By myself. Deputy Kelly has referred to the inadequacy of the budgetary instrument. I had hoped he would be more forthcoming with ideas that should have been used by the Government to focus on the economic and social problems and on the need for the development of our economy and services, that he would have brought to the attention of the Government prior to their launching of the budget other instruments that could have been brought into play, that he would have indicated for us, if he is so aware, that there are mechanisms which in the future will deal more adequately with the kinds of complexities and difficulties to which he referred and in respect of which he expressed concern.
However, no such references were made specifically. Therefore, I find Deputy Kelly's decision to ignore the content of the budget surprising and, secondly, I must point out to him, to the Government and to anyone else who might be inclined to take that line that in the absence of other mechanisms we must use the budget as the primary instrument to deal with the enormous problems facing us.
The budget is a disaster primarily because it has little or nothing to offer as solutions to the real ills in the economy. It is clear that the budget was framed deliberately as a piece of political expediency with cynical disregard for the real issues. The Government are made up of two parties but these two parties, whatever about the reality, are poles apart ideologically. They were faced with the dilemma of how to placate the increasing disenchantment within their respective ranks at tha abysmal failure of the Coalition to make even one worthwhile contribution to the frightening dismantling of our economy, the falling apart of some of the basic structures, both semi-State organisations and private sector enterprises. That dismantling is unfolding before us daily.
The budget will be remembered primarily for a number of reasons. It is antiemployment but there is little point in quoting figures to illustrate that. The budget is anti-worker though it proposes to do much for those who are employed both in terms of tax and in terms of incentives for employment. The budget is anti-family. I am very disappointed that one party to the Government would permit such a budget to come before the House because of the extent to which it is anti-family. The budget is anti-social and it is very much anti-builder.
Regardless of the struttings or the posturings the handlers engage in, no matter how much they talk about this being the kind of recipe necessary for economic reconstruction and no matter how persistently the Taoiseach decides to babble on about the economic upturn being at hand, the package meted out by way of the budget is being perceived quickly for what it is. The public will no longer be conned by these self-appointed lords of credibility. I must use that term because it has been the keynote of the Government's term in office. We were told that everything they would do would be in the interest of credibility, that despite harsh and unpopular measures having to be taken the Government would retain their credibility. Many people believed that. Obviously, at the general election in November 1982, not a majority but a significant proportion of the people believed those pronouncements. But the face masks are falling off. The veneer is cracking and the real incompetence, insincerity, conmanship and deceptions are rapidly being exposed.
The public did not have to wait for the recent budget to demonstrate what they think of this bungling Government. They had done so already, as was indicated in the outcome of opinion polls. However, since the publication of the budget the public have even more unequivocally demonstrated their dissatisfaction, distrust and downright disillusionment with such gross mismanagement. There is little doubt that, if the people were given the opportunity in the morning to demonstrate their opinion of this Government, the overwhelming majority would hurl them out of office and would be only too glad to see the backs of them for the rest of the century. That is a belief that has grown out of the sentiments and views being expressed in local communities, expressed so vehemently, so enthusiastically and in some cases so bitterly against the performance of the Government in the past two years.
The figures presented in the budget are wrong. They are deliberately distorted and grossly misleading. For example, 217,000 is the figure used to represent the average number of people who will be in receipt of unemployment benefit and assistance in the coming year. Surely, with 234,000 unemployed at present, this is totally unrealistic and gives a deliberately false promise. The PAYE earner is told by the Taoiseach and by the Minister for Finance that he will be better off by from anything between £17 and £600 this year. This is rubbish, absolute nonsense. The PAYE workers will be paying an additional £160 million in tax this year. I know that the Taoiseach, on the night of the budget, explained that away by saying that reflected the buoyancy which would take place in the economy. I think his expression was that nearly all of it could be accounted for the in that way.
We all agree that over a number of years the tax burden carried by the PAYE earner, both as a percentage of total direct tax and as a proportion of tax revenue, had become most unacceptable and disproportionate. Urgent reform of personal taxation, it was agreed by all, was essential in the interests of equity. Very serious inequities are there, which needed to be addressed. These have grown into the system over the years. Even as far back as 12 July of last year Minister Bruton was quoted in The Irish Press as stating that the Government definitely intended to introduce indexation in the next year's budget and that it would be the first time since 1981 that income taxpayers would not be worse off. A Minister who preaches credibility, honesty and frankness made that statement then. I know that he got his wings clipped shortly afterwards for making it. However, that is the background against which the public approach this budget.
One would have to admit readily that the budget simplifies the tax code by reducing the number of bands from five to three. Income tax payers will in future be paying income tax at 35 per cent, 48 per cent and 60 per cent. At the same time the bands have been widened. Any attempt at simplification of the code must be welcomed, but the big question is: is this exercise meaningful reform? Because of the abolition of the 65 per cent top rate and the widening of the bands, in gross terms the high income family will benefit, according to the calculation of one accountant, to a greater extent than the low income family. This is a very important aspect of these changes which we must take into account.
There are implications right down the line, for social policy among other things. For example, the calculation given to me was that a married couple with three children and one spouse earning £30,000 would be, under certain circumstances, likely to save £503 next year whereas a similar family with one spouse earning £15,000 would save only £160, or perhaps slightly more. That is in certain circumstances. However, all analysists who have seen the figures now agree that these savings assume that earnings will be static in the coming year. If, for example, earnings keep pace with inflation, there will be no real tax saving — in fact there will be a real loss, although slight. This is because the budget changes have not reduced the rate at which income tax is charged. Instead they ensure that basic wage increases are taxed at more or less the same rate as for 1984-85. From the figures which I have already used, it is quite clear that that would be the case.
If the intention was to improve the situation, very obviously the gains will accrue to those on higher incomes. Again, that the greater hardship, in relative terms, is on those on lower and middle incomes is a very obvious, immediate deduction which it is possible to make. Surely the gains should have accrued to those in need and surely, if involved in this simplification exercise was an intention to reform with equity in mind, that is how it should have been done. I agree that the reduction from the top rate of 65 per cent imposed by that Government to 60 per cent was a wise move because there were implications for investment and for incentives. There was a very definite fall-off in these areas because of the existence of that rate.
It is commendable that the top rate was reduced. However, if one takes the lower and middle income family and looks at how these would be likely to suffer on the basis of what is perceived as the ostensible intent of this instrument, surely the measure is anti-social. It is giving the greater benefits to those who least need them and the lesser benefits to those who need them much more. There is a big lie exposed in this income tax adjustment situation. There will be no gain, but a real loss for taxpayers in this budget. They will pay over £160 million more in 1985-86 than in the previous tax year because of the absence of any real reform or meaningful adjustment other than a simplification exercise.
The house buyers are told that they are getting a grant of £1,750 for the purchase of their first homes, a 75 per cent increase, while the Government through the back door increase the price of the average house by VAT to the tune of £1,800. That is keeping a low average price for houses in the Dublin market at present. The Minister for Finance and the Taoiseach did the best arithmitic exercise even when it comes to buoyancy. To balance the budget and provide for a £58 million shortfall of what was granted for public sector pay increases but not allowed for in the budget, they very neatly, conveniently and, one would have to admit, inspirationally come up with the exact sum in revenue buoyancy. What an extraordinary piece of arithmetic mumbo-jumbo. The importance is that the sums add up in the end, that the figures come out exactly right. I wonder how many members of the public, if they appreciated what was meant by that, would believe it.
Our poor and unemployed, our sick and senior citizens are told that they are getting enough by way of this budget because their increase benefits, in the words of the Tánaiste in this House on 31 January, 1985, Volume 1321 "at least match inflation over the period they are intended to cover".
He goes on that the Government can make this claim "in respect of last year and the previous..." That is very important. I suggest to this House that these statements are grossly inaccurate and the Minister knows that. His party have simply treated the unemployed and the disadvantaged with derision. His party's actions and attitudes are nothing short of immoral in this respect.
The Labour Party have betrayed the legitimate aspirations of the voiceless and defenceless among us. They are clinging to power on the backs of the unemployed. Whatever Deputy Kelly thinks about it, this budget is callously driving thousands onto the emigration ships. Deputy Kelly went to great lengths to point out that he had been misunderstood in the recent past because of his sentiments in relation to emigration and he conjured up images of greatness, importance and great significance, the wonderful experience, insight and broadmindness in the idea of taking that trip across the Irish Sea or the Atlantic, where horizons could be broadened and where all disadvantages that could be put down to emigration could be so overwhemingly overcome because of the gains that would ensue. I refuse to go along with those sentiments. I wonder if the Government go along with them. Quite frankly, the decisions and the effects of the budget seem to coincide with that point of view. If that is the case we have taken a very sad turn.
Last year was an extremely harsh year for all those on social welfare benefits. The miserly increase of 7½ per cent was not paid out until July, giving an annual increase of 3½ to 4 per cent from that budget. This was the second time that the Coalition had left this sector to suffer all the other increases that came on board for a full six months before, giving them a meagre increase. Then came the halving of food subsidies, the curtailment of supplementary benefits through the health boards, the alteration in the guidelines for eligibility for assistance for school uniform grants, the almost total abolition of assistance to the poor, the unemployed, the widowed and the sick with the payment of ESB bills while at the same time the price of fuel increased substantially. This is the scenario that the weak section of our community had to endure last year. That is the nightmare with which they were faced. Anyone who tries to deny that is flying in the face of reality.
All these things happened in 1984 because of the Government's massive cutbacks in the health and social welfare services. The most unsavoury feature was having to listen to the present Minister for Health repeatedly passing the buck last year for his callous decisions and the callous decisions of the Government in regard to the defenceless local officials manning the health boards in an attempt to administer a scheme and meet guidelines for which there was inadequate funding. The Ministers denials ring hollow when compared with the realities. The Minister must be aware of the queues of people outside health boards and the sitins that took place on various occasions and of the deputations that went to his Department and were not given a fair hearing and of the calls and appeals to him to meet groups. The Minister refused on nearly all occasions. The Socialist element in the Government must be terribly embarrassed by these realities. They must be wondering as to their purpose and as to whom they represent if they are prepared to ignore all these hardships and turn a blind eye by way of policy to what has happened to our economy. These people do not want to know about the embarrassment felt and the hardships endured by the most defenceless section of our community. The experiences of these people will not be forgotten.
The 1985 budget is consistent with the Coalition's other budgets in at least one respect. When it comes to the poor and the unemployed it appears that anything will do. We have again all the worst features of the previous budgets. There is only an annualised increase in social welfare payments of 3 per cent and 3½ per cent respectively to the long term and short term recipients and again the increases are deferred to mid-July when these people will have borne the increases from other budgetary measures for nearly six months. That is a scathing indictment of the budget and a terrible reflection on those who profess any kind of care or concern for the weakest among us. There has been no increase in children's allowances, and footwear has been taxed at 10 per cent VAT. To say that it is only adult footwear does not exonerate the Government. Tax on clothing has been increased from 8 to 10 per cent and fuel, except electricity, is now being taxed at 10 per cent. Each of these increases will hit our senior citizens, our unemployed, our widowed and our sick people and there are no compensatory effects. There is no provision to ease the burden on the least well off. It is a terrible indictment of the Labour Party that they committed the poorest to shoulder the most. That is the real result of the budget.
On the night of the budget when discussion was taking place on Financial Resolutions and when elaborations were being given, damaging effects for certain sections were pointed out to the Taoiseach and he was quick to point out that bouy— ancy in our economy, reform of the tax system and other aspects of the budget would compensate for losses in certain areas. I must confess to an inability to get in on the debate on that night but when I put it to the Taoiseach — and I know he heard what I said — that he might be able to point to compensatory effects for many sections but that he certainly could not point to compensatory effects for the category of persons I have just mentioned and I asked the Taoiseach to explain why there was no compensation there, the reply I got was a deafening silence.
From 1980 to 1982 Fianna Fáil gave increases of 25 per cent towards those on social welfare. We always ensured that payments would not leave those people less well off in real terms. The decision in the 1983 budget and in the two consecutive ones to defer payment until July is most unjust and extremely harsh. Rather than deferring payment from the traditional April date it is fair and reasonable to suggest making these payments available to these people to coincide at least with the date of increases in costs caused by budgetary policy.
Another feature of the budget, of which great play has been made, is the miserly increase of £5 in the fuel voucher scheme. It does not in any way compensate for increases, direct and indirect, in the cost of living of social welfare recipients in the past three years. The prices of a bag of coal and a cylinder of gas have been increased and are likely to be increased further during the year. A bag of coal now costs nearly £7.50 and a cylinder of gas nearly £8, yet a £1 increase has been given this year to make up for a three year gap — we are talking about the 1983, the 1984 and the 1985 budgets during which there was no increase of any kind in the fuel scheme. The £1 now given is totally inadequate in a system which is outdated and meaningless. I would have considered a £7 or an £8 voucher as necessary considering the other unfavourable aspects of the budget. That would have been a minimum requirement.
To leave the fuel voucher scheme there in its present form except for this meagre increase is unfair and wrong. The scheme should be scrapped altogether and the equivalent of £5 given in some other way. It is mere pretence to say that giving £5 in the fuel scheme on a limited time basis to certain categories will make a substantial contribution to their fuel costs. I would prefer to see the scheme scrapped altogether and to have an equivalent increase given to eligible persons in other ways.
The cost of education for families has increased greatly over the past couple of years and because many families are operating extremely restricted family budgets, decisions to withdraw children from second level schooling are more frequently being made on the basis of inability to meet the costs of bus fares, school books and other school expenses. The Minister for Education — I am sorry she is not here — has done a hell of a lot to ensure that the concept of free education has become irrelevant.
If we take a husband, wife and three children on short duration unemployment assistance, they are in receipt of £76.50 a week whether their children are in primary or second level schools. The Minister for Health and Social Welfare must know only too well that families in this and similar categories are flocking to health centres in the cities and country looking for supplementary benefit. Nobody in this House will deny that, because any Deputy who makes himself or herself available to the public and listens to what is going on — sometimes in a disagreeable way, sometimes in a critical way — must be well aware of the position in the past couple of years. People go to health centres looking for supplementary benefit, for school uniform allowances, for assistance to pay their ESB bills or rent, only to be turned away because the Minister concerned has simply robbed the health boards of funding for very necessary services.
This morning two widowed persons came to me to inform me their local health centre had told them that although they had been in receipt of £5 per week each to enable them to pay off mortgages on their homes the money would no longer be payable. When one of them called to her health centre last week for a £25 cheque — she was letting the amount run up for five weeks — she was told by an official that before being paid she would have to get a statement of the interest she was paying on the mortgage. She went away, got the statement and came back yesterday, but she was told she did not need the money. He told her "You are better off than many other people in receipt of social welfare benefits". No reasons were given for that. When she queried the decision it seemed to her that the decision had been handed down from on high.
The second widow yesterday had the same experience. The only difference was that she was not asked for a statement of the interest paid on her mortgage. Earlier, when she called in about something else she was told the money was there for her, but she asked that it be held until this week, that it would be more convenient for her because the date of payment of the mortgage fell due this week. When she went in yesterday she was told she did not need the money, that she was better off than most others in that category, but they offered her a little help with her ESB bills from time to time.
We know of the difficulties faced by people who genuinely have not got money. In such cases electricity has been cut off on many occasions. Here we have widows being denied callously assistance that was available to them in 1983 and 1984. Though there might be some validity in the statement that this category of people might be better off than others under the social welfare code, nevertheless if they were eligible for assistance in 1983 and in 1984 what changes have taken place or decisions issued from the Department to the local health boards to the effect that those people are no longer eligible? I have no evidence to suggest that things are better now than they were in 1983 and 1984, and I would not agree with anybody who tried to convince me that that is so. Last year the Eastern Health Board were left short by £3,500,000 and all the Minister for Health and Social Welfare would say was that there was no shortfall or any change in guidelines issued from his Department. The people will not accept this verbiage any longer from the Minister.
The effects of the budget in real terms will leave the families of the unemployed, the sick and our senior citizens anything from £10 to £30 per week worse off in real terms than last year. That is a frightening prospect for those people. It calls for an unequivocal condemnation of the Government and the Minister for Health and Social Welfare who is obviously so uncaring as to permit this to happen. If he has any conviction he would resign from the Government in protest at the manner in which the poor, the unemployed and the sick are being so derisively treated. I call on him to resign as a protest against the Government and as a mark of respect to all those so callously ignored by this budget.
The Government came to office in November 1982 and promised that they would get rid of the legacy of irresponsible borrowing and mismanagement of the economy and State finances by their predecessors. Day after day, week after week the public were treated to a profusion of outpourings about how the Coalition would pursue a policy of financial rectitude, bring the finances of the country back into line, wipe out deficits and thereby diminish the enormous strain being imposed by the servicing of our foreign debt. Borrowing was supposed to be immoral and the public were reminded that only through such a policy could our young people face the future with hope. The previous Government, they said, had mortgaged their future for votes. Credibility had become synonymous with a policy of deflation and austerity. To say otherwise or even to start to think of people as people was simply living in cloud cuckooland. All decisions had to be taken in Government within the framework of stringent controls of current budgeting and debt management.
What is the reality? Beginning in the 1984 budget, and continued through this one, the Taoiseach has thrown all of this conviction out the window. If it was so important before he took office, when he was canvassing for votes early in 1983, why is it not still so important?
The national debt, taking the effects of this budget into account, will have increased by £10 billion during the short term of office of this Coalition. The foreign debt has been increased by almost £3½ billion in the same period. The current budget deficit has increased by over £350 million over the past couple of years, from £988 million in 1982 to £1,234 million in 1985, although that figure is still being questioned today in this House. The Government are refusing to up-date the figures on the basis of changes that have already taken place, changes that have not been brought before the House for approval. I am convinced that before the effects of this budget are fully seen throughout the year, there will be an additional £50 million to £60 million on top of what has been very optimistically allowed by the Minister. When one looks at this scenario, where is the so-called responsible management, where is the diminution of our foreign debt or the reduction in the cost of its servicing? Where is the rhetoric now about taking on the current budgetary situation? How can the Taoiseach have had the effrontery to tell the people a couple of months ago that our finances had been restored to an acceptable level of normality, that the economy had been turned around and that we were now heading for better times? Does the Taoiseach not realise even at this late stage, that the plot has been blown, that the web of intrigue has been broken and the truth is really out? Surely he must now accept that all the handlers in the world cannot put his fairy castle together again? This pillar of integrity, and that is what the Taoiseach was put up as being — the pillar of integrity, truth, honesty and reality; he was built on reality — should come clean and admit to the people that he has been downright dishonest and deliberately misleading. He should admit also that he has simply lost control of the ship of state, that he never really had control. He should state that he does not know where he is going or what he is doing.
Let us take the example of their new commitment that by 1987 the current budget deficit will have been reduced to 5 per cent of GNP, despite having strayed already by a significant amount from the commitment in their national plan. Is there the slightest hope of effecting a few hundred million pounds reduction in this deficit over two years? Perhaps the Government contend there is but nobody on this side of the House believes them. Therefore one must ask do they really believe it themselves?
When one takes into account that the Taoiseach and several of his Ministers, not least the Minister for the Public Service, on a number of occasions towards the end of 1984, right into this year, were adamant that there would be no increase in 1985 in public sector pay, how literally on the eve of budget day they so rapidly and suddenly capitulated, then it takes a frightening and unbelievable degree of naivety to hope that the public at large have not seen through their charade. It must be seen that the Taoiseach, the Minister for Finance and this Government will never be believed again. No matter how long they remain in office they simply cannot hope to rule effectivly because they have lost the trust and confidence of the people and any Government that does not have those, simply is not a Government.
Speaking in this House on 31 January last the Tánaiste had this to say at column 1317 of the Official Report:
The budget, considered as a package of measures, is designed to promote enterprise and employment and protect the living standards of those on low incomes or in receipt of social welfare payments to the maximum extent possible. Budgetary policy is one major instrument in seeking employment creation,
That is the view of the Tánaiste, not necessarily that of Deputy John Kelly and, if it is the view of the Tánaiste, then it must be considered to be that of the Government. Through a deft sleight of hand the Tánaiste omitted to mention how the provisions of this budget would operate by way of going anywhere near creating a situation in which the average number of unemployed for the year would be 217,000. How one can explain that is beyond me. The Tánaiste forgot to illustrate how even one job could be created by virtue of this package.
Speaking in this House on the same day the Minister for Industry, Trade, Commerce and Tourism had this to say:
It is desirable that we should try to set up new industries but that would be of little value if we cannot preserve the industries we have.
Those remarks appear at column 1430 of the Official Report of 31 January 1985.
There would appear to be a certain degree of honesty implicit in that statement of that Minister although he does not attempt to quantify it. First of all, he appears to acknowledge the fact that the Government's failure to prevent the closure of over 400 companies last year was clearly a disaster. Neither does that Minister get involved in the ridiculous posturings of the Taoiseach, the Tánaiste and other Ministers that this constitutes an employment-creating budget. Admittedly his long preamble on the absence of price competitiveness in Irish industry vis-à-vis our competitor nations, the role it plays and has played in the recent past in dismantling our industrial base, seems to be a rather obvious exercise in buck passing.
When the figures are broken down one must ask what is in this budget for industry and jobs? Where are the great incentives about which we hear so much? What grand plan is designed to take on the greatest social evil of all, namely, the unprecedented high level of unemployment? There are now 234,000 people unemployed, approximately 50,000 of whom are from the building sector. Any Government worth their salt must realise that the construction industry is one of the biggest employers, offering potential for alleviating to a great extent this disastrous unemployment situation. Economists the world over, although rarely agreeing on many issues relating to economic management, agree that, right across national divides and frontiers, the building industry has a greater multipler effect in terms of employment creation than has any other industry. Yet this very industry has been forced into rapid decline over the past two years.
It is an unfortunate and sad feature of Coalition rule that it manifestly hits this industry and that any time they come to power, the construction industry must dive for cover, investment decisions are shelved and, in many instances, moneys available are invested outside the country. In the past year an inordinate number of builders, large and small, have crashed into industrial oblivion. Plasterers, carpenters, bricklayers, plumbers, electricians, semi-skilled and unskilled labourers daily call to our clinics asking when this stupid Government are going to get out, indicating that if that does not happen very soon they will have no option but to join thousands of their comrades who have already jumped aboard the emigration ships.
The latest increase in VAT from 5 per cent to 10 per cent on new houses represents a final attempt to dismantle the house building industry. When, on the evening of the budget, the Taoiseach was asked in this House by Deputy Calleary to justify this increase he had this to say at, column 1223 of the Official Report for that day:
... but there is clearly no way that we can arrive at a simplification of the VAT structure without some going up and going down.
That is what the Taoiseach thought or cared for the plight of the house building industry, that it would simply have to fit into the figures he wanted to employ — forget about people, about jobs. The Taoiseach continued to say, at column 1225 of the Official Report of that day:
Taken overall, the net effect on the construction industry is positive.
I accept that he juxtaposed a mumble, jumble of figures against the 5 per cent VAT increase but I do not accept his conclusions. One element in his reply was that there was a reduction in VAT on cement blocks. The reality seems to elude the Taoiseach, that blocks constitute a minimum component in house building.
Let us now consider what this Government decided to do to the new house building sector. In their press release they told of a 75 per cent increase in the house purchase grant, that first time buyers of new houses would receive an increase in this grant from £1,000 to £1,750. What a generous gesture on the part of this Government to young newly weds. It was implied that thousands of young couples would now be able to rush to the nearest builder, bringing forward their decision to buy a new home on the strength of this increase. Of course, builders are always seen to be the bad boys. It is contended that they will now increase the price of a new house by 5 per cent. What a bunch of rogues. But it is not the builders who are doing this at all, rather it is the Government. But the unsuspecting house buyer is not supposed to know that. After all, is it not the builder who charges the price? No matter what may be his protestations his action is seen as a greedy response to this increase in the grant. One must ask did it not all happen before, anyway? That is how this Government hoped to put across the net increase in the price of a new house to the innocent public but it simply has not worked. Their devious little scheme simply has not worked. The Minister for Finance, in an attempt to run for cover — when questioned on television last week or the week before about the effects of his budgetary decisions on the building industry and new house buying — tried to fudge the issue by stating that the increase was not on the gross price. However, everybody should be fully aware of what this budgetary measure means. I should say in relation to VAT that all builders will admit and anybody who does a costing of it will agree, that when the VAT was increased by this Government from 3 per cent to 5 per cent almost invariably the builders absorbed it because there was no future in their doing otherwise. Take a new house costing £30,000, inclusive of 5 per cent VAT — incidentally one will find very few houses on the Dublin market at that price and anybody who knows anything about it will agree with that — its price from 1 March 1985 will not be £30,000 but £31,429.
