Deputy Leonard was in possession. I will call on the Minister to conclude if I do not get a speaker.
Mr. Kenny rose.
Financial Resolutions, 1985. - Financial Resolution No. 9: General (Resumed).
Debate resumed on the following motion:
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.)
On a point of order is the debate concluding?
The Chair was trying to pull a fast one.
Mention the hospital. The Minister is in good humour. He got his way last week.
Other events superceded this debate, for example, the Family Planning (Amendment) Bill and the discussion surrounding the emergency legislation introduced by the Government to take control of funds supposedly in the hands of the IRA. Then there were various political matters concerning Members of the Opposition. With it all, the political talk as far as the budget is concerned has dwindled a great deal.
I listened to many speakers over the last three weeks each commenting on the value of contributions made by Deputies. It is important that even though the budget has been announced for some weeks, Members still have an opportunity to reflect on it and put forward the views of those they represent. The budget aimed at three important items: improving the environment for increasing employment, the reformation of the tax system and the protection of those on low incomes from the impact of the recession. The budget should be seen, not in the light of a giveaway budget but as a budget of reform. It is a reforming of the tax system and, as was pointed out on budget day, tax reform will help to create conditions that will favour expansion of employment, that will reduce opportunities for evasion of tax and restore a competitive balance between domestic business and the commerce and trade of Northern Ireland.
On a point of order, is it not usual to have a representative of the Government present when a young Deputy is making such a valuable contribution?
The Chair has no control in that regard.
There must be a Minister present.
Can the Deputy refer me to the Standing Order which stipulates that?
We will manage to hold the fort for the time being.
Notice taken that 20 members were not present: House counted and 20 Members being present,
I thank Deputy Tunney for his concern that the Government benches be occupied.
I consider the Deputy to be worthy of at least the Minister of State.
There was nobody on the Front Bench of Fianna Fáil for half the day yesterday. Perhaps they were at Dublin Airport.
There are people well paid to be on the Government Front Bench.
Order, please.
As reported in The Irish Times of Monday last the Minister for Finance said, by way of a prepared script, that spending would exceed revenue by 30 per cent in 1985, that the debt service alone this year would consume almost 35 per cent of tax revenue, or virtually the entire take from income tax, and that this necessitated of itself a curb on expenditure. The Minister defined the issue as being a matter of how to achieve this goal as quickly as possible with the minimum dislocation to the performance of the economy and the position of the disadvantaged.
That is the kernel of the problem, and it corresponds with the statements made by Deputies here in the past number of weeks concerning the lack of employment and the various advantages and disadvantages in our society. The 1977 budget, which was introduced by Fianna Fáil in Government, is responsible primarily for the economic crucifixion of our people. We are still paying for the seed that was sown at that time. Irrespective of one's political views one must accept that the massive debts incurred at that time are not yet paid off. This is putting economic pressure of an unprecedented kind on all of us. Those who have lost their jobs are carrying the burden of economic adjustment for everyone else while those who retained their jobs after the 1977 to 1981 period had no wish to reduce their lifestyles appreciably. This has necessitated even further borrowings with the consequent interest repayments and, in turn more bad debts.
Additional spending in 1985 obviously means extra debt and that means extra interest payments in 1986. That situation in turn means higher taxation and probably more people losing their jobs. I have been intrigued by speeches from the Opposition regarding the current budget deficit. On the one hand Deputies opposite slated the Government for not being in a position to bring the deficit in this regard down to 5 per cent, and to abolish it if possible, while on the other hand they have spoken repeatedly about what would be likely to happen if the level were reduced.
On 10 October 1984, Deputy Haughey said, in referring to Building on Reality that for two years the Government had kept on telling us that they were devoting all their energies to putting the public finances right but that they had not done so. He said that the foreign debt was two and a half times what it was three years ago and that the document stipulated that the current budget deficit would remain at its present level of about 7½ per cent of GNP not merely in 1984 but in 1985 also. He went on to say that on the revised GNP figures published earlier in the year the current budget deficit in 1981 was 7.7 per cent of GNP and that in 1985, on the basis of the decisions in the Government's document, the current budget deficit would be 7.7 per cent of GNP. The Deputy pointed out the various difficulties facing the country. The implication is that if the current budget deficit were to be reduced to the level expressed in Deputy Haughey's statement, matters would be much worse than they are.
On the following day, Deputy Reynolds said that in regard to borrowing and bringing the State finances into line, the projection is that the current budget deficit would be 5 per cent of GNP in 1987. He made the observation that the greatest let down for people generally was when the Taoiseach did a U-turn on the current budget deficit. Deputy Reynolds, too, advocated an immediate reduction in the current budget level but he must have realised that that in itself would impose even harsher and more stringent pressures on the economy and on the people.
On 16 October 1984 Deputy Bertie Ahern said that bad as the situation was it would have been worse if the Government had taken the advice of the Governor of the Central Bank and opted for eliminating the budget deficit for 1987 instead of reducing it to 5 per cent of GNP. He said that for those people who are unemployed or who for whatever reason are on the breadline the adoption of the suggestions by the Governor of the Central Bank would have made matters worse. That is an indication that the Government realise the implications of an immediate reduction to the level of 5 per cent.
It is interesting to note that between 1970 and 1980 in the US about 15 million jobs were created in a population of about 220 million while the corresponding figure for Japan was 3 million new jobs in a population of about 70 million. However, in the EC, in a population of 270 million, 750,000 new jobs were created. That would appear an almost unbelievable statistic but it was quoted recently by the CEO of the IDA. But one must ask what kinds of jobs were created in the US and in Japan and where we have failed in the Community as a whole and as a nation to measure up in terms of the creation of employment.
There is a need to create a mood of optimism and of confidence. An examination of the figures for the past number of years does not lead one to believe that there has been sufficient optimism and confidence in the climate for employment creation. Potential employers will now find it more beneficial for themselves to hive off any profits or lodge them where they might give a better return than Government securities or venture capital or the risk of attempting to set up a new industry or expanding ones which exist would yield. The climate of optimism and confidence must be tempered with a sense of the intensity of the competition for the attraction of industries into our country. Discussions with the IDA, CTT and various industry inducing agencies give one an idea of the pressures facing the IDA in terms of attracting industries in here. We are an insular nation removed from mainland Europe, therefore removed from mainland markets and so we require in the main transport subsidies and various other incentives to get foreign industrialists in here. Many of these come in for a short time, avail of the various grants put out by the various agencies and leave once the terms of their export relief are up.
The dollar has become so strong of late that financial commentators in many Western Governments are seriously concerned about it and about the potential danger inherent in its continuing strength. President Reagan said recently that his intention is not to toy with the dollar at its present level. For every cent that the punt drops against the dollar the cost to this country is in the order of £3 million increased foreign debt repayment. Recently I saw a documentary on the BBC which I found very disturbing in that it revealed that many Western heads of Government together with their financial advisers appear to consider that if the dollar continues on its upward path it will be very much overvalued and could through various difficulties induce another recession in the US which would have a follow through effect throughout Western European democracies in the next two or three years. One wonders about the political aspirations of the EC. It has taken over ten years to put together a foreign passport and various member states have still not agreed on the costings of this and how it should be implemented. When they get down to grapple with larger, more political problems one wonders where their real interest lies. One man's disadvantage can be another person's advantage, and the strength of the dollar itself should be good for our exports.
CTT in a recent report stated that their projects for the coming year were that they would provide a programme of incentives and services for at least 2,400 exporters and that these services would include the provision of trade information to approximately 2,000 firms, a marketing advisory service both at home and abroad for about 1,200 firms, arranging 3,500 exporter visits to be organised through their overseas offices, preparing 2,000 research reports by the overseas offices and making something like 7,500 trade contracts to be carried out by the head office for approximately 850 firms. That is a commendable projection, and the Minister for Industry, Trade, Commerce and Tourism and the Minister for Finance in terms of the strength of the punt against the dollar should see to it that CTT are given every possible assistance in their effort to break into the American market. That can only do good for exports for the country and help employment. Within the mood of optimism and confidence created, reward for investment in hard work must be seen and I trust that the projections through CTT will result in increased employment in that respect. People will not invest money unless an adequate return is evident from any investment they might make. The incentives to them to invest money should be at least equal to the risk they might take in buying Government securities.
The black economy is on the increase and we have all heard reports concerning the amount of money leaving the country. The estimated figure appears to be upwards of £300 million a year haemorrhaging out of this country. If that allegation is true, then surely there must be some authority or ability within Government to harness that kind of money and use it for employment creation potential within our State for the numbers unemployed here. It is interesting when comparing the energy, motivation and incentives that exist in the US against Western countries and particulary here, to appreciate the level of interest that people have in work and job creation. At present the US are going through a second industrial revolution. The shift is towards the information and service industries and high technology.
The key element in the attitude of American workers is the discretion they are given in the workplace. During the first industrial revolution in the US the level of that discretion was very low. People left the land, crafts and so on and headed into various industrialised centres where the assembly line did not demand any great level of motivation, where jobs were simplified and concentration was on increased output and productivity. That left many of the high discretionary jobs in agriculture and the various crafts in decline. In the mentality of the American worker are two contracts, first the economic contract in getting to work, staying there and having the resulting material benefits from salary, and secondly, of late, the psychological contract in that blue collar workers in many cases have now more discretion in their areas of work than white collar workers have. They see this as important for the value of the job, for personal challenge and also as a result of management's ability to upgrade skills and accountability within the various departments of industry.
This trend in American industry giving workers much higher discretion than they had heretofore, naturally, leads to increased motivation and personal challenge and, therefore, a greater interest in one's work. For instance, in 1950 the goods producing sector in the US comprised 41 per cent of all jobs while service industries accounted for something like 59 per cent. In 1981 the goods producing sector was 28 per cent of all jobs while the service industries had grown to 72 per cent. This country can learn a lesson from the kind of jobs that have become available in the US in the 1970-80 period. While it was a privilege to have a job during any recession, it has now become a demand and a right for everybody.
A study carried out by a Professor Cherrington in one of the universities there, in which he clocked behaviour over a two year period in an objective sense, revealed that half of the workers' time was related to the job and the other half was related to coffee breaks, late starts, early finishes, personal activities and idle time. A lesson can be learned from that kind of study. The management courses run by the IMI and the various other bodies could lend themselves to that kind of activity. We have heard of the poor performance of many of our industries, heightened by poor labour relations. Management should see to it that their workers have a higher interest level, greater motivation and greater discussion in the work place.
Naturally the work place itself has strong connotations for family, status and authority. If that were handled properly from a management and skills point of view, much could be gained.
The average business has been under enormous pressure in recent years. When books are audited at the end of the year the accountants usually tell an industrialist who is under any kind of pressure to shed labour and to put in machinery that will not go on strike, that will not answer back and that will perform at maximum productivity level on a continuous basis. Many industries here who have expanded in the past ten years and who find themselves under pressure from a competitive, quality or undercutting point of view, instead of sustaining the workforce on a three day week to meet that level of competition and demand find that their entire industry goes to the wall. In many cases the markets they had three or five years ago prior to their problems developing are still there. However, there is an inability to reduce the output to that level of market and in many cases the pressures on the industrialist bring about the demise of the entire industry and more people are put out of work than is necessary. This has happened in a very personal sense to people who have over-borrowed or who have taken out too high mortgages. Then, because of redundancy or for some other reason, they find it is not as easy to meet the repayments. If they had the opportunity to reduce their lifestyles to the standards obtaining five years prior to their problems developing they would gladly accept that opportunity. The vital thing is to hold what we have and to expand where that is possible and necessary.
How does this country measure up in terms of creating a suitable environment for industry, where industrialists and employees can be motivated to increase national output? What atmosphere of optimism and confidence has been created by this budget and by the Government? In the industrial sense, what platform do the Government stand on? Some 5,000 people have availed of the enterprise allowance scheme in the past 12 months. It will be interesting to see how many of these people will be able to continue in employment after one year. Under this scheme married people get £50 a week or the entire amount of unemployment benefit in one lump sum in order to develop a business. The social employment scheme announced recently is expected to take 10,000 off the unemployment register. Difficulties have arisen because the National Manpower Service, who are to operate the scheme, are unwilling to do so because of lack of funding and extra staff requirements. I understand that calls for the appointment of an arbitrator have been made to the Minister for the Public Service and I trust he will ensure that this matter is sorted out in the shortest time possible.
Representations have been made about the level at which payments under the social employment scheme have been struck. Many people are working very hard for £90 per week, even though I accept they may be eligible for the family income supplement. However, if a worker gets £70 for two and a half days work, naturally some people will question why they should work a full week for £90. That is something that must be treated with due care and attention.
The Youth Employment Agency have given £92 million and many imaginative and worthwhile schemes have been carried out. The important point in those schemes have been the appointment of supervisors. In many cases this has been a waste of time and money and has not led to any element of training for young people. Where the supervisors had their programmes properly set out and where the necessary discipline was imposed, the schemes were worthwhile. We have had the alternance scheme, which is a concept in training and work experience, the employment incentive scheme and others.
Deputy O'Kennedy when speaking in the debate challenged all and sundry to indicate one area where jobs would be created as a result of the budget and he repeated this call several times in the following days. However, as things changed and political discussions became more heated it appears this challenge was not answered either by his own side or by some people on this side. The budget will help people involved in tourism and it will also help in the diversion of cross-Border trade on this side of the Border. The manufacturers will also benefit from the cash flow effects of the reduction in VAT.
With respect to cross-Border trade, in some cases we have a rather warped mentality about where we are heading as a nation. One can find republican sympathisers in a most vociferous mood singing republican songs; but in many cases if one asks them where their wives are one is probably told they are up in Enniskillen with the ICA or some other organisation on a day's shopping. It is time that kind of mentality was thwarted by Government action and I was glad to see the response of the Minister for Finance to the calls made by Border Deputies in particular to do something about the matter. The electrical industry expects sales to increase by 7 per cent to 10 per cent in the coming month and the Minister should be congratulated for his action.
VAT at point of entry has had a most detrimental effect on manufacturers and industrialists. I have had many representations from people who have entered the country at the North Wall or at other points of entry complaining about the lack of facilities that exist at many of those places. If the documentation is not absolutely in order they may have to wait overnight before getting the various loads released. Last Christmas I received representations from a person who came from the North with a container of toys. He had to spend two days going through every single item, setting out the serial numbers, the country of origin, the category of toy and so on. These people are investing in businesses and are investing under extreme pressure and their representations must be considered. I hope the day will come when the Government will dispense with VAT at point of entry. I will refer to tourism and its potential for employment at a later time.
The Republic of China and Taiwan are most progressive from the industrial point of view. This year is the Year of the Ox in China and they expect to invest more than $20 billion in the next few years to achieve a further growth rate of 8.6 per cent in their economy. Their stated aim is to help traditional industries to renew their equipment, to increase productivity, to expand local industries, to strengthen their research and development and to provide information on marketing and investment opportunities.
The Minister for Industry, Trade, Commerce and Tourism has covered all those points in various addresses and through various actions on behalf of his Department and the Government. He referred to profit sharing and I wonder why this had not been followed up. When compared with industries here, their counterparts in the US and in Britain are up to 150 per cent as profitable. Six thousand companies in the United States operate profit sharing. This gives increased motivation to many workers. Management might be wary of it because it might lead to acquisition by workers of confidential material. This should be looked at. Over the last five years there have been 1,500 employees in Britain involved in this area and this has led to increased productivity and harmonious industrial relations in each case. If management and workers have a common goal it is easier to achieve stated objectives.
I noted Fergal Quinn's recent statement about a £75 million market in fruit and vegetables. In 1983 we imported 31,421 tonnes of potatoes and £146 million worth of fruit and vegetables. Some of these could not have been grown here, but others could. Instead of wishing to be at the top of the market someone should start at the bottom getting advice and encouragement from existing State agencies. In 1984 imports of fruit and vegetables reached £149 million from January to October, and that included 35,000 tonnes of potatoes at a value in excess of £7.4 million. For an agricultural country with many different soil conditions we could make genuine in-roads into those imports and provide employment at home.
I recently heard of a very observant person who took the time to travel to the Dublin market every Monday morning for six months. He decided to grow cabbages. First he inquired about markets in his local towns and he was assured of them. Then he decided to get the best strain and varieties of cabbages to grow in a ten acre plot on a rota basis so that the best vegetables would be available at any one time. When the crop came to maturity the local markets were not available. Many people preferred to buy from the Dublin market and to have the vegetables transported by truck. He said his mistake was that he could not market the goods he produced. When he went to the United States later he went into a very large supermarket and saw that a local farmer had a stand in that supermarket. He sprayed the vegetables with water from a container giving the impression that the vegetables were fresh from the field, even though they may have been there for some days and the unsuspecting consumer bought those vegetables. The vegetable industry is run in a haphazard way. There is too much of one variety grown at one time and not enough of another. If the vested interests were to get together and decide what should be done, we could make inroads into those imports.
It is a long time since the first Cumann na nGaedheal Government backed Dr. Drumm's invention for a battery which would provide an experimental train from Dublin to Greystones. Over the years the operations of CIE have been a bone of contention because of the number of industrial disputes, the very bad industrial relations and complaints about the quality of service. I want to refer to the train services where CIE appear to be in difficulties. I avail of the transport service to the west. Over the years there have been calls for new trains and an increase in the standard and quality of the existing service and this has been brought about lately. In his capacity as Minister, Deputy Flynn, did not put his head on the line but he made strong representations to his Department that the supertrains and the better quality trains should be put on the western line. That has happened, but the trains cannot be used to the fullest extent because of the poor quality of the lines. Many railway stations have become very dilapidated. The architectural quality of those buildings is second to none. The social employment scheme could be used to clean these buildings and provide a better visual impression of the country.
I am intrigued by the price system CIE operates. The normal train to the west has a carrying capacity of 300 passengers. This is in competition with a fleet of private buses from provincial towns who charge a return fare of approximately £8 to £10. CIE operate various charges on different days, but the average consumer is not aware of this. It costs approximately £26.50 for a return ticket from Castlebar to Dublin but the equivalent rate on a private bus is £8. Students, civil servants and young people from the west living in Dublin do not have the money to pay the high CIE fares. Admittedly the fares are reduced at the weekends but people are not aware of this even though the lower rates are advertised in the local papers.
I am having some difficulty in relating the Deputy's remarks to the budget.
Recently I was coming to Dublin on a morning train with the capacity for carrying 300 passengers and there were only 92 people on it — 40 pensioners, three students and the rest fare-paying passengers. If CIE reduced their fares, as they did last November, they would have a full train and this would make economic sense.
The number of unemployed has always been a bone of contention. In his speech on the Finance Bill on 17 June 1982 Deputy O'Kennedy said, at column 506 of the Official Report:
On the question of the level of unemployment, which has been mentioned so often, perhaps when one is on the Opposition side one likes to blame the Government. I have been on both sides and now find myself on the Government side but not in Government so I can perhaps take a rather special view of it. But we all generally recognise that the level of unemployment in terms of the figures presented is not the true level of unemployment. Most Deputies know that in many parts of the country where we supposedly have high levels of unemployment the fact is that they are not nearly as high as are being registered in the unemployment exchanges, because many people are doing what are called nixers. This could be dealt with by a strengthened inspectorate, but it also calls for an awareness on the part of the citizen.
We have an inherited attitude about informers. Those who communicated with the State to the detriment of their fellow citizens did not earn very much respect but, in a sense, the whole community now needs to become informers for the public good.
The unemployment figure stands at 234,000 approximately. This would lead one to believe that about 80,000 to 100,000 of those registered unemployed people are not unemployed. This points to the growth in the black economy. One has to weigh that against the robbing of the PAYE workers to pay people who are registered as being unemployed but who are not unemployed. It is the system which is at fault. The PAYE worker should be given an incentive and should be seen to be able to get a reward for his work.
Deputy O'Kennedy said that this budget would not create jobs. However the reduction in VAT on accommodation in the tourism area creates a significant potential for job creation. Because of the strength of the American dollar against our punt there will be a bonanza for American tourists if Bord Fáilte have the capacity to attract them. We should have a significant increase in American tourists this year. At the higher end of the market the Americans have already booked out many of our finer establishments. Ashford Castle where President Reagan stayed last year has had enormous calls on its capacity. We are getting a new breed of tourists from the Continent, people who travel around staying in caravan parks and camping. This market has not yet been fully exploited. We have the best fishing, hunting and outdoor facilities in the world. Many athletes would agree that we have the best outdoor pursuit facilities in Europe. It is difficult to beat the friendliness of our people. This aspect of tourism is very important and we should do everything to maintain the quality of the service we can offer.
In the Irish Independent on Monday 25 February last Dr. Tony O'Reilly remarked that the “Brits Out” policy could lead to a civil war and he praised the Forum document which he described as a unique Grecian attempt in that people came down to the market place and honestly and honourably put forward their points of view. In relation to the tourism industry it is important to understand the mentality of Irish Americans. There are something like 40 million Irish Americans who have a legitimate right and aspiration to see the country of their origin reunited. However the activities of the Provisional IRA and others have led Irish Americans to believe that the country is at war with itself and with Britain. Many Irish Americans are misinformed as to the situation here, perhaps because of history, the thousands of miles and the generations that separate us. It should be remembered that the annual invasion by Irish Ministers of the United States on St. Patrick's Day does not really inform the vast number of Irish American households about our situation. It calls into question the ability of Governments to deal adequately with the perception that Irish Americans have of British domination here. The staffs in the Irish American consulates are first class and do an excellent job although their numbers are insufficient to cater for the demands. Irish Americans who might wish to travel to Ireland on holiday or who might wish to invest their money here are not inclined to do so on the basis of their perception of a country at war with itself and with Britain. The Government should make efforts to inform the Irish Americans of the true situation here and to assure Irish Americans that if they invest here they will get a return. That policy will demand a high level of commitment from our personnel in the US. Calls have been made over the years for the floating of Government bonds by the American President to allow Irish Americans to invest here and that is an important point to remember in the context of the budget.
Mr. O'Kennedy in his contribution to a debate on 17 June, said:
The Department of Health particularly, should insist on not just being a channel of public expenditure. They have an obligation which, speaking from my experience as Minister for Finance, I am not convinced they have always readily accepted.
Will the Deputy give the reference?
It is the debate on 17 June 1982 at column 502, on the Finance Bill. Deputy O'Kennedy then pointed out that further savings could be made by the Government provided they went into conformation of standards, prescriptions and so on. It is time the Government looked at legislation which governs health boards. The setting up of the health boards by the late Erskine Childers has probably unintentionally led to them becoming licensed authorities to spend ever-increasing amounts of public money so that the Minister for Health is now in difficulties with many health boards in relation to cutbacks. Few businesses would appoint chief executive officers for life with the authority to spend the amounts of money that have been spent by the health boards over the years.
In many cases savings were not implemented when they could have been. For instance, in the area of dental care I have heard Deputies speak about grandiose schemes for orthodontists and so on. The Western Health Board had something like 3,300 people on their 1983 list for orthodontic treatment and about 4,000 people in 1984. The cost of a fixed appliance in any orthodontic treatment would pay for 40 to 50 ordinary examinations. What has happened is that the most vunerable age group between 12 and 18 have been left out in the cold and in many cases are not examined at all. This results in some orthodontic difficulties which could have been prevented, at a cheaper cost, from arising and needing treatment later on.
Forty years ago an old age pensioner was entitled to get glasses and dental treatment when the County Councils administered the health schemes. At present he cannot be catered for in that way, but at the same time we allow a person with a very high income to have a free bed in a public hospital. We have gone too far along that road especially when we consider that many people in the high income group would not avail of a public bed anyway. The health boards have introduced fine schemes in relation to speech therapy, occupational therapy, child care, psychiatric services and so on. These are all valuable but what has happened is that we have set up an administrative system of programme managers and various grades of officers and administrators who are removed from the ordinary people and who do not know the effects of the schemes they are implementing. For instance it will be found that the calls on the time of a dentist who operates for any health board are enormous and he is not able to cope with the demands. They often have to treat people who have not been listed in their registered appointments. What is a dentist supposed to do if a casualty comes in having broken his teeth while playing a hurling match? Should he write to the CEO and ask for permission to operate? In many cases dentists are operating on up to a third of their patients who were not registered appointments and they do not get paid for that work. This is a service which needs to be looked at seriously in the context of the effect of the overall budget.
The only aspect of agriculture I wish to refer to is the proposed land tax. I regard it as being as fair a system as can be devised. However, there would appear to be a need for some sort of sliding scale for those above the 20 adjusted acres rate. We have had various political speeches on this in the last two months. True to form, Fianna Fáil have used it to try to stir the emotions of the farmers, to try to bring about an atmosphere of hysteria. They have been saying that the Department of Agriculture intend to go to town on this. The effect of Land Commission inspectors going out to do the valuations will be beneficial. They are highly qualified and should be able to do a good job. I would issue a word of caution to the Minister. I suggest that the demise of the Land Commision could lead to a new system of Irish landlords because you could have people buying up land at an enormous rate, speculating saved money in this way and thereby creating a new system of Irish landlords worse than that of previous years. In regard to the land tax I should like to give a quotation:
What the farmers should pay should not be annuities but a land tax for the privilege of using their land.
That was uttered by none other than the late Eamon de Valera on 28 June 1927 in an interview with The Manchester Guardian. Those who espouse his cause should take a look at that.
I listened carefully to some of the speeches made in regard to the employment assistance scheme. The Minister for Social Welfare has gone a reasonable way in his attempt to see that justice will be given to every person. The onus and the responsibility is on social welfare applicants in accordance with a Supreme Court decision of years ago. They must put forward their true list of expenditure which they will be claiming against assessed income. The Minister provided a list of items against which people may claim. People may say that social welfare officers may have hounded applicants throughout the country but when one sits and talks to applicants one can give them explanations which they understand and in many cases accept. When you try to tamper with a system like this, instead of giving more to those who deserve it you often end up by destroying the whole system.
I should like clarification in regard to medical card assessments which do not seem to be as clear as they are for social welfare benefits. In December the Minister said that generally a person in receipt of unemployment assistance would also be entitled to a medical card. That is not the case and I should like the Minister to say in his reply what are the criteria laid down for social welfare officers.
In relation to the bovine TB scheme, I trust the veterinary officers will accept the calls by the farming organisations and the Minister so that at least a start will be made with the scheme as proposed by the Minister. If difficulties arise later I am sure the Minister will be lenient in some respects. I was glad to see the recent statements about the western drainage project.
I will not comment on car thefts, about which many statements were made during the debate. However, just to show how times have not changed I should like to read an extract from The Western People at about the time the late Mr. de Valera made his statement on the land tax:
Look back, then, to 1921, to 1922, with its turmoil and murders and gun-manship, its cannonading and midnight raids, its horrors, its tragedies and its enmities, its broken bridges, and nameless graves, its uncertainties from hour to hour, when neither banks nor Government, nor even life or property were safe from moment to moment when County Councils were more effectually silenced and abolished than any declaration of a Minister could silence or abolish them, when farmers suffered less from bad prices than from trenched thoroughfare, and when most of them would have gone ungrumblingly to the brink of starvation if only they could feel certain that the morrow's sun would not shine through where the night before there was a solid and opaque thatch, or that their persons or possessions would not be shot up before the next sun had gone down. It is well, is it not, that we should sometimes remember that we did not always enjoy the freedom of speech, of movement, of action, aye, even of soul or conscience, that is ours to-day. There is a certain solace in the knowledge that if we are growing old, we are growing old in relative peace. The danger lies not in the length of the years, but the shortness of memories.
I do not think times have changed in many respects. I will conclude by saying the budget is progressive. We could be one of the foremost nations in our continent and I hope the Government will continue by giving encouragement, increased motivation and dedication to the cause for which they were elected. I know they will not fail us.
Ireland is going through the greatest economic crisis in its history, and despite Ministers' repeated assurances that Ireland is "poised for recovery", the economic recession is worsening, the numbers of firms closing are increasing daily, and rising unemployment figures make depressing reading. Those who are still fortunate enough to hold down jobs, understandably are frustrated at the Government's taxation policy which is the most regressive in western Europe. Am I exaggerating?
The figures speak for themselves. Almost 2,000 firms closed down in the last two years and we have had a considerable increase in the number of unemployed in the last 12 months alone. The Wall Street Journal in a recent editorial highlighted the injustice to the Irish worker and businessman. It pointed to the very attractive incentives available to foreign investors in Ireland where there is an average of 30.7 per cent return on investment, twice the Common Market average. It referred to the right to repatriate profits and to the added advantage that foreign workers in Ireland are not subject to Ireland's high personal taxes. That is the great attraction for foreign business coming here. Of course there is no return to the Exchequer here by way of taxes. By contrast, the Irish businessman is discriminated against, vis-à-vis his foreign counterpart, with a 50 per cent corporate tax and a punitive personal tax and a high VAT rate. The workers here fair no better under foreign employers than under Irish employers.
Our unemployed now total 234,000, 17 per cent of our workforce, almost one in six. However, that figure is not accurate because there are many in AnCO courses who are not employed, thus disguising the real unemployment figure. This figure cannot in any circumstances be justified as in statements by the Tánaiste such as the following: "1984 saw a slowdown in employment loss as against 1983 or 1982". Whom is he trying to delude? This figure of 234,000 unemployed is a damning indictment on a Government with a so-called socialist component who seem more preoccupied with their monetarist policies than with easing the hardship of these people. We must remember that over 50 per cent of these are on unemployment assistance, which is means tested. Because of this, it is no exaggeration to say that today as much as 25 per cent of our people are living at or below poverty level. I do not think that charges of abusing the social welfare system can ever disguise that fact.
With the country in such a deplorable state, one must ask what are the options open to us to get us out of the difficulties and help us to pay our debts? First, we could cut back drastically on social welfare benefits and payments; second, we could reduce public expenditure generally; we could hive off the semi-State industry, reduce considerably our army of civil servants, teachers, doctors, nurses, gardaí and the Army, for these groups are what comprised the public service; third, we could increase further the direct and/or indirect taxes, or alternatively — and in addition perhaps — widen the tax net to pay for the public expenditure costs; fourth, we could borrow more at home or abroad, or do both, and let posterity pay. These were the options facing the Government and the recent budget was their answer. What exactly will this budget do or what does it aim to do to solve our national economic problems and restore the morale of our people? The Taoiseach in his budget speech has said:
We have at a stroke rationalised and simplified the tax system both in respect of income tax and VAT.
One would be justified in assuming that the main purpose of the budget was to bring about tax reform. The Taoiseach's statement was a very bold statement which should be analysed carefully. He claims credit for what he calls "so many radical and innovative measures". The 65 per cent tax band has been abolished, but what we must always remember is that it was the Taoiseach and his Government who introduced that tax band in the first place. The abolition was an admission that they were wrong in introducing it. He said that selective changes in the other tax bands have also been provided for, but hardly anything approaching what the Taoiseach calls "radical and innovative measures". The 35 per cent VAT rate has been reduced to 23 per cent. Was that radical and innovative? We must remember that it was the Taoiseach and his Government who introduced the 35 per cent VAT rate in the first place. The Taoiseach is admitting that he and his Government were wrong in introducing this punitive VAT rate which had a disastrous effect on the economy. However, he is making a bold claim to radical and innovative measures now. Can this be termed a major achievement of the present Government? No, it is an insult to our intelligence to suggest so.
In the case of VAT, there was some financial juggling in this budget, forced on the Government by cross-Border trading, not done by their own volition or as radical measures in the interest of the country. They had no alternative and it is a lie to suggest that these are innovative measures.
An untruth, Deputy.
It is a lie for the Government to suggest this and that is not charging any person, a Leas-Cheann Comhairle. It is a lie for them to suggest that these are radical and innovative measures.
Has the income tax reform of which the Taoiseach spoke so eloquently eased the burden on our PAYE workers? He says:
We have brought one-sixth of those on higher tax rates down to the basic 35 per cent income tax rate.
Sixty one thousand taxpayers, or 12 per cent of the total number of PAYE workers were affected. What about the 448,000 PAYE workers whose position was not improved by this measure which he calls so innovative and radical?
With regard to the excise duty on TV sets, was that innovative? Never. It was again forced on the Government by the cross-Border trade. It was a reaction to the problem but never innovative. Was doubling VAT on house sales from 5 per cent to 10 per cent innovative? This will be detrimental to the housing construction industry. Increasing the grant to first time house buyers certainly will not mitigate the effect of this VAT rise. Increasing the tax on building societies will also be detrimental to this industry. This is the sum total of the tax reform measures of which this Government boast.
The next question to be asked is: what will this budget do to solve unemployment, remembering the 234,000 who are anxiously waiting for some action? The Tánaiste in his letter to the Labour Party of 30 January 1985 speaks about:
A big impact on jobs in specific areas like the newspaper industry and tourism.
In the newspaper industry, I challenge anybody to tell me that there will be more than 200 jobs provided by that measure and that is being very generous. I fail to see how he could ever meet such a target. There is nothing there to suggest a big impact on jobs in specific areas like the newspaper industry and tourism. Again in his letter he talks about:
More good news for jobs with a significant reduction in cross-Border trade.
Again this was forced on him. The problem was created by the Government who had to backtrack quickly to get the country out of the mess. Finally, he says:
The overall thrust of the Budget will be to stimulate confidence, to boost consumer demand, and to stimulate new hope. VAT changes will have a significant impact because they will reduce cross-Border trade.
What does the Taoiseach say about this budget regarding unemployment:
No longer do they [the people] have to watch employment falling and unemployment accelerating out of control.
Almost while he was saying these words, an extra 34,000 people were becoming unemployed. There is no indication whatsoever of the number of jobs that will be created by this budget. If anything, the chances of job losses will be greater than those of job creation.
We must all ask: how far will this budget go towards reducing or eliminating our debts? The Taoiseach says:
This Government has brought our country successfully through the crisis we inherited in 1981 — not, of course, that this crisis has been resolved, but that it has been brought under control.
Perhaps I am a little simplisitic and perhaps I may be a little dense, but I find this statement rather baffling. Bringing the country successfully — note that word "successfully"— through a crisis would suggest that the crisis is over. If you bring somebody through a crisis, in medicine or anything else, the crisis is over. However, the Taoiseach is at pains to emphasise that the crisis is not over, merely brought under control. That is not possible. You either have a crisis or you do not. You cannot have a crisis under control. I should like him to tell us by what figment of his imagination he has a crisis not solved, just under control. He continues:
As a member of this control, the current budget deficit has been brought into line with budget projections.
Last year he told us that the Government brought the budget deficit in under target. One could suggest any target under which to bring it in. In simple terms, this will mean that it will cost £200 million more to run the country this year than last year and the national debt will reach £21 billion by the end of this year. That is what has been achieved.
The Government said there would be no foreign borrowing. Instead, they started borrowing on the domestic market and sent the interest rates rocketing, creating a shortage of funds for private sector borrowing. Even Dr. Brendan Menton, a consultant economist, had some words to say on this in the AIB Review, Economic Outlook 1985. He said:
Increased recourse to external borrowing as a source of funding could dampen the pressure on domestic interest rates, which in real terms are at an all time high. Lower domestic rates would reduce costs and give a stimulus to economic activity, especially investment.
By borrowing on the home market we are now doing the reverse. We are inhibiting economic activity, inhibiting investment and increasing costs. There is no reason why, with our stable currency within the EMS, we cannot borrow at acceptable rates on the European market. There is no reason in the world why we cannot do that and protect the home interest rates.
What has the budget done for the unemployed, the handicapped, the disabled and the socially deprived sectors of the community? The Tánaiste in his budget speech said he fully accepted that this was not what might be called a socialist budget. Well might he make that statement. Of his 5,000 word speech less than 800 words were devoted to the social aspects of the budget. A 6½ per cent increase in social welfare benefits from July next puts this section of the community in a worse position, not better. For years I have pleaded with Governments to ensure that social welfare allowances are indexed annually in line with inflation as of right without any interference from Government in a budget and that, in addition, the Government would increase them in line with improvements in the GNP. It should be done as of right annually and not at the political whim of any Government. There was not one word about children's allowances or about the hardship caused by the withdrawal of food subsidies. There was an admission that the family income supplement scheme is not working and a token gesture to the increasing poverty in our society with a promise to set up a combat poverty agency. I saw the farce of a similar such body set up during the 1973-77 Coalition Government, a farce if ever there was one. That is the total Labour input into the budget and hardly one of which that party can be proud.
It is important to emphasise that point because the Labour Party were in a unique position in the Government, knowing that there could not be any Government without them. Their input could have been significant in improving the lot of so many people in our society. For any of us as legislators it is not sufficient that we condemn things without offering proper alternatives. I have always maintained that if we are prepared to criticise we must be constructive in our criticism.
Hear, hear.
I must say that the Taoiseach's performance in the budget debate left a lot to be desired. He was at pains to emphasise the aid to the Zoological Gardens, the park for Cork and the increased assistance to Irish welfare centres in Britain. I wonder if the increase in aid to Irish welfare centres is in anticipation of massive emigration which is already on the way. I omitted to mention the imposition of VAT on footwear which will cause hardship to needy families.
However, I must say that the public relations job on the budget was wonderful. I have never seen anything like it. It fooled the political correspondents because they were all very much in its favour.
What should the budget have done? As I see it, our semi-State bodies are an intolerable burden on the economy, and CIE is just one example. The decision in the national plan to divide up this body fails to solve the basic problem there, which is that CIE is a loss-making inefficient body not fulfilling the purpose for which it was mandated. Why? It is because the words "incentive" and "motivation" are alien terms within that organisation, and nothing is being done to rectify it. Take the case of the ordinary bus workers. Those good people are an essential part of this organisation but they are barely eking out a living. Do they receive bonuses? No. Do they receive a share in the profits? No. It is a strange situation that the national plan outlines how every effort should be made to encourage private businesses to involve their workers in profit sharing arrangements — indeed, the Finance Acts provide incentives and concessions to encourage such worker participation — but there is not one word in the national plan for the workers in semi-State bodies to share in the organisation. Why? The Government have failed to appreciate the importance of this. It is difficult to understand why they do not set an example to private industry by introducing a profit sharing scheme in the semi-State bodies or by encouraging workers to get shares either free or at nominal cost.
While a member of the Labour Party I could never understand the party philosophy that "profit" was a dirty word. I could never understand the party's support for semi-State bodies such as CIE which are soulless impersonal bodies — I believe the Leas-Cheann Comhairle was associated with such a body — ostensibly operating in the interest of workers but in which workers are treated as robots without interest or a feeling that they belong. How can employment in bodies such as CIE be more spiritually uplifting than in private industry? Would it not seem more sensible that workers be allocated shares in them free or at nominal cost in proportion to their years of service? Would that not motivate workers much more, giving them a say in the operation of their company? Why not hand over these bodies such as CIE to the workers? That was done successfully in Malta with the shipyards. The Prime Minister, Dom Mintoff, said the Government could not afford them and they gave them to the workers. The response was magnificent and productivity increased fourfold. I went there and saw the result. Why is it that we cannot learn a lesson from that?
That is the position, as I see it, with semi-State bodies. I do not think the country can afford the luxury of semi-State bodies which are inefficient and a constant drain on the Exchequer I cannot understand how the present structures of our semi-State bodies, which deprive their workers of active participation and a share in the profits, can be honestly defended by the Labour Party, the most ardent supporters of semi-State bodies. The item is now opportune for a serious debate in the House on this question of semi-State bodies and the role they must play in the future.
And the Deputy's contribution would be to argue for profit sharing in CIE?
And it makes a good profit always?
There will be profits if we get worker participation. Might I ask the Minister of State to defer his contribution until I have finished mine. Unless we apply ourselves seriously to this question there will be a further drain on our natural resources, never restoring balance to our national finances.
I might refer to the latest semi-State body, Telecom Éireann, another company with the potential to make considerable profit. Their only means of doing so is through the creation of a State monopoly. What have Telecom Éireann planned for their workers? Will they have participation in the company? Not as I see the position. They will have guaranteed employment, but one must ask: is that sufficient nowadays? Would it not be in the better interests of the public and employees if they both could acquire shares in that company? The State would benefit, the employees could be given preferential shares, and that semi-State body becoming much more efficient would be to the benefit of the public.
Might I pose the question: what is the difference between State and private monopoly when the workers are not the beneficiaries? The PAYE taxpayer is paying a disproportionate part of his income in tax. Unless we can satisfactorily come forward with some alternative source of revenue to the Exchequer we may find a serious social upheaval on our hands. There is no incentive to work; it is as simple as that. The present Government have chosen to ignore the recommendations of the Commission on Taxation. The Taoiseach has said that with the fiscal rectitude his Government are applying we shall in a few years reap the reward of a higher living standard and lower taxes. Beyond those words there is no guarantee. It is a very simple statement to make, but it offers nothing because the budget offers nothing — he cannot offer anything to the public.
It is difficult to expect workers, overburdened with this tax, to accept such promises when they have been deluded before. It is so ridiculous to ask that, as proof of our sincerity, of the Government's sincerity and as an earnest of their intentions, the Government agree an immediate percentage reduction in PAYE right across the board, giving refunds to taxpayers by way of tax rebate certificates redeemable in, say, five, six or seven years' time? What is so preposterous about that? That would be the best way of telling the workers we mean business, that we are serious about it, that we will issue tax rebate certificates now, redeemable in five to seven years' time. This would restore the flagging morale of our workers and at no immediate cost to the State. Can one imagine what incentive this would be to workers?
That is a subject that should be debated in this House. We need the collective minds of the Members of this House applied to problems such as these. We need innovative measures, but they are not forthcoming from those benches. The public want it, the public demand it. One might ask: is it too proposterous to suggest that perhaps the depopulated area of Connacht province be declared a low tax zone? In such circumstances could one imagine the influx of foreign business tycoons there? Can one imagine the impact this would have on Government Departments which have been endeavouring to decentralise but meeting such resistance? Is that such a ludicrous suggestion? Remember Berlin — the German Government introduced a low tax zone there with tremendous success. This is not my idea; it has been done before. Is it too much to suggest that perhaps a Government representative go and examine such a system? Remember also the Isle of Man, an area smaller than Connacht, a very lucrative island because of its low tax status.
The present policy of the Government — borrowing on the home market and thereby shoving up interest rates — is creating havoc for Irish business people and a serious disincentive to business investment. Is it any wonder there is such reluctance to invest in private industry when interest rates of 14 per cent and more can be obtained without any risk? They have declared themselves to be totally against foreign borrowing. That is understandable in the present climate of uncertain interest rates but it should be possible to borrow at acceptable rates and not start a domestic money market of funds for private investment.
The Taoiseach is an honourable man. There are 15 honourable men in Government — well intentioned, I have no doubt, but totally inexperienced in the complexity of high finances. They are being advised by Government economists who themselves are so inherently conservative that no major innovative changes can be expected. That is the situation as I see it, and I see little hope of change. It is little wonder there is such general malaise through the State? The present Government offer a plan but there is no incentive accompanying that plan. There is no point in having a goal if it carries no incentive, and that is what is missing. Their vague, nebulous, meaningless statement gives no firm commitment of the nation as a whole.
If the workers were promised that their tax bill would be reduced to 30 per cent in, say, three to five years, with a maximum of 50 per cent, with a VAT rate of 15 per cent and no higher, that would be positive and the kind of thing needed to stimulate our people, but there is no evidence of that. That would give the worker something to work for. Such must be Government commitment to gain the co-operation of our people. But they should not ask for sacrifices if they cannot offer some positive hope in return. I would contend we need to motivate our people with offers of tax incentives. We need to create jobs for the 250,000 odd who are jobless. We need to come forward with specific proposals for the elimination of poverty in our society.
Even with regard to the unemployment situation, I do not see how the present enterprise allowance scheme can make much difference to or impact on that problem. There have been statements to the effect that there are 5,000 applications a year with no indication of the success or otherwise of the scheme. But they tend to delude the public that the scheme is successful. We must be told how many of those applications were approved.
Let us be honest about it. We have got to be more radical. We must seriously consider early retirement to provide more jobs in the market place for our young people. If we feel that early retirement is too dramatic could we not then arrange a phased retirement, shortening the working week for those aged 60 and bringing in young people to replace them, again on a phased basis of two to three days a week initially? Where is the innovation from this Government? I am afraid they are not willing to experiment with such ideas, or is it that they listen too much to conservative departmental thinking? That is very obvious to me. I cannot see how such a phased early retirement scheme could be seriously resisted once we arrange for proper benefits to be paid for those opting for early retirement. It should not be beyond the ingenuity of the Minister and his Department to devise a satisfactory scheme.
I might suggest another idea to the present Government. Could we say for every worker employed by a company over and above their present workforce the Department might consider paying a contribution towards the workers wages of a sum equivalent to the unemployment benefit for, say, a period of six months? The cost of such a scheme to the State would be nil, but the return to the State by way of worker paying income tax and PRSI would be enormous. The return to the firm employing the worker could be enormous also, and to the worker himself a boost to his morale with, in turn, a considerable reduction in the dole queue. There are so many jobs that could be got in companies but we must assist them. It would entail no cost to the State and the unemployment numbers could be halved by the implementation of such a suggestion. Of course there would be need for stipulation to the effect that the firm do not exploit workers and also that no worker could be dismissed by the company for a new worker. Each worker under the scheme would have to be paid full wages and recruited from the employment exchange. The return to the State could be enormous and would help to eliminate the black economy.
Why could we not have a clean up programme for public buildings? This is normal work which should be done to prevent deterioration and not just to employ people. The saving to the State would be enormous if a scheme of this nature was implemented.
We must apply ourselves to these problems and come forward with ideas. I read the speeches made by the Taoiseach and the Tánaiste and I did not see anything in them which will stimulate the economy or offer hope to the people. The Taoiseach said that after three successive budgets of a radical and imaginative kind, three years of low inflation rates and rising employment, with unemployment beginning to fall as the special measures introduced by the Government start to take effect, the electorate would in 1987 respond to good Government and bad opposition. Everything seems to be in terms of voters, not people. I do not understand the Taoiseach's reference to three successive budgets of a radical and imaginative kind. Where are they? One third of the Taoiseach's speech was devoted to a vilification of the leader of the Fianna Fáil Party.
It is Deputy O'Connell's party now.
Despite all the gloomy forecasts, this country has great potential under proper leadership. We have a well educated, young population and considerable natural resources sufficient to ensure a proper standard of living for all our people. There is a great danger that we could talk ourselves into a state of despair. President Roosevelt said that we had nothing to fear but fear itself. Of course there are difficulties, but these can be overcome with proper leadership. People need to be motivated and we must provide the challenges necessary to stimulate the economy. We must rid society of the selfishness that exists and which is at the root of many of our problems. The unemployed, the handicapped, the aged and PAYE workers are making all the sacrifices and sacrifices should be made at the top.
Regrettably, many sections of society are not prepared to make sacrifices. Indeed, the recession could be a challenge, and we should not be held back by the conservative elements in Government Departments. Bureaucracy has a stranglehold on the country and is stopping many ideas from coming to fruition. There are jobs in abundance to be created but, in order to achieve this, the people in authority must have the will and determination to do so. We must offer something to the people who are at present losing heart. We could reduce the dole queue by half within a year with a little effort. If we did this, we could restore morale and start a crusade to bring back prosperity and pride to our people.
I was elected to the Dáil approximately three years ago and in that short period I have heard a number of budget speeches from different Ministers. Each time a budget is introduced Members of the Opposition come in here and harangue the Minister. We have just listened to such a speech from Deputy Dr. John O'Connell who, at the end of his contribution, tried to temper his attitude towards the Government by suggesting that there is hope for the future. He seems to have missed a lot that has gone on over the last two years and to have forgotten that, when Senator Dr. Martin O'Donoghue was Minister for Finance, he proposed schemes to provide employment including an expansion of the health boards, and the number of people employed in the boards has increased since 1977 from 20,000 to approximately 40,000 at present. Deputy Dr. O'Connell was very concerned about the PAYE workers, but I should like to ask them if the country has benefited from such a big increase in the number employed in the health boards. Where has this expansion led us?
This Government inherited what has been described by other Deputies as a rag bag economy crippled by stagnation. They have tried to marshal the finances of the country. Most independent commentators agree that the Minister for Finance has made strenuous efforts, which have been successful, in bringing our financial difficulties under some kind of control. In 1984 the Minister predicted that the economy would return to the path of growth last year and, indeed, that was the case after a number of years of virtual stagnation. In 1984 our exports contributed overwhelmingly to the increase of national production of approximately 2 per cent, which was quite an achievement considering that the home market and demand made very little contribution to the growth in the economy. Of course, Deputy Dr. O'Connell did not hear anything about that, as he has been away for the last number of years. When a Deputy of his stature harangues the Government he should prove his sincerity by making a personal gesture. I suggest that he should return his income for the last two years to the Exchequer. That would be the correct thing to do and would be a very generous gesture. If he did this PAYE workers would appreciate his sincerity. Deputy Dr. O'Connell's criticism of the budget was of a personal nature in attacking the Taoiseach.
Was the Taoiseach correct when he said that after three radical and imaginative budgets he expected the electorate to respond to the Government? I understood what the Taoiseach was saying. I do not have the lack of imagination which Deputy O'Connell seems to have. There are two further budgets to be introduced. This budget is consistent with the targets in the national plan and the Taoiseach has every reason to be confident.
The Opposition have been at pains at all times to undermine confidence. If they could destroy confidence in this country they would be happy because that would bring down this Government. They want power for power's sake. We witnessed that the other day when Deputy O'Malley was turfed out of the Fianna Fáil Party because he dared to make one point or another about how this country was going. The Government are not trying to keep power for power's sake but have tried to bring order to our finances.
It will be recalled that in 1982 the Government was short lived. The budget which had been introduced was overspent by £800 million by July 1983. The world bankers then stepped in and said that this country was insolvent. The reason we are in Government now is that the Opposition did not live within their targets. If this Government have done nothing else they have at least shown that they are prepared to live within the financial constraints. That is an achievement. I hope the people realise that the Government understand their problems and will try to relieve them the best way they can.
Deputy O'Connell suggested that the State could borrow in the EMS. He said the Minister for Finance was wrong not to do so. It was as simple as the Government walking in any day to a bank, say in Germany, and borrowing. Deputy O'Connell never heard of financial queues and does not know that other countries borrow within the EMS. That would be an easy solution to our problems.
The Government have borrowed substantially abroad and on the domestic market. It was in an effort to keep the balance between domestic and foreign borrowing that domestic rates went up last year. The Minister was acting in the national interest. We continuously hear simplistic solutions from Deputy O'Kennedy. The other day Deputy Haughey said on radio that the Government had over-borrowed and that if he was in power he would have borrowed in the EMS system which would have saved £400 million. He said he would have put that into the building industry. Deputy Haughey was Minister for Finance at one stage, and he should remember that. It is suggested that the Coalition have indulged in cruel borrowing and that the Minister borrowed in America rather than in Germany or Holland because he gets on better in America. The simplistic approach of the Opposition must be admired. People would believe it except for the fact that in 1982, when Deputy Haughey found that the financial institutions of the world were not prepared to lend any more to this country, he started to cut back. I remember the screams from the health boards when they were told that this and that was gone. Fianna Fáil put down a motion about the health board cuts. There were very savage cuts brought in by Fianna Fáil in 1982, far more severe than anything this Government have brought in. As far as the Opposition are concerned, they should be given carte blanche when it comes to economic matters.
There was some improvement in the position in 1984 and one of the things that contributed to that was the fact that the rate of inflation came down. I remember various sections of the economy crying out about our terrible inflation rate, in particular the farmer organisations. They were at pains to say that the Government had not taken any action on inflation and that they did not understand the trauma farmers experienced as a result of inflation. This Government reduced inflation from approximately 20 per cent to 6 per cent. That is an achievement, and is something Deputy O'Connell ignored. The deterioration in the national finances was checked and there was a marked improvement in the balance of external payments.
I will recall for the House the deficits we have had in the balance of external payments. In 1981 it was £1,595 million or 15.1 per cent of GNP. In 1982 it was £1,316 million or 10.9 per cent of GNP. In 1983 it was £863 million or 6.5 per cent of GNP; and in 1984 it was £720 million or 5 per cent of GNP. Those figures are contained in an article by Brendan Menton in the Allied Irish Bank's Review. It is suggested in that document that there will be further improvements in 1985, although they will be moderate. They will not be as expansive as the growth Deputy O'Connell looked for. He was wrong to suggest that it would be possible to reduce unemployment from 234,000 to 112,000 in one year. That is not possible. Why has he resorted to the ridiculous and why have the Opposition resorted to these misguided tactics? Why do they tell the people to take this leap into the unknown and that it will produce this magic solution they have in the back of their heads?
Of course, Deputy O'Connell's contribution was very constructive. He said the 15 Members of the Government were good men but had no initiative. Innovation of the kind we have seen from Fianna Fáil has only led us into financial ruin instead of taking us out of it.
Deputy Kenny referred to the emphasis being placed on the budget deficit by some Fianna Fáil speakers and their implying that if they were in power there would be an enormous reduction in this respect — a reduction which, according to them, could be effected easily and painlessly. Some people opposite suggested that State companies be disposed of, but I would remind them that some semi-State companies are profitable. It is ludicrous to suggest that the Irish economy would benefit overnight by way of the sale of semi-State company shares. Do Fianna Fáil believe that there are people merely waiting to buy such shares in their present state?
Deputy O'Connell emphasised the need for worker participation in profit-sharing schemes and he accused the Government of negligence in that respect. The Deputy might like to hear that only last week one of the few semi-State companies making a profit, Aer Rianta, set up an industrial council which includes workers and that they will operate a worker participation scheme. Legislation will be introduced shortly to provide for the scheme. The Government are aware of the necessity for worker participation. The Minister for Industry, Trade, Commerce and Tourism has encouraged profit-sharing schemes for workers and also worker participation on boards. That is the way forward. It is the way by which employees can have confidence in their companies. A new and imaginative format is to be adopted in respect of the Aer Rianta worker participation scheme. The scheme will allow for extensive powers and representations for all unions. One union who have only one member with the company are being represented on the industrial council by that member. That is an indication of how democratic the semi-State bodies are, of how forward looking they are, with the assistance and guidance of the Government.
The 1985 budget changes should result in an increase of 2 per cent in personal consumption. That has been the real problem in the economy. The home demand has made virtually no contribution. There are reasons for believing that an increase in domestic consumption will help to generate confidence in the economy. Opposition spokesmen have made the point in regard to the budget deficit that public expenditure will increase by ½ per cent. By modern standards that is not an extraordinary increase. While it is not in the direction we would wish to be going, at least the budget will result in maintaining the present position and in giving the opportunity for the domestic economy to grow. Together with that, the volume of exports will increase by about 9½ per cent, and this should contribute to an increase in employment.
I agree that unemployment is at a very high level, but some Deputies seem to be confused about the rate of increase in unemployment on the industrial scene and the reduction that has been occurring generally for a number of years. This is a very important aspect in so far as the export area is concerned. I do not agree with the thesis propounded, particularly by Deputy O'Connell, that the public service and the services generally are the means by which we will improve our overall level of unemployment. I consider the answer to our unemployment problems to rest totally with the amount of native raw material we can process and export so as to earn valuable international currency.
The budget is expected to result in growth rate of 2.7 per cent. These various assumptions are based on such factors as growth in the US economy. The American economy grew by approximately 7 per cent in 1984 and on the basis of present trends it is likely to grow steadily again in 1985. World trade is expected to expand and as a result of the various budgetary measures personal disposable income should rise by about 7 per cent in money terms. This has been approximately the level of wage agreements entered into so far. The increase in real disposable income will be of the order of 1 per cent and that is another achievement for the Government. It will represent the first real increase in disposable income in the past four years.
Rome was not built in a day but the targets set out by the Government in their national plan are achievable. The Government were not over ambitious in that plan though they have been criticised on that account. For too long we have suffered from the misconception that confidence in the economy is a matter which rests only with one party or with one set of leaders. The Government inherited a very bad economic and financial mess. They have tried to rectify that and their targets for the years 1985 to 1987 should inspire confidence in the economy. In addition, the 1984 budget contained provisions for the improvement of employment on the domestic front by way of the use of venture capital. I regret that not very much use has been made of this provision. I understand that the banks are reticent about becoming involved in the scheme and have not set up funds for that purpose. Some people tell me that there is a need for a change in the trust legislation. Consequently, I urge the Minister to include the necessary amendments in that regard in the Finance Bill so as to allow for greater participation in this very laudable scheme.
The Minister has indicated his intention to pursue tax collection more vigorously in an effort to reduce the black economy. There are people who are avoiding their tax payments. Calculations of the amounts involved in this respect have varied from time to time. In some instances publication of figures by the Revenue Commissioners has been counter productive and very alarming. In some cases the figures do not add up at all. At the year end an amount of tax remains unpaid.
I urge the Minister for Finance to discuss with the Revenue Commissioners statements about outstanding tax and how shortfalls are arrived at. The impression has been created that if the Minister for Finance takes out his whip and gets the Revenue Commissioners into line they will find the crock of gold at the end of the black economy rainbow and that this tax is there for the great relief of PAYE workers. Anybody who has examined the records will know that these figures, which were published early in the year, are grossly exaggerated and used out of context especially by people who are attacking the basis of this democratic State.
The Minister's rationalisation of VAT is the engine which will inject growth into the domestic economy. Many people were very disheartened about the VAT increase. Deputy O'Connell pointed out that this Government brought in the 65 per cent rate in PAYE and the 35 per cent VAT rate. Of course, he forgot to mention the circumstances in which the Government brought in those rates. The Government were elected in November 1982 and had to bring in a budget based on Estimates published in October of that year. Some of the figures did not unite, consequently the emphasis had to be on trying to keep this country solvent by tax. Unfortunately, that bore heavily on the taxpayer.
The Government have recognised the severity of these measures and have moved in to rationalise them. In rationalising VAT they have brought hope to the tourism industry. Forecasts for the western seaboard, as Deputy Kenny has said, are for a bumper year in 1985. Some tourist sources in my constituency in Clare say that advanced bookings are 50 per cent up on last year. In our constituency now accommodation is almost unavailable. I heard recently that a group of European tourists who are to come to Clare in 1985 wished to reserve accommodation in a good hotel and failed to find bed nights. At least the facilities available will be utilised to the full, and this should lead to some employment in my county. I am grateful to the Minister for that.
I am unhappy about the 10 per cent imposed on the building industry. However, if we are to suggest any improvement there we must examine the total State package for house building. We have the £3,000 mortgage subsidy, the £1,750 house grant and in the national plan the Government announced a £5,000 grant to people who vacate local authority houses. In the aggregate these grants should help to maintain the rate of house building. The dispute between the building industry and the Government outlines a few of the problems. The speculative market has been hit badly. However, the Minister for Finance has given a great opportunity to speculative builders to avail of the time up to 1 May to dispose of their houses. This will give an impetus to movement in that regard.
Contrary to what Deputy Dr. O'Connell said, in the area of legislation and social welfare this Government have index linked social welfare payments. The Government have been consistent in doing that. However, I have one group in mind for whom I appealed last year in this House. They are old age pensioners who do not qualify by virtue of loss of credits due to a change in legislation between 1953 and 1970. The Ombudsman and the Social Welfare appeals officers have recommended a number of these people for inclusion in the system. These people are suffering because of an anomaly. I urge the Minister to examine this matter and bring in the necessary amendment to the Social Welfare Bill which will enable them to be included.
I am satisfied that the Minister has made as good an adjustment in the economy through the instrument of the budget as was possible and I commend it to the House.
There are 234,000 people unemployed. That is the measure of the Government's failure. I have stated on numerous occasions in this House that unemployment is the greatest problem facing the country. In view of that fact, a budget is good or bad in relation to what it does or does not do to increase employment. The 234,000 people unemployed are proof of the failure of past Coalition budgets. The loud applause from the Government benches for the present budget was not the result of any deep consideration of what the budget contained; rather it was a response to a well presented public relations speech. The announcement of the huge increase in the numbers unemployed two days after the Budget Statement brought the Government and the Deputies opposite rapidly down to earth again. When large numbers of people are out of work, when young people in ever increasing numbers are leaving school with little prospect of employment, when industries are closing down with frightening regularity, then judgment on the soundness and efficacy of the budget must be related to what it will do to provide jobs. This budget is doing nothing to improve employment prospects.
In my constituency of Louth over 8,000 people are on the live register, unemployed. That is frightening. It is understandable that they all watched for a sign through this budget that the Government were going to grapple realistically with our shocking unemployment problem. This budget made no provision to tackle that problem. Looking at the Government's programme Building on Reality, 1985-1987 we should have anticipated that this budget would have done nothing for our unemployed people. After all, the Government in that programme accepted that unemployment would increase by the time the programme ended in 1987. However, one would have thought that since that programme was announced the Government would have had a change of heart and would have given some consideration to the plight of the unemployed.
One might have hoped that the Labour Party particularly, who are so fond of using the word "compassion", would have insisted on positive steps being taken to cut down the numbers of unemployed people. That was not be. It appears the Labour Party believe the level of unemployment is tolerable despite their verbal protestations. To me it is shocking that in my constituency 8,000 people are on the unemployment register with all the misery and hardship that entails for them and for their dependants. I shall persist in pressing for measures to be taken that will improve their employment prospects.
On numerous occasions in this House I pointed out that with proper planning the building and construction industry could provide jobs of a permanent kind and provide them quickly; and I expressed my concern at the neglect by the Coalition Government of this vital industry and their failure to finance it adequately. In this budget the Government take a further step towards damaging that industry. They have ensured that employment will fall further by doubling the VAT rate on the industry from 5 per cent to 10 per cent, having already increased the rate from 3 per cent to 5 per cent in a previous budget. This VAT increase will have a disastrous effect on house building, and when one takes account of the fact that since this Government took office the industry has been declining rapidly this new imposition will have a very bad effect. It is obvious to me that any re-allocation of funds into the construction of roads and schools as outlined in the Government's programme Building on Reality will be negatived by the tax increase and it will mean also that the volume increase will be very small
There will also be a considerable decline in the value of the £5,000 grant for local authority tenants who wish to buy their own house because of the increase in the price of houses caused by the new VAT rate. I was very interested in the defence made by the Minister for Finance, in reply to complaints made about the increased VAT on the building industry, when he said that in respect of the increase on a particular type of house it would cost only an extra £800. Clearly the Minister is out of touch with reality. Is he aware that many people were unable to pay the original price of a house, never mind paying an additional £800?
It is obvious that the increase in the VAT rate will increase the price of new houses and will make it even more difficult for people to buy them. In itself that will reduce further the numbers employed in the industry as well as resulting in a reduction in the numbers employed in ancillary industries. The increase in the price of £30,000 house will be approximately £1,500 and for people who were at their wits' end trying to buy a house before this increase was announced their prospects of buying a house in the future are very bleak.
The Government point to the increase of £750 in the grant for the purchase of a house. However, this applies only to first time buyers, but even a first time buyer who purchases a £30,000 house must find an extra £750. It should also be pointed out that the reduction in VAT on materials used in house construction will have no effect on house prices because the building companies who are registered for VAT will have it refunded. There has been a significant drop in the level of private house building in the past few years and the level of completions has fallen considerably also. The increase in VAT from 5 per cent to 10 per cent will accentuate this decline and will increase the numbers on the housing lists of the already hard-pressed local authorities. As a result, many people who are already on those lists will have to wait for a considerable time before a house becomes available.
Building is our second largest industry and is worth more than £1.8 billion but the Government have failed to face up to the need to develop it. We were told in the document Building on Reality that the Government proposed to stimulate construction. They have a rather peculiar interpretation of what the word “stimulate” means. Even if they reach the objective outlined in their programme — and present policies, as far as I can see, show how unlikely that will be — it would mean by their own admission an increase in the workforce of the building and construction industry of only 1,000 workers by 1987. That is in an industry where the workforce has already been cut in half. Surely the Government are not suggesting that an increase in tax on the building and construction industry is the way to stimulate it? Adding this extra 5 per cent to the price of a house, together with the increased mortgage rate, will ensure that there will be a considerable drop in the number of house purchasers, a drop in house building and, consequently, a further drop in employment. The Government need to adopt a completely new approach to this vital industry. Such a change is needed immediately. However, if one is to judge by this budget, the Government have not the political will to help and it is likely that nothing will be done.
The changes by the building societies to increase the mortgage rate will mean a reduction in the number of people purchasing houses, as well as contributing to the very considerable problems facing those who have already got mortgages from the building societies. As far as I can remember, the Minister suggested to the building societies that they should impose the charges on the depositors rather on those who had mortgages, but nobody knows better than the Minister himself that if these charges were imposed on the depositors they would simply go elsewhere with their money with a result that less money would be available for house building in the future.
On a number of occasions in this House I mentioned that when the Government took office they cut back on the Fianna Fáil public capital programme by £220 million and I said this would prove dissastrous. I pointed out that the outgoing Government had published their Estimates before the election and they had also put forward a policy document. It was clear both from the publication of the Estimates and the policy document that the current and capital budgets had been cut to the bone. Nevertheless, when the Coalition Government came into office they cut the Fianna Fáil public capital programme by £220 million. I pointed out that there would be dire consequences because of this cut not only on the building and construction industry as a whole but on the economy generally. It was obvious to me that unemployment would rise rapidly not only among building workers but among workers in ancillary industries. I made the case that such a huge cut was bad economics and would create a deflationary cycle which would intensify as time went on and its effects would permeate society. My forecast unfortunately has proved only too true.
There are now 45,000 building workers unemployed, construction work has been slowing down and redundancies occurred in Cement Limited Drogheda for the first time in their history. In all these circumstances I would have expected the Government to rethink the financing of the building and construction industry. I felt they would not allow such a situation to continue in a vital industry but perhaps I was expecting too much. The forecast in Building on Reality was that they expected only 1,000 extra workers to be employed in the building and construction industry by the end of 1987, leaving 44,000 building workers still unemployed. This should have forewarned me that this Government care little for the industry and the increase to 10 per cent of VAT on this industry proves once again how little regard they have for it.
The building and construction industry provide homes, schools, hospitals, factories and the infrastructure needed for development. They provide work not only for building workers but for all engaged in ancillary industries, such as cement production, furniture making, electrical supplies, household goods and so on. New homes are badly needed for young people. If one is to judge by this budget, Government policy is very deficient in this vital area and must be reconsidered and revised immediately. I had hoped that when the Minister met the representatives of the building and construction industry to discuss the implications of the budget on that industry he would agree to make the necessary changes in the Finance Bill to revitalise this industry which can help to turn the tide of unemployment more quickly and efficiently than anything else.
Even the banks are proposing that there should be more capital expenditure. I read in the Allied Irish Bank's Review, Economic Outlook 1985, that the size and intractibility of our unemployment problem makes a strong case for increased expenditure in worthwhile labour-intensive investment. I do not know a more worthwhile labour-intensive investment than the building and construction industry.
It was ironic that on the day it was announced that the Clarks factory was closing down, the Minister for Finance announced a 10 per cent VAT rate was being imposed on footwear, on leather normally used for the the manufacture and repair of footwear, soles, heels and insoles. In reply to supplementary questions on a Private Notice Question submitted by Deputy Kirk and me on the closure of the Clarks factory, the Minister for Industry, Trade, Commerce and Tourism stated that his Minister of State had been in touch with Clarks factory for more than a year endeavouring to help the firm overcome their difficulties. The Minister obviously knew the conditions that existed in that factory. I expressed amazement at that time, and I am still amazed, that any Minister could even contemplate putting a 10 per cent tax on footwear when he knew that the largest footwear factory in the country, with 370 jobs, was in jeopardy. If the company had hoped to keep the factory in operation this tax would have ended all hope. The company did not make that effort but that was no excuse for imposing a 10 per cent tax on footwear.
When I asked supplementary questions on this matter the Minister said that the tax would be 10 per cent on all footwear, home produced and imported, and that there would be no disadvantage for home produced goods. In fact, he said it could be an advantage for home produced footwear. That is clearly nonsense. Clarks produce high quality shoes and therefore they would be more costly than most imported footwear. Obviously the higher priced shoes would be more severely hit by the 10 per cent increase and this will create very serious problems for other shoe manufacturers and their workers.
The closure of Clarks factory is a severe blow to the town of Dundalk which developed over the years because of this industry. The shoe industry is part of this town's industrial tradition and therefore this closure is a grievous blow to the morale of the town which has been ravaged by unemployment and where trade and commerce have come to a virtual standstill over the past number of months.
There are 8,000 registered unemployed in my constituency. Is it any wonder that in a recent report the northeastern development organisation stated that County Louth could be described as a disadvantaged area? It is of vital importance that County Louth should be immediately classified as a designated area. The five Border counties on this side and the seven district councils on the other side, which form the Border area, all qualify for the maximum financial aid and incentives available from the respective development agencies, except County Louth which is not classified as a designated area. That situation might have been acceptable some time ago when industry was thriving in that county, but in recent times with the dramatic downturn in industry, trade and commerce and when unemployment numbers have increased so rapidly, there can no longer be a case for the exclusion of County Louth.
The 10 per cent VAT on footwear generally will seriously jeopardise employment in other footwear companies and will place the jobs of the workers in those factories in grave danger. In the main Irish products are of a much better quality than imported footwear and so cost more. The price of Irish shoes with the tax added will make them less competitive on the Irish market as well as on the export market so that fewer Irish shoes will be sold. The Government must have been aware of the problems facing the footwear industry. I am amazed that the Government would even contemplate introducing a tax to further damage the industry, but that the Labour Party should troop through the lobbies to vote for such an increase is incomprehensible.
In relation to the closure of Clarks I am not happy with the reasons put forward by Clarks for the closure of their factory. They let their employees down very badly. For a number of years Clarks have done very well in this country and with a little bit of sympathetic consideration they could have continued their operations in Dundalk.
I do not accept the nonsense being put forward by the Labour Party as an excuse, that had we not entered the EC our boot and shoe industry would be secure. The reality is that had we not entered the EC we would not have our foreign based industry which employs about half of our industrial workers. What level of tariff would we need to keep out cheap imported shoes, if we were isolated? Imported shoes in some of our stores cost £6 a pair and a 100 per cent tariff would raise the cost only to £12, a figure still well below the price of quality Irish shoes. If we put exceptionally high tariffs on imported shoes other countries would retaliate by putting high tariffs on our exports.
The 10 per cent VAT was imposed by a Fine Gael-Labour Coalition. The Deputies in the Labour Party voted for it. I make this statement because I have heard Labour Party speakers attempting to excuse themselves by stating that the Irish footwear industry was in a bad way. I do not understand the logic of that argument. Is it suggested that, when an industry is in a bad way, the way to revive it is to slap on a 10 per cent tax? I was shocked when Labour Deputies voted for this 10 per cent VAT imposition on the footwear industry. The Labour Party Deputies did not refer, in their contributions in respect of the 10 per cent tariff, to the fact that this will increase the price of shoes. The prospect which our unemployed people and their families now face is that, difficult though it was to buy a pair of shoes before the budget, it will be more difficult now and many will have to do without. The increase in the VAT on clothing from 8 per cent to 10 per cent will have a similar effect — the poorer people will be adversely affected.
For a period before Christmas and since then there has been a considerable differential between tax rates here and in the North and this has caused an exodus of shoppers from here into the North. Millions of pounds were spent by shoppers in the North. Cars and buses have travelled in a procession day after day to and from the North with shoppers. The effect on employment here was catastrophic in industrial employment and in the retail and wholesale businesses. My constitutency was devastated. We urged the Minister for Finance to make the necessary changes in the tax system to counteract the situation, which was creating unemployment problems for the people and financial problems for the Exchequer.
The Minister in his budget went some way to meet the case we consistently made. However he then proceeded to negative the advantages accuring from the measures he took by increasing the price of petrol by 10p a gallon thereby increasing the differential in the price of petrol here and in the Six Counties. This is a serious matter particularly in my constituency. About a year ago there was a considerable difference in the price of petrol here and in the North. Many people went across the Border to buy petrol and, having gone there, invariably bought their household requirements as well. Once again more people will be tempted to go across the Border, to the detriment of the business people in County Louth.
The business people in my constituency were badly hit by this in the past. The change in the price of petrol will create similar problems now. I would have thought that the Government, knowing what this area had suffered in the past, would have been slow to create conditions which will result in a similar experience for these people. As far as I can remember, either the Minister or somebody on that side of the House suggested that this 10p increase in the price of petrol would be absorbed by a reduction in the price of petrol generally. Looking at the situation now this is very unlikely to be the case.
In 1983 the Coalition budget increased the price of petrol by about 35p a gallon. The immediate effect of that increase was to direct the attention of motorists to the fact that considerable sums could be saved by going North for petrol and so we had an exodus of cars across the Border. The first to be affected were the petrol filling stations on this side of the Border. A number of them were forced to close down. People calculated that they would save a certain number of pounds on the transaction and they then proceeded to buy goods in those towns across the Border. The psychological effect was that, after buying the petrol and buying goods with the amount of money they had saved on the petrol, they would not be any worse off had they simply purchased the petrol in my constituncy.
The new increase of 10p a gallon on petrol will reactivate the trek across the Border, and not only will garage proprietors and petrol pump owners lose out but so will the wholesalers and retailers in my constituency. I would emphasise that, apart from relatively small number of categories of goods, there is little or nothing that can be purchased in the North which is of better value than is available in my constituency; but because the Government by increasing the price of petrol have made it more attractive to go across the Border for petrol I fear that shopkeepers in my constituency will continue to lose in a big way.
Another aspect of the increased price of petrol is that large numbers of people have to go to work in their cars. Already the price of petrol was very high and the cost of travelling to work and home was a considerable drain on weekly pay packets. The increase of 10p a gallon will increase the cost on the overburdened workers. To add to this, we have an increase in road tax. The annual tax on private cars has been increased by 50p per h.p. for cars under 8 h.p., by £1 per h.p. for cars between 9 and 15 h.p., and by £2 per h.p. on cars of 16 h.p. and more. The manner in which this was put before the House was a good example of a public relations job: it looks better to say 50p per horsepower for small cars than to give the total tax payable.
I will make a special comment on the increase in diesel price which has been increased by 10p a gallon. In my view this is particularly serious. For example, it is estimated that the increase will cost between £36,000 and £40,000 for those operating out of the port of Greenore, a huge increase for hauliers working from a relatively small port. Greenore is the hub of economic activity in the Cooley Peninsula and large numbers of people there earn their living by hauling goods. They will be badly hit, and the consequence for everybody else as well as the hauliers will be serious. By increasing the price of diesel the Minister turned his back on the development of remote areas throughout the country. The effect on areas in the west will be similar to that on Cooley. Indeed, it will be much worse for them because they are much farther away from import and export outlets. The cost of transporting materials to and from the east coast will be increased and the cost of the distribution of finished products to the various centres throughout the country and to the ports for export will rise.
We are all too well aware of the keen competition facing Irish goods in both home and foreign markets and this extra 10p a gallon on diesel will reduce the competitiveness of home produced goods which can result in further industrial closures, particularly in remote areas. I am convinced the Minister did not give sufficient thought to the increase in diesel prices on an already overburdened industry and I suggest to him to reconsider this aspect of the budget. I have given a practical example in the Cooley Peninsula and if such damage can be done in a small area on the east coast the damage to remote areas will be evident.
The treatment in this Budget of social welfare recipients is the norm for Coalition Governments. Over the years Fianna Fáil Governments have endeavoured not just to give increases to compensate for the rate of inflation. They gave much above the percentage increases in the cost of living and the purpose was to ensure that the living standards of people depending on social welfare benefits would be raised. We have seen Fianna Fáil Governments giving 25 per cent increases on a number of occasions and this was well above inflationary rates.
One must remember that this year's social welfare increases do not take account of the cut in food subsidies last year. I referred to this at the time because in the budget social welfare recipients were not given any compensation for the cut in food subsidies. Therefore, the real percentage increase in social welfare payments will be very much below the percentages announced by the Minister. The food subsidies were halved last year but, as I have said, social welfare recipients got no compensation for it.
Another disadvantage to social welfare recipients is that this year the increases have been deferred until July. The normal time for these increases has been April. The Coalition in one budget put that back until June. I cannot understand why the Coalition Government should select people who are in most need on whom to make savings.
With one hand the Minister increased the value of the fuel voucher for those in need but with the other took the increase back. That was done in a throughly cynical fashion, because on the day before the budget the price of coal was increased considerably by order of the Minister for Industry, Trade, Commerce and Tourism. That accounted for most of the £1 granted in the budget. Then in the budget the Minister for Finance increased the VAT rate on fuel. The social welfare people who would be entitled to the increase in the fuel voucher will not get it until October. In the meantime they will have to pay the increase in the price of fuel permitted by the Minister for Industry, Trade, Commerce and Tourism and also the increase deliberately imposed by the Minister for Finance in the budget.
Of course we know the budget is only one facet of the Coalition's taxation system. In the past two years the Government have imposed taxes at regular intervals. In many instances individuals become aware of the new levies on their incomes only when they become directly affected by the new impositions. The public generally remain unaware of them.
We have had vast increases in the price of drugs for people who are entitled to a rebate from health boards. The amount payable by such people has been increased in the last two years from £12 under Fianna Fáil to £28. That is a penalty on those who are ill. Medical cards have been withdrawn from many old age pensioners and students, thus increasing their outlay for medical attention, all of it without reference to the budget. Fares were introduced on school buses, creating severe financial problems for numerous families. If I were to catalogue all the various impositions and charges decided upon and put into operation by this Government over the past two years which increased the costs for every family but which had nothing to do with the budget, I would have little time left to discuss the matter under consideration here, which is, of course, the 1985 budget.
Might I make a point in respect of water charges? I must emphasise that the need for such charges is as a result of a decision by the Coalition Government to make available only a 1 per cent increase in finance to local authorities while the inflation rate is over 7 per cent. That policy was put into operation by the Minister for the Environment, a Labour Party Minister. To ensure that the water charges will be levied, the Tánaiste, a Labour Minister when Minister for the Environment, steered a Bill through this House giving power to the county managers to impose charges. All the Labour Deputies voted for that Bill, Fianna Fáil Deputies opposed it. I stress this to pinpoint the nonsense of the Labour Party in my constituency stating that they oppose water charges when their own Minister is responsible for the need for such charges and when the Labour Deputies voted in favour of giving the manager the power to impose charges.
I have a question down to the Minister for Energy asking if he is aware of the feasibility study on the gas industry carried out by Coopers and Lybrand and by Congas Engineering of Toronto which showed that it is viable to pipe natural gas across the Border. The Minister for Energy informed me some time ago that he had to rethink the position in respect of natural gas coming to County Louth because of the breakdown in the negotiations between the Irish and British Governments. May I again make the point that the attitude of the British Government in respect of that matter was absolutely deplorable?
I have never accepted that we should have to wait for an extension of the pipeline into the Six Counties before a supply of natural gas is made available in my constituency. Now that the survey has been carried out by reputable people and is available and now that it is agreed that it is economic to bring gas north of the Border, there should be no excuse for not proceeding with the pipeline to County Louth. I would urgently request the Minister for Energy immediately to have the work commenced. We need natural gas in my constituency. There is an industry in Drogheda, Premier Periclase, which uses all natural resources except energy. The only import in respect of that industry is fuel oil. If natural gas is made available, then fuel oil will no longer be needed and we will have an industry which uses nothing but our own natural resources. That is a consummation devoutly to be wished.
There are problems in Dundalk and Kilkenny in respect of the request for natural gas to be made available in both those towns. I couple the towns because the same company are involved in each case. I understand from the newspapers that natural gas is being refused to the town of Kilkenny and that there is a danger of the workers there losing their employment. Ultimately, the same thing would apply in Dundalk if natural gas is not made availablea there.
Recently I noted that the Taoiseach and the Minister for Energy met a deputation from Kilkenny who urged that natural gas be made available. The pipelines pass within about three miles of Kilkenny town. I understand from recent reports that the gas is not being made available, that the Department state that it is not viable. It is also being said that the decision not to make the natural gas available is not affected purely by economics but rather by ideological approaches, that the Labour Party are not anxious to make the gas available to this company because it is privately owned.
I would be very sorry if that were the case. One must remember that, apart from any other considerations, workers' employment is now in jeopardy. The most recent announcement I have heard in respect of this matter seems to indicate that the company in Kilkenny will have no alternative but to close down the gas works there, with a resultant loss of employment. As I said, it is very difficult to understand why it would not be viable to provide natural gas to a town the size of Kilkenny considering the proximity of the natural gas pipeline. I would strongly urge that the Minister for Energy and his Department quickly re-consider this matter and make a positive decision to provide the area with natural gas.
Deputy Carey referred to the record of the 1977 Fianna Fáil Government with regard to employment. He expressed the view that that Government should not have taken steps to create employment and that such employment was all in the public service. The reality is quite different. The graph of the 1977 to 1979 period showed a worth-while increase in employment generally, and in my constituency in particular. I am naturally very pleased to note the very considerable increase in employment at that time. If one were to take my constituency, one could hardly suggest that all the jobs there were created in the public sector, except, perhaps, in the telecommunications sector. More technicians were taken on and I make no apology for that. I was responsible for urging the Government to make £650 million available for the development of the telecommunications system which was in a very bad state when I took over as Minister for Posts and Telegraphs. The Government accepted the proposal I put forward and that £650 million was more than had been spent on the telecommunications system from 1922.
At that time I forecast that by the end of the five year programme I initiated there would be a dramatic change in the position in regard to the provision of phones and in the efficiency of the telephone system. What I forecast then has come to pass. One only has to look at what the position was like at the time I introduced that programme and consider the telecommunications system today to see the enormous advance that has taken place. As Minister for Posts and Telegraphs I also decided to take the postal and telecommunications services out of the Civil Service. I set up the two new boards on an interim basis, An Post and Bord Telecom Éireann and appointed people of the highest calibre to those boards. The proof of that is the fact that although we have passed through several administrations since then, very few changes in personnel have been made on those boards. In the near future I believe we will have one of the best telecommunications services in the world. I mentioned those facts because I read some fairy tales in the media as to how this happened and I thought it was better to put on record how it really happened.
Between 1977 and 1979 we created a considerable number of new jobs and I am proud of that but a new problem arose in 1979. We had to deal with the second oil crisis which was of exceptional severity. It shook the economies of the strongest nations in the world, the US and Germany. The oil crisis in the early seventies affected us but it did not have much impact on the stronger economies. However, the second crisis affected the strongest economies in the world and naturally, that had a severe impact on our economy, and created new problems.
With 234,000 people unemployed here the value of any budget must lie in the provision made to increase employment. The budget does not do anything to help the unemployed. However well presented by the Minister as far as the 234,000 unemployed are concerned, as far as the 8,000 unemployed in my constituency are concerned, the budget has been far from helpful.
I do not think there is a great deal of point to a budget debate of this nature. To call it a debate is a misnomer. Frankly, the person in the street has unquestionably forgotten the immediacy and impact of the budget. I suggest that we should consider some more mature and sensible way of discussing budgetary measures. Having listened to most of this morning's debate I am of the view that a debate on the budget might be classified as a state or place of punishment where TDs who may have sinned have to endure for a period before going on to other things. I am sorry Deputy Faulkner has left because I am anxious to refer to some of the remarks he made.
The Government might consider some form of referral to a committee system of the budget statement which would allow for line by line analysis and a genuine exchange of views rather than this irrelevant exchange of prejudices and opinions which now characterise much of what has come to be the debate on the budget. Invariably it is open ended and, quite candidly, is of very little public interest or relevance.
I heard two speeches this morning from Opposition Members. I will not comment on Deputy O'Connell's except to say that I did not have a great degree of expectation in that regard. I was disappointed in what I heard Deputy Faulkner say. When I was elected to the House in 1977 he was one of the senior Members. His hour long speech this morning epitomised much of what is regressive and backward looking in our approach to public affairs and the economic and social development of the country. There was not one positive suggestion or idea in what he said. On the contrary it was a list of complaints laced with special pleading about his own constituency although it is reasonable that his own constituency should be mentioned. His speech reminded me of the line from one of the works of Shakespeare when he described the school boy as mewling and puking on his way to school. It was dreary, forlorn, bleak, depressing, uninspired, negative. If that is the best vision of the country and the hope we can offer our people then the young people will, if they have not already done so, bypass the House in terms of it having any effect on their lives or offering any hope for inspiration in the future.
To classify the efforts of the Government in the tones Deputy Faulkner used was a waste of parliamentary time, a disservice to the House and a disservice to his constituents. People who have served in ministerial rank and been members of the House for many years are obliged to give us better than we have listened to. It is a sad commentary when one bears in mind that in the last week we heard an inspiring speech from a former member of his party and, apparently, the degree of inspirational effect and the degree of integrity and truth which the speech contained was in direct ratio to the political vulnerability which a person in that party has if he offers an idea which has not been approved by the Fuehrer or by whoever is running the party at the time.
The Deputy should stay with the budget.
I will return to the budget in a moment. The type of hypocritical cant we have had for the last hour is not the essence of any type of approach to responsible public affairs. I resent the Deputy's repeated references to the Labour Party and his surprise that the Labour Party would do this or that. This Government are united in their attempt to resolve some of the difficulties of this country. The Fine Gael Party have as much concern in the social and economic area as has any other party in this House. In many cases their individual members represent constituents who might, at a passing glance, be said to be represented by people about whom Deputy Faulkner spoke. That kind of mean attempt to divide, and presumably ultimately to conquer, I resent and reject. I certainly hope that the people of County Louth can be better served than by a speech which, in net effect, asked, if you do not mind, that County Louth be classified as a disadvantaged area.
A Leas-Cheann Comhairle, I think Deputy Keating should speak on the budget rather than make an attack on Deputy Faulkner's contribution.
I am speaking about my predecessor's contribution and I am perfectly in order.
I am in control of the debate.
Deputy O'Leary will have his turn in due course. Will he please have the manners to listen to me?
The Deputy should speak on the budget and not make a personal attack on Deputy Faulkner.
I am in control of the debate. Would the Deputy please resume his seat?
I would hope that the people of County Louth would have a better prospect of success and economic development in the future than a simplistic call that their area be classified as disadvantaged as if, somehow, that kind of nonsense in itself would turn on the lights and make the wheels of industry turn in County Louth. Deputy Faulkner accused this Government of lack of political will. The essence of the reason this country is in the difficulty it is in is that his party lacked what I would call political "won't", the capacity to say no to a series of vested interests and special interest groups who unfortunately were bought off one after the other out of public funds in recent years. If that is the kind of political will about which Deputy Faulkner is speaking, responding to every whim and request from some interest groups, then I am very pleased indeed that this Government have the guts and courage to stand up and confront that. I believe that view would be shared by very many people outside the House.
I do not see much point in going over the entrails of the budgetary statement which has now been before the House for weeks. I believe it has long since passed from the minds of the public and now forms part of political or economic history. Instead I should like to make some suggestions which I hope will be of some constructive assistance to the Minister and the Government as to the way in which we could handle some of the resources this country has in abundance. In general, despite the economic difficulties with which we are confronted and are experiencing, I feel that when we come through these difficulties, the country will be better, more hardened to endure the inevitable economic difficulties and constraints confronting any modern democracy, will be more resilient, self-reliant, have stronger indigenous industry, will be less cushioned by the kind of protectionism which served us well at a certain time but which is no longer a part of the current, international free trade mentality; in other words, a nation independent and proud, self-sustaining, able to compete, and not one which has to depend for its existence on the begging bowl mentality which we heard epitomised, I might say with respect, in my predecessor's speech — the hand out for "gimmes" for this or that industry, having some place designated a disadvantaged area, going to the EC for money.
That is not the kind of nation of which I would like to be a citizen. I want Ireland to be able to compete on its merits, to have people who are happy in their work, to have work which is self-sustaining which can compete internationally on its merits and not because it has some artificial wall built around it. This country has to compete in that environment, we cannot hold back that tide, nor can we build a wall around our country. Recent events in this country do indicate that in some ways, though not necessarily in the economic area only, there are too many walls and barriers built around it.
I make these comments in a situation in which it is clear that income tax at least cannot be increased for the PAYE worker, though I do not necessarily accept that tax in general has yet reached its ceiling in some areas, in an area in which it is very difficult for any Government — impossible for our predecessors but very difficult for any Government — to introduce systematic and effective controls on the growth of public expenditure or cutbacks in certain services.
Within that environment there are possibly one or two other options which have not been adequately examined. One of these is the realisation of State assets, the bringing into full creativity and the realisation of the full potential of dormant assets. I want to list a couple of these. The State could very well consider allowing public participation, full democratic ownership by the public, in asset-rich State enterprises. By that I mean that the public would be able to buy up to a certain percentage, say 30 per cent — lest people would fear that control might pass from the State, which does not carry any great problems from my point of view but which might do for some — in industries and enterprises which would allow for the generation of much needed revenues by the State on the one hand. It would allow the possibility of reducing certain taxation and would give direct public participation. This might mean that policy in such enterprises would be educated and better informed as a result and the actual cash raised could be orientated towards allowing such enterprises to re-equip or modernise from some of the resources so raised.
I hesitate to give examples of specific companies but I might be a little provocative in this respect. There is no reason why companies such as Irish Life, the Industrial Credit Company — which I think have already got a stock exchange quotation — Bord Telecom and other agencies at present seen as State or semi-State enterprises, many of them set up with vast amounts of public funds, could not now be allowed to develop their full potential, compete in the marketplace and, therefore, be open to the purchase of equity in them by members of the public. If that were to occur it would be reasonable and sound economic sense and very good for what I might describe as participative democracy.
A specific example of an area warranting that kind of approach is housing, at present a vastly uneconomic area. In 1984 the State spent £620 million on housing. Yet we are told that housing provision lags behind by approximately 6,000 units per year. The reality is that the housing finance which we give to local authorities increases continuously — in the case of my local authority some £70 million this year — but economically it is creating a millstone. It is not generally known or perceived that every local authority dwelling has in effect an annual subsidy of £4,500 from the taxpayer. It is not generally known or perceived that the total rental income from all local authority housing stock does not pay for half of the cost of their maintenance never mind making a contribution to capital costs. I submit that, for economic and social reasons, such a scenario cannot be allowed to continue. It cannot continue for economic reasons because the money is not there, and because the taxpayer will not continue to pay it, and some Government some day will simply say: enough is enough.
It should not be allowed to continue for social reasons because it is creating a certain undesirable social outcome. Economically I submit that the Government — and I would ask the Minister for Finance to consider this in framing budgetary policy — could spend the money they are now spending on housing, particularly local authority housing, in creating much more productivity. The way to do that would be to embark on a very substantial, affordable, joint venture housing scheme, using local authorities as agents. What joint venture means is that, instead of the average cost of a new local authority house at present representing more than the cost of the average private, speculator-built house, a scheme would be devised whereby a local authority would agree a total package with a developer for the design, layout, house types and selling price and would sell to people from their housing lists or as otherwise agreed.
The land, one of the dormant assets of which I speak, owned all over the country by local authorities would be turned into realisable potential now by getting the building industry committed to turning that dormant asset into housing rather than waiting for some time in the future when the State may own it. The developer should be allowed to build under licence. We should ensure the availability of very generous loans, perhaps change the mathematical requirements laid down for housing layouts and tackle the scandalous situation of house conveyancing costs. I have never understood why the same house sold five or six times over a period of years has to have an expensive search done on it every time which, of course, has to be paid for by the purchaser. It is reasonable that a house should have a registration book as in the case of an automobile. The search should be done once and stamped from then on, taking the first search as being authentic and done with integrity. This would save the public money although I know that my legal friends will not be enamoured of the idea. Remembering that approximately 40 per cent of the sale price of each house comes back to the Exchequer, a sensible approach could be adopted in relation to joint venture housing and it would pay enormous dividends.
I would consider going even further. I see no reason why the money at present spent in the local authority housing area could not be given in principle to people who need housing by means of 100 per cent loans to buy on the open market as they see fit, subject to certain criteria with regard to the maximum amount of the loan, perhaps a means test and other qualifications regarding those who would qualify for such loans. The effect of the State detaching itself from construction of houses but facilitating people economically to buy houses would be more housing because the per unit cost is cheaper in the general housing market than for those built by the local authority.
It would mean speedier housing of people on the waiting list because of the inevitable layer of bureaucracy involved at present which would not arise if private builders were involved. It would also end the ghetto mentality attached to some local authority development. We would give people the dignity and self-respect of being able to go on the open market and buy their house anonymously, as it were, thus ensuring that they would not be seen as part of one category of house buyer.
Ultimately, it would mean more people housed more quickly for the same money in good housing and that they would be treated the same as everybody else. As a member of a local authority, a Leas-Cheann Comhairle, I am sure you will agree that when you try to create a local authority housing scheme at present, there is a fair amount of resistance — quite often from people who have just got local authority houses themselves. There are certain problems attached to that kind of development; this would be one way of dealing with them and we would also get better value for the same money.
I suggest that the approach I am talking about should be followed through in every area of Government and public administration. The converting of dormant and potential assets into revenue possibilities should be carried out. To give an example, about five years ago a group of voluntary helpers and I carried out a survey into derelict sites in Dublin. Extraordinarily, unlike the stereotyped image most of us have heard of derelict site owners as speculators basking abroad in the sun, waiting for the value of their property to appreciate, we learned that approximately one third of derelict sites are in public ownership of one kind or another. Another third is in private hands and no one seems to know who owns the rest. Arguably, they could be taken into public ownership also.
There is an enormous amount of land at present in the hands of local authorities, health boards and Government Departments, which have all been bought with public money. They are dormant assets and could be turned into potential if we had the will to do so. We should consider, therefore, not getting directly involved in any area unless we have to. The whole question of regulation by the State has not been thought through. This House is cluttered with a litany of Bills controlling every area of activity and they have a financial implication because they are all supposed to be enforced and policed.
Land banks held by most local authorities are dormant assets and they could be given, relatively inexpensively, to builders for the purposes of building houses for local authority tenants in the context of the ventures to which I referred earlier. Strict conditions could be applied by the local authorities and the Department of the Environment. I am really asking: is the best Government perhaps the least Government? I am not convinced that it is. All I am saying is that someone should ask that question and that it should be debated. Minority interests or properties of State boards should be examined with a view to seeing to what extent they are relevant to the essential functions and terms of reference of such boards and whether they could be sold on the open market.
When I started my career in politics, I wondered why the State was responsible for providing telephones and running buses. I could not quite fathom why this was so because they are revenue-generating, and sensible commercial enterprises would be able to run them as they do in other democracies. The establishment of separate boards in the area of post and telecommunications is an indication that that kind of thinking is percolating through but of course the Government and the State — no matter who are in office — are very loath to relinquish power. Examples of such properties or interests which some of these boards have might be buildings owned by such companies; one State company owns hotels and I am not sure what their function is in that regard. Obviously, in cases where there is a net drain on the State board and public funds, this rationalisation or streamlining should be a priority. We should consider these options.
We must look seriously at public expenditure. I will not delay long on this subject because whenever one mentions public expenditure people's eyes glaze over and I do not blame them for this. I am Chairman of the Committee on Public Expenditure and occasionally my eyes glaze over when the subject is mentioned. The public do not understand public expenditure and the politicians make speeches about it but nothing much happens. There is a ticking time bomb contained in the Minister's statement that the estimated current deficit for 1985 is £1,324 million which is 7.9 per cent of GNP. He said it compared with an outturn last year of £1,039 million, equivalent to 7.2 per cent of GNP as against the original budget target of 7½ per cent. He also said that the total Exchequer borrowing requirement for the year will be £2,019 million or 13 per cent of GNP which compares with an outturn of 12.6 per cent for 1984 as against the original budget target of about 12¾ per cent. The total public sector borrowing requirement for 1985 will come to £2,521 million or 16.2 per cent of GNP.
I do not believe that the implications of the borrowing requirement have been thought through. I am not clear on how it can be tackled without major economic and social trauma. In the past seven years the proportion of GNP taken up by public expenditure rose from 45.8 per cent to an estimated 61.9 per cent in 1984. Last year public expenditure was £9 billion or £2,500 for each person. What this means is that the Government have increased their direct participation and involvement in the economy in terms of the provision of services and employment and as the creator of economic activity. As has been pointed out on numerous occasions it is not clear that direct Government involvement has brought about the desired effects.
We must systematically re-evaluate every area in which the State is involved. We must ask two fundamental question. The first is, why is it involved? If there is not a clear answer to that the State should get out. The second is, is it involved efficiently and effectively? Could it have better systems in place to get better value for money? If the answers are not a clear "yes" in both cases, then the State should do what is essential. What that means is that the principle that no matter what happens in the private sector, in the public sector no programme is dismantled or no person is let go has no validity in our present economic climate. If the State cannot justify its involvement in an area, it has no function in it and should not be there. If it is not doing the job more effectively and efficiently than anyone else it should not be doing it. There is vast evidence to suggest that we have failed to ask those questions. Perhaps we are afraid to ask them.
As Chairman of the Committee on Public Expenditure I have been dismayed at the lack of clarity of goals throughout the public service. There are no plans, targets or objectives in any Department. Civil servants do not have clear job descriptions. That is not any Government's fault in particular, it is just the way it has happened. There is no reward for a civil servant with imagination, flair or initiative. There is no sanction if he does not do his job. There is reluctance to start a discussion in the public service about such issues. The public service is one of the great under-utilised resources we have. We should either turn it on for the good of the people or turn it off.
There is no point in any Government believing it can continue to frame budgetary strategy and provide for young people and the unemployed by carrying several millstones around its neck. Our huge borrowing requirement is a tax on future generations. I do not believe that that public expenditure pattern can continue and I am not confident that we have the reserves of will to deal with it effectively. Until such time as I see a Government dismantling a programme which is no longer relevant I will continue to believe that. We abolished domestic rates but how many rate collectors lost their jobs? None. At central Government level we send inspectors from Dublin to Deputy O'Leary's constituency to inspect houses for house grants. When the work has been carried out we send them down again. We allow money to be frittered away, without proper controls, on public capital programmes, works and buildings — reference the last report of the committee to this House in relation to the Office of Public Works.
There is no point in our running faster just to stay in the same place. In the areas of public expenditure we are going backwards. Without increasing taxation or making severe cutbacks we could get better value for money than we are getting at present.
In our approach to economic wellbeing there has been a tendency to over-emphasise the degree to which the budget is seen to be a fiscal statement and a set of figures. We still have extraordinary poverty. I am not sure any of us really realise that. All we have to do is look at the minimum social welfare rates to realise that some payments on which people are expected to live in decency and dignity are lower than the price of a pair of shoes. I am not blaming any Government in particular for that. We must galvanise ourselves into believing that as long as there is inequality and injustice we will have the growing urban chaos we are witnessing: crime, vandalism, thuggery, degradation and old people locked in their homes through fear.
A budget statement is essentially a philosophical statement. It tells us not so much what we are spending but what our priorities are and the way in which Estimates have been framed. Unfortunately it does not allow for a fundamental reassessment of our priorities. We tack on a few per cent to last year's Estimates, not asking if our Estimate is relevant any longer or if it should be doubled. Departments which were set up in the distant past are never subject to the scrutiny of whether they should exist any longer or whether a new Department, reacting to new economic and social trends, should be created in their place.
Poverty has not been dealt with. In my constituency of Dublin Central nothing has changed. Nothing is changing and nothing will change because the culture of poverty and the cycle of crime and poverty in parts of it remain as they always were. There is no mechanism for dealing with it because the authority does not exist. The devolution of authority to local authorities who might be able to deal with it does not exist. The structures do not exist. I am worried that the generous funding in the budget to the Combat Poverty Agency might distract us from tackling the roots of poverty in our community. It remains a central commitment of this party and Taoiseach to do something about it. This is not an inopportune time to remind ourselves of that.
In terms of developing our trade, industry and commerce much more emphasis should be placed on marketing. One of the major semi-State agencies has two marketing people abroad, both of them in the same city. There should be more emphasis on multinational marketing, perhaps using local labels and licensing arrangements for our goods. A product does not necessarily have to be sold into the German market under the Irish name. The classic example is the drink "Irish Mist" which unfortunately causes red faces in Germany when it is marketed there because the word "mist" means something totally different in German to what it means here. It would be good marketing strategy to use local names, labels and companies franchised by us but we have not developed that. In net terms to the State the return would be greater than persisting in highlighting the Irish brand name or Irish origin. Instead a local, appropriately tailored, marketing image could be developed with the final printed labels produced in Ireland.
The food processing area is one that needs a committed approach. This country should be the food capital of Europe. Some years ago when I was in Luxembourg I went into a supermarket and saw fish marketed and produced, packaged beautifully and attractively and reasonably priced, so far as I could judge, by a country which does not have a coastline. I cannot find the same here though I do not profess to be an expert on the range of goods in supermarkets.
There was reference earlier to natural gas. In this regard I consider that freedom should be given to An Bord Gáis to enable them to develop a network of gas pipelines in conjunction with private enterprise especially in the main urban centres. I trust the Government's attempt to supply natural gas to Northern Ireland will succeed despite the difficulties involved.
We must introduce a system of economic rents for local authority housing with simultaneous compensation, where appropriate, by means of family income support to families in local authority housing and do so based on an income index and with means testing. The net gain in this respect could be of the order of £60 million, though I admit there would be political difficulties involved.
As a way of saving money I suggest that all those in receipt of short term disability allowances be referred to medical referees of the Department of Social Welfare. I calculate that the direct saving as a result of that change would be of the order of £100 million and I am basing that on the fact that of the one in four so referred at the moment some 40 per cent fail to present themselves for a second medical but return to work instead. The implementation of this change would have the advantage of not causing any hardship and it would allay the growing perception on the part of many in the non-social welfare payment categories that they are carrying the burden for those in receipt of benefit.
Perhaps either in the Finance Bill or in the context of future budgetary strategy the Minister would consider adopting the suggestion that part of the rent paid by flatdwellers be offset by way of income tax. I have never understood why this cinderella of the housing area should be so neglected. House owners who convert their houses into flats provide, though this may not be their primary intention, an extraordinary social service without there being one penny by way of public investment involved. The reason I suggest that flatdwellers be allowed offset part of their rent against income tax is that not only would this recognise a very large constituency in respect of which we do not spend public money — the only spectrum of housing in which this is the case — but it would have the major advantage of eliminating immediately evasion of tax by landlords. Calculations made three years ago by the National Flat-dwellers Association, acting on a request from me, indicated that there was evasion of income tax of about £100 million in respect of private rented apartments. I would consider it reasonable to give back half of three quarters of such revenue, if realised, to the tenants or landlords so long as the dwellings were being used to facilitate flatwellers. In that way we would be introducing a radical scheme of grant aiding people to enable them to improve and update such a legitimate element of the housing spectrum, one that is growing in popularity and in strength and which is a common housing mechanism on the Continent. The rationale behind considering such an approach is that if the private rented accommodation sector were to be diminished either in quantity or in quality the public housing sector might very well have to foot the bill.
Another area in which we might raise money is that of commercial broadcasting. This is an area that will be discussed in detail soon so I shall not delay on it now, but I suggest strongly that minimal criteria, relating especially to the distribution of airwaves, should be introduced by way of control in the area of private radio broadcasting. Revenue could be generated by issuing licences to all applicants who would accord with such criteria and the licence fee, royalties or share of profits could be paid by such stations direct to the State. The advantages would be a net income to the State of significant proportions in addition to the meeting of young people's wishes with stations tailored to their needs, a role that pirate stations are more or less fulfilling now. This could be done with the minimum of bureaucratic cost and the simplest possible approach to what, if what one hears is correct, looks like becoming a bureaucratic and political jungle. Why do we not proceed in the simple way?
I offer another suggestion, but with a certain degree of temerity. I am of the opinion that there would be a broad basis of support for considering carefully the possibility of reducing or rationalising some of the expensive Border security depending on the perception of need at this time. I do not understand why there should be two expensive rings of steel, one North and one South of the Border. I am not very strongly committed to this view, but it should be considered. Would not some degree of rationalisation mean that we would spend less money protecting ourselves against a problem which fundamentally is not of our making? I know that action in this respect could be very difficult, that it might not be popular politically or universally, but perhaps greater co-operation and better use of technology would result in reducing expensive manpower. I offer the suggestion for what it is worth.
We could endeavour to reduce our energy import bill by way of the more efficient use of our transport resources — for instance, by way of taxi services being allowed ply for business at city bus stops. We need also a co-ordinated attempt to develop our transport resources. Seven or eight different Government Departments each have a little responsibility in the matter; but in an area where there is no co-ordination and no systematic policy we must be wasting expensive energy resources and, consequently, money.
Installation standards in housing and commercial developments should be improved and enforced. The Government should do everything possible to ensure that this would be financially viable by way of whatever grant schemes are possible. Obviously the better we preserve our existing housing stock the less there will be for new housing. It would be much cheaper to give a young couple money to add an extension to an existing room than to build a new one for them.
I suggest, too, that district heating schemes using waste heat from power stations be utilised wherever possible. I ask the Minister to consider putting aside a small allocation for the encouragement of greater utilisation of schools and colleges during the summer months for the purpose of providing elderly poor people with short holidays, people who might have no break otherwise. Such a scheme could be successful, assuming goodwill and community involvement. Schemes of this type are very successful on the Continent and they do not involve very much more expenditure than transport costs.
The employment area is one of frightening implications. Apart from the budget, there is much discussion and policy making in other contexts in regard to employment. But I suggest specifically that there be a re-examination of the employment implications of agricultural re-equipment grants which at present can be interpreted as encouraging an anti-employment approach.
There should be a review of the PRSI system, especially in regard to labour intensive industries such as the clothing industry. The present system takes no account of the value added per employee, that is, the total and potential wealth that can be generated by the employee in a sector or in an industry out of which all taxes and liabilities must be paid ultimately. The value added per employee in, for instance, the clothing industry and in banking are totally different, but the employee in each case pays the same rates of income tax and PRSI.
I congratulate the Minister on introducing a budget which shows a fair amount of initiative and imagination. I hope it succeeds and that he will accept the comments I have made in the spirit in which they are offered.
Debate adjourned.