unemployed. It would give hope and confidence to parents to know that there was at least one year's employment available for their sons and daughters. In addition such a concept would help the breadwinner who could work a two and a half day week while being guaranteed a £70 payment in unemployment benefit. In addition such a scheme would result in various and necessary jobs being undertaken in the community. The scheme would be easy to control because we already have a parish system so the unemployed in each parish could be easily identified. The scheme would give them the opportunity of using their imagination so that with the business community they could plan various work activities. The people concerned could be guaranteed that the money for approved projects would be made available in advance of the work commencing. That would provide an element of stability and it would encourage people to help themselves. To a large extent it would eliminate the hand out attitude that has become so much part of our society down through the years but which must be eliminated if we are to provide motivation for our workforce. Reference has been made to pilot schemes on those lines being put into effect immediately. We are not talking about an objective that is very difficult to achieve. We can begin immediately by using the expertise and the technology that are available to us.
There would not be much difficulty in setting up a computer or a word processor in every parish and putting one person in charge of each and then to arrange for a link up with a central control area where the activities would be co-ordinated. That is one solution to the problem of the long term unemployed. Once people had been back at work for a year or so and had been engaged in thinking out projects and so on they would acquire the confidence that would help them to seek work elsewhere.
The next step that could be taken as a result of this very welcome budget would be to tackle the short term unemployment problem which is a much more difficult area. People had been waiting for some indication in the budget of a solution to this problem, but not having got any such indication they are now very critical of the budget. The Minister did not set out to solve the short term unemployment problems and that is why there is not a great deal of interest being placed on the budget. However, that is not to say that the short term unemployment problem has not been tackled by the Government. In the coming months the Minister for Industry, Trade, Commerce and Tourism will have to devise policies to deal with this problem. The White Paper on Industrial Policy which was produced last year and which outlined policies into the nineties has been overlooked to a large extent. There was much attention to detail in that document. It must be the focus of attention in the coming months in regard to the short term unemployment problem.
One objective outlined in the White Paper was the doubling of manufacturing output in the next ten years and which would lead to a growth in jobs in manufacturing of between 3,000 and 6,000 per year. The objectives are summarised in general terms. A good deal of thought went into the production of that document. A study has been made of the change in the pattern of State aid between the years 1978 and 1988 and there is reference to the State's identifying weaknesses and in having as its objective the motivating of a more skilled workforce. There is reference in the summary document to a strong equity and financial base and to access to venture capital. This is a topic that has been considered and in which a lot of hope has been placed in the past few months. In a short space of time in the search for projects and ventures in which to apply that capital there seems to be a shortage of ventures. While money is available both here and abroad the ventures are not readily available. That is an area which I trust the Minister for Industry, Trade, Commerce and Tourism will have regard to. We must identify projects and concentrate more on that area than on the area of rescuing and propping up certain other operations.
It is obvious from their reaction that the Opposition are unsettled by the budget. They had not expected such an imaginative document. Indeed, I do not think anybody, myself included, had thought there was so much room for manoeuvre. In that respect the Minister has made a good start. The budget has been welcomed by the taxpayer, by the business community and by all other groups.
The budget did not set out to solve all problems in one go overnight. It took the wind out of the Opposition's sails when they were responding to it, immediately in the House and in the media later. Deputies Reynolds and O'Kennedy appeared on television that night and they found great difficulty in being critical because there was not much to be critical of. They were very slow to pick up the case of the builders. It was a few days afterwards that they woke up to that. On the Saturday night Deputy Molloy spoke on radio and referred to the builders for the first time. He had been prompted by some builders in Galway and he woke up to the fact that a change had been made.
Nobody realised that the builders were saying the budget would have a serious effect on them. The Opposition earlier thought that the budget provisions in this regard were eminently reasonable. It was a good move because it enabled the Minister to do many things which he could not have done: he was able to manoeuvre more by reducing personal taxation burdens and the VAT from the high rate of 35 per cent to 23 per cent. I do not think Deputy O'Kennedy mentioned that at all. Deputy Woods referred to it after prompting following the emergency CIF meeting.
I do not think there is much sympathy for their case, certainly on this side of the House, because I do not think the effect will be as devastating on house building as the Opposition or the builders try to make out. The reaction was hysterical, to say the least. That hysteria, I suggest, was motivated more by the political leanings of most of the members of the builders' association than by the impact of the changes that were made, which will be minimal in the matter of house prices, and that is what counts most, particularly in relation to the type of houses people in the lower income bracket purchase.
(Dublin North-West): About £1,000 per house.
I do not think it will affect the price of houses in the coming year. If you get a mortgage over 20 years the £1,000 will not affect house prices in the coming year, particularly considering the benefits that will accrue to the economy in purchases. The budget was not meant to harm the industry — it had been thought out perfectly so that it would not.
I discovered from my investigations into the building industry that when the CIF asked for a meeting with the Minister — they were not the only association he met — he said he would discuss these matters during the budget debate. He said he would be having discussions with the television industry about the reduction of VAT. He did not exclude the CIF from discussions. Without all the hullabaloo and the threats of marches, walks and disruption, the Minister was quite willing to meet the industry. He met them immediately and as a result of those meetings a deferral period was agreed until 1 May before the VAT increase to 10 per cent would come into effect. Most of the builders were satisfied with that, particularly the bigger builders. The indications I have received are that this will not affect the numbers of houses that will be built or purchased. The "take" the State gets from developers is not excessively high. Earlier it was 47 per cent and that was far too high. Indeed it became no longer profitable to build houses and that is why those who could do so went abroad to build where it is more profitable.
That was also the case throughout the entire business sector. It was not profitable to be in business and this had to be tackled. Unfortunately, that could not be done in the last two years. This year is the first time when we have been able to make a move in that direction. We started by reducing the highest band of taxation from 65 per cent to 60 per cent so that confidence to work has been restored — it is not fully restored but it is a step in the right direction.
There are other matters on which I should like to get the Minister's help and I will refer to them later. One matter which would not involve a lot of pain, and it is very dear to the public, is the rate of VAT on cinemas. It was reduced or wiped out altogether on theatres and one felt it should have been wiped out as far as the cinemas are concerned. There are about 2,000 people employed in cinemas throughout the country but it is expected that because of the VAT rate of 23 per cent about 1,000 of those will become unemployed. Apart from monetary benefits the cinema industry provides for the State, picturegoing is a pleasant way to spend an evening. It is a substitute or an alternative to public houses or hanging around the streets. During the past three years the number of feature films coming in has been reduced from 300 to as few as 80 and it looks as if the number will fall even further. I have inquired about the industry in Dublin, Cork, Waterford and Dundalk. Takings in Cork, for instance, in the past year show a drop of £30,000 per cinema. In Dublin city centre takings are down by 32 per cent. In the Savoy-Metropole-Odeon group takings are down very heavily. Because of the amount of money the State takes from the industry it would not be very difficult to help it out. When cinemas or other businesses are making money it is fairly easy to pay value-added tax but in difficult times a burden of 23 per cent VAT is crushing and could well wipe out that business altogether. It should be remembered also that if 1,000 people become unemployed in that industry they will cost the State £2 million to £3 million, while the cultural amenity of a cinema is no longer available in cities and country towns.
The Confederation of Irish Industry has called on the Minister to encourage private investment in productive assets. They sought the removal of the bias against personal investment in manufacturing industry. They asked the Minister to invite the private sector to participate in investment in infrastructure, to float the shares of appropriate State commercial companies on the Stock Exchange and to encourage joint ventures between State owned and private companies, selling off the dormant assets of State owned companies. Many people may object to any or all of those things being done. But it we have confidence in the private sector — asked to do so much — we must carefully scrutinise those areas, ascertaining whether there is a way of boosting businesses and jobs in our economy.
I might refer to the announcement yesterday by Mr. Mark Hely Hutchinson, reported in today's papers, in relation to the proposed levy in the form of higher interest charges on some loans to be introduced by the Bank of Ireland. They are described as risk premiums and will apply to loans not considered safe. He contends that the higher interest charges will especially affect new, developing small businesses. Mr. Hely Hutchinson has suggested that interest subsidies should be paid to these companies by the IDA and other State agencies, he placing part of the blame for their introduction on the bank levy which has been in operation for the past couple of years. This is an area to which I made reference before on many occasions. I intended saying something about it today and it is coincidental that this announcement should be made almost simultaneously. I understand one of the reasons for the introduction of these risk premiums is that the bad debts of the Bank of Ireland represent approximately 3 per cent of its domestic lending. Mr. Hely Hutchinson is reported in The Irish Times today as saying:
It is just not possible for a bank, using depositors' funds, to continue this kind of business without being adequately compensated for it.
It is contended that the bank levy is a direct confiscation of shareholders' funds which must be used to absorb bad debts and to underpin risk taking. Mr. Hely Hutchinson went on to say:
The consequences are inevitable — the domestic banking system has not been able to maintain its shareholders' funds in real terms and is forced to reduce its risk profile.
The risk premium, he said, could pose a serious problem for the newer developing small business, adding:
...this may be an area for the State support agencies to provide interest subsidies until the risk profile reaches normal standards. The banks would take the capital risk; the State can help support the cost of that risk. I am not an advocate of additional State spending but, with additional equity capital being available from the private sector, I suggest that the IDA can divert funds from capital grants to interest subsidies.
That takes me to the third point I mentioned at the outset with regard to rendering this budget 100 per cent successful. The Government contended that there were needed short and long term jobs and that then we must look at money for investment in industry. It appears that Mr. Hely Hutchinson is contending that the banks are not receiving adequate compensation for their risks — this from a sector which in my view and that of many others in this House has not contributed very much, if anything, throughout this recession. Of all the institutions, they have not played their rightful part. It is all very well being offered loans when things are going well, but when things become tight it is useless putting pressure on business people. It has already been recognised that banks in this country are not great risk takers. Certainly they do not undertake risks in anything like the same way as is done in other countries such as the USA, where businesses can get loans on their debtors and creditors.
I do not like this arbitrary method of imposing risk premiums on small businesses. I have always maintained that either the Government become involved in the risk taking area through State institutions or they must persuade the banks to do so by way of subsidy or whatever. Perhaps they should commence by rescinding the levy. I am not an advocate of levying the banks; it is an imposition. But if the banks played their full role then it should not be necessary to impose that levy. I do not contend that constitutes the reason the banks were levied in the first place. Rather I think it was because people thought the banks were making too great a profit. Given their size I would not think they did make too much profit, that it was tied in with the philosophy of profit being a bad thing.
It is being said now that the banks wish to reduce their risk profile. Therefore one may deduce that they want to move from a position of taking little risk to reducing that risk even further. I contend that, if they cannot bank, then the State must take a close look at what exactly they are doing, if necessary becoming involved itself or by way of the provision of incentives through personal taxation, company taxation and reward for initiative. All of these things have an effect on lending institutions. It is time there was a look taken at the banks. Mr. Hely Hutchinson is seeking interest subsidies, but the type of subsidy that might emerge after a close scrutiny of the banks may not necessarily be the type he would like or recommend. What I have been saying is very much the same as what he has been saying except that I have been saying it in a different way. If the banks cannot or will not get involved in the risk area, the State must provide that risk either by helping out or by stepping in. The banks' lack of contribution should be highlighted to them in this area. In that regard we should be prepared to give back the levy to the banks.
I should like to refer to an editorial in The Irish Press today headed BANKS' ROLE. It says:
In a healthy capitalist economy there can be no such thing as banking without risks. In fact, given the experience of the US in recent decades, it could be argued that the existence of a risk taking banking sector is a necessary condition for the establishment of a free enterprise economy which can regenerate itself continually and provide for the needs of its people.
Two developments in recent days suggest that Ireland's economy could lose out seriously because both its banks and its bankers are averse to risks.
Yesterday, the chief executive of the Bank of Ireland, Mr. Mark Hely Hutchinson, more or less suggested a direct State subvention to cover the extra cost of lending to small and developing businesses in Ireland...
And two days ago a number of Dublin based banks threatened to withdraw facilities totalling £2.4 million from a State-owned firm called Ceimici Teo, unless they received direct and explicit State guarantees for their loans.
The banks are at present charging their borrowers between 15 p.c. and 18 p.c. a year on term loans.... The introduction of Mr. Hely Hutchinson's suggested "risk premium" could push the cost of capital for small firms to over 20 p.c.
Meanwhile the industrial policy of both the Government and the IDA is one of looking to small firms to act as an engine of economic development. Such firms often suffer from severe handicaps in their initial stages, including a lack of cash and a disproportionate reliance on borrowed capital. Interest rates pitched at roughly four times the rate of inflation could mean that the game was not worth the candle.
The levy is a tax which takes no account of a bank's capacity to pay out of its profits and lessens its capacity to lend. But to attempt to boost either retained earnings or dividends by imposing penal rates on small firms in high risk categories could prove to be a self-defeating exercise, both from a commercial and a political standpoint.
After all, the higher the rate imposed on such borrowers, the more firms will collapse and the more bad debts will be incurred by the banks. And if the banks make capital prohibitively expensive for small firms at a time of mass unemployment, they could risk political retaliation which could take surprising forms.
Small firms could be running the gauntlet if that levy were to apply. It is time that we looked at what they are suggesting and the problems involved, if any, and see where we may be able to help out in the risk area.
To finish off that point I should like to mention very briefly the personal guarantees for bank loans and the need for a loan guarantee scheme which was requested by the Small Firms Association in their November 1984 Newsletter. It is time that business people and people individually put up a stand against personal guarantees. This is an invitation from the chief executive of one of the largest banks in the country. He suggests that they arbitrarily impose this levy on business which would bring rates to over 20 per cent and crush them. It indicates to us what they would do if there were no constraints on them.
An example of what has been happening in the area of personal guarantees is given very well in this Newsletter. The SFA carried out a survey of some 70 per cent of the accountancy firms and 77 per cent of member companies in relation to personal guarantees. In this survey it was found that, while financial institutions state that it is only in a minority of cases that they will attempt to foreclose on personal guarantees, yet personal guarantees are perceived as an unnecessary burden by some 88 per cent of accountancy practices and 87 per cent of the member companies.
The association believe that the financial institutions should be encouraged to stand over their commercial decisions without undoing the principle of limited liability by seeking personal guarantees. In the survey the attitude to enterprise demonstrated that reward for success was the single most important factor in stimulating risk taking and that personal guarantees further eroded the risk reward ratio which businesses currently operate.
The article says that probably the most important single answer in the survey relates to the advice which accountancy practices give their clients in circumstances where they are of the opinion that the client has already made an adequate financial commitment to his firm. Some 94 per cent of the accountancy practices stated that they advised their clients against providing personal guarantees.
The solution proffered by the SFA is a loan guarantee scheme of £50,000. This was recommended by the Oireachtas Committee on Small Businesses. It would have a presumed failure rate of 15 per cent and that would require a possible Government expenditure of £2¼ million. If there were an insurance scheme based on that it would reduce that possible Exchequer expenditure. The important thing about this suggestion is that, in the view of the SFA, many companies are inhibited from expanding because of the increasingly frequent requirement by financial institutions to seek personal guarantees. It is their view that the policy of seeking personal guarantees is a serious inhibiting factor in the creation of many new jobs in existing small viable industries. They say each £30,000 new investment would create three new manufacturing jobs and an additional three jobs in the service sector. A fully subscribed loan guarantee scheme would create 15,000 new jobs and would save the Exchequer some £9 million in unemployment payments. I ask the Minister to look at that.
I do not know how the personal guarantees could be stopped, but the banks go much too far in requiring personal guarantees. People go into them cap in hand asking for loans. The bank manager asks for a personal guarantee. The borrower is reluctant to give a personal guarantee and he is asked has he not got confidence in his project. He has no choice but to give a personal guarantee. The personal guarantee should be cut out in certain instances. This Government introduced a family home protection Bill which gave some measure of protection.
I want to stress the fact that people who built up a business over many years should not be ashamed if their business failed because of the recession, inflation, high interest rates and so on. We are not providing any help for these people. The State provides millions of pounds for our institutions who invest in industry and help ailing businesses and so on. Much more of the State's money is lost than the money provided by banks. What happens when long-established businesses collapse? These people are shunned by their friends, the financial institutions and successful businessmen. They are left alone and made to feel they have done something of which they should be ashamed. They feel abandoned.
Now the State has an opportunity to use the talents and experience of these people. I have not thought this out very carefully but I realise that this opportunity exists. A few years ago I remember interviewing executives in Britain when their unemployment figure had passed the three million mark. I was embarrassed by the number of experienced executives of very large companies who were suddenly thrown out of their jobs because of the recession. Many of these people were in their mid-fifties and had a very high standard of living. I could not get over their lack of confidence and the way they were depressed because of their experience. We should not write off such people and the people concerned should not feel ashamed.
I hope that the Companies Act, which is being reviewed, gets a good airing and takes into consideration the difficulties that arise in business. I have heard over the last year that a witch hunt was contemplated for businesses that got into trouble. There seemed to be a very simplified idea abroad about a company which was on the slide. It was thought that a businessman would be able to pull in the reins at any time. People do not realise that when in business a man tries to keep going, tries to extend his credit facilities, tries to get more orders and so on and if after all this a company collapses a broken man is left behind.
At a recent seminar Mr. Frank Mulcahy, Director, Small Firms Association said:
It is ironic that the prevailing attitude to those who fail in business and those who succeed is similar. Those who fail are regularly treated with contempt, those who succeed are seen as pampered recipients of State aid. We need to develop new attitudes to failure, risk-taking and success. Honest failures should be encouraged to try again. Those who succeed should be applauded and encouraged to further enterprise.
He gave an interesting definition of entrepreneurial activity.
Given people of similar intellectual abilities, experience and training, the acid test of entrepreneurial activity is the willingness or otherwise to take financial risks. The entrepreneur will apply himself and deploy his own capital, whereas the non-entrepreneur will only engage in the first part.
He went on to say that the entrepreneur takes a calculated risk with his energy, ability and financial, commitment. He says that if we are to meet successfully the challenge of ever rising unemployment we need more indigenous entrepreneurs.
I want to mention bank intervention. The Irish banks are not prepared to take risks across the board; they only want the cream. They cannot have it both ways. It is a challenge to the Government to look at this area or else to work with the banks to provide the risk money for people going into business. In this budget we have started to restore the incentive to business people.
I do not want anyone to say that this is sour grapes or that I am a spoilsport, but I want to sound a note of caution to the Government, who are thinking of introducing a national lottery. I do not think many people in Ireland know a great deal about national lotteries, but such lotteries are run all over America and Canada and produce billions of dollars for each state. That money has been used for community and sporting organisations and for development, which is the intention of this Government. I ask the Government to think very carefully before introducing this lottery because I do not know if they realise that the lottery is a tax on the poor. The poor will lose out on it because if a thing is worth doing it is worth taxing and the lottery is a wild gamble. The people who lose most by it are the poor.
I should like to refer to an article which appeared in the Toronto Star on 7 October last referring to lotteries, headed “An Indirect Tax on the Poor” and makes the point that “the few who win big fuel the fantasies of low income Canadians who dream of tickets to a bright new future”. It continues as follows:
They stand there looking at the numbers with so much hope on their faces. Sometimes they have to scrape together the pennies to buy a ticket. It's the poorest ones who come back every week. And who can blame them? Winning the lottery is the only hope they have of ever having anything... For many, they are a cheap diversion but for some, our national mania with lotteries has become a costly, futile attempt to escape the realities of poverty.
Last year, Canadians spent $1.4 billion feeding their obsession for lotteries... that hold out the elusive dream of instant wealth.
And in case their urge should start to wane, they are bombarded with ads urging them to bet every week, not just once in a while. Look at what happened to Miss Penelope — her numbers came up the week she didn't buy a ticket.
There is enormous pressure on people to continue buying tickets in lotteries. The provincial governments who run them and profit by them — and we are talking about a sum of $400 million in one year — argue that lotteries are harmless entertainment which finance worth-while health and reactional products, but Church officials, economists and sociologists argue that it hits the poor the hardest by preying on their desperate need to escape economic reality.
If the facilities they fund are worth-while, they should be funded through other means, they argue, and in any case, the poor are the least likely to use them.
The manager of one lottery said that everyone in his area was on welfare and spending $30 dollars to $50 a week on lottery tickets and they would rather do that than spend it on groceries. The article continues:
Sports Minister Otto Jelinek ... announced that the federal Government was getting out of the lottery business for good, called lotteries "A tax on the poor, perhaps even an immoral way of collecting taxes". "There's no question that lotteries are indirect taxation... and statistics prove that lower income people spend a higher percentage of their income on tickets. It could be construed as an indirect tax on the poor".
There are many gamblers in Ireland. There is an accumulator which involves several race courses and I remember standing beside experienced punters one day who were watching somebody betting £1 on the accumulator. One of them remarked that the person might as well be throwing their money away. People do not realise that, although there are millions of pounds or dollars involved, the chances of winning can be a million to one. I have been doing some calculations and, bearing in mind that if we reduce the Canadian figures to our population, we might be talking about an annual sum of £93 million on lotteries. If one million people buy a ticket at £1 each, their chances of winning are a million to one. Would any punter — and we have a few in the House — bet on those odds? No doubt there will be photographs of people who win a sum of £1 million and everyone will rush out to buy a ticket. People who are not well off will spend money which they do not have and their chances of winning anything will be very small.
Parts of this article are pathetic because it gives examples of people who even sold their houses and embezzled money to gamble on lotteries. Gamblers Anonymous said that their membership had increased enormously as lotteries became a craze and people could not stop gambling. I am afraid that the same would happen here. People who have enough to eat and a roof over their heads probably would not bother buying tickets, but the people who have very little hope are more likely to invest in lotteries. The temptation to hold lotteries here must be very strong because they could bring in about £90 million per year to spend on sports and community centres and we could do a fantastic job in that regard. However, it would be taking money from people who do not have it. Maybe that is all right for those it would not hurt but the damage it would cause others would not be worth the end result. I ask the Government to think very carefully before they introduce lotteries.
It is just a little over two years since the Government came to office. At that time many thousands of people who voted in the election were given to believe that there was a new era, a new prospect and a new opportunity developing which would provide for changes in our economic growth, developmnet, social reform and considerations and indeed in constitutional reform. The chickens have now come home to roost. The theorising, promises and commitments given seem to have been reneged upon and the circumstances in which we find ourselves now are a sad and tragic loss to the economy as a result of two years of retrograde steps by the Government in many instances and an attack on some of the growth features of the economy. Almost every town and village have regretfully seen their factories closing down. It is fair to say that in every town and village where there was industrial development in recent years advance factories are now closed. The weeds grow around them and the unemployed have either left the country or are queueing up at the local dole office. Shops, hotels, petrol stations and many areas of the service industries have all closed. We watch families torn with the tensions and stress that unemployment and economic collapse have caused and we have seen the disease and tragedy of emigration return.
In the west the fear of what the people see as the only other alternative, emigration, is a real fear and brings back memories of what happened in their fathers' time. This has been brought about by the Government's failure to take into account the social requirement of our people. This has resulted from the severe, cruel economic policies pursued to such an extent that we have damaged the fibre and capacity of the people and they now feel depressed. In some instances they are unable to activate themselves into a position of hope, confidence and belief that this nation can come out of its present difficulties under a different Government.
Some Government speakers have claimed that this budget is a way out but it has developed into being a U-turn on all the fiscal rectitude we were told we must pursue. In the last two years traders have been forced to trade in the black economy in order to carry on business. It has become clear that to make a profit in Ireland appears to be a crime. We have factory inspectors, customs inspectors, tax inspectors, social welfare inspectors and so on pursuing the last of that rare breed, employers. They are forcing those who are left in business to engage in the black economy to survive. That is as a result of penal anti-social considerations that prevail.
We all know that everyone is seriously questioning the direction in which the country is going. They are looking for leadership, hope and new confidence. They do not want to be denied and deprived of the pride of being Irish with the disease of emigration in the background. They want an opportunity to be part of the economic growth of a country which would have great potential if it did not have the encumbrance of its present political management.
One of the major industrial opportunities over recent years has been agriculture. However, agriculture has been starved throughout this Government's period in office. The lime subsidy which has been so important to farmers has been removed. Lime was used to ensure the production of better quality grass. As a result of that better quality beef would be produced and beef produces profit. Farmers must make a profit and must be in a position to produce the raw material they need to increase productivity. Last year the subsidy was withdrawn and as a result beef production on many farms seriously decreased. Farmers are not in a financial position to provide the necessary capital themselves to purchase lime which is unsubsidised.
When the sun was shining last summer many people, to their consternation, found that food subsidies were removed. This was at a time when we did not have an opportunity to calculate the serious imposition it would place on the poor and less well off sections. It was at a time when we could not calculate the effects of a harsh long winter. The little relief that was given to those sectors through food subsidies was significant and Christian.
VAT was reduced in a number of areas and no matter what our political differences it is only right that we should recognise this as a step in the right direction. However, it must also be taken into account that Fianna Fáil have urged this for some considerable time. In their report, the Commission on Taxation made such a recommendation. I wonder if the Government propose to implement the rest of that report.
Apart from the reduction of VAT, I cannot recall the budget speech containing anything that was important, advantageous or significant for any section of society. It will be said by many that it was a budget with just some political ceremony attached to it, but as budgets go it was a non-event. It is not necessary to examine the details very closely to realise that it does no more than rob Peter to pay Peter.
The social welfare increases amount to 3 per cent in a half year. As I see it and as the recipients of social welfare see it, those increases do not take into account the inflationary effects that will be evident later as a result of the budget. They do not take into account the increases in the cost of food, fuel, clothes, shoes and transport. Social welfare recipients have to use those commodities. The social welfare increases have to be balanced against increased health charges and the wide-spread withdrawal of medical cards. Local authority estimates will be prepared in the next few weeks and, as a direct result of this Government's policies, the local authorities will continue to increase the charges they have imposed, some for the first time last year. Again, those charges include essential services. We cannot forget the anger and annoyance that was felt by people at the deceitful way water charges were introduced. Refuse collection and fire brigade charges are additional costs that will be imposed in addition to what has happened as a direct result of decisions taken in the budget. There is also the matter of ESB charges. Rates on the ESB will be between £50 million and £60 million this year and these charges will be passed to the consumers, many of whom are not well off. The 3 per cent increase for six months in respect of social welfare is not adequate compensation to help recipients to meet those additional costs.
There is a proposal that a levy be placed on Bord Telecom to the tune of £180 million. Again, that charge will be passed back to the consumers. All of these charges impose another form of indirect taxation on the business community, the farmers and on the services and manufacturing industries. The hardpressed people in those industries will be faced with greater demands than they are able to meet. Many sound viable industries and prospects for such industries have collapsed in recent times because of the failure of the Government to take into account the crushing effects of taxation.
The Government must realise that they cannot continue to direct senior civil servants into devising and developing silly schemes for the purpose of creating statistical jobs. We cannot continue with the practice of spending millions of pounds on the pretence that jobs of a productive, essential and viable nature are being created. Millions of pounds are wasted on non-productive, unreal jobs. Even though many people are engaged in organising, devising monitoring and promoting such jobs, the unemployment figure now stands at 234,000. In addition, emigration is with us again and large numbers are taking the emigrant ship or the emigrant plane every day. At the request of this Government senior civil servants are creating jobs that merely perpetuate their own positions. Millions of tons of paper are being pushed to and fro across this country. It is no wonder that this Government have generated in the minds of all thinking men and women a sense of extreme cynicism about the political parties in Government and the future of the country.
When this Government came to office they said there was new hope, new prospects and a new future. They said that financial rectitude and sound economic policies would be the order of the day. We were going to live in Utopia, to find ourselves beneficiaries of a great new political genius. The record speaks for itself. Every single aspiration that one could ascribe to this Government in December 1982 on coming into office has not been realised. Everything they have pursued has brought nothing but hardship, distress and paralysis to this nation and to those who are capable of generating, motivating and activating something that could help us in the difficult times that face this country and other countries in Europe. By our policies we have intensified the blow to ourselves.
We must regard with some bewilderment the proposal to bring reform to our local authorities. I cannot understand why we are about to be faced with local authority elections on the one hand and on the other the emphasis on the importance of the role of the local authorities particularly from an economic growth point of view and the fact that they contain administrative expertise, management expertise and technical expertise. One would have thought that the Government would have set about restructuring the local authorities to take account of the type of development and growth they would seek; but no, we face local elections next June. The preparatory work being done for those elections is no more than changing the local authorities and restructuring them from an election point of view. The attempt is no more than an exercise in political opportunism, but it is a tragedy that the opportunity was not grasped and that local authorities were not restructured as necessary to ensure that they could engage in greater participation in job creation and wealth production.
Everybody who is unfortunate enough to live in rural Ireland will tell you that a great national resource known as our county roads has fallen into disrepair. In many instances it would take millions of pounds to bring them back from their present condition to what they were in 1978 or 1979.
I think the roads are more a matter for the Estimate.
In this budget no reference has been made to job creation or job opportunity. I refer to local authorities in that context to highlight the fact that the thought has been given to the development of the local authority structure to improve the prospects of job creation. Unfortunately, local authorities were used as an agent of the Government to collect more and more taxes, levies and charges without any consideration for people and their ability to pay, and this when social welfare benefits have been seriously reduced.
A matter of some grievance to many people, particularly women, is that the children's allowance was not increased in the recent budget. Some people might consider that not very important, but I cannot say that I agree with them. Because of social difficulties, unemployment, the high cost of living and tragedies in many homes, children's allowance was what many women needed to get them to the local Garda station or the local railway station or to take the nearest bus away from a horrendous situation. Many of them were battered wives. For that reason I have always considered that the children's allowance had that aspect to its importance as a payment to women. This year is has not been increased when the social conditions brought about directly by the actions of this Government have imposed greater hardship on families than ever before.
This budget has closed the stable door too late in the reduction in excise duties by 50 per cent on imports from Northern Ireland. You do not buy colour television on a weekly basis but many people must have bought colour television sets in the last two years having regard to the great movement of people from the South to North to buy electrical goods and items such as drink. As a result many thousands of jobs were lost. This measure is closing the stable door after the horse has bolted. It is interesting to note that the figures for tourism given by the Northern Ireland Tourist Board indicate an enormous increase in the numbers of visitors from the South. One thing those figures did not illustrate was that the bulk of those visitors did not go more than ten miles beyond the border. They were forced to go there because of a situation that had existed here for far too long. Now in the budget we are debating we have turned around in that policy and changed direction, but too late. Unfortunately, a Cheann Comhairle, many people in such businesses in your constituency have gone to the wall. You and many others share the loss that has occurred as a result of the inability of people in Government to recognise what was necessary not alone to save jobs but to ensure that some growth and development could come from an infrastructure development that existed two years ago in service industries but has totally collapsed because of many aspects of Government policy.
Debate adjourned.