Deputy Ormonde is in possession.
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.)
There was a sum of £20 million set aside in the national plan for the public pay deal. This sum has now been increased to £108 million, £58 million of which has been explained by the phrase "taxation buoyancy". Bearing in mind last night's decision and all the additional rubber available to the country I wonder if this will assist this buoyancy.
I referred last week to the additional 10p on the price of a gallon of petrol. As you well know, Sir, from your Border constituency, the price difference between the price of a gallon of petrol north of the Border and here is in the region of 90p, something in excess of £10 on a full tank of petrol. Do the Govern-ment not think that this will benefit the Border counties? There will be a further flood of motorists across the Border to fill up their tanks and the Government should have no doubt but that the wives of such motorists will accompany them to do their shopping, which will occasion a further major loss to our Exchequer. As far as I can recollect this is the first Government in the history of the State that appointed no Cabinet Minister representing a Border county. This reflects the poor treatment being meted out to Border counties by this Govern-ment.
Since assuming office over two years ago this Government stated that their committed intention was to do something about the unemployment situation. To be fair, they certainly have. They have raised it by 90,000 people to 235,000 in that period. Can anybody understand the logic of a Government who kick the one labour-intensive industry we have in the teeth? I speak of the construction industry, which was dealt a body blow in this budget by a 100 per cent increase in VAT from 5 per cent to 10 per cent. The construction industry is our second largest after agriculture and is probably the most labour intensive. Fianna Fáil have always been convinced that it makes good economic sense to encourage the construction industry because it gives a high level of employment on the capital invested, in turn producing valuable assets of long term benefit proving to be a worthwhile return on the investment made and producing a high proportion of indigenous materials of which we have a plentiful supply. One must ask: what have this Government done to date for that industry? In addition to capital cutbacks, planning charges have been massively increased, once again in order to placate the Labour Party — as they did last evening. Residential property tax was introduced. They have introduced also a land tax, again to placate the 4½ per cent Labour Party. Section 23 incentives have been virtually abolished, all of which pales into insignificance when one considers the increase in VAT from 5 per cent to 10 per cent.
And 45,000 unemployed in that sector.
In addition, as the House is aware, in the past week mortgages have been increased by 1¼ per cent as a direct result of this budget.
Overall the effect of the VAT increases on the construction industry output will be to increase VAT on that industry by £75 million. The average price of a new house, at £36,000, will increase by £1,750. Despite what the Minister for Finance has said in an attempt to cause confusion the price of all new houses will be increased by 5 per cent. Only where houses are being sold to first time buyers will the increased grant to £1,750 reduce that increased price. Furthermore, the reduction of VAT on materials will have no beneficial effect on the builder because, being registered, he is entitled to reclaim it anyway. New houses will be taxed at a rate of 10 per cent while second-hand houses will be subject to the 4 per cent to 6 per cent stamp duty, showing a further bias in favour of second-hand houses and an additional kick in the teeth for the construction industry.
In a submission by the construction industry they make the point that house purchasers cannot afford the increase and that the builder cannot afford to absorb it, thus leading to an inevitable reduction in the throughput and to increased unemployment. They continue to say that in turn this will increase the number of persons on local authority housing lists. I say to the Government and to the Minister for Finance in particular: they have got it wrong again; despite their attempts in the national plan to entice people from public to private housing they have just ensured that the flow will be reversed by their performance in this budget. I honestly believe that the treatment being meted out to the construction industry by this Government is a vindictive response to an industry which is known to be aligned to Fianna Fáil. Is it not a sad day for this country when such petty, vindictive performance is allowed to cloud one's judgement, putting party before country?
I might turn now to an area in which I am directly involved, that of health, and examine what the Government are doing in this area. From a reading of the papers over the past couple of months it will be seen that this Government and the Minister for Health are slowly but surely dismantling our health services. One can note from the papers even this morning a third meeting being held of the Western Health Board today, a third meeting also of the South Eastern Health Board today to discuss estimates. There is no doubt but that there will be massive cutbacks in the allocations to health boards in 1985. In 1984 the eight health boards were expected to achieve a saving in the region of £24 million. We all know now that they could not possibly manage to do so and, as a result, these charges became a first charge on the 1985 allocation. I might take one example, that of my health board, the South Eastern, where we had a shortfall in 1984 of almost £1.1 million. We have been told by the Department of Health that this will be the first charge on the 1985 allocation. It follows that this figure must feature again in 1985 because, if that health board failed to achieve the necessary cutback in 1984, it follows that they will be unable to achieve it this year. Therefore, that figure can be doubled. If one adds to that the additional amount required to reduce expenditure to the authorised 1985 level, which is £1.76 million, this leads to a total shortfall in the South Eastern Health Board for 1985 of £3.95 million, or, rounded off, to £4 million.
I might go back a few years, to 1980, when the allocation to the South Eastern Health Board was £57.45 million. Had that figure been brought in line with variations in the value of the pound since then, that health board would have received an allocation of £100.66 million in 1985. Instead they received an allocation of £83.59 million, a difference of £17 million, and the Minister and Govern-ment expect us to believe there will be no resultant cutbacks or hardships. Do they take us all for fools? Of course, there will be cutbacks and job losses. Wards will be closed and patients will suffer when their lives are in jeopardy. I do not want to be an alarmist, but if in order to achieve savings the health boards will not provide locums the position will be very serious.
I will give one example, which I have given before in the House. They refused to provide a locum for a surgeon who was away on holidays. Most county hospitals have two surgeons, two physicians, two anaesthetists and so on and, if the health boards are not in a position to provide a locum, it means that the person on duty has to work 24 hours a day, seven days per week, while his colleague is on holidays or ill. As a result, he can only provide an emergency service and cannot do the day to day work required. Is it the Government's intention to reduce the health service to that of an emergency service? Is that what we are offering our sick and elderly? If so, let them say so. They should not expect the health service to do their dirty work for them.
If we do not provide the financial allocation for these regions, it is the duty of the Minister and the Government to dismantle the health services, because that is what they are doing by stealth at present anyway. We in the south east cannot possibly live within our present allocation, and it is inevitable that there will be suffering as a result. The shortfall in the Southern Health Board is even greater than ours. They speak of a figure of £10 million for 1985.
The Western Health Board are meeting today for the third time to try to achieve a saving on their estimate to run the health services in Galway, Mayo and Roscommon. They have a shortfall of something in the region of £4 million, and other health boards are similarly affected. We cannot hope to run the health services with these shortfalls.
What has been the Minister's response? He has raised the cost of private and semi-private accommodation by a massive 20 per cent. It is cheaper now to spend a night in the Shelbourne or the Gresham than in any county hospital. By raising the cost of hospital accommodation to this level the Minister has ensured that many patients who, up to now, opted for voluntary health insurance can no longer afford it and will have to revert to the general hospital services. However, we have just discovered that the general hospital services cannot cope with the present demand on their services, and the Minister will now add a further group to this area while, at the same time, reducing the allocation to the general hospital service. It is crazy that he will not provide the money for running the present service and puts further pressure on the service by increasing the private and semi-private costs.
I referred here on a number of occasions to the scandal of units which cost in excess of £7 million lying idle because the Minister and his Department have refused to provide the funds to staff, equip and open them. I will refresh the Minister's memory by listing the units involved. The maternity unit in Galway, built at a cost of £4 million, remains unstaffed and idle. The 30 bed maternity unit ar Cahercalla, Ennis, built at a cost of £750,000, lies unopened. Maybe the fact that these maternity units are unopened had something to do with the rushed family planning Bill last night.
The Western Health Board did not accept their responsibilities in regard to the maternity unit in Ennis.
There is no money to open it and the Deputy knows that as well as anybody else. The 14 bed gynaecology unit at St. Luke's Hospital, Kilkenny, has been idle for three years now in spite of severe overcrowding in the general hospital. Patients are being accommodated in the corridors in every wing in the hospital, and we cannot open that small unit because the Minister will not provide staff.
The infamous Building on Reality spoke of the intention of the Government to make provision for the needs of the increasing number of elderly people. We are told there will be many improvements to institutions which provide for geriatric patients. They are lovely sentiments, but the reality is different. There is a geriatric assessment unit in Ardkeen, Waterford, which was built at a cost of £90,000 approximately two years ago. It lies idle because the Department will not provide the funds to staff it.
Money has been spent to provide paediatric facilities in the Midland Health Board region, but these cannot be opened either because no money has been made available for consultant staff. There is no money available to provide an orthopaedic service for the Midland Health Board and there is no service of that nature in the region. It was suggested to the Midland Health Board that if they could find the funds for these requirements from within their financial allocation, maybe they could go ahead. I have bad news for them in that regard. The South Eastern Health Board attempted to do that, and we were promptly told by the Department of Health that as long as we had a shortfall in 1984 any funds that we managed to save would be taken as a first charge against that. We would not be allowed to use it to provide additional facilities.
The Minister of State, Deputy Fennell, made a lot of play in her speech last week of the provision of dental facilities for pregnant women. We are all in favour of this but, unfortunately, the reality is different. Because of the cuts in the health boards and the inadequacy of their allocations, many of the health boards — I speak specifically of the Southern and the South-Eastern Health Boards — no longer have adult dental services so how, in the name of God, can pregnant women avail of a service that does not exist?
I wish to turn now to a situation dear to my heart and you, a Cheann Comhairle, have an involvement whether you realise it or not. I am referring to the Ardkeen Hospital, Waterford, and I will give the history in this regard. We were ready to go to tender in 1981 but, unfortunately, it was the time when a previous Coalition were in office and, as you probably remember, there was a by-election pending in your constituency at that time——
The Chair loses its memory for things like that on assuming the Chair.
You may well do but I do not, because we suffered as a result. To jog your memory, I shall be a little more specific. In the constituency of Cavan-Monaghan there was a by-election pending in 1981——
I have resurrected my memory. At that time there was no such constituency as Cavan-Monaghan. There was a constituency of Cavan and a constituency of Monaghan.
Very well.
The last by-election in Cavan——
There was one pending.
——was in 1918 and was won by Arthur Griffith.
There was one pending in that constituency and lo and behold the new Cavan hospital, which was way behind Ardkeen and others as regards planning, was suddenly catapulted ahead. As a result we are still waiting for this badly needed facility. Thankfully there is no by-election in Waterford. I appeal to the Government, in the interests of fair play, to allow this complex to go ahead now. We have suffered more than most in Waterford. We lost Clover Meats in the weeks before Christmas. It could have been saved if the Government agencies and the Ministers for Finance and Agriculture had the will to save it. However that is history. It must be our turn this year. We have two Ministers who are from Waterford and it would look very bad for them if they fail to deliver again. They failed to deliver on the Clover issue, and I appeal to the Minister, in the interests of these two men, to ensure that he does not renege on Waterford again.
The president of the FUE in his annual report said that the return on capital for a wide range of Irish companies was less than the lowest rate at which funds can be borrowed. Without investment there is no way out of our economic morass. We must create a climate for investment. Unfortunately the Government appear to be incapable of doing that.
Listening to Deputy Ormonde one would think he was speaking on a Fianna Fáil budget introduced some years ago. He has failed to realise the fact that this budget has improved the environment for employment. It has improved the taxation system and has protected the lower income group.
Unemployment increased by 20,000——
The Deputy was not interrupted when he made his contribution.
I was.
It is unfortunate that his party do not have the ability to recognise that. It any of them have the ability to do so they have not the decency or goodwill to come into the House and praise the budget for what it is worth.
This is one of the most significant budgets to be introduced in recent years. It is a watershed in our economic history. It improved the climate for employment and has improved the taxation system. Everyone agrees that the PAYE sector are over burdened. This has been the position for many years, but it took this Minister to change that radically. He has reduced taxation from the top band of 65 per cent to 60 per cent, the next band to 48 per cent and the next to 35 per cent while at the same time he has increased the personal allowance. That was a major step given our economic climate. I congratulate the Minister and the Govern-ment for taking that initiative. Many of us would like if he was in a position to go further and reduce the level of taxation on the PAYE sector more significantly. However, we appreciate the constraints on him and realise it is not possible for him to take the major steps many of us would wish him to take. Given the strategy this Government adopted they will be in a position next year and in the years to come to further reduce the burden on the PAYE sector.
As regards the collection of taxation we must look at sectors which are not paying their fair share. The Minister recognised that and said attention had been drawn to this in the national plan. There is urgent necessity to make the tax collection apparatus more efficient. The Minister said in his speech that one of the biggest problem areas was tax collection enforcement. The Minister announced the setting up of a working group to make recommendations to the Government for substantial improvements in the enforcement process. I urge the Minister to make this area a priority one and to set up the group immediately. The sooner they report back to the Government the quicker we will be on the road to introducing equality in taxation.
Unemployment is our most pressing problem. We have a very young population compared to other European countries. We do not have sufficient jobs available for those coming on to the labour market. The most disturbing fact is that the rate of job opportunities is inadequate to meet our growing labour pool. We have often debated the causes and effects of unemployment, but we have failed to recognise that all Western world economies are experiencing this phenomenon. Traditional employment is reducing in all sectors of these economies with the growing impact of technology and the natural exhaustion of one time labour intensive industries. The Western world is further threatened every day by growing competition from Eastern countries, frequently referred to as Japan Incorporated. We have only to look at the manufacturers of televisions, motor cars, cameras and the electronics industry to see the mighty impact Japan is having on these areas. One of the implications of this is that we will continue to have difficulty in attracting job opportunities, and as a result we need to develop our natural resources to their fullest potential. I urge the Government to press ahead with their policies on forestry and fisheries.
I appeal to the Department of Energy to make a matter of priority the entire exploration of our oil wells around the coast. It is important at this stage that the exploration companies get clarification in relation to marginal wells and the economic benefits to them should oil be discovered. It is important that this be clarified sooner rather than later and I urge the Government to treat this matter as a priority. There is an opportunity there that we should grasp. We are going to become more and more dependent on our own natural resources, and we will have to look at them in a different light than we have done in the past.
The Government have concentrated heavily on the area of import substitution. I should like to congratulate the Minister concerned on the approach he has adopted in encouraging this trend. It is something we must continue to develop in the years ahead. I will not attempt here to address myself to the entire problem. However, it is important to realise that this House should conduct its affairs in a way that does not give the impression to the public that the Government of the day are capable of creating the level of employment that we know is needed. We must face the world economic facts and also the increasing and developing technology. If we are to improve our employment levels the Opposition here will have to change their attitude from the one they are adopting at the moment in relation to any bona fide and constructive proposal brought forward by the Government to reduce unemployment. Bona fide proposals must be accepted for what they are by all sides of the House regardless of who are in government. If this House adopts a positive approach it will encourage the people to look more to themselves and to their inherent ability. Within each person there is an ability to develop and to fend for himself. This is so in the case of the Irish people and particularly the case in respect of our young educated people. This tremendous ability should be encouraged.
This budget was very encouraging for young people. It lifted the dreadful depression that seemed to hang over everyone's head. It gave a feeling of hope that the country was going somewhere, that there was potential and possibility for all on this island. In this House we have a responsibility to give every encouragement to young people by adopting a positive approach here. We should not have a continual negative approach where everything that is proposed is automatically opposed just for the sake of opposing it. Instead of having constructive opposition there is a continual debate with no constructive proposals from the Opposition. This is very unsatisfactory. If this House is to maintain credibility we will have to change our entire approach in that area.
Another area that offers great scope for development is tourism, and the budget will make a tremendous impact on that industry in 1985. I should like to congratulate the Minister for allowing a reduction in taxation for the hotel, car and boat hire industries. I come from Clare, which depends heavily on the tourist industry, and I should like to welcome the measures in the budget. Many of the people in the hotel and car hire industries and in other areas of tourism recognise the major steps the Government have taken to help the industry.
When I spoke here last year on tourism I forecast a bonanza year for that industry in 1984. At the time the hotels' federation objected to what I said and they were very annoyed about it. They now realise they were proved wrong. Today I am prepared to say we will have a much better tourist industry in 1985 than we had in 1984. It is important that the tourist industry and those involved in it recognise that fact. Tourism is a growing industry. Employment conditions are changing throughout the world, there are increased leisure hours and longer holidays, and these factors will have considerable impact on the industry. We must ensure that our standards are kept high across the board. This is very important, and we must also be seen to give value for money. There is room for improvement here. I appeal to those involved in tourism to make every effort to ensure that high standards are maintained and improved in all areas of that service industry.
Recently in this House and in the committees of this House the body responsible for the development of small industries in the mid-west was subjected to much criticism. I should like to take this opportunity to comment on the criticism made in relation to SFADCo specifically. They are based in Shannon and are responsible for development in the mid-west region. As a Deputy for Clare I realise that SFADCo have done tremendous work for small industries in the mid-west region in recent years. Above all other semi-State bodies they have been very successful, and it is unfortunate that Members of this House felt justified in criticising their activities. If it were not for SFADCo many successful small industries would not be in existence, and that is something for which we should commend SFADCo. We know that every State body has defects, but if I were to list in order of priority the greatest offenders so far as the semi-State bodies are concerned SFADCo would be at the bottom of my list. It was unfortunate it was brought into disrepute in the way that occurred recently. Possibly the Deputies who spoke in relation to SFADCo were not as well versed as they should have been. The criticism and the scathing attacks on SFADCo were unwarranted, unnecessary and unfair. We need only look at the American economy to see that the American Government, and particularly the Republican Party, recognise that small industries will be the major development in the future. They are concentrating heavily on encouraging small new industries in the United States. The White House and President Reagan frequently meet what they call "futurists". In the mid-west region we are a step ahead, because we are developing what the Americans are now trying to develop. They recognise, because of increasing automation and developing technology, that everything will have to go into smaller areas because of the decreasing need for a heavy labour force. Therefore, people must look to certain areas with a view to creating a niche for themselves.
I will give an example. A lady in my constituency of Clare saw an opportunity to manufacture radons. She is Angela Collins-O'Mahony who operates Essco Collins Limited. Her development has proved very successful and is a typical example of a successful small industry that saw an opportunity, explored it to its full and developed it with the assistance of greater expertise from the US. We can develop this joint venture approach further, because we are ideally situated for such joint ventures. The IDA and other developing agencies should look to this for greater development.
We all recognise the supreme importance of agriculture to the economy.
Debate adjourned.