I like to come into this House to listen to a speech because it helps me to make a more constructive contribution. I consider I have been most unfortunate having to sit here for the past hour listening to what was a not very inspiring contribution. I could perhaps have tolerated its content with greater patience if it had not been laced with a measure of vindictiveness and bitterness, which rarely makes an appearance in this House, in a speech for one hour. Sometimes one gets impatient outbursts and these are understandable, but the personal vindictive and bitter attacks made, particularly on the Minister for Health and the Minister of State, Deputy Pattison, the last speaker's former colleagues, makes me regret that I was the Deputy who had to sit here and listen to that contribution.
We were told we were being offered a new, courageous and radical approach to a solution of this problem, but the most radical thing proposed by the last speaker was that we restructure our debt. "Restructuring" has become a great word. I am sure there are people in the House who will be impressed by a phrase like "restructuring our national debt in order to resolve our problems". Already we have pushed the burden of paying for our current standard of living on to our children. By restructuring the only thing I imagine the Deputy meant was that we push this burden on to our grandchildren.
I cannot see the countries who have lent us money willing to forego the rates of interest. We know the countries that are involved. We know the banks and the individuals from whom we have borrowed in the developed world. To talk about restructuring our debts means pushing them further back. Surely this country, listed among the 20 richest countries in the world, will not say to our creditors that we want charity in the form of reducing the relatively modest interest rates they are charging us. It is all right for Brazil, Mexico and some African states to talk about renegotiating in a situation where they do not intend to pay all their debts and all the interest due. They might expect to be let off the hook, but we are a country who trade some 60 per cent of our GDP. We trade with America, Germany, and Britain on equal terms and we hope to attract capital from those economies in order to generate jobs. Yet, the best solution that can be proposed by Deputy O'Connell is that we should restructure our debts as a means of resolving our economic problems. We have done a certain amount of restructuring with regard to loans but nobody should get the impression that is anything but putting off the day when eventually the entire loans and the interest due will have to be paid.
There has been an attack on rationalisation measures. Rationalisation is the application of sensible policies with regard to the production of goods and services. It is not sensible for anyone to attack the idea of rationalisation. I accept that sometimes this may lead to a loss of jobs in one area. If two people are doing a job that can be done by one person and if they are to be paid a full wage, obviously the service given or the goods produced must cost more money or otherwise the State must give a subsidy and at the end of the day we do not create extra wealth. The idea that we can cease to talk about rationalisation with regard to making our industries and our public sector more competitive is a clear indication that Deputy O'Connell was not thinking seriously about the solutions he was proposing. He spoke about young people spending longer at school. There is nothing new about that but, of course, it costs money to build the extra schools, to pay the teachers and perhaps extra transport costs. The Deputy was against increasing taxation. I consider I was most unfortunate to have to sit here and listen to such a hodgepodge of contradictions, irrelevancies and bitterness.
The debate in this House at budget time is not very inspiring. On the Government side there are claims of resolving all problems. Credit is grabbed for everything that happens irrespective of whether the Government policies have made any contribution. On the other side there are constant attacks and failure to accept the genuine efforts made by the Government. There is a refusal to understand why some policies fail to achieve their objective even if put forward with the best will. Sometimes a grudging concession is made in the form of obscure compliments to Ministers for minor matters but generally it is a case of attack and counter-attack with not much honesty on either side of the House.
In recent years a regrettable feature is the personalising of the attack on the Minister for Finance of the day. It is a game played in the media and the public appear to enjoy it, particularly the taxpayers and those who have been stung. It has a kind of sadistic humour and I do not like it. The Minister is only part of the Cabinet who make their decision collectively. I am sure that if Deputy Dukes were the president of a republic with absolute power to draft his own budget and with the assurance that he could carry it, the budget he would put forward would be entirely different from the one he presented to this House. I am sure if he were not answerable to his colleagues in Cabinet, to backbenchers, to the Opposition and the media, he would introduce a budget very different from what he has presented. However, while Ministers have considerable powers there are limitations. I do not think the Minister himself thinks everything he has proposed is ideal.
To some extent this has probably happened because Ministers personalised their Departments at a time when we had a different economic climate. I am talking of the day of the Santa Claus Governments when money started to come from the European Community, when there was economic growth here, when our trading partners had a very rapid economic growth rate and full employment and when our unemployed quickly flowed to their markets. At that time the Minister for Finance did not have to pay unemployment assistance to all the people for whom the State failed to create the conditions in which they could get jobs. In that era the question at budget time was what would the Minister give away. Some Ministers liked that but now, instead of playing Santa Claus, they have to play the part of the policeman. This is the age of the policeman government. Now the Minister for Finance does not have so much to give away. He cannot go on borrowing and getting increased amounts from the EC. Thus, the Minister concerned becomes the object of caustic criticism and personal attack that is not justified.
One of the saddest things is the extent to which there is so little understanding of economic and fiscal policy. I honestly believe that there is little understanding on the part of people on both sides of this House of the effects of what we are doing here or of the options open to us. Some of the proposals put forward are totally contradictory. Opposition speakers and backbenchers sometimes take every side of the road at the one time, trying to have it every way. There is immense confusion throughout the country about what is involved in spite of our improved standard of education. Despite the fact that newspapers are available for the vast majority of people and that more families listen to or watch current affairs programmes on radio and television, they appear to be totally confused about the cause and the origin of our problems. They do not seem to have any consistent view on what they would like a government to do. Even though much work goes into the current affairs programmes on RTE, many of them just subtract from the sum of the knowledge that exists about the whole procedure and at the end of the day people are more confused.
Another feature which becomes very obvious at this time is the absence here of any consistent economic philosophy in any of the three major political parties. In all of these parties we get policies and philosophies of the extreme right and the extreme left. Not only is there a failure to understand the influences and factors that operate, but there is no clear political ideology. I do not favour extreme ideological views on economic matters but I like people to be consistent and clear as to where they stand. Some people think the State should solve all the problems while others think it better to leave matters to the private sector. In this House it is very difficult to identify people's political positions. In Europe or in the US one can look at where people are sitting and have a fair idea about their general approach to solutions to economic problems. In any of the three main political parties here I can identify people whose economic views are considerably to the left of a group like, for instance, the Italian communists in the European Parliament. Though it is not likely to happen, I should like to see a shake out whereby people could choose between policies at election time and identify the kind of policies they favoured.
Long ago I used to be grateful that we did not have extremes of political thought in Ireland, that we did not have periods alternating between privatisation and State control whereby at one time the State would be controlling everything and this would be followed by another period when another party would come to office and begin to deregulate everything. I thought then that that kind of situation would not be good in the long term for the economy but today I should very much like people in the House to be identified as having consistent political views so that when the voter went to the polls he knew the kind of social and economic policies he could expect during the period of office of the Government he was helping to elect. We have had a very much mixed up approach to social policies.
There has been much talk in the past two days in this House and elsewhere about the state of the economy. Some people say that we should give leadership and encouragement, that we should tell people everything will be well in the future so as to encourage them to work better. This is the type of philosophy that Deputy MacSharry refers to as the policy of boom rather than the policy of doom. There are two sides to this argument. When I meet young people today and the topic of the economy or of jobs is raised, I notice that there is much disillusionment among them with our economic policies. These young people say we have failed to create the kind of country that would be a lot more attractive for them to live in. On the other hand, some of us like to be realistic and to explain precisely what the difficulties are and what are the prospects. Only by knowing exactly what the position is can we succeed in proposing the right policies and having them accepted. We can view the whole scenario in a number of different ways but when young people complain about the failure of the system to provide jobs for them or about the high cost of living or about the failure of the State to provide a new school somewhere, I like to remind them of the country in which I was brought up when the vast majority of children went to school barefoot and left school after primary level. I remind today's young people that those who went before them did not have the option of State jobs, that their only option was the emigrant ship. We have no wish to return to that situation but for those who seem to think that we have been going backwards all the time it is no harm to be reminded that a certain amount of progress has been made.
On the employment side we should point out that despite the fact that in the rest of the Community 1.5 million jobs have been lost in the past 13 years, there are 50,000 more people working in Ireland than was the case 13 years ago. In other words, we have created more than 50,000 jobs in that time because in that period 75,000 people left the agricultural industry. Therefore, our record in terms of creating jobs is not all that abysmal. If we did not have the kind of demographic structure that we have or if we did not have the kind of birth rate we have, we might have a tolerable unemployment level. I can identify many regions of the Community which are bigger than Ireland and in which the unemployment rate is as high as if not higher than ours. This is the case in parts of Holland, of northern Germany, of Britain and France. We do not have to think of Spain, Portugal or Greece in this context because their position is considerably worse than ours in many respects.
We might ask what the unemployment levels in those other parts of Europe would be if they had birth rates as high as ours. If, for example, the Federal Republic of Germany had our level of birth rate and had pursued the same economic policies as they have pursued, creating the same number of jobs as they have created, they would have an unemployment rate as high as ours but in such circumstances that country would have readjusted its economic policies to cater for an increased population. We have failed in that respect. We have failed to readjust our economic policies so as to take account of the fact that families here are bigger than the family size in other countries.
We might remind young people, too, that 13 years ago the proportion of our people in second level education was 50 per cent less than today's figure — 231,000 compared with 317,000 today. That is considerable progress. Our young people should be reminded that they are being given an opportunity that was not available to those who went before them. Admittedly, there are not jobs in the public service for all those leaving school but our young people are better equipped now to look for jobs. They are better equipped to provide services or to produce goods that some one somewhere is willing to pay for. We cannot continue to raise money from the taxpayer to provide public service jobs simply to accommodate people on the basis that they have spent five years in secondary school.
The number in third level education has increased from 29,000 13 years ago to 48,000 today. Again, this is progress. It ensures that we are turning out as many engineers, for instance, per capita as is the case in the US; that we are turning out many qualified people. Of course these people worked so far as their studies were concerned but their conditions were comfortable by comparison with the sort of places in which my generation attended school. A considerable amount of taxpayers' money is spent on a person's third level education but when that person leaves college with his qualification he is in a good position to render a service to his fellowman in his own country if that is his choice, or elsewhere in the world. A graduate is better equipped to start his own business. He has a better knowledge of the world he is facing into.
Another measure of our progress might be to consider that 13 years ago the ration of telephones per 1,000 of the population was 49. The latest figure I have in that regard is 106 per 1,000 of the population and I am sure that proportion has increased in the meantime. This is another indication of the considerable economic progress we have made. The figure for registrations of private cars went down over a few years but, over the period as a whole, it rose from 155 per 1,000 to 205 per 1,000, another indication that living standards have improved, that comforts and amenities are available to people to a greater extent.
We have increased spending on health, education and social welfare from £336 million in 1973 to £3,728 million today. In spite of the fact that money has depreciated by about 60 per cent during that period, nevertheless in absolute terms we have increased our spending by 300 per cent in volume in that period. That is a considerable tribute to a generation of workers and politicians.
The quality of life in Ireland as measured by the standard of infant mortality, literacy and life expectancy is one of the highest in the world. While there is a lot of weeping and moaning and a lot of depression about our failure to achieve more, the young generation growing up in Ireland and everybody living here should realise that they are fortunate in the time and place in which they are living. We live in a free society where the frontiers of hunger, hardship and disease have been pushed back, where life expectancy is long and where people live in considerable peace and security. We have much to be thankful for.
Of course it is in the nature of human beings to want to make progress. While we can explain to young people that they are fortunate in many respects, it is only fair to make the comparison between what we have achieved and what other successful economies have achieved in the social and economic area, to measure our performance against theirs and to ask ourselves if we could have done better, given ourselves more reason to hold up our heads in the developed world, more muscle as a member of the European Community, in the international political arena, in helping the deprived and the hungry. Certainly we could have done all these things to a greater extent if we had been more careful. Economic progress does give people more muscle.
After the problem of Northern Ireland, we recognise that the vast number of people who are unemployed constitute our biggest national problem. Now that the problem of Northern Ireland has at least been brought to the stage when we have clear understandings between the sovereign Governments about the road they should go, our next most serious problem is unemployment.
I have spoken about the progress we have made during the past 13 years. We achieved a fairly modest economic growth, but all the benefits of that economic growth have been swallowed up by the public sector, taken by the Government in increased taxation and spent in the social areas I have mentioned or in subsidising jobs in semi-State enterprises and other such things. We have arrived at the situation where the Government are spending the highest percentage of GDP of any country in the developed world.
When we talk about economies which are closest to ours such as Holland, West Germany and Sweden, we should not compare our economy as it is today with theirs as it is today. When they were at our stage of development they were taking something like 25 per cent or 27 per cent of GDP into the public sector and spending it. The position in which we find ourselves today is unprecendented anywhere in the world. We cannot say with certainty that it is possible to get out of it, but we know that no other country has ever been there before. While we may look at other economies and say they are spending as much of GDP on social services etc. as we are, when they were at our stage of development they did not have social legislation developed to the same extent as we have.
Thirteen years ago we had a foreign debt of about £200 million. Today it is £8 billion. These are the truths which should be known to us on all sides of this House and to the young people who will have responsibility for keeping this economy going when the rest of us get tired. We have a total public sector debt of £20 billion. This has stunted agriculture because this continuous borrowing by the Government has taken out of our economy the money that would otherwise be available for the development of the agricultural industry. We have made it impossible by our fiscal and economic policies for the private sector to borrow money. We know that the average indigenous company last year was getting an average return of 5 per cent on capital and for expansion or development they were expected to borrow money at 14 per cent or 15 per cent, if they were lucky.
Recently I have come across industrialists and people in the service sector who started their own businesses and find themselves in a different cash flow situation but can produce facts and figures to show that they have viable business, yet they are being charged penal interest at the rate of 22 per cent. This is because this State gobbles up every shilling available in this economy and leaves nothing for the private sector. Let the private sector take the leavings — that has been the attitude in recent years. We have been expanding Government spending, Santa Claus Governments making gods out of themselves at the expense of progress and of the future. We have starved the private sector and stunted agriculture. We have brought our social sector forward more rapidly than perhaps we could afford.
I see a tendency to exaggerate this and make it worse at European level. I am a firm believer in economic convergence between European countries. I firmly believe that Ireland should play its full part as a member of the European Community, doing its best to harmonise social and economic legislation so that the Community may develop without borders of barriers, an area in which our young people will be able to trade and work and move freely. This is one of the more prosperous areas of the world. It is not geographically vast and is quite small by comparison with the USA, but it is a very favoured area.
I should like to see economic convergence and harmonisation of laws but I am concerned about the very progressive social legislation which is being strongly promoted by some of our partners in the European Community and being accepted, apparently without full knowledge of what they are doing by Ministers from different Governments who acquiesce and go along with social legislation which will certainly have the effect of slowing down economic growth. Until we have greater economic convergence we cannot have harmonisation of social legislation. We have moved too fast in pursuance of social legislation. When we talk about the whole problem of unemployment and its solution this question arises, certainly in my mind, and I must ask myself: to what extent has the progress we have made in this area been responsible for much of the unemployment that has been created?
Deputy O'Connell proposed that we give grants to industrialists, allowing them to employ somebody and then give them the social welfare benefits as well. I should have thought that proposal amounted to much the same thing as the scheme already in existence under which the State undertakes to pay the shortfall in income. I refer to the scheme introduced approximately a year ago, the supplementary income allowance, which amounts to much the same thing. Deputy O'Connell forgot that we have introduced legislation which established minimum wage levels, that employers are obliged to pay these levels of wages whether or not they can afford them. The attitude prevailing in many Departments is: if they cannot afford to pay the level of wages demanded by the law, then let them close their factories, put those people on the dole, allowing the Government to pick up the cost, allowing our economy to suffer the production loss as well.
When we move away from a market situation, when the State begins to interfere to a certain extent, then it is very difficult to know where the State ought to stop. If the State is to decide how much money people should receive, the conditions under which people should be employed, under what conditions employees should be dismissed, then the State should go all the way and decide where everybody should work and what wages they should receive. If people say they are out of work, then the State should be able to say to them: "All right, you report in a given place tomorrow morning and take up that job." Once the State begins to interfere to an excessive extent, as it has — and it should be remembered that we now have the social legislation introduced over the past few years, for example, the Unfair Dismissals Act, the redundancy obligations of employers, minimum wages — this creates an environment in which employers are slow to take on labour.
I know that in the past grave injustices were committed against employees by employers, that they were exploited and abused. We must seek to achieve some sort of balance. But the balance obtaining means that employees can walk out of work, mount a picket on a gate, bringing things to a standstill. On the other hand, an employee may not be dismissed by an employer. It has proved extremely difficult to sustain a case in any type of court advancing the argument that an employee has not carried out his or her job efficiently and well. Unless they are caught robbing the till or such like it is very difficult to get rid of them. Employers are aware that when they engage personnel today they are as good as married to them. That is why they are fairly careful about increasing their workforce. This constitutes part of the problem. I do not contend that it amounts to all of the problem. Certainly minimum wage levels form part of the problem. It is interesting to note that in the countries which made most economic and technological progress, Japan, Austria, the United States, and Switzerland, since the first oil shock came, real wages have dropped.
There is such a thing as the labour market. If labour became cheap then production costs would be reduced, economies would become more competitive and there would be additional recruitment of personnel. That is the way the labour market operates. If the State could think of industries or jobs to create and did so without penalising the taxpayer in the process by continuing subsequently to subsidise those jobs I would welcome that. I am not so far to the right in my economic thinking that I would be entirely against that idea. If the State could think of goods and services to be made and sold competitively without the need to continue subsidising employees, I would be quite happy to see the State do so. But I do not think there are easy solutions like that lying around so that some civil servant could say: "Build a factory here; produce this commodity; sell it on the world market," and everybody would have jobs and all would be well. The private sector is not that slow or stupid. If such opportunities existed they would have been identified.
The truth is we have become uncompetitive in our economy. Deputy O'Connell seems to think that OECD reports prepared on behalf of the countries of the developed world that have successfully managed their economies — to the extent that they can lend to us and subsidise us — are somewhat immoral, that there is some thing immoral about accepting their advice. They have told the British that the failure of their economy to respond to the surplus in the labour market by reduced wages and so on has created their unemployment problem. It should be remembered that our wages levels increased more rapidly than those in Britain, as did our social services. If that is what has occasioned the problem in Britain, certainly it has contributed in a big way toward the creation of that problem here.
Over the past 13 years we have seen in the distance prosperity in other European countries, in the United States, and smelled it on the way here. However, we grabbed it too fast. We improved our social legislation and increased our standards of living. We ate dinner at breakfast time. We ate the green fruit and now we have a belly ache as a result. We cut the green corn. We borrowed £20,000 million to pay for those improved standards of living. In addition we received, in today's terms, approximately the equivalent of £1,000 million annually from the EC. We used that money to fuel inflation, rendering our agricultural and industrial production less competitive. That is what we did over the last 13 years, in a period in which we were afforded an opportunity to catch up.
Some people talk about the varying rates of growth as between the different European countries. We should remember that a 3 per cent rate of growth in the Federal Republic of Germany is not the same as a 3 per cent rate of growth here because we start from an entirely different base. If there is a 3 per cent economic growth rate prevailing in the Federal Republic of Germany and the same here, that means that the gap is widening even more between the GDP per capita here and that prevailing in those other countries. That would mean that at present we would need to have double the economic growth rate prevailing in, say, the Federal Republic of Germany, Switzerland or even France or Britain.
While we have the same level of social services as obtain in Britain — and there is not a great difference in wages either — the truth is that in Britain GDP per capita is 70 per cent higher than here. In Germany it is two and a half times, 250 per cent, higher. The truth is that we need to achieve an economic growth rate which is twice or three times that of our partners in order to catch up. Of course the only other solution to the problem would be that they would transfer some of their wealth directly to us. That is the type of solution Deputy O,Connell was recommending. It is a wonderful solution and, I am sure, is popular but I want to warn anybody who cares to listen that it will not take place. If one wants to know what the people of the Federal Republic of Germany, France, Italy, Britain, Luxembourg, Holland or Belgium will give us, then we should ask ourselves: what are the rich parts of Ireland giving to the poor parts of Ireland? Equally we should ask: what is Ireland, as a rich country giving the poorer countries in the world? The answer is: very little.
The truth is that we will receive very little. We have received a fairly generous amount. While the Community have been giving us what I would regard as generous amounts, the gap between our economic performance and theirs has continued to widen. We have not used the money received as we should have used it. The only solution we can think of now is to beg for more. We have stolen from our children. Deputy O'Connell in his contribution was recommending that we steal from our grandchildren as well. That does not represent any solution to the problem. There is one solution only. If we want more money, if we want higher standards of living, we will have to produce more. We have the education, training and resources. Our main fault has been our failure to exploit those resources to achieve our potential and we have more resources per capita than any other country in the EC. We must have, because we are a thinly populated country with quite an amount of good land — not the best in the world but good — a reasonable climate, rich fisheries around our shores and a population structured and educated to produce wealth particularly at this time, and to avail of technological developments in the world and the assistance that has been given to us.