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Dáil Éireann debate -
Thursday, 13 Feb 1986

Vol. 363 No. 12

Financial Resolutions, 1986. - Financial Resolution No. 13: General (Resumed).

Debate resumed on the following motion:
That it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision in connection with finance.
—(The Taoiseach).

Deputy Keating was speaking when the debate was adjourned yesterday. He is not here. I call on Deputy Faulkner to resume the debate.

This country has had considerable experience of Coalition Governments and it is unfortunately true that the major problems facing Coalition Governments have been inability to make difficult decisions in time and, perhaps still more important, to abide by these decisions once made when such decisions entered troubled waters. This indecision resulted from real or pretended differences in ideologies. I say "pretended differences" because I think it can be said truthfully that all Ministers, both Fine Gael and Labour, in this Government have shown themselves to be conservatives in economic matters, with the Fine Gael economic approach being predominant. The Labour Party feel it incumbent on them to give the impression to their followers that they are pursuing their own objectives, so we have a pseudo crisis from time to time, the overall result being failure to make difficult but necessary decisions in time, the economy then being allowed to drift to the detriment of all our people.

Perhaps Deputies on Government back benches will point to closures of hospitals and a college of education and to the teachers' dispute, and state that difficult decisions were taken by the Government. Having seen Deputies opposite hightail in every direction since the decisions were made, I doubt it.

From the beginning of the Coalition period of office it has been the "in" thing for Government back benchers, Labour and Fine Fael, to take credit in their constituencies for everything popular done by the Government, but to distance themselves from unpopular Government decisions, even going so far as to attack their own Ministers publicly. The most popular pastime of Government Deputies when faced with unpopular Government decisions is to leak to the media how hard they had fought at party meetings to block the unpopular measures, in the hope that this lead will reduce the anger and frustration of those affected, when the same Deputies march into the lobbies later to vote for such measures.

From long experience in this House. I say to them that this will not work. The public have more respect for those who defend their Government's decisions for which these Deputies, by keeping the Government in office, are responsible just as much as the Government. The public have very little respect for or are not impressed by these manoeuvrings.

The cutbacks recently announced were clearly not as a result of proper planning. They are panic measures forced on the Government by the fact that for three years they have failed totally to face up to the economic problems which beset the country. If the Government had had a proper plan from the beginning of 1983 and followed such a plan through with courage and vigour there would not now be need for the panic and the insensitive decisions taken recently.

One abysmal element threading its way through the performances of all Coalition Governments here is the failure to tackle unemployment and an inability to awaken in our people a belief in themselves and a hope for the future, which are fundamental to overcoming these grave problems. I entered the Dáil in 1957 on the demise of the second Coalition Government. Unemployment was rampant, emigration widespread, despair had gripped our people and the outlook was such that all hope apparently had gone.

The problems were tackled by the incoming Fianna Fáil Government, and in a relatively short period the climate of despair and despondency began to disappear and Fianna Fáil proved what can be achieved by a determined single minded Government. Employment increased, emigration was reduced rapidly and our young people could look forward to a worth while future at home. It is my experience of 1957 and its aftermath, which, relatively speaking, was plagued with the same economic problems and the same serious unemployment as we have today, which gives me hope for the future, provided we have a Government who know their own mind and will have the courage and the conviction and the capability to make the difficult but necessary decisions for the nation's good; when we will no longer have decisions based only on the needs of conflicting ideologies.

We have had three years of this Coalition. Our economy is in tatters, unemployment is soaring, industrial closures are a regular feature, emigration is rising rapidly. It has become obvious that we cannot expect a unified approach to our problems and that only a new Government can instil the hope in the future which is so necessary to revitalise the economy, vitally important for all our people but particularly for our young people.

The gravest problem facing the country is unemployment. It is sad that since the Government came to power we have had to make this point year after year, yet the Government persist in doing little or nothing effectively to deal with the problem. The average rise in unemployment in the EC was just over 1 per cent in the nine months to September 1985. The rise here was 8.5 per cent. The Government no longer can claim that the high rate of unemployment here is related to conditions in the EC or worldwide. At 18 per cent, our unemployment is the highest in the EC.

The figures I have just given also belie the statement by the Minister in his Budget Statement last year that employment would rise in 1985. A few small employment schemes have been introduced. They are welcome if only because they take some young people off the dole queues, but they are short term jobs. The experience of the majority of our young people is that, when these jobs come to an end they find themselves back on the dole, more hopeless and despondent than ever.

It is little wonder that emigration is increasing rapidly. In a small village in my constituency I have learned that a dozen young people from the village emigrated to America relatively recently and have remained there illegally ever since. This scenario is repeated throughout the country. When one notes the fact that County Louth was never noted even at the worst of times for high levels of emigration, the movement of young people from a once prosperous constituency is a positive vote of no confidence in this Government.

Passenger figures in and out of the country show that emigration was running at around 30,000 in 1984. If one is to judge by reports from my constituency and other constituencies, the figures for 1985 will be higher still. Fianna Fáil Governments have tackled very successfully this problem of emigration and it is a matter of very deep disappointment for us on this side of the House that emigration is once again increasing rapidly.

There are now 240,000 people signing at the employment exchanges. Added to this exceptionally high number must be those on temporary employment schemes and those who are emigrating. This situation is intolerable and totally unacceptable. In a sense, however, it is understandable because if one is to judge by the Government's most recent programme, Building on Reality the high level of unemployment appears to be acceptable to them. In that programme the Government stated that unemployment would be higher at the end of the programme period in 1987 than when it was announced in 1985. Such a programme offers no hope to the unemployed and such a policy could not but fail to spark off any enthusiasm among our youth, an enthusiasm which is vital for economic survival. Worse still, since this programme was published foreign borrowing has increased while unemployment has also increased. The programme has failed. We have instances of countries in western Europe, such as Denmark, where foreign borrowing has been reduced while at the same time unemployment has also been reduced. This is proof positive that with proper Government and with proper management both foreign borrowing and unemployment can be reduced.

The introduction of the programme Building on Reality was an acceptance by the Government that the Joint Programme for Government issued by the Coalition partners in late 1982 was a failure. Now Building on Reality has also been proved a failure, as will any programme produced by this Government. While the desire to succeed may be there, the will to take the difficult decisions necessary to implement the programme is not there.

In the constituency of Louth there are now 8,472 people registered as unemployed, an increase of 33 per cent since this Government came into office. In Drogheda and district the number of unemployed is now 3,443, an increase of over 35 per cent in the same period. We have now 2,112 more people unemployed in the constituency since the advent of this Government and this includes over 900 more people unemployed in Drogheda and district since December 1982. We have large families of adults in the town of Drogheda with not one person in employment. Mothers are at their wits' end trying to provide food for families when neither the father nor the mother nor any member of the family is working. The deterioration in living conditions in the town is something I forecast before the general election should a Coalition Government be elected. It was clear to me that Coalitions, like the leopard, never change their spots and that four Coalition Governments had already run their course leaving high unemployment in their wake. This Government was not likely to prove any different. So it is that once again the need to change the Government is obvious if any improvement is to be effected.

If we are to make a lasting impact on unemployment it is of the utmost importance that we concentrate on the two major areas in which real jobs can be created, that is, manufacturing industry and the building and construction industry. It is the function of Government to create the climate in which each of these major areas can flourish. The budget does nothing to help in either case; it is quite the reverse. The failure to reverse the disastrous decision in last year's budget to double VAT on the building and construction industry and the huge cut in the public capital programme all point to further unemployment. Investment is the life blood of industry. Technological change demands investment in plant and machinery. The need to create the climate for investment in industry is apparent. However, this budget in effect increases taxation on manufacturing industry through change in tax treatment of investment in plant and machinery and because of special duties on loans and so on. When one takes account of the fact that the volume of manufacturing industry, seasonally adjusted, fell in the first three quarters of 1985 with only a slight change upwards in the last quarter, it is clear that we can hope for little change in the coming year in this basic area where our main hope for job creation rests. The provisions of this budget will inevitably increase the rate of inflation, which will further retard industrial growth. Technological change demands investment in plant and machinery and the Minister's attitude in this budget will have exactly the opposite effect.

The continuing exceptionally high level of personal taxation is a disincentive to initiative, effort and investment. Apart from investment in plant and machinery we need investment in brain power. Such investment is low here in comparison with other developed nations. High personal taxation levels help to ensure that where we have an investment in brain power it will be lost through the brain drain when highly qualified young people, badly needed at home, through frustration, go abroad and give the advantage of their abilities to build up the economies of other countries.

We need greater investment in infrastructure and control on costs of essential industrial services such as energy and transport. This budget is doing little or nothing to help in these vital areas. Investment in management education and development and training in technological skills is not adequately catered for. A thorough examination into courses available for managers must be made to ensure that our approach is the right one and that those responsible for such courses have the expertise and the up to the minute know-how which is so necessary.

Our present tax structures are a major disincentive to industrial development here and the Government in their most recent published programme and in this budget have failed to put forward any programme for worthwhile change in this area. The Government, in spite of election promises to introduce a fair taxation system, have done nothing over the past three years in this regard and inexcusably propose to do very little in this budget. Every effort was made to create the illusion in the presentation of this budget that taxes were being cut. The facts are quite different. Income tax in 1986 will bring in £2,356 million as compared with £2,103 million in 1985, a rise of 12 per cent. Even allowing for higher incomes, the figures portray the reality. The tax burden has clearly not been shifted from income to any worthwhile degree to other tax revenue sources. We are informed that the Minister has given considerable concessions in the area of VAT, but VAT in 1986 will yield £1,562 million as compared with £1,402 million in 1985. The facts are that we will pay more income tax and VAT this year than we paid last year. The so-called concessions are an illusion. We are being told that the banks, the building societies and the financial institutions will be taxed but the reality is that they will simply pass on the new tax to their customers. It is the people who save money in these institutions who will be taxed.

The general line pursued by this Government has been to increase taxation over the years, resulting, as we have seen from recent figures, in less and less income to the State. We have reached an extraordinary situation where a single industrial worker with an income of a little over £9,000 a year comes within the top tax rating. Does this tax system inspire people to invest in industrial enterprises? Let us look at the facts. There has been a serious decline in investment in industry over the past three years resulting in a fall off in growth. It should be clear to all that any real hope of reducing unemployment must come from industrial development. The constant stream of closures in industry in 1985 is, to put it mildly, disheartening; indeed it is frightening. While we must continue in our efforts to attract foreign industry to set up here, our major objectives must be to motivate people with worthwhile ideas to translate them to practical effect and we must also formulate a reconstruction package of proposals in an endeavour to halt further closures and to maintain employment which would otherwise be lost.

The Government are pinning their hopes on the National Development Corporation but the reality is that we have sufficient tried and tested State bodies in this field and that we do not need a National Development Corporation but new practical ideas. Even if we had large sums of money available for investment without worthwhile ideas it would be useless. The lack of ideas in the Government to date has been a major drawback and does not augur well for the remainder of their term in office.

It is generally agreed that output in the industrial sector must be doubled if we are to make worthwhile progress in reducing unemployment and in raising living standards. Competition for money is keen. Banks, building societies and the Post Office are able to offer reliefs of various kinds to those who invest with them and it is important that industry should also be in a position to compete on an equal footing. Unless something is done to help in this area, most people will continue to invest in what might be termed safe investments. Risk capital will only be available in necessary quantities where the return is considered reasonable by the investor.

The extension of the natural gas grid throughout the country and — from my point of view to County Louth, including Drogheda, Dundalk and, hopefully, Ardee — is a must. The pace with which this great national asset is being made available to manufacturing industries is unbelievably slow. A gas distribution grid is an essential element of modern industrial infrastructure and it is well to remember that our competitors in Europe, inside and outside the EC, have a gas distribution network. This places us at a disadvantage in our efforts to develop industrially and to compete on home and foreign markets. Natural gas is needed to help in developing industry in my constituency where unemployment has risen rapidly in the past three years.

Premier Periclase, Drogheda, is a case in point. This is an industry with a high employment content using natural resources and the only foreign element in production is imported heavy oil. This foreign element could be removed to quite an extent and natural gas substituted. If that happened, we would have that most desirable of industries, one which relies on our own natural resources only. The consumption of natural gas in such an industry would be exceptionally high and, therefore, I urge the Minister and the Government to proceed, in the national interest, with the extension of the gas grid to Drogheda and Dundalk immediately.

Natural gas prices should be set at a level which will enable energy intensive industries to compete on an equal basis with foreign competitiors and thus create more jobs here. Many of our energy intensive industries are competing with industries abroad which have much lower energy costs and when one adds transport costs the problems and difficulties for Irish companies attempting to break into foreign markets or to hold their share of these markets are all too obvious.

The chronic state of our national finances under the Coalition is such that their main objective at all times is to siphon off as much cash as possible from all available sources. One example of this was the demand for an enormous annual cut from our telecommunications services even before they were fully developed. Another relates to the price being charged for natural gas where the yardstick used is to add up all the energy costs of an industry prior to the installation of a natural gas supply and to charge for the gas at that level. This is a very shortsighted policy particularly in a country with such a high level of unemployment. This great natural resource should be made available to industry at a reasonable price so that they can compete on equal terms with foreign competitors.

I have repeatedly asked the Minister to grant relief to Premier Periclase in regard to hydrocarbon fuel oil tax. This tax is an enormous imposition on the industry. Every effort has been made to improve energy efficiency in that industry but they still need to use many thousands of tonnes of heavy oil annually and the heavy tax on this oil leaves the company at a grave disadvantage in relation to their competitors. I have already pointed to the fact on previous occasions that Aughinish Alumina have been relieved fully from tax in this area. If the Minister were far seeing he would appreciate that anything which would help to improve competitiveness can only result in more much needed jobs. This industry is special in that its raw materials are all native materials.

My constituency of County Louth has been devastated since this Government came to office, with industries large and small closing down and with others cutting back on the numbers employed. This constituency, which under Fianna Fáil Governments, was one of the most prosperous in Ireland has now long queues outside the employment exchange, drawing State assistance, week after week, with no hope of a change in this sad situation. We have a large number of secondary and vocational schools filled with young students, most of whom have little or no hope of getting employment when they leave school and this has an extremely depressing effect on parents and children alike.

I have called on the Government on numerous occasions to make the same grants for industrial development available to County Louth which are already available to all other Border counties north and south of the Border, so as to give County Louth an opportunity to compete on fair and equal terms with other areas for foreign industry as well as to give our people there the necessary financial assistance to develop industrial undertakings. A few years ago I would not have dreamt of making such a request here in this House. County Louth was one of the most highly industrialised counties in Ireland, with good sound employment available to large numbers of people, and nobody would even think of asking for similar conditions as those applying in other Border counties. Today the situation there is completely changed. As I said earlier, industries are collapsing and unemployment has increased dramatically and the need to come to the assistance of our hard pressed community cannot be denied.

Far from helping my constituency the Minister saw to it in his budget provisions that unemployment will increase more rapidly than ever there. The increases in the prices of old reliables, drink, cigarettes and petrol may perhaps have been taken with a degree of equanimity in other parts of the country but I can assure the Minister that that degree of equanimity does not apply to my constituency or indeed to the other Border constituencies.

The policies followed by this Government since they assumed office have devastated the Border areas. Their high taxation policy has made it virtually impossible for the retail business in these areas to survive and there are regular closures of businesses, signs all over the place announcing sales of premises, all resulting in more and more redundancies. Lower tax rates in the North serve as an encouragement to the people of County Louth to travel north of the Border to buy goods of all descriptions resulting in a severe drop in trading in my constituency. Major attractions for people on this side of the Border to travel north to shop were the considerable differences in the prices of petrol and spirits. Because they went north for petrol they tended to buy other goods there also.

We, on this side of the House, protested vigorously to the Government and to the Minister about this state of affairs and eventually the Minister took some action which ameliorated the situation and helped to an extent to stem the rush across the Border. He has, however, in this budget reversed the situation, by increasing the price of a glass of whiskey by 6½p and petrol by almost 11p per gallon. This is a total increase of 15p in the price of a gallon of petrol in the past three months. The Minister can be assured that the trek across the Border will return to flood proportions. Petrol in the North is much cheaper than south of the Border and this added to the increase in the strength of the punt will ensure a rapid return of the problems which bedevilled trade and commerce, particularly in Dundalk but also throughout the county generally only a short time ago. It is believed by economists that cross-Border trade will extend to a greater catchment area then heretofore has been the case.

The Minister, after repeated protests by us, stated that he recognised the special problems of Border areas. So grave had the situation become that he eventually took some action. He has wiped out in this budget the assistance previously given and he has exacerbated an already bad situation to a point where those involved in trade and commerce in my constituency are fast losing all hope for the future.

One of our national papers made the point immediately after the budget that further falls in oil prices would soon equal the tax imposed by the Minister. That, of course, is of no value to traders in Border constituencies because the price falls North of the Border for the very same reason and the differential remains.

I am now asking the Minister to explain why, having in the past expressed concern for the plight of trade and commerce in Border areas and the number of redundancies caused by Government policies in this area of trade in my constituency and having taken some steps to alleviate the situation, he can now reverse his position and once again create the conditions in Dundalk and in County Louth generally which will wreck all hope for the business people there and their employees?

I would remind the Minister that the Economic and Social Committee's report on Border areas recognises that Border areas in this country are among the least economically and socially developed in Europe and points to the extra problems created by an unnatural Border which hampers normal economic development.

The other major job creation area to which I have referred is the building and construction industry. In their first budget the Labour-Fine Gael Coalition Government cut the Fianna Fáil public capital programme by £220 million. I deplored that cut at the time and forecast that the cut would have a catastrophic effect on the building and construction industry and on its workers. Time has proved me to be only too correct in this prognosis. The taking of this very large sum of money out of the public capital programme plunged the industry into a deflationary spin. So much so that minor measures taken by the Government in recent times have totally failed even to slow up this deflationary cycle and so an industry, which should be capable of producing new stable jobs, instead has seen more and more of its workers and workers in ancillary industries losing their employment. Construction output has been falling rapidly over the three years of this Coalition Government. Public investment on construction has fallen by over 25 per cent in the last three years and the volume of State-funded construction work in 1985 fell very considerably. Publicly financed construction work carried out by the private sector in 1985 declined by 10 per cent. The output target for the industry, set out in the Coalition programme, Building on Reality of a 7 per cent growth rate between 1985 and 1987 is no longer achievable.

The number of people unemployed in the industry currently stands at over 45,000 and the forecasts are that the number will be much higher. Added to this must be the number of people who have lost their employment in ancillary industries. Irish Cement Limited, in Drogheda has had redundancies since this Government came of office for the first time in its history. Indeed, as I have said on a number of occasions, these redundancies had very severe repercussions in Drogheda and district because Irish Cement, since its establishment there by Fianna Fáil, was regarded as being as solid as the Rock of Cashel and the very idea of redundancies there was unthinkable. Is it any wonder that workers in the building and construction industry claim and rightly so, that only under Fianna Fáil has their industry developed and prospered, and only under Fianna Fáil have their jobs been secure.

The index of employment in the industry in September 1985 show a 15 per cent decline compared with an 8 per cent decline in September 1984 in respect of the previous year. As I mentioned earlier, the recently announced scheme of grants, while it is welcome, will have little impact on the general depressed situation of the industry. There is little doubt that because of the Government's lack of positive thinking in respect of this great industry, its major problem is a total lack of confidence. Positive action is what was required from this Government and it was obvious that unless this action was quickly taken and unless adequate finance was made available the lack of confidence which permeates the economy generally and the building and construction industry in particular would remain. Far from providing the necessary incentives, however, this budget has drastically cut by £25 million, the public capital programme, reducing the money for sanitary services by £4 million, for schools by £3 million, for house and improvement loans by £2 million, for farm modernisation scheme by £3.2 million and for IDA grants by £3 million, all of which will have a retrograde impact on the industry.

We had, in the building and construction industry, an organisational structure of management and professional services which enabled it to undertake projects of every kind, large and small, and indeed which was the base from which many Irish building and construction companies were able successfully to compete worldwide for building work. It is tragic that this great organisation is disintegrating. Old established firms have been liquidated and the building and construction skills of a trained workforce are unused because of the high level of unemployment in the industry and, eventually, unless quickly utilised, will disappear altogether. We in Fianna Fáil believe that we can restore the industry to its former capacity but such is its state of demoralisation, that it will take quite a time to do so. In the meantime I must again demand that the Government take an active interest in the industry, at least to show that they recognise its importance and its capacity to create new jobs quickly.

Might I also draw the attention of the Minister to the fact that the building and quarrying material supply industry north of the Border has received huge capital grants, particularly over the past four years? A very high proportion of these grants were for manufacturing units set up in close proximity to the Border in order to avail of the market here. These grants have now been removed but as the industry north of the Border expected this to happen, they had geared themselves to such an extent that the effects can last for the next ten years. These grants are contrary to the spirit of the EC concept and the industry here is entitled to some form of counterbalance to allow it to compete. The net effect has been a big number of closures in plants in and around the Border areas resulting in a large number of job losses and a loss of revenue to the State.

During the period 1981-84 the numbers employed in plants here servicing the areas affected by imports has fallen from 870 to 620, a loss of 250 jobs, most of which were as a result of imports from the North. There is now a prospect of a further 200 jobs being lost. A total loss of 450 jobs could mean a loss of over £9 million to the State. I would strongly urge the Minister to come quickly to the assistance of this industry here to save the jobs which are in danger and to create new jobs in substitution for the jobs lost. The general consensus is that if present trends of market penetration continue, plants trading in the affected areas here will be forced to close or declare further redundancies. I might add that the artificial price levels being employed by Northern producers in order to gain markets offer no long term benefits to consumers here because once competition is eliminated here prices from Northern sources will soar.

In the Estimates for the Department of Communications I noted that the priority for capital grants for harbour developments would go to Dublin port, to Ringaskiddy in Cork and to Rosslare. It is clear from a reply to a question to the Minister for Communications on 22 January 1986 that after the needs of these areas have been satisfied there will be little money left for the development of other harbours. There are two quays in Drogheda, Ballast Quay and Welshman's Quay, which are in critical condition. I have over and over made the point that not only are these quays in danger of collapsing, but if one of them in particular should collapse, it will bring with it portion of another quay, on which large sums of public money have been spent.

Let me again repeat that when I was Minister for Transport I made available to the Drogheda Harbour Commissioners almost £1 million in grants as well as large sums from the Local Loans Fund for the reconstruction of the other two quays in the port. Because of inflationary trends since then, it would take £2.5 million to do a similar amount of work to the quays today. The Department have offered £300,000 which is, to put it mildly, ridiculously low. However, even this small sum of money, if one is to go by the most recent epistle to the harbour commissioners from the Minister, is unlikely to be spent this year. The Minister states that the project must be financially viable and also technically viable, whatever that means. The two quays are technically falling into the Boyne; that is certain.

The Minister states that he will be deciding shortly on the allocation of State grant assistance for harbour works. Provision was made in the 1985 public capital programme for a payment of a State grant of £300,000 to Drogheda Harbour Commissioners. No work was sanctioned by the Department, and so the £300,000 is still in the Estimates. No doubt provision will be made in the 1986 public capital programme, or perhaps even in the 1987 public capital programme, but no action is likely to be taken by this Government. Meanwhile Ballast Quay and Welshman's Quay are further deteriorating.

When one considers the importance of the port of Drogheda in the business and community life of Drogheda the refusal of the Minister and the Government to provide the necessary money to assist in the reconstruction of the quays is nothing short of disastrous. Might I again stress that in a matter of great importance such as this, the £300,000 proposed is pin money? If the Government are serious in their approach to the port of Drogheda they must immediately make the necessary money available and I call on the Minister for Finance to provide the funds which are urgently needed.

This budget has been termed a holding budget, by the media, and indeed one Government Deputy privately said it would keep the show on the road. While I understand that the purpose of the Government's approach to the budget was to try to hold the Coalition together, I do not know why it should be capable of holding it together. When one looks at the social welfare provisions in this budget one cannot but wonder how the Labour Party which has so much to say about assisting the weaker sections of the community before the general election of November 1982, can stomach the miserable increases offered to the old, the sick and the unemployed in this budget and the fact that they are not payable until the third week in July 1986, the latest date for the payment of increases in the history of the State. An increase has now been granted which is below the cost of living increase. Because of the fact that the terms of this budget will result in increased inflation, the increase granted to people dependent on social welfare will ultimately be very much below the cost of living increase.

I have often made the point that people on low incomes usually experience cost of living increases considerably above the national average because they can afford to buy in small amounts only. This 4 per cent increase is clearly totally inadequate, and it is shocking that it will not be paid until the third week in July. The reduction in the food subsidies in April will further increase the cost of living for those dependent on social welfare. Life for these people is a constant struggle. Gone are the days when Fianna Fáil gave social welfare increases above the rate of the cost of living. The new child benefit scheme is to be partially financed by the Minister by saving the increases in social welfare money normally applied to the child dependant supplements payable with the weekly benefits and assistance.

Since this Government came to office their attention to the cause of the poorer sectors of the community has been abysmal. A typical example of this was when, instead of doubling the Christmas social welfare payments, the Government granted only a three-quarter increase. All this is symptomatic of the Coalition's approach to the less well off in the community. It is easy to understand why the lower income sector wish for a change of Government.

I am anxious that the Minister should explain the position of older people in respect of the 35 per cent tax on deposits. I am referring here to older people who do not normally have sufficient income which would bring them within the tax net. There is no provision whereby they can reclaim this tax. Many older people on fixed incomes are very perturbed about this matter. It should be clarified by the Minister and then rectified so that these people can reclaim the withheld tax. The method by which such a claim would be made should be simple because old people already have severe problems with complicated tax procedures. The fact that individuals on low incomes will have 35 per cent deducted from their deposit interest and cannot reclaim it is totally unfair and unjust, and that position should be rectified.

Voluntary hospitals are also very concerned about the retention tax. Money which they accumulated over the years, and which they used for the development of their hospitals, is now subject to the 35 per cent tax. Very often because of the use to which that money was put, the Department of Health were able to delay payments due to these hospitals. It was also a fact that these hospitals spent money which they could properly have demanded from the Department out of their own funds. They will no longer be able to do this and I strongly urge the Government to introduce some means by which such hospitals can be excluded from this retention tax.

I want to again emphasise that the basic failure of this Government has been their failure to create the climate for job production, to encourage investment in industry and to stimulate the building and construction industry because we are largely dependent for increased employment on the building and construction and manufacturing industries. This budget once again showed that the Government are unable to grasp the opportunity to help to create employment. There are now 240,000 registered as unemployed; emigration has reached serious proportions; and many young people are engaged in short term employment which provides no hope for the future.

The signs are that unemployment will continue to rise. What can only be regarded as a sleight of hand budget will clearly do nothing to help. Families with several members unemployed are in despair. Whole communities believe there is no hope. A new confidence must be infused into our people, a belief in themselves, a belief that they can win through, that new employment can be created and that there is a future for our young people in this country. This Government clearly cannot engender such confidence.

Are you bringing in the Minister before me?

The Deputy seems to have some information the Chair does not have.

The Deputy is living in the seventies. Deputy Faulkner is one of the most respected Deputies in this House, and that view is held by his opponents as well as his Fianna Fáil colleagues. I was depressed listening to him because if well meaning, decent Deputies like Deputy Faulkner have no suggestion to make to a Government, running a country in such trouble as ours has been for the past 15 years, other than to pay out more and take in less in tax — because that is what his contribution boils down to — then there is no outlook for us and the sooner we bring in the International Monetary Fund or the Cubans, the better.

The whole thrust of the Opposition approach to this budget is much like what used to be the whole thrust of the Fine Gael approach to a Fianna Fáil budget. If one had changed Deputy Faulkner's voice and appearance and changed the names of the parties in his speech, one could not have told which side the Deputy was on. There was no philosophy in his speech. There was not an idea which would give the impression that he understood what was dragging this country down. I sympathise with the Deputy's complaints, and I agree with him about high levels of taxation, but the only other side of the matter which appeared to appeal to the Deputy was the opportunities for further spending.

The Deputy's constituency has taken a beating over the past few years, like every other constituency, and I agree that his was one of the best industrialised counties. Surely an experienced Deputy and former Minister such as Deputy Faulkner should have some better advice to offer the Government, even in regard to his own constituency, than to repair the quays and put more money into building? I accept from Deputy Faulkner that the quays need to be repaired, but surely there must be more to Government policy and rescuing an economy than pumping money into building projects. The repair of a quay is a productive investment; but merely putting up buildings, whether domestic or office buildings, is the worst form of investment if we are aiming for long term sustained job-creation. A wave of employment would pass through the town while the building was going on but, once it is up, apart from the money which would be generated for contract window cleaners and people who may service those who live or work in the building, there is no productive long term employment. Of the money generated a large proportion goes on imports. Something like 50 per cent of every £ put into circulation disappears from the country.

The real problem this country has faced for years is that the State is over-extended, over-exposed and overburdened. The State is over-extended into areas where it has no business. What business has the State in broadcasting, in shipping and in virtually monopolising public transport? These things are not necessarily part of the State's function. A State may be driven to supply these things in an emergency, or if they have some inherent social value which private enterprise cannot supply; I do not deny the necessity for State regulation, control, application of standards and so on. But the areas into which the State extends unnecessarily become part of the public service, and the notion of unsackability, and the notion that it cannot be closed down prevails. It has taken a Minister of this Government to begin to chip away at that perception. It is unfortunate that it should have had to be done at the expense of a very large body of excellent former employees of one of the best semi-State bodies. But it has taken this Government at least to say there must be a stop and that we cannot, merely in the name of protecting a semi-State body, pump in unlimited quantities of money.

The State is over-exposed for similar reasons — because of the expectation that there is no risk in failure, no risk for individual managers, workers or companies, that it does not matter if they overrun, if they have a bad purchasing policy, or if they open up an air route for which there is no commercial justification, because the State will pick up the bill at the end. This Government have refused to bail out certain operations which were closed down, in part by the attitude of their own workforce, like some of the ones in Cork.

The State is also overburdened by the immense back-pack of the public service structure which it carries and which must be paid for by a relatively small number of productive working people.

These are the reasons why we have the conditions about which Deputy Faulkner complains. The Deputy is right to stand up for his constituency, to complain about high taxation and call for investment. The reason why it is not possible for Ministers on this side who essentially agree with his sentiments, to do what he suggests is that they are weighed down with the burdens I have described. Until we grasp that truth and deal with it, we will continue in this way no matter who is in office.

This is the first time I have had the opportunity to address obliquely a member of the Progressive Democrats in the House. I wish them the best of luck but if they get in, or play any part in a future Government, whether dominant or ancillary, if they are not able to produce some better way of dealing with the nation's affairs than budget manipulation, they too will fail. There is no alternative to getting this State slimmed down, to getting its hands out of areas in which it ought not to have a role. Until we face that fact, which is full of political dynamite and political thorns, we will have this situation. All of us will come and go but the State will keep going downhill until somebody else takes over, unless we succeed in reducing the State's fat.

In the budget debate last week the leader of Fianna Fáil cited the economic correspondent of the Sunday Tribune, Mr. Tansey, a correspondent whom I very much admire. This correspondent had the high honour of being cited not only by Deputy Haughey but by Deputy O'Connell. Deputies quoted some rather disparaging paragraphs from an article by Paul Tansey in the Sunday Tribune of 2 February about how the budget would result in higher taxes because the Government had succeeded in getting the deficit down a bit and, since they had not cut expenditure, the only consequence of reducing the deficit would be higher taxes. Both Deputy Haughey and Deputy O'Connell carefully and fastidiously avoided transmitting to the House the burden of Paul Tansey's message since he has worked in the Sunday Tribune and before that with The Irish Times, which is, that State expenditure is at the root of our problems and, until that expenditure is ruthlessly tackled, we will not get anywhere.

That is the core of the message implicity repeated in the article to which I have alluded. That does not suit Deputy Haughey, Deputy O'Connell or any other Deputy who has that paragraph up his sleeve to throw at the Government; they would naturally find it disobliging to suggest expenditure cuts. But that is the centre of that correspondent's message, and it has been so for years. I agree with it. If a Government do not succeed in cutting expenditure the results are as he says. The results are something about which an Opposition can bleat, but it would be far more constructive if the Opposition, represented in the last few minutes by Deputy Faulkner, were to concentrate on the central problem in this area.

So unaccustomed have we become to expenditure cuts that when the Government try to economise, when they say we simply cannot afford this or that, a frisson of horror runs through the country, naturally experienced at its strongest by the people immediately affected. That sentiment, that we cannot afford something, is heard often enough in the family, but not from the State or from those who work for the State, as nothing is too good for the State. Look at the uproar we have about teachers' pay. I do not want to appear unsympathetic to the teachers. Perhaps by an accident of chronology they are in the front line. Like so many ranks of infantry in the 18th or 19th centuries coming up to the front after reloading they just happen to be in the line with their demand at the very moment when the Government have come to the conclusion that they cannot meet any more demands of these dimensions and were driven to invoke, as they perfectly legally invoked, the clause in the arbitration agreement which permits this House to overrule the arbitrator's award.

Naturally, the teachers are outraged that this should be done to them. It is only an accident of chronology that they should be the ones to suffer first, but certainly they will not be the last, and they will have company in their outrage. What fall-out that will have for the Government, you, Sir, can predict as easily as I. There is no point in being in Government if we are to be always worrying about the next election, and some Government sooner or later will have to take the plunge and do unpopular things, one after the other, if we are to get back into some sort of shape where we can relieve the burdens which we are now piling on to our children's, if not on to our grandchildren's, shoulders apart from our own.

You see, Sir, the outrage about the rationalisation which the Ministers for Health and Education respectively are trying to bring into the hospital and training college scene. I will say nothing about the way these matters were handled. I do not mean to disparage the motives or the points of view of any of the people who have written to me about one or other of these topics. All I am saying is that these are unpopular, disobliging measures which I am quite certain both Ministers would be politically glad to have been able to avoid, but which they have faced up to carrying through; and we can hear the upror that there is about them. If you quantify what is going to be saved by withholding the teachers' award, by phasing out Carysfort and by closing down the handful of not very big hospitals which are in the plans of the Minister for Health, you are talking about a sum of money which is only scratching at the surface of the boulder in the way of economic progress. A small chip has been knocked off that boulder, and think of the agony, the political bloodletting which even the removal of that chip has caused.

This Government could easily go out over an accumulation of these things, and if the other side get in they could easily go out over it, if they ever have the guts to do the sort of things which are being done here now. However, only by this means will economic salvation be possible for everybody, including the teachers and the staff and students of Carysfort. It is only by economies that the students of Carysfort, who now feel outraged about having their institution closed down, can be given some better hope of future employment than they now have. I am sorry that they too are in the firing line. I am sorry that the staffs of hospitals, who I know have worked devotedly down the years, feel that they are in the firing line and that the small towns in which the hospitals are situated and where they have come to be regarded as something like a local factory are in the firing line. They are only the first casualties in what is going to be a long and difficult war which could damage all of us. But unless that war is fought and won we can be fiddling and tinkering here with budgets well into the next century, for as long as this State exists — and it may not exist all that much longer if we cannot get new ideas — and we will not make any significant improvement.

The correspondent who was being quoted here triumphantly by the Opposition in the week following 2 February wrote another article on 9 February in which he praised, rather grimly, the Government for the cuts that I have just been describing. He said that they were rather clumsily handled and that was because the Government had not much practice in doing what they are now doing, namely, making a few decisions; no more committees, no more commissions, we have had enough consultations, we are just going to make decisions. That is what every Government will have to do from now on, and I do not care which parties provide or support them, if this State is to survive.

I could scarcely believe my eyes when I read in the papers the day after Deputy Haughey spoke here that he had said — I think it was even given the status of a saying of the week somewhere — that "what we needed to get away from here was not civil war politics but Victorian economics and financial precepts". If Mr. Gladstone could be recreated and brought back to earth and given a look at what this State has been doing with itself for the last 17 years, since I first came into Leinster House and before that, would he recognise any similarity between the philosophy underlying our activities and those which guided him? What would Mr. Gladstone have said about a State which annually runs a collossal deficit on current account and has been doing so increasingly since 1972?

I will go further and leave Mr. Gladstone and his whiskers out of it. What would Deputy Haughey when he was Minister for Finance have said about that? Deputy Haughey was Minister for Finance for a couple of years up to 1970. He never produced a budget here which provided for a current account deficit, and he would not have been let do so by his party as they then were, even if he had wished to do so. We do not need to go back to Mr. Gladstone for the days of a bit of rectitude in these matters. We do not have to go back beyond 1972.

What would Mr. Disraeli have thought of a country like this with £20 billion of a national debt? Is that Victorian? Where are the heavy tasselled plush curtains and horsehair sofas behind the philosophy which ran up that kind of public debt here over the last half generation?

Where is the Victorian philosophy in the near-doubling of the numbers of the Civil Service in the last 30 years? These 30 years started out with the old post office pen rusting on the blotting paper and ended up with micro-chips. These 30 years have seen service employment shed, halved, decimated in every other area which was private, but not in the State which, until the Minister, Deputy Boland, got his axe to it, kept expanding its workforce as though it was a galactic explosion somewhere out in the universe. It appeared to be expanding at a colossal speed in all directions simultaneously for no visible reason. There were all kinds of office aids, calculating aids and computerisations available to the public service in the eighties which should have made additional recruitment redundant. I do not mean that people should have been made redundant, but according as people retired the slack could have been taken up by all these glittering machines. Of course, they have the glittering machines anyway, because the poor old State can pay for them. There is no shortage of glittering equipment; but the people working the equipment have not reduced in number, at least until Deputy Boland got to work, for which no doubt we will pay a political price — I have no doubt that there are people in my constituency who voted for me last time who will not do so next time because of the Government's approach to the Civil Service — I cannot see anything too muttonchop-whiskery about that development.

What is Victorian about the shape of our health services? The institutions themselves, in some cases, may be Victorian all right, but the central feature of our health service here is the presence of a large number of relatively inefficient hospitals providing nothing except ease of access for visits for relations at the expense of better services in fewer locations, at an immense public cost. What is Victorian about that? I cannot see that any niggling Victorian miser has been at work there. There is no Scrooge in a stovepipe hat behind the design of our present health services.

What about the wild reckless waste around us every day of the week — as though the State were an ill-designed robot filled with some kind of fluid, leaking at every step as it clanks across the floor?

I use this only as a symbol for other things — I am perfectly certain that there are white elephants to be accounted for on all sides; we have a culpable part in the history of the thing, too — but about the Knock Airport syndrome? Was that Victorian? What about the huge overruns on projects like NET and public building? What about the fact that there is no proper financial management, no proper criterion of value for money in the individual Departments? The accounting officer has remained, as he was before 1922, secretary of the Department. Once upon a time he might have been able to keep an eye, in the humble days of the twenties, on whether too many public servants were going away with the Minister to a conference or something of that kind. It is now completely beyond such a man, who is burdened by all kinds of other business to keep an eye on whether the offices are unnecessarily ordering new equipment or unnecessarily expanding into a new building. Where is the Victorianism there?

What about the local government councillors paid for — in spite of all the bleating of Ministers for the Environment, largely or mostly if not always — out of the public purse on their expeditions to international conferences on this or that subject at which the Irish contingent not infrequently outnumbers the rest of the world put together. It was possible for one of my colleagues to report to me on his return from one such conference that the centre of Oslo, the night before the conference was to open, presented the aspect of O'Connell Street on the night before an All-Ireland Final. That is not my image — I do not want to be accused of colurful speech in this regard — that is the image of one of my colleagues, sitting at table with me in the restaurant, describing where he had just come from. On my oath, he so described the centre of Oslo on the evening before a conference on high rise buildings or something of that kind. There was a genial Irish presence, courtesy of the Irish taxpayer.

What about the Talbot deal and these election-time strokes? Is there any chance that the dear Queen might have authorised such a thing, or any of her Ministers from first to last — Lord Melbourne, Lord Palmerston, Lord Sailsbury? Deputy Haughey and his team will need to think up a few more homely epithets before they will make an accurate point along those lines again.

We are told by the same Deputy that forestry and fisheries need to be expanded and I completely agree with him. It has been sticking out a mile that the Irish climate is suitable for forestry, uniquely so in western Europe. The EC have a shortfall of native grown timber and will have an increasing shortfall. We obviously have opportunities. The same goes for our seas and for fisheries, both sea and inland; there is no question about it. But there is nothing new about that. People have been talking about forestry and fisheries since the time of perhaps Thomas Davis, but certainly since the time of Arthur Griffith. The reason for these things not getting off the ground is that the State designed itself as being the prime mover. We had no fishery tradition and virtually no forestry tradition, and the State certainly has a certain role in getting the thing going. As I said before, the State is the old sow to whom everybody comes crying when anything needs to be done. Since these are both potentially prosperous areas, what is to stop the State from trying to make sure that while it is not over-exposed or asked to be constantly putting up money and perhaps throwing it away, private capital is mobilised into those areas?

I seem to have come up here against something which is hard to understand in the Fianna Fáil approach. Although in one breath they talk about how profit must not be a dirty word and people must be allowed to make money, in the next breath they appear to speak as though the State must keep its monopolistic involvement in certain areas. I am going to bore the ears off Members by reading some motions on the Order Paper for a different purpose, but there is a motion on the Order Paper at this moment from Deputy Daly in regard to State involvement in forestry and the necessity to keep private capital out of it. I hope I am not paraphrasing him unfairly. He does not put it in quite those words, but if I turn out to have been unfair to him, I shall apologise. It can be read as meaning that, and I read him as meaning that. Where is the reason for that or the justification?

Look at CIE. Everybody complains about CIE and public patience with it is exhausted. However, if anybody mentions de-nationalising CIE, even experimentally or in strips, even in little sectors or segments as I have often done here, there are cries of protest from my own dear colleagues in the Labour Party first but from everybody else as well. Nobody wants to grasp that political nettle. Nobody wants to take on 27 or 28 unions, or whatever number it is, which represent the relatively small, by world standards, staff of CIE. Does the House realise that for the pleasure of having CIE, every adult in this country is subscribing £1 per week? If one were to say every man, women and child, it would be obviously something less. In round figures, whether employed or unemployed, every adult is paying £1 in taxation every week of the year. It has to be paid for him by someone else if he is not able to pay it himself. That is his contribution to the CIE deficit.

That deficit must be got off the taxpayers' backs. There is no justification for it. There are certain dimensions of the public transport system which private enterprise will not want to take on; I recognise that. I realise their social importance and I accept that the State run transport company must keep them going or ought to keep as many going as possible. However, the vast bulk of the CIE operation could be privatised. I do not say that it should be done overnight in one sweep, but it should be done experimentally, a little at a time and see how it does. Let us see if there is a public demand for more, or if there is a fair balance between the profit made by the man taking on the sector of transport and the service to the public.

Perhaps this is not the best test, but it is not the worst — to look down the Order Paper and relate Fianna Fáil's appearances on the Order Paper with the cries for lower taxation. It would make a cat laugh to see the discordance in philosophy, if I may call it that. I am taking no account of the motions which have already been debated because these are off the Order Paper, for example, last week when the Fianna Fáil Party, in an excess of sloothering which must have almost overtaken their own record, put down a motion which did not actually commit them to paying the 10 per cent themselves but allowed the teachers to believe that it did. The Government were being called upon to "settle on the basis of paying the full 10 per cent." If words mean anything any longer, that presumably means that Fianna Fáil would acquiesce our raising another £110 million of taxation or our borrowing another £110 million abroad. The taxation might be met, let us say, by re-imposing the I per cent income levy which the Minister removed some two weeks ago. Do they advocate that? Some of these motions are a little stale and I apologise for boring the House with them, but this represents Fianna Fáils input into Private Members' Time.

Deputy McCarthy wants Dáil Eíreann to call on the Government to provide a replacement industry at the Weatherglaze factories in Cahir and Dublin. Deputy Gene Fitzgerald wants Dáil Eíreann to call on the Government to restore the employment incentive scheme assistance to the building, hotel and services sector as was the case prior to 31 December 1982, Deputy Bertie Ahern and Deputy Gene Fitzgerald want the Dáil to call on the Government to make sufficient moneys available as a matter of urgency to Dublin Corporation to prevent the layoff of 400 workers. Deputy Rory O'Hanlon wants us to call on the Government to introduce immediate measures to alleviate the hardship caused by the need to purchase drugs for medical requirements. I am only starting.

What about the Labour Party motion down for discussion next week?

Deputy O'Hanlon also wants us to call on the Government to maintain the existing status of Monaghan County Hospital and to proceed immediately with the construction of Cavan Hospital. Deputies Hugh Byrne, John Browne, Seán Bryrne, Willie O'Dea and John Wilson want us to call on the Government to retain passenger and freight services on the Rosslare Harbour-Limerick and the Rosslare Harbour-Dublin railway lines. A whole raft of Deputies have the following motion down:

That, in view of the very serious difficulties confronting traders and business people in the border counties, because of the economic and fiscal policies pursued by the Government which result in many millions of pounds of consumer expenditure being diverted to the six counties with disastrous consequences on business and employment in the border areas, Dáil Éireann calls on the Government to reduce substantially the rate of VAT and excise duties immediately, in order to alleviate this situation.

I do not want to appear to be lacking in sympathy with the motives behind these calls but I am drawing attention to the consequences of listening to them. Deputy Ned O'Keeffe wants us to call on the Government to introduce a special financial rescue package to assist family farms which are in severe financial difficulty and which have been the backbone of Irish society for generations. He also wants the Dáil to call on the Government to make financial incentives available to the Irish pig industry similar to those which have been made available in France.

Deputy Noonan (Limerick West) wants the Dáil to call on the Government to provide, as a matter or urgency, out of Exchequer funds money for the further continuation of the AI and lime subsidy schemes, following the termination of the EC schemes, because of serious repercussions and so on. Deputy O'Hanlon wants us to reverse the decision to close the maternity unit in Monaghan Hospital. Deputies Brendan Daly and Pat “Cope” Gallagher want us to deplore the failure of the Government to provide the revenue, resources and manpower to the regional fisheries boards to fulfil their statutory responsibilities to inland fisheries conservation and development. Deputy Seán McCarthy wants the Dáil to call on the Government to grant a double payment at Christmas to all long term unemployed persons and to the families of those on short term unemployment benefits. A raft of Deputies want us to promote the Border region for industrial development, naturally with money. Another raft of Deputies want the Dáil to call on the Government, in view of the trading disadvantage experienced by manufacturers of concrete products in the Border areas, to direct the IDA to grant-aid concrete product manufacturers in the Republic. No problem; the IDA have bags of money. There is no difficulty at all about getting them to shell out money. It is their money; they make it themselves on the side.

Deputy Daly wants the Dáil to call on the Government to "prepare and implement a comprehensive plan for the full scale development of Irish forests and reject any proposal for the exploitation of this national resource by private, commercial or financial institutions". Is that a misprint? Could that be Deputy Mervyn Taylor or one of his colleagues? No, it is tabled by Deputy Daly who comes from County Clare, where I presume the profit motive is as respectable as it is anywhere else in the country or, if it is not, it is the first I have heard of it and I know quite a few Clare people. Is Deputy Daly telling us that he would regard it as contrary to Fianna Fáil policy for private interests to go into forestry? Where are we going in this country?

A fair list of problems.

Another lot of Deputies, whose names are rarely seen on the Order Paper, ask that the Dáil call on the Government to make sufficient compensation available to the farmers in the Shannon and River Suck catchment areas who were particularly badly hit by the severe flooding over the last number of months. Then we go into the first official area. Tá tairiscint ag Donncha Ó Gallchobhair a deireann:

Go molann Dáil Éireann an obair atá á déanamh ag Comhdháil na nOileán ar mhaithe lena muintir agus go n-iarrann sí ar an Rialtas na seirbhísí atá riachtanach do mhuintir na n-oileán a chur ar fáil gan mhoill.

Tá an ceart aige.

Agus arís tá píosa eile uaidh:

Gur cúis dhíomá do Dháil Éireann an mhíshástacht atá ar Chomhaltas Ceoltóirí Éireann de bharr easpa tacaíochta ón Rialtas lenár gceol agus ár gcultúr a chur chun cinn agus go n-iarannn sí ar an Taoiseach a dheimhniú go mbeidh deontais fheiliúnacha curtha ar fáil dóibh.

Ceart arís.

Surely a large scale entertainment industry should be able to pay for itself. Must we carry the fleadhanna ceoil on our backs as well as everything else? Must the State subsidise these events into which tens of thousands of people pour, drinking for 36 hours in a row? There is also an immense motion about hospitals.

The Deputy will not deal with the hospitals. Is there a motion about Careysfort?

I will not weary the House any more. I appreciate that in the heat of the moment a party may consider a topical issue and a Deputy may ask to get a few pounds for this or that project resulting in a motion being put on the Order Paper. But the cumulative effect of that, as far as representing to the people what the philosophy of the main Opposition is, is deadly. I am short of sympathy for the idea of subsidising a fleadh ceoil at public expense, but I am not short of sympathy for most of the motions I have mentioned. I can see the human problems lurking behind them and Deputies opposite are correct in sticking up for their own people and doing their best for them, but there is a grotesque discordance between the cumulative effect of these demands on the one hand, and the cries and whingeing about cut-backs in State expenditure and high taxation on the other.

It is a sign of ineffective Government. What about the Labour Party's motion? The Deputy forgot that.

I said a few things about the Labour Party before the Deputy came in.

I am referring to the Private Members' motion for next week. That is a sore point with the Deputy.

Deputy O'Kennedy in replying to the Minister's statement said that "a budget can and should be an element of economic policy". Nobody will disagree with that but I put the emphasis on the word "an". Our problem is that we rely too much on budgetary mechanisms, and that a sort of artificial hyped-up expectation emerges in the weeks before a budget about the Minister and his plans. Naturally, we have to copy our dear neighbours across the water in even the smallest respects, and Ministers here do not disdain being photographed with a little box — a little "battered dispatch box" as the English call it — on the table before they come to the House to deliver the budget secrets. Without meaning to be profane or blasphemous I should like to state that we tend to look on that box as a type of secular tabernacle out of which when opened some salvation will emerge. I hope that figure of speech will not appear out of place or offensive, but we tend to encourage ourselves, and the media encourage us to look at a budget in that way.

It is time we understood that there is a limit to what a budget can do. The budget operates within constraints. There are a lot of images of speech one could provide for the budget but it is constrained with the situation which preceded it. What has preceded budgets here in recent years is that before the Minister takes out his pencil to do any sums he knows that roughly 35p in every pound he takes in the following year will go out the window in the servicing of our national debt. That sum represents something like the entire take from PAYE, if not more. Members should think of the agony of the PAYE sector, of the complaints they make to their TDs and everybody else about the fact that so little is left of their pay. Every ha'penny of the PAYE take goes out on paying interest on the debts we ran up previously. In recent years the debt has run up for current and not capital purposes.

The next thing that constrains the budget is that the State has this immense army of State servants, equivalent to several military divisions, indeed Army Corps, and all the housing, heating, equipment, leave and pension provisions that go with them. I am not saying that it is an extravagant army by comparison, million for million of the population, with what we find in other European countries. As a matter of fact, it is not extravagant, on that standard; but it is extravagant in relation to what we can afford to pay for. The people of Luxembourg, Belgium and Holland, with far higher industrial and agricultural productivity than us, may be able to afford a well-upholstered public service bearing a high ratio to the total working population, but we cannot afford it. I do not mean to say something offensive to the public service. I have never meant that although I have often been interpreted in that sense. I want to disclaim that absolutely. I have the highest regard for individual members of the public service. What I am saying is that there are more of them than we can pay decently. If there were fewer of them we could afford to pay them better. That is something that is not said often. Undoubtedly some individuals in the public service ought to be paid more.

These are the constraints within which a Minister for Finance must operate. He is in a similar position to the asthmatic who takes part in a series of swimming competitions. He may change his swimming style and opt for the breast stroke, the side stroke, the back stroke, the crawl or the over arm paddle, but the change will not make much difference to his performance in competing with someone who does not suffer from this unfortunate affliction because, regardless of how he swims, not enough oxygen will be delivered to his muscles. That is the kind of problem the management of this State has had to deal with for years. We are not getting enough financial leeway or possibilities. Far too many of our possibilities are already pre-empted. The money must go to keeping our public service afloat and to keeping our public debt serviced. There is so little left for anything else that it is no wonder the Minister must try to make a budget paragraph out of some pittance given to some little enterprise here or there.

What is needed is a mechanism which is different from a budgetary mechanism and which is not so much a mechanism as an approach. If Deputy Molloy's party are first in evolving such an approach, good luck to them. That would be an approach which would concentrate on a level far deeper than any level that could be reached by a budget. It would be to the budgetary mechanism what a deep plough is to a harrow. It would be an approach that would try to reach levels of this country's existence which ultimately will determine its performance. I am talking about the kind of approach that cannot be reached merely by bleating about the provision of a few pounds here or there or about some tax incentive.

What is central is the whole question of our approach to the world, our knowledge of the world and of the necessity to sell our produce on world markets. The State cannot help unless and until it sweats down the burdens which prevent it from offering more than a token gesture while at the same time imposing a level of taxation which damages industry and agriculture. Attitudes must be changed partly by education, as I have said here so often before.

If Deputy Haughey were to say this I would agree with him: Irish children grow up conditioned by attitudes to the world which emerged here in the society of the 19th century and at a time when the only secondary schooling available could be availed of only by the middle class. That has left people in Ireland conditioned towards white collar jobs, preferably within the Civil Service. It left us with the kind of situation we had two years ago when 14,000 school leavers submitted to examination and were solemnly examined by the Civil Service Commissioners for posts as Post Office clerks. The public service must be filled; but in that instance the number of applicants represented one third of the entire school-leaving cohort in that year. I just happened to hear about it because it was mentioned before the Committee on Public Expenditure. Perhaps the situation in respect of the filling of other posts, junior executive posts and so on, was similar. However, the point is that there was the ludicrous procedure of examining 14,000 applicants with only six appointments being made. That reflects an attitude which is not the kind of attitude on which industrial, agricultural or commercial success is built.

I would be in favour, not of making this an examinable subject, but of trying to inject into our educational process at some stage, say, for 14 year olds upwards, an understanding of basic economics, an understanding of basic marketing problems and techniques, of basic industrial and agricultural techniques, of the facts of mass production and economies of scale, and all those other factors which affect our prosperity. I would be in favour of trying to orient children more towards factors that will provide prosperity for them and eventually for their families, rather than gearing them for positions that will merely be a burden on the productive sector. I do not mean that that is morally culpable. I am talking about the financial effects of it.

While I am on the subject of education, something I have advocated here often is relevant in this context, that is, that something must be done urgently to improve the linguistic capabilities of our school children and of people involved in education. The immense market of the Chinese People's Republic is now beginning to open up. By the end of the century that will be a market of 1,200 million people and they will have three times the purchasing power individually than is the case now. This represents a golden opportunity for countries like ours that are not burdened with an imperial past. From that point of view even the Japanese are starting from behind and yet the Japanese are in the grip of China fever. A smile crosses our faces when the word, "Chinaman" is mentioned, but, to their credit, CTT have understood and realised the importance of this immense market. Unfortunately, this has not percolated to where there is a necessity for it — into the educational establishments and the Department — in such a way that would ensure some core of people who would be able to deal with the Chinese.

While there may be a couple of rookeries in the most academic and remote parts of the arts faculties of UCD or Trinity in which someone or other is learning a little Chinese or Japanese, and even then the learning would be confined to literature and poetry, there is no teaching of these languages for commercial purposes. Indeed, there is barely any teaching of continental European languages. Last year only 1.3 per cent of Irish school-leavers presented themselves for examination in German, despite the fact that Germany is by far our biggest trading partner in the Common Market, is the most powerful economy within reach of us, is sympathetic and friendly towards us and will provide an environment in which there will be huge numbers of job opportunities for Irish people in the years ahead. The Minister, for whom I have deep respect, presides over a Victorian Department, a Department that must be taken by the scruff of the neck and dealt with. I trust she will not resent my making the suggestion behind her back and without notice that if Carysfort Training College must be discontinued in its present function because there will not be a need in the future for the same number of teachers, a reasoning I agree with, it should be converted into a college of language training — I do not mean merely for academic, aesthetic or artistic purposes, but unashamedly and totally for commercial purposes so as to train a generation of people for the opportunities that lie ahead. Those who could afford to pay for that education should pay, while those who could not afford it but who had a gift in that direction should be given generous assistance by way of scholarships. We should have a language school, unembarrassed by academic pretentions, but merely to ensure that a wide band of young people will be given the opportunity to acquire languages. One in every ten or 11 is gifted in that direction, and we must help them to use that talent so that we may be provided with a core of people who can mediate our message, commercially and otherwise, to the outside world and bring back from that outside world what they have learned there. That is all part of what I have said here often, about doing away with the fetish of emigration, and ensuring that we think more in terms of migration, and of cyclically achieving experience of the outer world by way of contact with it.

We must think, too, in more radical terms about local government reform. The present local government structure is an expensive and scandalous waste of time. I shall not be invidious by mentioning individual instances, but I regard the system as delivering to the people nothing worthwhile. A radical reform of local government should be such as to deliver on the creation in individual areas of the country of a process whereby private capital would be matched — not exceeded or pumped up by — £ for £ of State investment. That would create the co-operative structure which would give people in those localities the sense of being able to command their own futures, judge their own case and monitor their success.

I felt I could applaud Deputy Haughey on one point in his speech, when he spoke of the reservoir of ideas in the country. He was quite right to point that out. "My colleagues and I", he said, "have become increasingly conscious of the fact that in practically every parish in Ireland there is an individual or a group with an idea for development".

If that is so, and I accept it is likely to be so, the way to get that idea off the ground is to create under the name of local government some structure or framework of a co-operative kind to which people locally will contribute, not merely their votes but their money — invest their time and effort in local enterprises including the promotion and realisation of the kind of ideas Deputy Haughey has in mind.

The last of these themes I want to deal with is the need to do something about the larger scale reform of our political structures. I will not dwell on it because it is not central to the budget, but it is relevant to it to the extent that many people have a low opinion of political life and that gives them the excuse to discount or dismiss or belittle or ignore messages which politicians try to transmit to them. If we try to preach wage restraint we are instantly met with the cry, "What about your own pensions, your own pay, your own 19 per cent"? Long experience of this has taught me that it is a waste of time trying to argue with people about these things, or trying to justify the parts of this structure which are justifiable — some are and some are not.

We owe it to ourselves and the profession of politics to try to look at the thing from top to bottom and to reform it. I do not mean an element of it, such as pensions and salaries. They are not simple matters and it is not right to run along with the crowd because the crowd very often have not understood the basis on which calculations are made. There is the 19 per cent, for instance, which represented the accumulation of three rounds, the first two of which had been foregone voluntarily, so that when the 19 per cent came — without retrospection, let me add — it looked like people handing it out to themselves. It looked bad. Perhaps it should not have been done at the very outset of this Government's term, it should have been done at some other time or in some other way. In future, Governments will be very slow to forego pay rounds to TDs and Senators which are due.

Whatever the rights and wrongs of that, people will not buy the system we have. They do not believe in it, and it gives them a stick to beat us with. Above all, it gives them a reason for discounting what we say to them. We will have to bring some reason into the system of payment of salaries and pensions, I hope in such a way that nobody will be at a loss, but in a way which the people can see as reasonable. Perhaps we ought to have something common in other walks of life, an incremental salary scale for Deputies. Perhaps this suggestion is not feasible, but it is important that the public would understand the point. They would understand that a Deputy who has served here for 20 years has probably foregone opportunities in his business or profession. It might be fair to see that reflected in a somewhat higher rate of pay than in the case of a man who came in only at the last election. I do not absolutely advocate such a system, but it would be one way to do it which the public would accept more easily than they are willing to accept the present system.

I suggest that the Seanad is in need of reform, though the matter does not surface so often. I do not think that at the moment the Seanad does the type of job which the large sum of money spent on it ought to call for. The system we have of local government and councillors is defective in many ways and collectively brings the whole system into disrepute, between the skites and section 4 resolutions and all the rest of it. Those things only help to convince people that those in public life are out merely to look after themselves and their immediate electoral or other interests, and not to do anything for the development of the country at large.

We must do things like these if we are to give ourselves relief from financial asthma in the long run, and from the endless cycle of depressions which settle on this House with budgets year in, year out, whichever Government is in.

I have just time to protest about one thing in the budget. I feel it must be due to an oversight. I cannot believe that the Minister for Finance really intended to take from payments of deposit interest 35p in the £, non-refundable, even in the case of people who are not in the tax net at all, even after counting the deposit interest. I will not believe that is his intention. Whip or no Whip, I would find it very hard to support any such measure if it surfaces in that form in the Finance Bill. I am not threatening anything, I am not trying to make trouble — perhaps I have not understood what the Minister's intention is — but if his intention is that people not now liable for tax at the standard rate — people whose total income is below the threshold at which taxation starts and who, merely because their income takes the form of deposit interest, must now pay at the standard rate — I could not accept the justice of that. Deputy Faulkner adverted to it briefly and I fully agree with him.

To do that would be to treat a bank deposit as though it was an excisable commodity. It is like applying the law of excise in the area of income tax. The law of excise does not distinguish between the means of people who buy a bottle of whiskey, or make a bet, or allow themselves the other things on which excise is chargeable. I would resist very much the idea that it should be brought into this area, at any rate so far as it concerns people in this category.

I do not complain about the application of this generally, I would not even complain about its application to people in that area provided there was to be a mechanism for an immediate, speedy refund to people who would not be in the income tax category at all. There is every justification for the system of taxing bank deposit interest at source. That point was clearly made by the economics commentator I cited earlier from The Sunday Tribune. He pointed out that a comparison of takings from deposit interest with the amount of money actually in bank deposits last year, would lead one to believe there is widespread evasion. If so, I would support the Minister's intention to check it, and if this is the best way to do it I will support him; but it must not be at the cost of taking money away from people who are in the poorer section who otherwise would not be liable for tax. I sincerely hope it is an oversight due to haste or to a drafting difficulty, and that we will see a different shape on that proposal when it emerges in the Finance Bill.

Tá mé anseo le uair a chloig ag éisteacht le Deputy Kelly, agus caithfidh mé a rá nach bhfuil morán san méid atá ráite aige nach n-aontaím leis. Is mór an trua nach bhfuil tionchar níos mó ag Deputy Kelly san páirtí ina bhfuil sé in a bhall agus a dtugann sé tacaíocht dó, go háirithe nach bhfuil níos mó tionchair aige san Rialtas a dtugann sé tacaíocht dó.

Go raibh maith agat.

Bhí ciall san méid a bhí le rá aige agus bheadh an tír i bhfad níos fearr dá mbeadh níos mó daoine sa Teach ag labhairt mar sin agus ag cur a moltaí os ár gcomhair. Ach, dár ndóigh, caithfear gníomh a dhéanamh. Is é an trua nach bhfuil Rialtas againn faoi láthair, nó le fada, ata sásta cinneadh ceart a dhéanamh ar na rudaí seo ionas go mbeadh seans againn an tír a shábháil ó na deacrachtaí uafásacha atá os ár gcomhair.

Níl se i gceist agam labhairt chomh fada agus na Teachtaí eile, ag cur síos ar gach gné den saol eacnamíochta. Níl i gceist agam ach mo thuairimí a chur os comhair na Dála ar an gcáinaisnéis.

It is not my intention to range widely over the whole economic spectrum of national life, although there is a temptation. The budget is neither fish nor flesh It addresses none of the major problems confronting the country. It offers no hope for unemployment. Indeed, since the budget the numbers of unemployed have risen to exceed 240,000 for the first time. Inroads to the unemployment problem will not be made this year. The Government anticipate that the numbers out of work this year will average at 240,000, an increase of 9,000 on the 1985 jobless level. Things are getting so bad that the Department of Social Welfare are having to seek new premises to accommodate huge numbers of people who have no choice but to sign on for unemployment benefit. In Galway a new large office had to be obtained to accommodate the number of women signing on because otherwise they would have been left queueing in the street. The old employment office at the Claddagh, which served the needs of the area since the foundation of the State, is no longer big enough and another office is about to be acquired by the Department to accommodate the extraordinary numbers of people out of work.

While not holding out any hope to the unemployed, neither does the budget take substantial action to correct the continuing crisis in public finances. The budget deficit will still represent £7.40 out of every £100 of national expenditure this year even if the Government's budgetary estimate turns out to be correct. Exchequer borrowing will remain at over £2,000 million. Total borrowing by the public sector will be equivalent to £1 out of every £7 spent by the community this year. After three years of Coalition Government we have been brought to a point where one out of every five members of the labour force are out of work and the Government continue to borrow annually an amount equal to one-seventh of the total spending in the whole economy.

How has this appalling impasse come about? What has brought us to this economic catastrophe? The answer is that this Coalition, embracing diametrically opposed views, have tried to serve two masters. Policies lurch left, right, then left again and the Government do not appear to know their own mind. There is not a sense of unity or purpose. The Government do not appear to know where they are going and they are travelling more in hope than in expectation. In view of these internal stresses and strains in the Cabinet, is it any wonder if a weak and unstable consensus emerges on economic policy? By trying to serve too many masters the Government have ended up serving no one. It is this lack of common purpose which gives this budget, like its predecessors, a half-hearted appearance. It addresses the crisis in the public finances, makes marginal improvements, gives a nod in favour of taxpayers and then takes the benefit back again with the other hand, all in a half-hearted way. These signs betray a Government exhausted by internal disagreements on economic policy.

This is a tired Government as shown by their inability to cut spending in spite of the fact that a reduction in current expenditure remains one of their central policy objectives. Yet again this year the volume of current public spending will increase. The increase is not due to factors outside the Government's control, such as rising international rates or adverse movements of exchange rates. The increase in current Government spending is as a result of factors within the control and responsibility of the Government. The result of continuing laxity in expenditure is another increase in the burden borne by income taxpayers. In the fortnight that has elapsed since the budget was introduced, it has gradually emerged that the tax concessions supposedly granted in the budget are cosmetic. The speed of the Minister's hand deceived the public eye, but not for long.

I will give an example which illustrates the Minister's artfulness in full. The Minister said the budget would restructure taxation of financial institutions and income from financial assets in order to remove major anomalies and inequities within the system, while raising sufficient additional revenue to reduce personal income tax by a total of £121 million, or over twice the amount which would be required for indexation. That statement is the essence of the budget and it requires careful examination. Where is the £121 million which the Minister says he has given to income taxpayers? An examination of the figures shows that this supposed concession disappears into thin air when subjected to careful examination.

Last year the Exchequer raised a total of £2,177 million from income tax and the 1 per cent income levy. The White Paper on receipts and expenditure published on 25 January estimates the yield from various taxes in 1986 if the 1985 tax bands and allowances remain in force during 1986. It shows the position that would have obtained had there not been concessions, an allowance for inflation, or an increase in tax bands and allowances and had there not been a reduction in tax rates. On that basis the White Paper shows that £2,385 million would have been raised in income tax and the 1 per cent income levy during 1986. Yet in the budget, the combined yield from income tax and the 1 per cent income levy in 1986 is now estimated by the Government at £2,390 million, that is, £213 million or 9.8 per cent more than the Government raised through income tax and the income tax levy in 1985 and £5 million more than would have been raised if there had been no change in the income tax code in the 1986 budget.

The Minister may argue that he abolished the 1 per cent income levy, but he simply failed to renew what was always considered a temporary levy, a levy which required to be reintroduced annually. The Minister may argue that the composition of the income tax take has changed, that ordinary people benefit and that it is an accident that the taxation of financial institutions is included in the income tax take. Despite the Government's best efforts to disguise the fact, financial institutions will not pay the £75 million tax on deposit interests, but ordinary people who pay PAYE on their earnings. The grim reality is that there is not taxation of the financial institutions in this budget. The additional taxation has been loaded on to people who save.

The people will pay tax on deposit interest, not the banks, the building societies, the ACC, the ICC, the Trustees Savings Banks or the Post Office. There may well be a case for the introduction of such measures for levelling the playing field between competing financial institutions who wish to attract deposits, but there is not a case for pretending that the tax will be borne by those institutions rather than the general saving public. This attempt by the Government to turn away from the consequences of their actions could lead to serious social and physical hazards for our old people, particularly those who reside alone in outlying areas.

In recent years we have witnessed with mounting horror increasingly frequent and brutal attacks on old people in the west, many of them in my constituency. The clear and singular motive for these attacks was the robbing of any cash which these old people might have kept at home. At the best of times older people are suspicious of financial institutions and they do not like others to know their business. When these attacks commenced, great efforts were made by many in the community to encourage older people to lodge their money in a safe place, the local bank, building society or post office, for self-protection. At that time a facility was allowed whereby a single person could earn £70 in deposit interest from a bank tax free each year and a married couple with a joint account could earn £140 in interest annually, also tax free. This facility was later reduced to £50 and £100 respectively and now the budget proposes to abolish these tax free concessions and to levy tax at 35 per cent on any deposit interest earned.

The retention tax as proposed will be levied regardless of whether the older person is liable for income tax on his or her other income. There are no means whereby an old person who has insufficient income to pay income tax can reclaim the 35 per cent retention tax. The tax is unfair, inequitable and discriminates against the poor. It stands in sharp contrast to the treatment accorded to companies who are allowed to offset retention tax against their bills for corporation tax. Moreover, it could have extremely adverse social consequences in isolated areas and will act as a further deterrent to old people lodging their money with financial institutions.

Increased sums of money kept in the home could occasion another major outbreak of those violent and appalling robberies we have seen in the recent past. It is not enough for the Minister to argue that there are still State saving schemes available into which people can place their money and receive deposit interest tax free. It is all very well for those who can afford to wait but all these schemes make it difficult for people to get at their money in a hurry without sacrificing interest. They suit a certain type of saver but they do not suit those who want to draw on their savings regularly. For reasons of fairness and decency and to ease the fears of older people, I urge the Minister to look again at this section of the budget. It would not be beyond the competence of his Department to devise a scheme whereby those aged 65 and over could place up to £25,000 on deposit in their local post office without suffering the 35 per cent tax on the meagre interest they would earn.

I want to quote the following passage from the Budget Statement made by the Minister last year under the heading "Savings Relief for Older People":

I am introducing a change in the tax relief for certain deposit interest to encourage older citizens to put their savings in safe keeping. For taxpayers who qualify for the age allowance, that is, taxpayers over 65 years of age, the present ceilings for tax relief on deposit interest are being doubled. This new arrangement will apply in respect of interest otherwise assessable for 1985-86.

In this year's budget the Minister has gone completely against what he saw as necessary and desirable last year. Many will wonder why the Minister and the Government have singled out the elderly for this attack. The fairest thing would be to allow a refund of the 35 per cent interest tax where depositors had no tax liability, particularly in the case of the elderly.

The construction industry has been deliberately targeted by the Government. Certainly few sectors could claim to have been as severely affected by Coalition policies as this one. Employment and production have been in serious decline and the withdrawal of certain investment incentives and the addition of extra taxation on output such as the 100 per cent increase in VAT, has contributed to and greatly accelerated the decline resulting in a loss of employment for up to 50 per cent of the construction industry workforce. It is a terrible indictment of the Government's policies. Thousands of construction workers are now on building sites all over the United States and other countries with the resulting break-up of family life. In relation to new housing, there has been a decline of about 15 per cent in new work in 1985, the biggest drop in new house construction that I have witnessed in my 21 years in the House. This stark statistic puts into context the Government's claim that the introduction of the £5,000 grant to local authority tenants surrendering their homes on the purchase of a private house was a major boost to the house construction industry. For the last five or six months we have had speech after speech by the Minister for Finance and the Minister for the Environment — the Taoiseach even got in on the act — claiming that the grant was a major boost to the industry. This is a false claim and should not be repeated.

The Government are paying £5,000 to tenants who have bought existing houses, in some cases houses which had previously been the property of local authorities and often the local authorities to whom the buyers were surrendering a house. In many cases the grant is being paid to tenants who are buying second-hand houses from owners who are unable to meet mortgage repayments due to unemployment and so on and who are themselves being rehoused in local authority houses. This is the dog chasing his tail and shows the ineptitude of the Government and their policies. In reply to a recent Dáil question I was given figures by the Minister which proved beyond doubt that more of these £5,000 grants have gone to people who bought secondhand houses than to those who bought new houses. It is not correct for the Government to claim that the introduction of the grant has resulted in a major boost to the house construction industry. Statistics which I have already quoted show that there has been the biggest decline in the construction of new houses which we have experienced for over two decades and maybe longer, as I have not checked the figures further back.

I wish to refer briefly to the possibility for private sector investment in road construction. As I have already stated, the construction industry has been deliberately run down by the Government in the belief that a high level of public capital investment should not be sustained. I have argued on several occasions in the House over the past three years that private funds could be attracted into capital projects if the incentives for such investments were created by the Government, but my pleas have fallen on deaf ears. However, I live in hope and maybe even at this late stage the Government might agree to adopt the policies which will obviously be those of the next Government anyway.

I wish to refer specifically to the possibilities for private sector investment in road improvement. The private sector is primarily interested in generating additional construction activity which will use as much as possible of the current unused resources of the private sector which include design, construction, operation of infrastructure facilities and maintenance of these facilities. Even in today's depressed economic circumstances, there are investment projects with a profit potential where the State should allow maximum possible involvement by the private sector. I have in mind new road projects where the private sector would be involved in acquiring, designing, constructing, operating and maintaining new road projects on a particular corridor route. The Public Capital Programme currently costs about £1,700 million per annum and much of this programme is devoted to the provision of vital infrastructure which is essential for the efficient functioning of the economy. This essential investment should be carried out at a minimum cost to the taxpayer. The primary objective of the Government should be to ensure that the infrastructure is provided. This does not mean that the Government have to own every infrastructure facility but they must ensure that infrastructure and services are provided at the cost, quality and efficiency required by the community. In the past, successive Governments tended to examine one option only. The provision of facilities such as roads has tended historically to be restricted to 100 per cent ownership by the State. I believe that by laying down criteria which clearly specify the levels of performance required, the State could achieve major infrastructure facilities through private investment without abrogating their responsibilities to the community.

From my contacts with industry I believe progress in this area can be achieved only where the private sector involvement is comprehensive, involving a package of private sector resources and not just confined to a financial operation which would amount only to the effective purchase of a toll franchise. The failure of this Government to attract private sector participation in road infrastructure is precisely because that involvement has been confined to a financial operation only.

I would like to ask the Minister to extend the provisions of the inner city renewal scheme to Galway city. Otherwise this scheme will have a detrimental effect on the future growth of that city. Galway was one of the earliest settlements and being strategically located has been a major centre for trade and commerce over the past few centuries. Much of the centre of the old city consists of old stone warehouses now fallen into disuse and many city centre sites are lying derelict. Cumbersome CPO procedures and extravagant compensation expectations have contributed to this continuing dereliction which could possibly be dealt with if the Government were to implement the main recommendations of the recently published building land report. However, I see great difficulties if Galway is to be excluded from the inner city renewal scheme. Many city areas will remain in a derelict state because available investment resources will be attracted to the higher return available in other areas which are included in this scheme, such as Dublin, Cork and Limerick.

I am not making a special plea for Galway. I am trying to emphasise that the introduction of this renewal scheme and its extension to other cities, excluding Galway, will have a very serious effect on the renewal plans for Galway city because the limited investment funds available will naturally be attracted to where the greater return is. If there is a better return available in Dublin, Cork or Limerick, those funds will be attracted into those areas and away from Galway. Rather than making a special case for Galway, I am asking that the same facilities be entended to Galway. Otherwise it will be left in a detrimental position. As the only native Galwegian sitting in the Opposition benches, I am making a special appeal to the Government to have Galway included in the inner city renewal scheme when the Bill comes before the House.

I want to refer now to the home improvement and new house grant schemes. The new measures stipulate that house grants will be paid only where registered builders carry out the work. This is a move to deal with the black economy operators and as such as welcome. However, some consideration will have to be given to cases where the applicant carries out work himself and to remote areas and islands where there are no registered builders, and never will be. I am sure that, when introducing these measures, the Minister was not seeking to control the operation of the black economy on Inishboffin for instance. Unless some exceptions are made, there is a danger that housing in the remoter areas will fall into disrepair because, as of now, all grant assistance for house repairs has effectively been withdrawn from those areas.

I urge the Minister to review the operation of the registered builders clause in the circumstances I mentioned. It must be remembered that many of the new houses seen in places like Connemara were built by returned emigrants, people who went abroad specifically to save the £15,000 or so needed to build their own homes. These enterprising people are now being denied Government grants.

In the recent debate on the teachers' arbitration award, the Progressive Democrats voted with the Government against the payment of the full award. I want to say briefly on behalf of our party that the Progressive Democrats recognise the integrity of the arbitrator's award to teachers. It was not a binding award; it was merely a recommendation from the arbitrator to the Government.

The Chair is allowing very considerable scope in this debate but the Deputy is out of order.

I am sorry. I had started but you cut me off in midstream. However, I will have to find another opportunity to finish what I wanted to say.

You are trying to find an excuse for the mistake you made last week.

The steady development of the Irish economy which was so evident since the last fifties has now been halted and we are in a period of decline with the resultant despondency, despair, frustration and inevitable increase in emigration. The country is sadly lacking in leadership. The Government have no clear economic development programme. The Taoiseach and the Minister for Finance speak with forked tongues condemning excessive borrowing and current budget deficits while, at the same time, borrowing to limits we never even dreamed of, and the current budget deficit increases more and more each year.

The policies pursued by this Government have failed to create jobs. There are now 240,000 unemployed and the figure is rising. More and more shops, warehouses, factories and offices are closing under the ever increasing burden of taxation. The Government continue with their foolish policies and no change in direction is evident. No amount of propaganda, headline manipulation or expensive public relations efforts will distract from the real truth. This country is in serious trouble and national morale is at an all-time low.

The work ethic so vital for future development has been seriously undermined. The Coalition economy does not reward effort to excellence and all around us cynicism is replacing patriotism. I believe the spirit of enterprise must be reawakened. Conditions must be created to allow free enterprise to flourish. The entrepreneurs in our society should be freed from the bondage of taxation and allowed to profit from the success of their initiatives. There are too many in Government who are adept at distributing existing wealth created by other people, but blind to the need to create the climate where the creation of new wealth will flourish. Only in such a society can we expect to create jobs for all our young people and enough wealth to sustain and develop a level of service and a standard of living to which our people aspire.

I call on this Government to set free the spirit of enterprise thoughout the land and if, with their contradictory ideologies, they cannot do this, they should move away and let a new Government take over the task.

Listening to Deputy Molloy's concluding remarks in what was otherwise an interesting contribution, I was conjuring up in my mind a picture of the Government rubbing a bowl and a genie appearing who will solve all our problems.

I do not want to talk about tax raising or expenditure measures. I want to speak about the procedure of the Dáil in debating the Estimates and the budget, and the financial legislation procedures and instruments which I consider are outmoded because they do not allow us to control the finances of the State in a way a modern parliament should. The gross expenditure outflows from the State coffers show that the Estimate for 1986 is £9,473 million and the public capital programme is £1,681 million. The sum for non-programme outlays is £70 million. If we add the three together we get a grant total of £11,224 million of direct State expenditure. What real say does this House have either in controlling or directing that expenditure to areas where there is a cost benefit to society who own those resources? The money belongs to the people and in raising that money it is the duty of this House to ensure it is spent in the most cost effective way and to control and account for the expenditure. I maintain we do not do that. All the procedures are outmoded and need modernisation. The checks and balances that have been introduced constitutionally and legally are in need of an overhaul.

I wish to outline the number of financial provisions that are gone through annually in raising the £11 billion to which I have referred. A Book of Estimates is published annually which gives the departmental expenses that each Minister will spend in the coming year and after the budget there is a revised Book of Estimates. There is a public capital programme booklet which outlines the intentions of the Government with regard to expenditure of £1,681 million on infrastructure and on other important State assets. There is also a White Paper dealing with estimates of receipts and expenditure at existing tax rates. It is a document that is rarely, if ever, referred to by the Opposition spokesman on finance or by anyone else and it is of questionable value to any Member of the House.

We also have the Budget Statement and the various accompanying documents. We have the Financial Resolutions that must be passed by the House by midnight on budget day. We have the annual Finance Bill and, having passed the Estimates and the revised Book of Estimates, we then have an Appropriation Bill to allow the moneys already passed to be appropriated. There is no reason an Estimate for a Department cannot be classified as an Appropriation-in-Aid for that Department.

There is also a statement of authorised issues which justifies to the House issues made by the Minister through the Central Fund (Permanent Provisions) Act, 1965. He accounts to the House for issues he has made that have not been sanctioned by the House but which are subsequently sanctioned in the Estimates and in the Appropriation Bill. It is hardly necessary to have this type of procedure. All of this is governed by the Central Fund (Permanent Provisions) Act, 1965. Later we have a Central Fund Abstract Account, the Appropriation Account, finance accounts and we have a further document entitled "National Accounts — Classification of Budgets". There is a new booklet entitled the "Comprehensive Programmes Book" and there is also a publication entitled "Economic Background to the Budget". In addition, there are pre-budget tables. All of those documents are meant to help the House to deal with the £11 billion but I doubt if there are more than one or two Members who know anything about them. Any enterprise that ran its affairs in a businesslike way would not allow such a volume of documentation on the controlling of expenditure.

Very few Members know or have been encouraged to find out precisely what these documents mean, what are their sources and their authority. The Constitution does not even allow the Seanad to raise finances. It states that the Dáil must be the source of all money Bills. However, the Constitution and this House are being by-passed year in and year out by letters of comfort and many other instruments.

We had a meeting of the Public Accounts Committee this morning where it transpired that the National Petroleum Corporation of Ireland were given the power to borrow $540 million without a mention to this House or to any committee of the House. That company was set up with an authorised share capital of £100 with £2 issued to nominees of the Minister for Finance. The whole procedure set out in the Constitution has been by-passed and the authority of this House to raise money from the taxpayers and to spend it in the interests of the country is being by-passed. This is not merely due to a lack of understanding of the financial procedures involved but to other deliberate procedures. We must look at the whole accounting operation to see what needs to be done to bring it into line with the requirements of a modern State.

When the Comptroller and Auditor General examines the accounts he reports to the House. The House sends that report back to the Public Accounts Committee which sits with the Comptroller and Auditor General to examine the accounting officers of the various Departments. The Office of the Comptroller and Auditor General was set up in Victorian times and it was reaffirmed in our Constitution. He is a constitutional officer: he is not answerable to the Government or to anyone but to the Dáil. Yet his functions and powers have never been reviewed. Two or three years ago in Great Britain they passed the National Audit Office Act which reviewed the whole procedure for accounting for public expenditure. It gave their Comptroller and Auditor General powers to examine not only the book entries but also to see if the money was spent in an effective and efficient way. That follows from powers given to the Canadian Auditor General after a review many years ago. Every parliament has a Public Accounts Committee and a Comptroller and Auditor General. We have fallen behind other modern parliaments in our method of accounting for spending. The Public Accounts Committee of the Canadian Parliament, which is set up on the same basis as this Parliament, is perhaps the most advanced in calling to account the agents of the State for the vast sums of money that they spend. Their Auditor General, as he is known in Canada, has been given the powers to carry out efficiency examinations within the area of Government spending and where he considers there are inefficiencies, he reports these to the Public Accounts Committee, who, in turn, are in a position to go into the detail.

The Public Accounts Committee of this House is not so authorised. By our budget we are raising huge sums of money annually. We can all agree or disagree with what it is spent on, but we have no control on how it is spent. The controls and checks are not there; there is a very serious deficiency. The powers of the Comptroller and Auditor General badly need to be updated. We need a national audit office and powers to be extended to the Comptroller and Auditor General to examine the efficiency of Government spending as well as the appropriateness of it under the headings for which it has been voted.

As things stand, the Comptroller and Auditor General cannot even audit the budget expenditure which we have already approved. As well as his constitutional duty to examine the Appropriation Accounts and to report thereon he has also been assigned other duties by this House and is required to examine the accounts of semi-State bodies, for instance. He has a very limited staff and there are huge burdens placed upon him. All he can do at best is make spot checks in Government Departments and report on that basis the deficiencies he turns up not the lack of efficiency of effectiveness, but deficiencies in keeping within the subheads voted by this House. Even on his spot checks he has come up with some whoppers, enormously inappropriate activities within the Departments which have not been approved by this House, some of which may well be desirable but which are unauthorised. In other cases he has found some questions of deliberate fraud. Most of the public money is spent properly — of that I have no doubt — however, no company, corporation or body, spending the sort of money which the State spends would be so careless about its check on how those sums have been spent.

If we were to look more closely at value for money spent, we might find, for instance, that we do not have to raise the huge amount of taxes which we have to raise annually to fund our budget. We might find that we do not have to raise £104 million customs duty; excise duties £1.378 million; capital taxes £35 million; stamp duties £167 million; income tax £2,356 million, income levy £34 million, corporation tax £250 million, value-added tax £1,562 million, agricultural levies £13 million, motor vehicle duties £131 million and youth employment levy £87 million. We might find that if we were properly controlling our expenditure we could quite easily have savings which would reduce one or more of those items and allow us to cut back on the enormous amount of taxes which we are imposing on people.

Let us take the refund which will be given to the PAYE workers next April on the Estimates in the budget; the figure is something like £200 million. As a percentage of the £11,224 million which we are going to spend, it is not great, it is about 2 per cent. If we were to make even a 2 per cent saving on our annual expenditure by way of more effectiveness and efficiency we could give back twice as much to the PAYE sector. I have no doubt — and neither should other Members have — that within the public service there are not the same controls on spending money as in the private sector. Put another way, which of us would spend other people's money as well as we would spend our own? If we were spending our own money we would be more careful, more effective, more cautious and certainly we would ensure that we got better value for our spending. The money being spent is our money, Ireland's money. We are the shareholders of Ireland Incorporated. We should have the power — we certainly have the duty — to hold the people who spend that money accountable for it. Even the slightest of efficiences, savings which can be brought about by a reorganisation of the Comptroller and Auditor General's Office and the updating of his powers and those of the Public Accounts Committee would result in very substantial savings. That is long overdue and it should be addressed by this House.

Earlier I quoted the figure given for supply services as £9,473 million gross. It is never presented to this House as a gross figure, but as a net figure. In the budget tables that figure is shown as £9,473 million less £1,431 million, which equals £8,042 million. The difference is a famous thing called Appropriations-in-Aid. For 1986 these amount to £1,431 million. That is more than half of everything that we take in income tax, more than we take in excise duties and about equal to what we will take in value-added tax in the coming year. Yet, who in this House knows what Appropriations-in-Aid are and how they are accounted for? They are not accounted for, they are netted off against departmental spending. They are accounted for in total but there is no control over these figures and it is not even shown on the credit side of the tabular statement on budget day, rather is it deducted on the debit side, which has the same effect. The actual Government departmental spending should be shown gross. I do not know why it is not so shown and I have discussed this matter with the Taoiseach, among others. It is an anomaly which has been there over the years. The actual supply services figure should be given as the actual spending figure, £9,473 million. The Appropriations-in-Aid should be shown on the credit side of the statement, ranking beside VAT, corporation tax and income tax, so we can see there is a source of income to various Departments under this famous heading of Appropriations-in-Aid in-Aid which is collected over a wide variety of items. All Departments probably have Appropriations-in-Aid income, for example, from the sale of furniture or whatever, which the Departments are allowed to use themselves. Other technical properties which may not be immediately evident have been discussed by the Committee of Public Accounts of which I am a member.

As excess Vote is rarely allowed. It is frowned on. It can give rise to personal liability on the part of the accounting officer who approves it and is, therefore, always avoided. If an excess Vote is not brought before this House and sanctioned by this House — or even if it is and the Minister for Finance decides not to implement it — the person who has incurred that excess Vote is personally liable. The excess Vote can be reduced by Appropriations-in-Aid; in other words, moneys which have not been voted by this House can be spent by Government Departments through this device should they choose to use it. That provision should not be there. Appropriations-in-Aid should be on the credit side of the tabular statement and we should be able to examine all of these Appropriations-in-Aid to see precisely what that £1,431 million income is made up of and whether we are satisfied with the manner in which this income is disposed.

The procedures used now for the budget for raising the State's finances and for legislating for these finances are outmoded and need to be up-dated and reexamined thoroughly. I do not think anybody who has looked at the procedures in this House could disagree with that. I want to make one or two other points in relation to the content of the budget.

The Chair is glad the Deputy made that decision.

The Deputy is glad that the Chair is glad.

Gladness all around.

The House should not be treated as a county council. It should be treated as a serious House. The matters I have raised here today and put on the record of the House are most relevant to a budget debate.

We have grave doubt, but we give the Deputy the benefit of the doubt.

I agree with the comments made here with regard to the charge on bank interest. The tax being raised on bank interest, irrespective of the ability of people to pay or the liability which may or may not arise for the taxpayer, is a new departure in tax principle. The principle that has always applied in this country is that tax on income be related to the ability of the person to pay. This is a departure. It is what is called a poll tax in technical tax language, and it is difficult to justify except that it means there will be a significant inflow of funds to the Exchequer of the order of £75 million which I suppose must be raised to meet Government spending. We may not like to do this and we may seek some way to avoid doing it, but, if that is to happen, the Government will have to meet the shortfall in some other way.

I suppose Deputy Kelly did not realise he was doing it but, having read out a number of motions on the Order Paper which would commit the Government to spending if they were met, he went on to say we should not introduce this interest tax and was, therefore, guilty of the same offence, in other words, committing the Government to loss of revenue or to spending which they could not afford. If the Government are to modify the tax on interest provisions — they should do so — then they must make up the shortfall in some other way. The problem is that when that day comes, if it comes, any steps taken to do that will be further decided in the House, but the Minister should not be too concerned about backtracking a little on this.

When the Finance Bill comes in he should look at the question of interest, and he should be more discriminating in his application of tax on interest provisions. Many old people in particular live off the interest on their investments and would not be liable to tax under the exemption provisions and under the normal tax free allowance provisions, and it would be unfair to take 35 per cent of their interest in tax. I do not think the Minister wishes or intends to do that. It should be corrected and if necessary we will have to raise the funds in some other way. That might be catered for in the Finance Bill when published.

Deputy Molloy said the £5,000 grant and so on which the Government introduced last year did not result in a greater sale of new houses, that people were going for second-hand houses. That may or may not be so, and I presume Deputy Molloy has researched it, but one of the most difficult problems we have faced in Dublin city in my time as a public representative — I was first elected to Dublin Corporation in 1979 — was housing. One of this Government's great successes has been their housing policy and provisions. I am not referring just to the Housing Finance Agency. The Government have shown commitment to building local authority houses and the £5,000 grant has helped greatly.

If people are buying secondhand houses having been tenants for three years of a local authority, they are moving on, buying their own houses and returning the houses they are moving out of to the local authority who can, in turn, let them to other applicants on the list. This has had an enormous effect on the housing list. The pressure on that list has eased greatly. Anybody accustomed to dealing with housing problems on behalf of his constituents can say that without doubt houses are available even to parents with one child and parents expecting their first child because they qualify as a family of three.

This has saved the State finance in that the State does not have to fund the building of a local authority house which can cost anything from £40,000 to £50,000 because of the standards used and the type of house which is built to last so that it can be let and relet if necessary. It has had a significant effect not just on State finances but has resulted in large numbers of houses being made available to local authorities for letting. I congratulate the Government on that. It is worthy and I would like to see it continued.

Ag cur leis an díospóireacht seo ar an cháinaisnéis, 1986, ní mór dom a rá nach bhfuil muinín ná dóchas, ná treoir, beag ná mór, sna polasaithe atá á leanúint ag an gComhrialtas, polasaithe atá teipthe orthu go mór i leith na dífhostaíochta. Tá a fhios ag an saol gurb í an dífhostaíocht ar t-ábhar is tábhachtaí sa tír. Faoi láthair tá beagnach 250,000 daoine dífhostaithe, de réir na bhfigiúr oifigiúla, agus tá a fhios againn go léir go bhfuil an figiúr ceart i bhfad níos mó ná sin. Níl réiteach na ceiste sin sa cháinaisnéis seo.

This budget is without confidence, without hope, direction or leadership and has not addressed the single most important item facing all of us, namely, unemployment. The official level of unemployment is now almost 240,000 and rising, despite efforts by Government Members to indicate that the tide has turned. People thought the budget would address the problems facing the nation and that there would be an acknowledment that Government policies pursued over the past three years had failed. The budget has failed to meet the challenge of injecting confidence into the economy. Boosting output and growth is a precondition for job creation and dealing with the national debt. The budget did not give any hope to industry or businesses who were looking to the Government to lift their morale and lift the productive sector off the floor.

The Minister's exercise in tinkering with the nation's finances was a bit like watching a game of musical chairs. Analysis by independent experts would seem to indicate that the slightly deflationary aspect of the budget is likely to reduce growth in 1986. The Government are unwilling to invest in the economic reconstruction of our country. Instead they will increase the tax take by 9.6 per cent to more than £6 billion. The public expenditure cuts of £55 million and the £25 million cut in capital expenditure will undoubtedly have an adverse effect on unemployment.

The incentives to employment in the services sector through the reduction of VAT on meals and a range of labour-intensive services are to be welcomed and I acknowledge that as an employment creating measure. How realistic is it to tax fish and chips or, as they are referred to in the Dublin area, the one and one ?

The hike in PRSI costs is likely to have an adverse effect on employment by increasing costs to employers. All these points have been referred to by my colleagues during this debate. I wish to refer specifically to the cost of money to industry and expecially to small firms. This is central to the creation of a climate for investment and enterprise. The sharp 3 per cent increase in interest rates recently has very serious implications for industrial endeavour. It brings the cost of overdrafts and term loans to small industry and farmers to 17.5 per cent. The cost of money to Government Departments, local authorities and blue chip companies has increased to 15.5 per cent. This means that the rate of interest to corporate borrowers has risen by 4 per cent since the beginning of this year. Over a full 12 months the increase would add £15 million to the costs of the small firms sector.

Soaring interest rates may cost Irish industry as a whole as much as £80 million. Our industry is now perched precariously between falling prices on our main export market due to the weakness of sterling and real interest rates of over 11 per cent. Twelve months ago there was an outcry when Ireland's real interest rate rose to over 8 per cent. At that time it compared with 5.1 per cent in the UK, 4.5 per cent in the USA and 3.7 per cent in Germany. From the point of view of industrial development and job creation the latest hike in interest rates will gravely affect the profitability and viability of new enterprises while endangering those firms already in financial difficulty.

I suggest that an alternative strategy must be devised to lower interest rates for the productive and employment creating sectors. Banks, businessmen and economists agree that the upward trend in the cost of money during the past five years has had alarming implications for Irish industrial development. These high rates of interest are hampering the development of small indigenous manufacturing industry. Recently, the IDA acknowledged to me, when I made some inquiries, that a good deal of discussion is going on with foreign companies but, in their own words, "nothing is happening at home". That is a sad situation. I hope the Minister and the Government will address the problem and salvage our economy when the Finance Bill is introduced. I am not sure what Minister will be introducing it because of the various soundings we have heard from the media.

Small industry is vital for the Irish economy, accounting for some 90 per cent of manufacturing output. The economic strategy of the White Paper on Industrial Policy published by the Government in 1984 mentions that the economy depends on an efficient and thriving small industries nucleus around which strong home based industries will develop. I think all of us in the Dáil would broadly support a strategy based on our natural resources and indigenous firms. It is a great source of concern to all of us that this strategy is now endangered by very high interest rates, handicapping small industries and start-up enterprises.

There is an urgent need to relieve the pressure on domestic rates and to stimulate economic activity, especially investment. This is particularly so in view of the financial structure of many of our companies. It has been clear for quite some time that small and medium-sized manufacturing firms have financing problems. They suffer from a lack of equity and have inadequate profits. The NESC have highlighted an unhealthy dependence on debt finance on the part of Irish firms.

Soaring interest rates have increased the cost of finance to industry for productive investment. In turn, the low level of equity participation has reinforced the reliance of Irish manufacturing firms on debt finance. This has led to a truly tragic situation for many firms. They are caught in a vicious spiral of low profits, high borrowings, high risks and low investments leading to lower profits and so on. It is tragic to reflect on the number of enterprises, individuals and firms which have been crucified by the high rates of interest to the detriment of the community as a whole. There is evidence that this blight is affecting some of the firms established under IDA enterprise development programmes which are geared for high growth, high technology sectors of the future emphasising research and development and innovation.

There is evidence that the high technology aims of a number of these firms may be in danger due to their financial position. It has emerged that because the level of bank debt in these companies is far in excess of what is appropriate at their initial stages of development many of the firms are forced to engage in low technology manufacturing and assembly to generate sufficient cashflow and service bank debt. Many firms are not in a position to avail of the development in technology that we have spearheaded here. As a result, research and development, the original aim of many of these companies, as well as productive investment have suffered. There is four times as much debt as equity in enterprise development programme companies. A more appropriate capital structure for these ventures would be to have four times as much equity as debt.

Those financial trends, high interest rates and an over-reliance by Irish firms on bank borrowings, if allowed to go unchecked will almost certainly have disastrous consequences for future industrial development. The Government's emphasis on equity participation was briefly referred to in the main features of the budget but the Government must have the courage of their convictions and act more quickly to remove the barriers impeding increased equity participation in industrial development. I made that suggestion in the course of the debate on the Bill dealing with designated trust funds and I hope the Government, having acknowledged that this ought to be done, will do so in the forthcoming Finance Bill. I await that Bill with bated breath.

The Government might also address themselves to the recommendations of the Industrial Credit Corporation and the National Economic and Social Council. A concerted effort must be made to reduce the interest rates on finance for productive investment. The high cost of money must not be allowed to obscure the fact that fundamentally Irish industry is in a healthy state. Firms employing more than 100 people represent 94 per cent of all Irish manufacturing companies. The evidence points to such firms being more profitable than bigger ones and having a better financial structure. High interest rates must not be allowed to choke off the potential of these firms.

For more than 25 years industry has been the main growth dynamic within the Irish economy. The expansion of industry has created demands for new services and resulted in tens of thousands of additional jobs in the economy. The new jobs generated in the sixties and seventies were sufficient to cope with the drift from agriculture and a growing labour force. In 1960 investment in the economy was at the rate of 14 per cent. That increased to 22 per cent in 1970 and to 30 per cent in 1980. However, in recent years investment levels have fallen and now account for only 23 per cent of national output. Last year investment in manufacturing industry was almost 20 per cent below the level of five years earlier. Higher manufacturing investment will lead to a faster growth in output and a wide range of spin-off activities in the economy creating many thousands of new jobs. Those jobs will not only be in the manufacturing sector but also in sub-contracting, banking, insurance, maintenance, transport, distribution and many other areas. The list is endless. However, industrialists must be convinced that investment will yield a higher rate of return.

For decades successive Governments have sought to influence these decisions by offering favourable fiscal and financial incentives to accelerate investment. The budget proposals will have a significant impact on the amount of investment available to industry and must be examined in that context. The proposal to reduce capital allowances for IDA grant-aided equipment will withdraw £18 million from the manufacturing industry in the full year of operation. The proposal to impose a special 12 per cent duty on section 84 loan interest will cost industry an estimated £12 million in a full year. The main firms affected by this will be agricultural co-ops and foreign-owned industries. The latter are the only ones the IDA are dealing with in an effort to create more jobs. The duty reduces considerably the value of what has been an important incentive for Irish industry. Those proposals if enacted will have the effect of reducing the incentives to invest in manufacturing industry by about £30 million per annum.

As a result of the budget, grants allocated to the IDA will be reduced by £3 million. In real terms that will mean that they are now 10 per cent below the level of three years ago. The new 35 per cent reduction tax on financial institutions will have a negative impact on the business sector. In this way a further £30 million will be withdrawn from the cash flow of industrial and commercial firms in 1986 thus greatly reducing the working capital available to sustain employment.

It is extraordinary that one of the reasons given for introducing one of these measures is to make industries more labour intensive. What could be further from the truth? What are the Government thinking about when they make such a statement? Irish industry is not capital intensive relative to other countries but it must have the financial ability to purchase the most modern equipment. Large numbers of people operating obsolete plant cannot form the basis of a competitive industrial sector. Experience in all industrialised countries demonstrates clearly the strong positive relationship between the growth of manufacturing output and the increase in total employment levels in the economy.

The emphasis should be on accelerating investment to increase output and create more jobs. Every £ invested by the State by way of grant or fiscal incentive is matched by an input by industry of £3 or £4. Investment in plant and machinery alone must increase by at least 20 per cent per annum, that is, 10 per cent to replace obsolete equipment and a further 10 per cent towards necessary expansion. Recent investment rates fell well below this requirement. In recent years the annual level of industrial investment has been less than half the rate it needed to sustain the industrial expansion of 10 per cent per annum that is required. The top priority for Government and industry must be to stimulate a much more rapid increase in private investment activity. This budget is a move in the opposite direction.

It is a stark fact that our industrial sector is only half the size it needs to be if we are to aspire realistically to closing the gap between European living standards and to providing jobs for our young people. The only way to create real jobs — and I emphasise the word, "real" because we are all too well aware of the amount of money being spent on a multiplicity of agencies and on the overlapping of all this training and retraining with no sustainable jobs at the end — is to provide conditions which will stimulate higher investment leading to increased output. The Government accepted this on a Private Members' motion here recently.

One of the most important influences on industry is the declining price of oil and also the weakening in the value of sterling and of the dollar against the currencies of the EMS, including the punt. It is estimated that should the decline in crude oil prices be maintained, inflation will be cut by 1.5 per cent more than the projection. This would mean that inflation in Germany will fall from 1.8 per cent to almost zero. The average rate of inflation in the Community this year could fall to 2.5 per cent but the projected inflation rate for Ireland, as referred to by the Minister in his Budget Statement, is far too high in view of the strengthening of the Irish punt in recent weeks. It is essential that, in order to maintain competitiveness, the Irish inflation rate should be below that of our main trading partners.

The climate for private investment has been depressed in recent years because the returns available from risk-free investment in Government stocks were far higher. For example, last year more than £1,000 million was invested by private individuals and institutions in new Government gilts and less than one twentieth of that amount in new equity investment in manufacturing industry. It is essential that this 20:1 imbalance against investment in productive risk taking investment be removed if we are to make any impact on our unemployment problem.

The climate for personal enterprise and initiative has been adversely affected also by the high rates of personal income tax on relatively modest salaries. Industry, as I have said previously, has had difficulty in persuading people to work overtime, even on urgent export orders, and to accept more responsibility at higher salaries because the increase in net pay after tax is whittled away. That is a disincentive. The personal tax adjustments announced in the budget are welcome. They are a step in the right direction. At least they give the impression that the adjustments will be beneficial to the taxpayer.

I go along with those commentators who, to put it mildly, expressed doubts about the net results of the changes. However, there is a long way to go towards creating the atmosphere in which we will have the acceptance and the encouragement that are necessary among our people vis-à-vis taxation. That is why this subject must be addressed more firmly from now on if the effect that we all so dearly wish for is to be achieved. There is no doubt that Irish industry has the capacity to expand much more rapidly, but it must have favourable operating conditions. I repeat what I said earlier — the budget will not bring about an improvement in the overall climate for enterprise.

This year's budget represents a continuation of existing Government policies, policies which have been pursued in the past three years but which have not worked. One would have expected the Government to have realised that before now. They were presented with the opportunity to commence a programme for economic recovery but sadly they missed that opportunity. I am talking of the opportunity to make an attempt at a new direction which would offer hope to people who are deeply depressed and dispirited.

During the year economic growth was almost at a standstill, while unemployment continued on its upward spiral to reach its present dizzy height as firm after firm closed and liquidations became increasingly the order of the day, a trend which has continued up to the present. People lost their jobs but, in addition, they lost confidence in their own country, not to mention their loss of confidence in the Government. We all recall the statement of the Minister for Finance at the time of last year's budget when he said that at the beginning of 1985 the economy was well placed for the sustained expansion envisaged in the plan. He was referring to that famous or otherwise document, Building on Reality which has become more and more discredited, just as it was discredited within one month of its publication. In that document there was the observation that in the final analysis, the success of any economic policy can be judged only by its impact on economic activity within the State, account being taken of the extent to which benefits are captured through numbers employed, levels of income, taxes and profits. These standards which the Government set for themselves have proved a total failure. All we have achieved is the present disastrous economic and social situation.

There are many areas of total failure on the part of the Government. The single most important item in their litany of failures is our unemployment rate of 18 per cent, the worst on record in the EC.

Need I remind the House of the public relations exercise of the Government last October on the introduction of what was described as a package of measures to combat unemployment and to consolidate the improving employment figures? In this whole area of employment — and emigration is now back with us — the Government have been totally dishonest. We can recall — in case some of us do not, I wish to remind all and sundry — the Taoiseach on coming to office saying he would always tell the people the truth. We heard a lot then about credibility, honesty and truthfulness. What have we had? We have heard a series of misleading statements about unemployment and emigration so often, so long and so loud, that the truth has been totally removed from the Government's vocabulary.

I will refer to other areas in which I had expected the Government to display some interest or to give some attention to. Take the construction industry, which has the ability to create the jobs far quicker and at less cost than many other areas. There is considerable scope for Government action to increase employment in the construction industry if they had a policy or the political will to stimulate that industry. Is it not ironical, and this is a fact that cannot be distorted by any media or handlers, that the decline in the construction industry is synonomous with Coalition Government? Whatever the cause, the construction industry always have feared the prospect of Coalition Government, and they had every reason for doing so. This Coalition again have spread depression in the construction industry. Like the workers in that industry, I can see the demoralising effect this Government have had on this industry.

In their document Building on Reality, the Government forecast a 7 per cent growth rate in that industry between 1985 and 1987. We all know that target is no longer achievable on the basis of current Government policies, attitudes and decisions. Unemployment of operatives in that industry has now reached 48,400. To that we must add the many more in the downstream service industries associated with construction, and therefore it is reasonable to say the figure of unemployed in the construction industry is nearly 100,000.

We had expected some forward thinking in the budget which would help employment. Instead, we have a reduction in the capital programme, which must be condemned without qualification. The Government should be giving additional funds to that programme. I will give instances of a few areas in which there should be additional funding. Let us take infrastructure. With justification, much has been said about how far behind we are in the need to improve infrastructure if there is to be economic growth. There is the national gas grid, the construction of sporting centres and the provision of sporting facilities which were proposed by the National Planning Board in their report. That board also referred to accelerated refurbishment of public buildings and so on.

I will refer to agriculture for a few moments. Irrespective of the massive growth we need in agriculture, there has not been any improvement in that respect in this budget. The Budget Statement of the Minister for Finance devoted only four lines to the agricultural industry. Many times we have heard of the ability of the agricultural sector, given the required encouragement and incentives, to create jobs, particularly in food processing. We know the effects that would have on the balance of payments. The production of vegetables and other such foods would reduce our high imbalance of imports. It is unacceptable that firms such as Érin Foods of Mallow should have had to close down. I could list others. When we should be encouraging growth in this industry, we have been sadly neglecting it and this has been fully reflected in the attitudes displayed in the many meetings of farmers with the Minister for Agriculture.

Time does not permit me to develop further on the proposed report of the group of Ministers of State set up three years ago to promote programmes and plans to contribute to a correction in our imbalance of imports by the promotion exports of produce for which our climate is so suitable. I would have thought we would have had the results of that study before now.

I will refer to the infamous retention tax. All of us were encouraged to save our money from an early age. Various schemes were introduced to encourage people to save, and prizes were won by schools for their savings ability. Now the Minister is taxing children's savings. The retention tax is a monumental financial and social blunder. To date we encouraged people who previously kept their savings at home to keep them in banks and financial institutions. Now the Minister proposes to tax the savings of these people who are vulnerable to attack. Where is the credibility about which we heard so much in the 1982 general election? This Government and this Minister encouraged people, particularly senior citizens, to save their money in banks and financial institutions as a safeguard for themselves and their nest eggs. Now the Government are imposing a retention tax of 35 per cent on their savings. If the Government intend to ignore what we say about it, I hope their own backbenchers will make their feelings forcibly known as they did after the local elections last June, which resulted in the famous package of increased grants to the construction industry, in order to get action. We will continue to remind the Government of the effects of this retention tax on young and not so young savers and on voluntary organisations.

I have received a letter from the Arthritis Foundation of Ireland and I can apply the relevant sections to the many voluntary organisations and charities around the country, including the Aid Cancer Treatment Organisation in Cork who recently collected £300,000. That money is in the bank while awaiting a decision by the Minister for Health to give us £40,000 to put up a building, and it will now be the subject of a 35 per cent clawback by the Government. The letter pointed out that retention tax will bring many charities and voluntary organisations into the tax net. It was their policy to ensure that funds were available prior to commitment to expenditure on research and the provision of treatment facilities. During the period between the collection of funds and payment of the grants and so on, they had always considered it their duty to their supporters to utilise the funds in the best possible way. From time to time substantial such funds are on deposit in banks. Up to now interest on these funds was an additional income to enable groups to further the aims of their charity. This tax will curtail severely the activities of these organisations and will reduce the services being provided to more than 500,000 people suffering from various illnesses. The Government should be ashamed of themselves.

Certain savings should not be liable for tax when allowances are apportioned, under the tax code. These savings should include savings of dependant spouses, old age pensioners, redundant workers and so on. I know of a case where a person discontinued work for health reasons and has an income of £7,450 from interest on a deposit account. This is a married man with a tax allowance of £3,800, a mortgage interest allowance of £2,250, life insurance allowance of £172, VHI allowance of £310 bringing this total allowances to £6,532. Subtracted from his interest on his deposit that amounts to £918, taxable at 35 per cent, giving a tax liability of £321.30 so that his net income is £7,128.70p. He has a number of school going children. When this retention tax comes into effect this man will be taxed on his interest of £7,450 at 35 per cent which will give him a tax liability of £2,607.50p. His net income out of interest on £7,450 will be £4,842.50p on which he must keep his wife and family and pay his mortgage, insurance and so on. I hope the Minister and his colleagues will look at these four categories who have to pay retention tax: young people with small savings, the not so young whom we encouraged to save, depositors who are not liable for tax and charitable organisations, with a view to doing something for them.

In the short time left it is reasonable to talk about my native heath. We are waiting with bated breath for the Government to encourage, co-ordinate and assist those people in Cork who want to re-open the dockyard. At present the M V Leinster, which was built at Verolme, is in dry dock in Liverpool for a refit costing £250,000. That will involve six weeks' work approximately for 120 workers around the clock, which will be followed by a similar refit on the M V Connacht. As efforts are being made to re-open the dockyard, I am surprised that the B & I could not wait for another while when they might have been able to send that work to the dockyard in Cork.

The ESB are shipping thousands of tonnes of coal to Moneypoint on foreign vessels. Irish Shipping were liquidated by the Government and Alcan are bringing bauxite into Aughinish on foreign vessels. It is ironical that Englishmen and others are repairing our ships and that Liberians and Panamanians are transporting our cargoes while Irish people are stranded in foreign ports like Marseilles. The Deputies from Cork who support the Government should encourage them to do something positive and practical for this region.

In that regard I must refer to the enormous publicity given to the visit by the Taoiseach to Cork in regard to the rescue package proposed for the area. The television cameras were there to record the visit and the announcement that a sum of £15 million would be made available. If the Government and the Deputies who support them think the people of west Cork are impressed by this, they should think again. If one reads the small print, it is obvious that they did not get the sum of £15 million last Friday, as it is to be spread over four years. That is an even bigger insult to west Cork. Where has the other £20 million gone? A sum of £35 million was made available and, even with a commitment of £15 million over the next four years, a sum of £20 million is still unaccounted for. Will it be used to balance the books? It would have been much better to give a commitment in regard to industrial development which needs a helping hand in that region. There are sites there which could be utilised by the IDA as it is a 60 per cent disadvantaged area. The Government should add another £500,000 which would create jobs. It is a Kathleen Mavourneen system.

There have been closures and liquidations all over the country. Cork had the dubious distinction of suffering from the very beginning and, where they lead, others follow. However, we did not wish to give a lead in closures and liquidations. The whole country is now in the same grip of closures which are the hallmark of the Government. The Minister for Health and the Minister for Education did not improve matters by closing many institutions.

We welcome the grant of £50,000 for Cork Opera House and a similar grant for the enterprise board. A number of other grants were also given to the Gaeltacht in Rath Cairn and for the welfare of emigrants abroad. I support and welcome these grants, but if the Government allocated the grants to the Cork Opera House and the enterprise board as a sop to Cork, they are on a loser because any Minister making an Estimate for a Department would include those figures and it is not necessary to mention them in a budget speech. The attitude in Cork is that it is an attempt to curry favour with the voters.

I am glad there is a Cork Deputy listening to me on the other side of the House as he can confirm this over the weekend. The people have had enough of the Government. There is much speculation today about changing their team, but all the people want now is for the Government to go to the country as we are in an economic mess. Leave now and give the people an opportunity to replace an unsatisfactory administration which has brought us to this level of hopelessness by their policies and lack of leadership and commitment.

It is hardly worthwhile in the short time left but I will start with a summary of the thrust of the budget.

Debate adjourned.
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