Item No. 22. Deputy Hilliard is in possession and has 57 minutes left.
Financial Resolutions, 1986. - Financial Resolution No. 13: General (Resumed).
Debate resumed on the following motion:
That is it expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision in connection with finance.
—(The Taoiseach.)
I may want extra time.
The Deputy has almost an hour.
(Interruptions.)
I find it very difficult as a member of the Opposition to contribute to a budget debate when the budget was introduced by a different Minister for Finance and especially when the Taoiseach misled this House with the recent juggling of the Cabinet. It is strange to have a different Minister for Finance taking the budget through the Dáil now.
This budget has done little or nothing to give our people hope. It is obvious that the people want a change of Government. It is wrong for the Government to stay in office seeing that the people have no confidence in them. There must be confidence in any successful business, and Government is a business, if its policies are to be successful. The longer such a Government stays in office the more cautious harm will be done to the economy. People are becoming more cautious about investing money here at home. The Government have done nothing to improve the situation with this budget. There is no encouragement for business or farming enterprises to expand and there is no encouragement for workers to work harder or to create extra employment. It is sad to have able and willing people on the dole, people who want to work and cannot get work. Family life is being seriously affected by this. It is sad that so many educated young people must emigrate. Most people want to do something worthwhile with their lives but unfortunately many cannot find employment here and must emigrate. Boredom can be very harmful to society so it is important that we properly equip those who have to emigrate.
This budget will not maintain or increase our economic growth. Without economic growth we cannot create the revenue to provide the services. We cannot demand more from the taxpayers. Taxpayers' money should be invested in new productive areas and in areas which have been successful but which need increased investment if we are to create the urgently needed extra revenue required. There is no sense in continuing to spend more of taxpayers' money direct on administration and services when we cannot afford to do so. The money generated from productivity should be reinvested in productive areas a second time and this should be the priority of any Government at present. This policy would certainly help to create the cash needed to maintain and improve our services and, at the same time, create more employment. there must be radical changes in the collection of tax and how we spend it. If we continue in the same way our financial problems will become even greater.
We have plenty of successful business and farming people who could employ more people if they were given direct encouragement to do so. However, there is too much red tape when one applies for grant aid. Let us create competition among our own business people rather than a policy of protection. Why is our system of paying out grants geared to protecting those in business especially when some are not as efficient as they should be while others who wish to start up similar businesses and create employment find it impossible to get grant aid? Many young people in my constituency are quite capable of starting up in a small way in business, they are willing to do so and could employ four or five workers. They could and would pay taxes to the State but they are not encouraged under present regulations.
A national risk fund should be set up and each county development officer should be given a certain amount of cash to distribute locally to people who are decent, honest and capable. They should be given a chance to prove themselves. Initiative should be encouraged instead of knocking it. These people would be more of an asset to the economy instead of drawing the dole and doing nothing for it. I am not talking about big grant money; in many instances small grants to buy simple machinery is all that is needed. A small percentage share of the huge amount of money at present provided for the IDA, Manpower, the Youth Employment Agency and others should be provided to the people I have mentioned who are anxious to start up businesses. The taxpayers would certainly get better value for their money and even if some of the ventures failed, the cash risk would be very small.
Another way of spending taxpayers' money better would be to deal directly with small successful business people. We have many of these and they should be given assistance and encouraged. We are spending far too much of taxpayers' money on setting up very costly structures so as to register the unemployed and to provide courses and so on. In their own way these new structures provide encouragement and employment but many young people who participate in these schemes do not find employment on completion of the courses. The policies of the Coalition Government over the last three years have not been successful. We need more and more tax revenue to provide for decreasing services and our national debt continues to increase. We cannot continue asking people to pay more and more tax to justify expenditure when they know that their money could be spent more wisely. The cost of the services we require and demand must come from extra productivity and profit. In November 1982, before the last general election, Fine Gael and Labour said that they were the only parties who could solve the budget deficit, reduce our national debt, create employment and reduce taxation. They have failed to honour any of these promises.
Our national debt on 1 January 1985 was £18.5 billion, £10.5 billion in Irish pounds and £8 billion in foreign currency, of which £3 billion was in US dollars, £2? billion in Deutsche Marks, £0.5 billion in Swiss francs, £0.75 billion in Yen currency, £0.75 billion in sterling and the balance in Dutch guilders, ECU and others. The cost of foreign borrowing is subject to considerable uncertainty — for example, a 1 per cent change in the international interest rates would account for a variation of £47 million in our payments. Our national debt increased by £2 billion in 1985 and it reached £20.5 billion. At the end of 1986 it will have increased by a further £2 billion to reach the record figure of £22.5 billion. This is the record of the Coalition Government.
Our first and basic objective should be to curb the growth of debt service costs by reducing the level of Exchequer borrowing. We must exercise firm control over the level of foreign borrowing requirements and encourage more home investment instead. There is a need for a new national pride, awareness and commitment to solve the debt problem. That is what our people did in the past in a different way when they gave us the opportunities to develop. They worked hard for little pay to do so, and never believed that they were entitled to buy something unless they had the money to pay for it. These were the financial principles of the past. However, it looks as if we are prepared to mortgage our country more and more each year and go deeper into debt. If we do, generations of the future will be doing what our forefathers did in the past and this time it will not be the fault of the British but of the moneylenders of Germany and the USA.
Almost one-third or £2 billion of our increasing revenue must go to repay our national debt in 1986. In 1984 interest absorbed 32p in every £ of current revenue. In 1975 it was 21p in every £ of current revenue. For the past three years the Government have been borrowing more and more for the budget deficit than for capital development. In 1986 £1.25 billion of the extra £2 billion borrowed will be for the budget deficit. When Fianna Fáil were in Government they borrowed more money for capital development. There is no guarantee either that the estimated budget deficit of £1.25 billion for 1986 will be the figure at the end of the year, because if we judge it on the record of the Government for 1985 we find that the budget deficit was £50 million greater than they had estimated. The real budget deficit in 1985 was a record figure of £1.284 billion. The major reason for the 1985 budget deficit being £50 million greater was due mainly to the fact that the revenue receipts were £123 million less than expected and provided for. Why? There was more unemployment during the year than the Government had expected, there was less trade and commerce, less capital investment and our imports fell. The Government failed to realise this and they also failed to realise the financial hardship under which our people were living. People spent most of their money on lower VAT rated goods during 1985. Income tax receipts were down by £28 million, customs duties were down by £8 million and VAT receipts were down by £82 million. This is a confession of failure by the Coalition that their policies have not been successful.
The Minister for Finance in his 1986 speech gave the impression to the media that he had reduced taxation. Before the Minister came into the House he had a budget deficit of £1.3498 billion and when he finished his budget speech the deficit was £1.2500 billion, a reduction of £99.8 million net, and I repeat net. Where did he get this money from? There were two parts to the budget, the revenue side of income and the expenditure side of income. Under the first part the Minister took in £305.2 million in tax and gave back £151.1 million, thereby, collecting an extra £154.1 million in tax. The £305.2 million would be collected under the following headings: £10.5 million from alcoholic drink, £12.9 million from tobacco, £15 million from petrol and diesel, £4.7 million from road tax, £76.7 million from VAT increases, £18 million as a result of the cancellation of the tax-free child allowance, £7 million from income tax from the self-employed, £75 million retention tax, £1.4 million from corporation taxes, £6 million from the tax-based lending of financial institutions, £38 million from life insurance companies, £15 million in respect of anti-evasion and avoidance measures and £25 million from income tax. These amounts make a total of £305.2 million.
The Minister gave tax reliefs amounting to £151.1 million and they were under the following headings: £49.6 million PRSI allowances, £0.5 million stock relief, £7.5 million excise duties, £17.5 million VAT relief, and £76 million income tax relief. This means the Minister will collect an additional £154.1 million in taxation.
In Part II of the budget he increased expenditure by £144.5 million. He did that by an increase of £70.8 million in respect of social welfare and new claims. He provided £70 million for public service pay and £3.7 million for other matters. He reduced expenditure income by £90.2 million under the heading of "Expenditure savings and balances" leaving him with a debit balance of £54.3 million in income. If one takes Part I and Part II together one arrives at the following figures: a tax credit of £154.1 million and an expenditure debit of £54.3 million, which leaves a net credit of £99.8 million. This is the figure by which the Minister reduced the budget deficit.
I will refer to a few hidden increases about which the media do not appear to be aware and on which the Minister did not give details in his budget speech. Under the Social Insurance Fund the ceiling figure has been increased from £13,800 to £14,700. This will bring in an additional £3 million in 1986 and an additional £11 million in 1987. Under the Redundancy and Employers' Insolvency Fund he increased the ceiling from £13,800 to £14,700 and he also increased the contribution rate from 0.5 per cent to 0.6 per cent. This will give him an additional £3.2 million in 1986 and £5.5 million in 1987. He increased the ceiling in respect of the Occupational Injuries Fund from £13,800 to £14,700 and he increased the contribution rate of 0.4 per cent to 0.43 per cent. This will give him an extra £1.3 million in 1986 and £2.4 million in 1987. He increased the ceiling with regard to health contributions from £13,000 to £14,000. He will take in an extra £0.2 million in 1986 and £2.1 million in 1987. In respect of pay-related benefit to which the workers themselves contribute, he increased the floor price from £49 to £58 for new claims from April 1986. As a result of that he will take in £2.8 million in 1986 and will get the sum of £6.8 million in 1987. Under those five headings he will take in £10.5 million and will get the handsome sum of £27.8 million in 1987.
I welcome the provision of £50,000 to Gaeltacht Rath Cairn in County Meath. The people concerned have done excellent community and development work. Recently, they built a church and they have a fine community centre also. They are the new growth centre for successful development and the use of the Irish language. It is their wish to establish an all-Irish secondary school in County Meath and I hope the Government will continue to assist them in the future. I wish the people of Gaeltacht Rath Cairn continued success.
This budget has been disastrous for the construction industry. There have been cuts in funds for local authority housing, there have been increases in the cost of diesel and petrol which will add extra costs to transportation and there have been cuts of £25 million in the public capital programme. There is no new hope whatever and certainly no help to create employment in this area.
The unemployment figure is a disgrace. The Coalition Government have failed to assist the construction sector. The figure of 240,000 unemployed people is a clear indication of the failure of Government policies. Many young educated people write to me each week looking for jobs but trying to get employment for them is an impossibility. I am tired reading in the newspapers and seeing on television announcements of more jobs by the former Minister for Industry, Trade, Commerce and Tourism, Deputy Bruton. We read announcements about a factory opening and promising 500 jobs over the next four years but the truth is that the employment projection figures are never maintained. In many cases the companies go out of business after one or two years. If the Minister is correct, the unemployment figures would not be as they are today. A few weeks ago in my local newspaper, the Meath Chronicle, there was a heading: “54 New Jobs in County Meath”. This announcement was made by the former Minister, Deputy Bruton, at a Fine Gael meeting. It was announced as a great boost for County Meath. Let me remind the Minister in the House of the situation in my county with regard to unemployment. Since November 1982, when this Government took office, unemployment in Trim has increased by 100 per cent, in Kells by 60 per cent and in Navan by 30 per cent.
The Government do not appear to be interested in or to understand the importance of Drogheda harbour to the trade and commerce of Counties Meath and Louth and other areas. Cement Limited are only a few miles away and they and others could benefit greatly if harbour facilities were available. Instead, for the first time in the history of Cement Limited workers are let go because of high production costs and decreasing business. I am glad to say that when Fianna Fáil were in Government, the then Minister, Deputy Faulkner, gave a sum of £1.5 million for Drogheda Harbour Board. That has not been matched to date.
People involved in the furniture and carpet business in County Meath are struggling under severe trade difficulties. Again, I ask the Minister to reduce VAT in this area in order to help these hardworking and responsible business people to maintain employment. Otherwise, there will be more unemployment in County Meath. We must create more jobs if we are even to maintain the present services let alone provide the additional services demanded. We cannot create more administration if we do not increase productivity.
There has been little or no unemployment in the public sector. Most, if not all, of the unemployment in the past three years has occurred in the industrial and agricultural areas. How can we expect people to pay their way if they are unemployed? Employment is the key that will allow people to pay mortgages, local authority charges and so on. It is the key to success. I am convinced our system of taxation is seriously affecting the creation of employment. We must find some way to reduce taxation for those who may be in a position to create employment. I doubt if any tax will be lost to the Revenue and even if there was some loss at least there would be more people at work.
The 35 per cent retention tax is the major new feature of this year's budget and it will net an extra £75 million in taxation. The banks and financial institutions will certainly pass on these charges to their customers. It is they, the customers, who will have to pay. It also means that the Government will collect two years' income in one year. It is most likely that bank interest rates and building society mortgage rates will increase.
Many old age pensioners will now have to pay tax on interest income which was not taxable until now and they will not be able to claim back this tax. This cannot be accepted and I am surprised and disappointed that the Minister should have gone to this level to balance the books. Childrens' savings accounts will also be subject to this tax of 35 per cent. People who are taxable at a higher rate than the standard rate will now have to pay the difference between the two rates. It is likely that there will be higher life insurance premiums and building societies will either increase their mortgage interest rates or decrease their deposit rates. Many insurance companies will find it much more difficult to remain in business. This decision will cause much uncertainty and unrest in the financial agency business. People who invest redundancy money will also be subject to this 35 per cent tax. Other groups who will be affected by it are community organisations, group water schemes, fund raising enterprises for charity such as Concern and Trócaire, young couples saving to get married who put their money in deposit accounts, residential groups trying to improve the environments of housing estates. Environmental improvement groups will also be affected. This new tax will slow down the initiative of many voluntary groups in local community development and other worthwhile enterprises.
However, certain aspects of this new tax may be acceptable but I recommend that the Minister should reconsider his full proposals. If he does not, he will cause much unrest and uncertainty among our people. It is strange that the former Minister for Finance thought it wise to exempt non-residents from this tax because he knew there was a grave danger of mass withdrawals of money. Yet he is not worried if our own investors choose to invest outside the country, which I believe many will do.
The Minister will collect £15 million extra on petrol and diesel tax and £4.7 million extra in road tax. At the same time Meath County Council and other local authorities are getting less and less revenue from central Government. The county roads in County Meath are falling asunder and a crisis situation has now been reached. It is impossible to ask people to pay more tax at local level. With great financial effort and co-operation from the people, Meath County Council are maintaining all other services but it is not possible without Government aid to make a realistic start on improving our country roads. Our engineers are doing their very best with limited resources. I suggest that a percentage of the grants for national primary and national secondary roads should be allotted for spending on county roads or otherwise a special grant should be made for the improvement of county roads. I ask the Minister to give serious consideration to my request.
Agriculture was badly treated in the budget also because less money was provided for development in this area. Agriculture is facing many problems and it is important that the Government should encourage productivity. It appears that the Coalition Government are saying to the farmers that they are not interested in them. No real effort is being made to develop a national food processing enterprise. We have been in the EC for many years but we have made very slow progress in the area of promoting and marketing our agricultural goods. The opportunities are still there but the Government do not appear to have the ability to motivate our farming community to rise to the challenge. Instead this budget provides £5 million less for the expansion of our cattle breeding herd, the base of our great industry. The scheme for payments under the exchange rate as guarantees on loans, used by farmers to produce beef cattle, mainly on the grass, has been abolished. It was £10.6 million last year but only £0.6 million. This is the Coalition Government's agricultural policy and they should be ashamed of it.
This Coalition have failed the people who elected them. One might say they are doing their best but if that is so their best is certainly not good enough. The people are saying the same. Let us look at the record of the Government over the past three years. Trade and commerce have slowed down; investment has slowed down; capital spending has become less and less; unemployment, taxation and emigration are increasing; so, too, is the national debt. The construction industry has almost come to a halt. The Coalition Government may not be aware of it but the people definitely are and I am certain that the Coalition will be fully aware of it after the next general election.
A lot of water has gone under the bridge since this debate started. The temptation has been on the Government side to justify their performance for the last three years and, of course, on the Opposite side to knock it completely. In order to find the true path forward, which neither side seems to do very often, it is necessary to state bluntly and clearly the problems we have had to date, the position we are in at the moment and the prospects of getting out of it. Everybody seems to be short on ideas on how to get out of it.
There are several serious problems affecting the country. The first and most serious is the job situation. The second is taxation and the third is emigration. It is fair to say that everybody has thrown a hat at the first and the third but cannot seem to come up with constructive, worthwhile solutions. They seem to feel that by ignoring the emigration problem it will go away, except when the Opposition find it very useful to use it as a stick with which to beat the Government. They conveniently forget it when they themselves are in Government. Emigration has been with us for a long time and the history of both parties in Government will show that while emigration was rampant no attempt was made to stop it. It was conveniently forgotten.
It must be said in fairness that in the seventies the leaders repeatedly bragged about the young, vibrant population we had and they constantly referred to it as our greatest asset. In recent years we hear not a word about it because they have in truth become our greatest liability and we just do not want to do anything about it. It is totally dishonest to ignore a problem of such serious dimensions and not even to say that it is there and we do not know how to tackle it, and not even to ask for suggestions so that we might tackle it and hope that eventually it will work its way out.
Also it must be totally frustrating for those people in Opposition and on the back benches on the Government side to have ideas or suggestions to make in relation to these problems and not to have them even heard. I doubt if any attention at all will be paid to the speeches that have been made by Members in this debate and not often are they paid attention on other debates. The advice seems to be got from outside and we seem to rely more and more on theoretic, academic economic advice from people who seem to be the gurus in this country. You find them in every Department and at every level of Government working out what they seem to think is the answer to our problems and if we are all patient enough and are prepared to wait for another decade, at least ten if not 20 years, it will work its way out again. Then we will be a very depleted population resembling somewhat the population we had in the late sixties after a constant outflow of our young people, all the vitality of the nation spread throughout the world, and they seemed to do reasonably well for themselves abroad. I will come back to that.
I am aware of the problems that led us to where we are at the moment. I know that in the last two years there has been a rapid reduction in inflation, in rates of interest and in the growth of unemployment. That is what we are reduced to now, the reduction in the growth of unemployment. There has been no increase in employment but there has been a reduction in growth. There has been improvement in expenditure control on capital and current account and an improvement in the balance of payments. These are all accepted. We know the extent of the crisis that faced us when we came in which is not to be ignored and to put things into context it must also be referred to. We know that there was economic stagnation and no activity; we even had a decline in that area. Real GNP was falling and manufacturing production had declined for two of the previous three years before we came in. Unemployment was spiralling upwards. The balance of payments situation was frightening and the cumulative deficits over the four years to 1982 amounted to half of our total annual production. Inflation was rampant, well over 20 per cent, and the value of money had been halved in less than five years. Our international competitiveness was being seriously and relentlessly eroded. We had an imbalance in the public finances which seemed to have taken on a permanent character with the EBR at 16 per cent of GNP and interest rates at exorbitant levels putting impossible strains on the financial position of business, farmers and the ordinary individual. That situation confronted us as we started out. Now we have four budgets, including this one, behind us in attempting to deal with it.
The Minister will say that he has confronted the reality of the situation and given an honest assessment of it and that he has faced up to the difficult decisions needed to put the economy on a sound footing again. He will say that he has confronted head on the real problems of the economy, namely the creation of sustainable employment, the control of inflation, the restoration of our international competitiveness, the correction of the public finances and the reduction of borrowing. That is fair, because he has done those things and it was not an easy task to accomplish, given how near we were to bankruptcy when this Government came into office and that the tasks that had to be undertaken were not universally popular. To give credit where credit is due, substantial progress has been made in taxation and budgetary policies and control has been restored over the management of the annual budget. The deterioration in the public finances has been halted and Exchequer borrowing requirements and the public sector borrowing requirement as a proportion of GNP have been reduced. We are now getting to grips with taxation and we have seen the first small step along that way.
We still face enormous problems and we will not easily satisfy the people who are at the butt end of them. Much more needs to be done and we hope that we can set about doing it and give some indications and make some suggestions as to how that might be done. The Minister for Justice, then Minister for Finance, said recently that the primary aim of the Government's economic policies is to refer upwards the trend in unemployment, and that depends among other things on the rate of economic expansion. He said that faster growth creates more job opportunities and helps to reduce the budget deficit because it boosts tax receipts and reduces expenditure commitment. We had a good growth performance last year, probably the best in Europe, which was against the odds. We realise that there has been a tremendous increase in the number of people unemployed even though we started off at the end of 1982 with 180,000 people out of work, and that was more than double the number five years before that, and unemployment was rising at almost 40,000 per year then. This is not the fault of the Opposition. It is the fault of all of us. At least the total problem is not the Opposition's fault. There are contributory factors to that on both sides. We should accept that and then look for a way out, a way that can be supported by all parties and all sections of the community. That way out should be laid out very clearly over a given period of time and all sections of the community should be asked to support it.
The Minister has said that he appreciates fully the wide range of influences that affect employment here and, while that is genuine, the flaw is that he and other Members went on to say that they wanted to talk about the annual increase in the number of unemployed. They spoke about how this had moderated and that there are not so many out of work as had been last year. However, there are still 240,000 unemployed. The problem is that people cannot wait around for that improvement to take place. In the meantime they are being crucified, hammered and suffering unbelievable hardship. It is a commonly held belief of economists that it would take a considerable time to turn the tide on unemployment.
Two approaches have been taken to the solution of unemployment. One is the payment of unemployment benefit and the second the creation of training schemes such as those provided by Manpower, CERT, ACOT and the VECs. Much mention has been made of that and many thousands have been absorbed into these schemes. The numbers engaged in special employment training schemes under the Youth Employment Agency grew from 33,000 in 1982 to about 53,000 in 1984 and increased again last year. Among the long term unemployed, there was the social employment scheme which was to provide part time work for one year for those who had been unemployed for over a year and that absorbed 4,000 people. Then there was the enterprise allowance scheme designed to assist the unemployed to start their own businesses and that absorbed 4,500 people. That is about the extent of employment creation or absorption of long term unemployed and young unemployed that we were able to manage.
In the autumn of 1985 in order to boost the construction sector there were announcements such as that the Custom House-dockside area was was being designated for a major redevelopment programme and a wide range of incentives were being made available to stimulate investment in construction. There was also the institution of an additional programme of inner city development and reconstruction in Dublin city by designating specific areas of the city and making a wide range of incentives available there. That was also done in Cork and Limerick. It will be countered that these were not desperation measures but they were necessary measures and were the least that could be expected, given the awful plight of many people. There was the introduction of home improvement grants and of a programme of improved community and leisure facilities and other general amenities to develop much needed facilities, principally in urban areas. There were also special grants of up to £30,000 to develop better facilities in hotels and guesthouses, £2 million being made available for this. We had the accelerated development of the national gas grid and the doubling of the number of new employed eligible for aid under the employment incentive scheme. Then we had the introduction of a scheme of exemption from PRSI contributions by employers for the tax year 1986-87 in respect of additional employees taken on by any private employer between now and 31 March.
All these schemes are regarded by the Government as imaginative initiatives, wide ranging and a tangible response to the unemployment situation, designed to boost private sector job creation particularly in the construction sector. My point, sir, with the greatest of respect and in all sincerity, is that, even including the great success of the local authorities' tenants purchase scheme, they are not wide ranging or imaginative enough. They really only are keeping at bay the dissatisfaction felt throughout the country. This is borne out by the improvements in the welfare payments which have been made over the past three budgets. Long term welfare recipients have obtained compound increases in benefit amounting to 27.6 per cent and those on short term welfare benefits got an increase of 24.8 per cent. The long term unemployed got an increase of 32.8 per cent.
The Taoiseach has said that we are unique in Europe in that not only have we maintained the value of welfare payments during the present recession but have actually improved them in real terms, so that we have honoured our commitments to the people concerned. But that is the minimum that would have been acceptable to people who are about to scream for help. Really imaginative job creation programmes are needed now and that is what is missing. I have not heard anybody come up with solutions. To put things in their proper perspective, in Dublin, which has at least one-third of the population, we had a student population of 47,000 in 1975 and it is 74,000 in 1983. There is a very heavy concentration in the 15 to 24 years age group. There is a 17½per cent rate of unemployment in Dublin compared with 14 per cent in the rest of the country. There has been a very large increase in the services sector since 1979.
We have great imbalances in our society. In part of my own constituency of Ballyfermot, for example, there are 2 per cent self-employed, compared with 11 per cent self-employed in Dún Laoghaire. There are 21 per cent unemployed among surveyed heads of households in Dublin. Ballymun has an unemployment rate of 39 per cent, Finglas 25 per cent, Coolock 10 per cent, Ballyfermot 20 per cent, Crumlin 50 per cent among heads of households. In part of Clondalkin the figure is 60 per cent unemployed. In very tiny sectors one can get even as high as a 76 per cent unemployment rate.
The Greater Dublin area has a total labour force of 446,535 according to the 1981 census. The two main approaches to unemployment have been payment of unemployment compensation and benefits and the creation of special agencies. These have been created to redress the problem of unemployment, but they are not really solving that problem. The vast sums of money spent in those areas can be only a temporary measure because we are only playing around with the problem. Many have criticised this approach, saying that we are training people for jobs that are not there. Dublin has the fastest growing population and is one of the few cities in north-west Europe developing at such a rapid rate.
I do not think we have tackled unemployment in a realistic way — I am not sure if we know how to tackle it. The latest answer of the IDA was to come up with what is called linkage, a term used in the high technology industry. It may work, but only to a certain extent. I might add that the IDA were away behind when they concentrated on multinational companies throughout the years and overlooked the importance of small businesses. I was criticised bitterly for attacking them four years ago in this repect. I pointed out that in America 20 per cent of industry was composed of small businesses, and Harold Wilson, as British Prime Minister, was looking in that direction. The multinationals have been and gone, leaving a haemorrhage behind them which sacrified thousands of our young people, firms like Ferenka, Mostek and others. We should have been concentrating on building up our small business sector much earlier.
I am trying to impress on the Government — I suppose I am only impressing on myself — how big the problem of unemployment is and what some of the answers might be. This is the first time since the Famine when we have had our total population together, the young, the old and the people in between. In the meantime we have had emigration throughout the years, even since the foundation of the State. We ended up with very few ideas after our experience of the first two decades of independence.
Earlier in the century we did not have many young people coming up, and if a person were under 60 years he was unlikely to get the top job on a company board. One had to be close to retirement before one was taken cognisance of. Therefore, there was emigration. In the fifties we were losing about 40,000 people a year through emigration, about half a million in ten years. In the sixties the emigration rate was 20,000 a year.
Recently I heard different people in the House saying that emigration was good, that it should be encouraged because people would go away, get experience and use that experience for the benefit of the country when they returned. I was about to say that is a lie, but it was noted here already——
You did not say it.
I will say it is a myth. Encouraging emigration is a theme of the upper middle class who think about their sons and daughters going away for a few years to spend their time with uncles, have a period abroad paid for, and then return and settle down here. I would point out that those who need to emigrate do not come back, and it is easy to see why. They go to live in a different country, in different enviornments, they enter into personal relationships, probably get married and have careers. Few of them, as few as 1 per cent, come back at all. We have a highly educated young population coming out of our universities but we still have the dreadful points system in our education system and we know that only the sons and daughters of the professional classes or of the well off get into the universities. We have a terrible imbalance. I have personal experience of it in my constituency. For instance, in Inchicore only 1 per cent of the population get third level education and between 26 per cent and 27 per cent of the population in Saint Patrick's and Mountjoy are from there. In Ballyfermot, again only 1 per cent get a crack at third level education and 17 per cent of the population of Saint Patrick's and Mountjoy come from among them. I should like to have that reversed, and that is why I do a lot of shouting and complaining here — that is why I am so unpopular——
Who said the Deputy is unpopular?
This side.
So the Deputy is unpopular.
If one is liberal or conservative he is unpopular. Emigration does great damage to a nation. Indeed, we have no right to call ourselves a nation if we cannot give career opportunities and proper education to our young people. This is the challenge, the test, of ourselves as a nation, of whether we are fit to rule ourselves. Some people would like us to take on more than we have now, but to allow emigration to become a sluice gate as in the fifties and sixties would be a recurrence of earlier tragedy. That was the position until the late Seán Lemass redressed the position. It was not an answer to our problems.
It is not acceptable to have teams of economists saying they have it all worked out in regard to expenditure being brought under control, and the balance of payments and our deficit. Of course if they sit there it might all come right in 20 years. Those people claim that everybody else is thinking of short term solutions, but I am afraid they themselves do not think very far ahead. I do not think they will be there when solutions are found.
We must come up with schemes that are imaginative and courageous if we are to absorb our many young people in work. We have seen our capital city crumbling around us. It is in tatters but nothing is being done about it — we have no solution. It does not matter which way you dickie around with PRSI or with businesses, asking them to take on more people. It will not even being to address the size of the problem we have, 250,000 unemployed. We need to put tens of thousands of people back to work. The IDA who now occupy a new office building along the canal which cost £26 million are full of people who do not know how to create jobs. That organisation stopped announcing their job creation figures some years ago. On the last occasion they made an announcement — we were told 18,000 jobs had been created in that year — their figure was out by about 8,000. Later that body announced jobs in a cluster. We were told that 50 jobs were created in a country or 150 jobs between seven different countries. That does not amount to job creation.
We have an opportunity to create employment in the country's biggest centre of population, Dublin. Dublin should not be considered merely as a city on the east coast with a population of 1.5 million. It should be considered as a city in the midst of 60 million taking into consideration the islands of Britain and Ireland. The objective should be to turn it into the jewel of these islands, the most attractive city, a shopping-entertainment Mecca that can attract thousands of people for entertainment and shopping. We should be trying to attract tourists from every centre from Glasgow to London.
That is not a wild dream because such a project proved very successful in cities in North America. Those cities created over 50,000 jobs by such projects. If we had a link between Bord Fáilte, the hotels federation, Aer Lingus and the business and entertainment element, we could put together a package that would attract people from British cities to Dublin for a two or three day stay or a long weekend. If they had a longer holiday they could be enticed to visit areas such as Shannon, Cork or Knock. They need not necessarily use Dublin Airport and could use the smaller airports around the country. Some people may forget that the best tourists and spenders prior to the troubles were the British. One difficulty in attracting those people to Ireland again is the fares structure between London and Dublin operated by Aer Lingus and BA. It may be very laudable to help Aer Lingus — they have been an enormously successful company in recent years — but if that is done to the detriment of our economy or the business sector it is not a good policy to pursue.
Mention was made of that in the course of the debate on the Air Transport Bill. The contributions of Deputy O'Malley on that Bill were berated while my own were pilloried because I dared to mention certain things. I was pilloried also for daring to criticise the sacred cow, the IDA. However, we must realise that there is no way we can persuade people who can travel from London to Amsterdam for £45 to come to Dublin for £99 or £120.
I understand that some Dublin hotels offer package deals operating from Belfast for £29 for stays in hotels like the Gresham. While I accept that many of the steps taken by the Government in regard to the economy were necessary, it appears that we are now throwing up our hands and saying that we cannot do any more, that we must wait until things come right. That will not happen. We must remember that people point to our high VAT charges and the high charges all round. We are not allowing businesses to use their skills and experience to take advantage of projects such as I outlined. The work being undertaken by Irish businesses, at present could be increased with very little encouragement.
I have no doubt that we could attract tens of thousands of tourists to Dublin if we built up the city using EC grants. Our aim should be to turn Dublin into a tourist, shopping and entertainment centre. We should build a big complex in downtown Dublin to house sporting events or big concerts. Such events would fill our hotels and public houses where young people would be employed. A lot of money would be spent on the construction of such a complex and more employment would be created in glazing, joinery, with builders suppliers and so on. We need something big and imaginative in Dublin. That work could be carried out in conjunction with the programme outlined by CIE for a major bus station in the centre of the city. Taken in conjuction with the tax incentives announced by the Taoiseach for work carried out along the Liffey up to Mountjoy Square those projects would create a great deal of employment.
I do not think we have come up with a new method of employing the huge number that need to be employed. We need jobs for up to 50,000 people and, unless we produce an imaginative plan to do that, we are wasting our time and creating tremendous dissatisfaction among our young people. We must remember that in the fifties those who emigrated were to a great extent uneducated but those who are unemployed now are more articulate. If they have any sense they will not stand for this. I do not see why fathers and mothers should have to watch their children emigrate. I do not see why our people should tolerate failure to the extent that there are not employment outlets for their children. I would love an opportunity to be able to present employment schemes to the Minister and the Government.
The only plea I would make, and it is one I have made here on many other occasions, is that they would give us the opportunity to make those presentations, that they would listen to our ideas. Because the Finance portfolio is such a senior and critical one, it behoves the Minister, and the other Ministers too, to listen to what others have to say. One often gets the impression that when people are appointed to these positions they get the ideas that they are the only ones who have any contribution to make to the national economy thereby excluding specifically in that context other Members of the House. I do not know whether this stems from a fear of rivalry. Cabinets are chosen for many different reasons. There are many different elements involved in the selection of a Cabinet. The members are chosen on the basis of ability, of geographical consideration and of inside track as well as other factors.
It would be impossible to include in a Cabinet everybody who sits on the Government benches but very often we hear expressions of dissatisfaction from backbenchers on all sides of the House; regardless of who is in Government. This is because as backbenchers they do not have the means of putting forward their ideas on behalf of constituents. Therefore, we are left in the position of depending on the Ministers who make up the Cabinet. This is by no means intended to be an implied criticism. It is an actual criticism and one that I think I am entitled to make after four years of sacrifice on these benches during which time I have not been given the opportunity of contributing whatever little I may have to contribute. We must sit down together and face this problem and the Minister and his predecessor must be prepared to recognise that we do not have any coherent plan that would result in a solution to our huge unemployment problem. During the past few years I have listened carefully to the various suggestions that have been put forward from all sources and I have not been able to detect any sign of any such plan.
It is disturbing that the growth in emigration is being ignored in the way in which it was ignored in the fifties. If the Minister has not done so already, he might begin by reading John Healy's book which was serialised in The Irish Times in 1967 and which was entitled, No One Shouted Stop. He was writing about the emigration of the fifties. At that time there was a level of emigration that was nothing short of a national calamity and scandal. We should be courageous enough to face up to the full extent of today's emigration problem. We should be prepared to say that we realise the problem exists and even to give a breakdown of the various categories of people who are about to leave us. We should say that we are not in a position to do anything about the matter but that we are prepared to listen to anyone who has any concrete suggestions in regard to keeping our people together. Otherwise, we are doing a disservice to everyone in the community who ticks a ballot paper or even those who in annoyance do not bother to vote.
I trust that the contributions that are made in the Minister's absence from the House will be brought to his attention and that he will not be like a Minister I overheard once saying that he does not bother reading the speeches made here because they will be summarised anyway in the newspapers.
I should like to conclude on the remarks I made about unemployment especially in the Dublin area where up to 20,000 or 30,000 jobs could be created. Dublin has the fastest growing population and is one of the few cities in north-west Europe developing at such a rapid rate. The inner city suffers from extreme blight, described as rotting at the heart with decay just where everyone can see it. The urban sprawl has created major infrastructural problems. Unemployment is higher in Dublin than anywhere else in Ireland with particular acute levels prevailing in the inner city. Many of the suburban estates have a prevalence of social and economic conditions reminiscent of those constituting the inner city problem — high unemployment rates, low levels of skill attainment, large families and overcrowed dwellings.
Rapid urbanisation and social change have been accompanied by a sustained increase in criminal activity, most of which is concentrated in Dublin and in the inner city in particular. Indeed the current crime problem is described by some as more of a drugs problem. Young people are most vulnerable to exploitation by the increasing sophistication of the drugs industry. The economic, social and personal cost of alcohol and drug abuse range from health damage, through family and marriage break-up, to criminal involvement and absenteeism.
The circularity of the problems encountered in Dublin and especially in the inner city draws attention to the areas of poor housing, unemployment, illiteracy, drug and alcohol abuse, crime and violence as well as environmental and cultural deprivation.
Injection of finance and resources into these areas in a piecemeal way has proved ineffective. Resolution of the problems calls for an integrated plan to concentrate national and community resources in the most effective and dynamic way.
I do not know whether my experience is shared by other Deputies but increasingly I am encountering very high levels of poverty in some estates. I am encountering cases of children being fed on bread and butter alone in instances where the fathers are on the long time unemployment list and in many cases where the home is broken with the mothers being left with up to six children to rear on very small amounts of money. People in such circumstances cannot make ends meet. It behoves us not just to take a chance but to do something totally dramatic in order to deal with the unemployment problem and that would not be even touching the tax area. If there is anything worse than paying high taxation it is to be out of work. Apart from the effort in the budget to deal with the abuses of the social welfare system, there are many people who are much more miserable than are those who are paying too much by way of taxation. I am talking about those people who are humiliated and who consider there is some stigma attaching to them by reason of being unemployed.
The Minister may have to consider providing financial support in many cases for marriages. I say this because of the many children who are suffering, because of the strain on marriages, the number of broken homes and the total destruction of confidence among the people, factors that are brought about mostly by unemployment. We have to do something about that and the only thing we can do is to create jobs on a massive scale. Job creation is the one area which we are ignoring and skimming over. The city plan about which I talked should be seriously considered.
I do not like some of the things which the Government will attempt to do during the year and I intend to try to talk some sense to the Government especially in relation to the proposal to introduce a national lottery in July next. Such a move would be a backward step, in effect a tax on the poor.
The Deputy has five minutes to conclude.
When the Minister comes up against problems like the teachers' pay dispute and the closure of Carysfort College he should remember that the Cabinet introduced emergency legislation to legalise gaming or swindling machines which up to now have been illegal. It is still not intended to introduce emergency legislation to ban these machines despite the proposal of the city council and Dublin County Council. This is an absolute disgrace. A fraction of the earnings of these illegal operators, if they even paid tax, would pay the total wage increase demanded by the teachers. The budget has concentrated heavily on curbing abuses in the social welfare system and the tax code. I do not understand why they have not gone after gaming machine operators. In case it is not known most of the people operating these businesses are graduates of massage parlours from Northern Ireland who have come down here and made fortunes out of the poor people. That is the kind of lobby that has been successful in getting emergency legislation introduced here. Every day that goes by without action on the part of the Government to ban gaming machines is another day of shame on the Government.
Acting Chairman
The Deputy is getting away from the debate.
The Government's solutions for unemployment bear out my points. The solutions to unemployment apparently are social welfare benefits and training schemes. Of course, we are geting the finances corrected and are keeping expenditure down but nobody has come up with a massive job creating programme. If we want to save the country from depletion of our young people we must face the unemployment problem. I would like an opportunity to present employment schemes to the Government. The Minister should look to other countries where employment schemes have been successful. We will have failed as a nation if we cannot employ our young population. We should sort out this problem so that we can stand up with our heads high as one of the successful nations of the world, fit to govern ourselves.
A budget has been described as a mathematical reflection of a plan. A plan is the predetermination of a course of action, a course of action designed to attain some goal or address some problem. The major problem confronting us is the spectre of unemployment. This budget, similar to previous budgets of this unbelievably incompetent administration, does not reflect a plan, not even the plan they adopted in Building on Reality. To all intents and purposes that has been abandoned. This budget is another ad hoc, finger-in-the-dyke reaction to a progressively deteriorating economy, fuelled by a Government bankrupt of ideas and mesmerised by their total inadequacy. Worse, since this budget was introduced three weeks ago the finger in the dyke, being Deputy Dukes as Minister for Finance, has been changed. I am in the very awkward position of addressing a budget when the man who introduced it has been recognised by the Taoiseach as being totally inadequate and has been kicked out of his position in the total shambles and panic of what we have had over the last week, the reshuffle of this Government. Panic is the only word to describe it. We have an incredible mess from that reshuffle of last Thursday.
Let us remember last Wednesday and Thursday and put them in context. Last Wednesday, the Taoiseach went to his Fine Gael Party meeting and announced there would be a major restructuring of the Government. On Wednesday night, until about 4 o'clock in the morning, the Taoiseach tried to move the Minister for Health, a Minister responsible for major expenditure in this budget. The Taoiseach could not move the Minister and the Minister for Health is now in effect the Taoiseach. The Taoiseach, not exercising his constitutional prerogative did not move the Minister for Health who said, "I will not go, you must fire me". The Taoiseach did not fire him and we have today a Government being led by a Taoiseach who had neither the guts nor the ability to move the Minister for Health. The Minister for Health today has a veto on the activities of this Government. The Government are not being led by the Taoiseach, are not being assisted by the Tánaiste because he cannot control the Cabinet members of his own party, but are being led by the Minister for Health who proceeds to announce hospital closure after hospital closure.
Leaving aside the position of the Minister for Health the Taoiseach in his statement last Thursday said that in relation to the Ministers of State he had today accepted the resignations of Deputy Joe Bermingham from the office of Minister of State at the Department of Finance, Deputy Michael D'Arcy from office as Minister of State at the Department of Fisheries and Forestry and at the Department of the Gaeltacht, and Deputy Donal Creed from office as Minister of State at the Department of Education. He also stated:
The Government today appointed the following Ministers of State to the Departments mentioned with the responsibilities indicated.
The Taoiseach then listed various names. Today he had to come to this House and tell us that he had misled the House. I quote from his statement:
In the absence of resignations in writing, the Government today terminated the appointments as Minister of State of Deputies Michael D'Arcy and Donal Creed. The appointments of Deputies Enda Kenny and Avril Doyle as Ministers of State, accordingly take effect from today's date. I regret that on Thursday last I informed the House that the two Deputies had resigned.
That is a lie.
On a point of order, is that related to the budget debate now before the House?
Will the Deputy please continue with the budget debate?
The reason I mention these appointments is that the budget puts into effect the Book of Estimates and gives the necessary funding and a Minister and a Minister of State carry responsibility for the moneys voted. It is in the context of that responsibility that I wish to raise some questions.
In his announcement to the House last Thursday the Taoiseach said he accepted the resignations of the three Ministers of State. That now turns out to be untrue. In relation to two, if not three, Ministers he said:
The Government today appointed the following Ministers of State to the Departments mentioned with the responsibilities indicated.
I wish to ask a few questions and perhaps the Minister of State present would pass them on to the Taoiseach. I wish to know if there was a meeting of the Government last Thursday. Secondly, since the Taoiseach's announcement last Thursday in relation to the appointment of the three new Ministers of State clearly implied that the appointments took effect from that date and since he has just told us today that the appointments of Deputies Kenny and Doyle take effect from today, is he saying that Deputies D'Arcy and Creed held office until today? Did Deputies Kenny and Doyle take up their duties on Friday last, even though the Taoiseach now tells us that their appointments took effect from today? If Deputies Kenny and Doyle took up their duties last Friday, will the Taoiseach tell the House the nature of the official duties carried on by them since last Friday?
This is very important in the context of the budget because Deputies Kenny and Doyle have responsibilities as Ministers of State for the allocation of funds and the signing of Government orders. Did those Deputies sign any official documents since last Friday that would have committed their Departments to expenditure of sums shown in the Book of Estimates? If so, under what authority did they do that? Will the Taoiseach now correct the situation with regard to any such expenditure? What official orders were signed and what decisions were taken by Deputies Kenny and Doyle? I do not in any way cast imputations on the two Ministers involved. I congratulate them on their appointments and I am not in any way critical of them. I am critical of a Taoiseach who made a shambles of a reshuffle in a panic response to the opinion polls.
On a point of order, I do not think the Deputy is making any attempt to speak to the motion before the House. The Chair has a responsibility to ensure that he speaks to the motion. What he is saying now he can say in the debate on the no confidence motion that his party have put down on Thursday and Friday. It is unfair on others who wish to make a contribution on the budget that the matter should be dealt with in this way by the Deputy.
Acting Chairman
I ask the Deputy to speak on the budget debate.
I will talk about the Office of Public Works which comes under the Department of Finance and I will deal with Vote 10 which deals with Public Works and Buildings. I should like to know about the role of Deputy Doyle in regard to the Estimate. Did she sign any order spending any of the money voted under the President's household allowance, consultancy services, new works, maintenance, furniture, rents, fuel, light, water or arterial drainage? Did she sign any orders on Friday last, after apparently having been given authority on Thursday by the Taoiseach? At what meeting was that authority given? Last Thursday the Taoiseach told us that the Government had appointed the following Ministers of State.
On a point of order, what has this got to do with the budget?
I question if a Government meeting ever took place. If it did they made a mess of it.
Acting Chairman
I should like the Deputy to continue with the budget debate. I ask him not to go into so much detail.
On a point of order, that is the third time the Chair has said that to the Deputy. Does he realise how he has sounded in the past 15 minutes? He has not been dealing with the budget. He has been dealing with the reshuffle which is far more appropriate for the debate next Thursday and Friday.
The Deputy does not appear to have any intention of speaking to the motion. He wants to dig up muck.
What he is saying is factual.
We can dig up plenty of muck.
I am quoting the Taoiseach. In the absence of written resignations he had to come here and terminate the appointments of Deputies Creed and D'Arcy. I am merely asking under what legal authority Deputies Kenny and Doyle operated on Friday and yesterday. I want to know if Deputies Creed and D'Arcy had the power to work in the Department on last Friday and Monday? Apparently it is an embarrassment to the Deputies opposite. Perhaps if the Minister of State had not lost her telephone numbers a Cabinet reshuffle might not have been necessary. It was a panic reaction by the Taoiseach to the opinion polls and even that he could not get right. I wonder in what hall in Madame Tussauds he will be put: will it be the Hall of Rogues or the House of Horrors?
I should like to quote a speech made by the Taoiseach on 7 February 1985 when he was dealing with the 1985 budget. He said:
The budget itself represents a watershed. It marks the end of the period of rising taxation and falling living standards forced on our people by the need to pay belatedly for the vast increase in public spending that occurred between 1977 and 1981 and which has now been brought to a halt.
He continued:
The fall in employment is now being halted. It will take some time before rising employment, aided by this Government's special employment measures, succeed in providing sufficient extra jobs to cater for the whole of the annual increase in the labour force. We are now within sight of a reversal of the rise of unemployment which was launched by the disastrous policies of Fianna Fáil.
On employment he stated:
These facts need to be emphasised to counter the gloom being spread by Opposition speakers, whose exaggeration of what is certainly still an unhappy employment situation is spreading despondency among our people ...
The Taoiseach went on to say in his budget speech last year:
The point I want to revert to is that this Government have brought our country successfully through the crisis we inherited in 1981 — not, of course, that this crisis has been resolved but it has been brought under control.
A year later we have 240,000 unemployed. The Taoiseach continued:
No longer do people have to fear that every budget will bring a further increase in an intolerable burden of taxation.
We know what happened after the 1985 budget. He went on to say that no longer do they have to watch employment falling and unemployment accelerating out of control. I would remind the Minister of State and Deputies opposite exactly what has happened during the past 12 months.
The Taoiseach continued:
The restoration of control is evidenced most clearly by our success in bringing the current budget deficit into line with budget projections.
Even the Taoiseach does not believe that any more. We know that he is a very trusting man. He said earlier that he was at a Government meeting on Thursday but the country at large knows that there was no Government meeting on Thursday. He just ran in here with a list of changes.
The Taoiseach also said that he and his Government had at a stroke rationalised and simplified the tax system in respect of income tax and VAT.
A stroke indeed.
(Interruptions.)
He then referred to the resolution of the hitherto intractable problem of devising a system of farmer taxation which will be simple and fair in its application and will yield from that community an equitable contribution to the total burden of taxation.
(Interruptions.)
Acting Chairman
Allow Deputy Burke to continue.
They are very sensitive if one criticises the Taoiseach and the Government. I do not blame them really. They defend their Government one day but the Government are changed the next day. Then the Taoiseach has to come in and say he is sorry, he did not get it right the first time but will come back and get it right this time. He is sorry he misled the House.
(Interruptions.)
We will not stab him in the back like your men.
Donal Creed called his own Taoiseach a liar yesterday in the Cork Examiner.
Acting Chairman
Allow Deputy Burke to continue. I want order.
The Taoiseach's speech on last years budget continues:
This budget contains many other provisions which reflect the sensitivity of the Government to the many and varied needs of our society, needs which must be recognised and catered for even in a period of economic difficulty.
We know the recognition the Taoiseach gives to the many problems of the unemployed, social welfare recipients and taxpayers.
What would the Deputy propose to do?
He referred to drastic simplification of the income tax code in the budget. He simply increased income tax from a 1984 outturn of £1,966 million to £2,131 million and the actual outturn for the year was £2,103 million. He simply increased the lot. This speech, together with the Taoiseach's announcement last Thursday and his retraction today, should go into the annals of political somersaults. He continued his speech as follows:
Now that this Government, having broken the back of the problem left to them by their predecessors, have been able in the national plan, ...
(Interruptions.)
Acting Chairman
Allow Deputy Burke to continue.
Take your medicine. It is like backing a horse in Cheltenham that falls at the last fence. The general election is coming. The Government cannot wait any longer than next year. They will have to face the people and Deputy Dowling will be dragged before them. No matter how much he may bluster in this House, no matter how often the Taoiseach misleads this House, they will not be able to avoid meeting the general public at the ballot box and there they will get their answer. I will resume my quotation from the Taoiseach's speech:
Now that this Government, having broken the back of the problem left to them by their predecessors, have been able in the national plan and in this budget to launch the process of recovery, Fianna Fáil have been floundering in their own ineptitude.
The people made their decision on that in the local elections. The Taoiseach is a man for quotable quotes:
After three successive budgets of a radical and imaginative kind, after three years of low inflation rates and of rising employment, with unemployment beginning to fall again as the special measures being introduced by the Government begin to take effect, the electorate in 1987 will respond to good government and to bad opposition.
I have no doubt that in 1987 the people will respond to the sort of Government they have been getting.
(Interruptions.)
If we have a Minister of State who cannot even hold on to her handbag, she should not be interrupting. The killing level of unemployment is such that it poses a grave threat to social stability. Our trusting, young, well-educated body of unemployed provide all the ingredients of a social time bomb and finding solutions to this dreadful social cancer is an urgent priority.
The construction industry is the best avenue for creating jobs rapidly. The multiplier downstream spin-off of activity exceeds that in any other sector. A further advantage is that construction has a very low import content. It contributes to capital formation, social stability and provides a prime social need, shelter. Economists the world over have identified construction, particularly the private housing sector, as the major leadinto-slump indicator; equally they have argued that the sector should be encouraged as the lead-out-of-slump motor, something this Government know nothing about.
I want to say how bad this budget has been for the construction industry. I will use not just my own words but those of the Construction Industry Federation in a letter sent to all Deputies on 30 January this year which states:
Dear Deputy
I would like to advise you of our Federation's acute disappointment that the government has not introduced the range of incentives to boost construction activity which had been proposed by the industry prior to the budget.
The CIF is particularly disappointed that the Minister for Finance did not reduce the level of VAT on construction.
They were referring at the time to Deputy Alan Dukes but he has since changed and we have Deputy John Bruton back in Finance who, with the Minister of State at the Department of the Taoiseach, comprised the winning team which brought this House to a vote which brought that Coalition Government crashing down. I hope they will be as successful on this occasion. The letter from the CIF continued:
The continuing decline experienced by the industry during 1985 which was significantly contributed to by the doubling of the VAT rate in last year's budget will continue to have a negative impact on demand in 1986 particularly in relation to new housing which suffered a 15 per cent decline in new work in 1985. A reversal of last year's VAT increase to a 5 per cent rate would have provided a major boost to construction activity.
Of course, historically this Government——
(Interruptions.)
——have been totally anti the construction industry. Coalitions in the history of this country, on each occasion they have been in power, have brought the construction industry to its knees. They are doing it again and have done it on this occasion.
Let the Deputy explain that.
Let me give the figures for the housing completions.
We never had as many houses as are being built at the moment.
Acting Chairman
Deputy, please let Deputy Burke speak without interruption.
He has trouble finding his notes there.
Let me give the housing completions.
Just an in-fill.
In 1981 there were 28,917 houses built. Of that number 23,236 were in the private sector. In 1982 the figure was 26,798. In 1983 it was 26,138. In 1984 housing completions were 24,944 and in 1985 housing completions were only 23,500, down to 17,000 private houses being built as compared to 1981 when the figure was 23,236. Then they tell us that plenty of houses are being built. The building industry is on its knees as a result of the activities of this Government.
Not at all.
This Government promised certain things with regard to the construction industry in their dismal grey book, Building on Reality 1985-1987. For example they said in relation to roads on page 58 of that document:
The Government have also decided that the economic and social importance of an adequate road network justified accelerated State investment and accordingly State expenditure on road improvements will be as follows over the next three years. ...
It went to 1984 as the base year at £101 million; in 1985, £125 million; 1986, £140 million. What figure is in the Book of Estimates this year? It is £103 million. These are the Government who said that they recognised the economic and social importance of an adequate road network. They also talked about the employment content of that. The quotation continues:
The aggregate provisions for 1985 to 1987 exceed the corresponding provisions contemplated in the 1979 Plan... It is estimated that the proposed level of State expenditure on road improvements and maintenance will result in the following levels of direct employment...
In 1986 we are supposed to have 5,700 people employed in it, but we cannot because the Government have cut their budget provision to £130 million. They have cut down the allocation in their dismal grey book, inadequate as it was.
On local authority housing this book states as follows on page 113:
There is a direct link between local authority rent levels and the size of their housing programme, since low rents inflate the demand for local authority housing, discourage tenants from buying their own houses and worsen the burden of ongoing subsidies. Assuming sufficient progress in relation to rent levels, the Government will:
(a) provide accommodation annually for 9,000 households on waiting lists by building 6,000 new houses a year...
What do we see in this budget with relation to local authority housing? On local authority housing if you were going by the budget plan you would be talking about £210 million approximately but in the budget we have a figure of £178 million. Therefore, what is happening to the promise made in relation to local authority housing construction? Inadequate as it was in this plan, they have even scrapped that to the tune of £25 million or more. They have nearly £30 million less for local authority housing this year than was anticipated in that plan which was published only in the autumn of 1984, and that is from a Government who talk about employment and from a Taoiseach in his speech of February of last year.
Was the local authority housing situation ever better?
In talking about these Estimates let us remember that a budget is supposedly prepared on the basis of accurate Estimates and I want to question the accuracy of some of the Estimates in relation to the Departments, particularly the Department of the Environment. In no way is the money shown in the Book of Estimates adequate to cover the expenditure this Department are committed to in the coming year.
The Deputy's Government never were able to live up to their project or to provide for——
(Interruptions.)
I am sure the Deputy will have an opportunity to speak as a teacher on the whole question of education when he gets around to it and I am sure his colleagues in the teaching profession will be delighted to hear his comments with regard to the whole educational process, the closures of the various teaching establishments, and the reneging by this Government on their arbitration commitments. I have no doubt that he will jump in and be in there defending the Minister for Education on this one. I know the Deputy is out there fighting all the time and he will be delighted to do it. He will be able to attack Gemma now because they got rid of her. She has been shifted sideways. She has a safe job and she is in there now and she is going to make a grand job of it until she starts to fight with somebody in there and has to be shifted again. They have a decent man in there, Deputy Paddy Cooney, and I would like to take the opportunity of congratulating him on his appointment. I know that Deputy Dowling will be delighted to get in and talk about him.
Regarding the accuracy of these Estimates, I want to talk about the local authority housing subsidies. A local authority housing subsidy is a figure not related to the expenditure for 1986. It is directly related to the expenditure in the past number of years, over the years as far as construction is concerned. The investment by a Government in local authority housing over the last number of years results in a simple mathematical sum. You have houses built, therefore so much money is owed in housing subsidy. It does not relate to the houses being built this year. It relates to everything built last year and in previous years. It is a strict mathematical sum and there is no variation in it, there can be no differentiation in it and there can be no argument about it. It is a simple sum. You build so many houses, you owe so much subsidy.
The Book of Estimates before us shows a figure of about £180 million for the housing subsidy to be paid to the authorities for houses that are already constructed. I have gone through these figures very carefully, having been involved in the Department of the Environment and having been a Minister there twice, and to the best of my way of calculating the figure that should be in those Estimates is approximately £205 million. In other words, the figures there are out by about £25 million. I would like the Minister to come in here and correct me if I am wrong on that figure and tell me how I am wrong, but in my view this Estimate has been cooked to the extent of £25 million in local authority housing subsidy alone.
Does that mean ——
Let me come to the water and sewerage subsidy. Again it is a simple sum directly calculable on the basis of investment to date in the provision of local authority water and sewerage projects. This is not in any way connected with work to be done this year. It is related to work already in the ground, such as local authority sewerage and water piping and other projects involved in it. The figure there is without a shadow of a doubt being cooked to the extent of £6 million. There is no doubt that the figure shown is not the accurate figure. It is a serious charge I make and I would like either that I would be corrected in this House or that the figure would be accepted.
Between those two figures, £25 million and £6 million, in the Department of the Environment alone you are talking about over £30 million which I claim in this House on this budget debate should be shown in the Book of Estimates but is not. Those figures have been kept out of the Book of Estimates so the percentage current budget deficit can be kept low, as this Government want it to be.
As far as the reconstruction grants are concerned, the figure shown in this Estimate is totally inadequate to cover the applications received up to and including 7 February of this year of 36,000. There is only £24 million in the budget to cover these. Taking an average of £1,000 per application, for 36,000 applications that would amount to £36 million. I accept that of the 36,000 received so far, perhaps 12,000 will not be approved and that is a large figure. That brings you down to 24,000 applications. At the very conservative average of £1,000 — because some much higher grants will fall to be paid— that will give, for 24,000 applications, £24 million to be paid out this year. That is going on a reply I got in the Dáil this week. If the applications have been coming in at the rate given by the Minister here in the House, there being 150,000 application forms sent out and 36,000 having been received so far, assuming that another 36,000 come back and of that number 12,000 are not accepted, the Minister will be £24 million short by the end of the year on the Estimate shown by the Department. Take just that figure of £24 million or £25 million ——
I would not accept that logic.
That amount short in reconstruction, £20 million short in local authority housing subsidy, £5 million or £6 million short for the sanitary services. One can see the extent of the interference with the due process of an Estimate by the Government. On that basis, no wonder the Taoiseach felt it necessary to move the Minister for Finance. No wonder we have seen the back of the Minister for the Environment, although I wish the man well, he was a decent man in his own way.
The Deputy is very generous.
Property has a long gestation period. It could be five years or more from purchase of a green field to the first house built, during which time the haemorrhage of interest is unceasing. Private enterprise, particularly the construction sector, accept that the Government are unwilling or unable to solve their problems. The minimum role that they are entitled to and demand from Government is that an environment of economic stability and confidence should be created and sustained so that the necessary private investment so urgently required takes place. By contrast with this ideal, the property sector in this little island is so demoralised by the crazy ad hoc changing of the rules of the game by this pathetic Government that the main activity thrust of the large employment generators is now, unfortunately in foreign fields, whether it be Roadstone Cement, McInerney's, Rohan or others.
Is there not a frightening parallel between the 1973-77 administration when Messrs. Tully, Cosgrave and Richie Ryan virtually strangled the construction industry and consequently the economy? Now the present Government have had the massive outflows of capital and enterprise. What kind of Government have we where enterprise is almost socially unacceptable and entrepreneurs in particular, are treated as pariahs or social lepers? It is a Government with a philosophy of pseudo-socialism where it is frequently more profitable to be idle than to work, where an increasing number of people are discouraged from working and resentment is shown to those who do work with an aspiration towards a decent return on their efforts and investment. Some of the unbelievable statistics of the construction industry include that 1986 will be the fourth consecutive year of decline, that there has been a 44 per cent decline in the workforce since 1980, 40 per cent of them now unemployed and a 16 per cent decline in the private house-building sector for the first ten months of 1985vis-à-vis the equivalent period in 1984.
Cement sales, a classic barometer of construction activity, have been declining by 6 per cent to 8 per cent annually for almost five years. Direct public investment in construction will decline yet again by up to 10 per cent in volume in 1986. As I have already said, 1985 sees the new private house completions down to 17,000, compared with 1981 when new house completions stood at 23,000. Construction suffered from the lunatic doubling of VAT on a sector already on its knees. It also suffered from inadequate credit and fiscal policies in the subsector of house construction where all involved — developers, builders, builders' providers and, of course, house purchasers — are uniquely heavy borrowers. More and more small builders are being forced into the black economy with crazy VAT levels, planning charges, arbitrary development levies and a crippling administrative burden of form filling and revenue returns. This savage attack on the one area that traditionally can lead the economy out of a slump is unbelievable — at least it would be unbelievable only that the record of this Government is so well known in that regard.
Let me talk about the record of this Government. In 1982 they came into power on a change of Government and the unemployment figure stood at 170,000, an unacceptably high level. They said at the time — let me remind the House — in relation to their joint programme, on housing:
The Government will aim to raise housing output towards 30,000 a year, with sufficient local authority housing to cater for those who cannot, even with the aid of schemes like the Housing Finance Agency, undertake the purchase of their own dwelling.
Where are the 30,000 houses a year when one considers the figures that I have just given? By coincidence, I happen to have in front of me, on education——
By coincidence?
——the section on education in the Joint Programme for Government of the two parties:
The reform and development of our educational system is essential to this country's future progress in the modern world.
For "reform" read "close down".
In particular, education must be made relevant to the world of work and the nature of a rapidly changing and complex society. Our young people must be trained in the skills necessary to obtain and retain employment, as well as being educated to cope with the demands of modern life.
The demands of modern life for most of these now are trying to retain their places in rapidly closing down training centres.
The Deputy knows that that is not true.
As far as the Labour Party programme was concerned——
The Deputy is making a mistake in drawing attention to it.
You will have your own opportunity, Deputy.
Yes, the Deputy will have his own opportunity. I come back to the unemployment situation which was, in 1982 when we left power, at an unacceptably high level of 170,000. What have we now, in 1986? Over 240,000 people are now unemployed, compared with that 170,000. The 1982 figure for emigration was about 2,000 most of them voluntary emigrants. In 1985 the figure was more than 20,000. This is the brain drain of the eighties. Our young people are becoming disillusioned with the system, yet when Deputy Fahey puts down a question to the Taoiseach, the Taoiseach runs away and leaves it to Deputy Barrett, the Minister of State.
We hear much from the Government about the national debt being under control. They say Fianna Fáil were borrowers and spenders. In 1982 the national debt was £1.28 billion and by the end of 1985 it was £2.04 billion, a two-thirds increase. If we look at the current budget deficit, when we left power in 1982 it was £988 million; but by 1985 it had become £1,284 million, up more than £250 million. And they told us they would get it under control. I remember during the campaigns for the 1981 and 1982 general election I would be asked at every doorstep: "Mr. Burke, will your party get to grips with the current budget deficit?" It had become a cliché. The Taoiseach told the people that the current budget deficit had reached its limits, that it would be eliminated in five years. It has gone up to £1,284 million, and even with their cooking of the books it will be still higher in 1986.
I will look at tax levels. Earlier I quoted the Taoiseach's speech in February of last year on this subject. In 1982 tax was 32.9 per cent of GNP; by 1985 it had gone up to 35.6 per cent. Current expenditure has increased from 47.8 per cent of GNP in 1982 to 48.69 in 1985, gone through the roof because we must look at other figures, like the Department of Posts and Telegraphs.
Of course, the Government have hit other records, like the rate of business closures. In 1984 there were 736 such closures and the Government in 1985 succeeded in closing 932 companies, and rising. The Government were worried about repatriation of profits by the multi-nationals, and so were the Labour Party, and if it were not for Deputy Barry Desmond running the Government the other Labour members might not be there today. However, in 1982 the multinationals repatriated £500 million profits but in 1985 the figure was £1,200 million.
The Department of the Environment are a good example of how the targets in Building on Reality are coming out, particularly in regard to borrowing requirements, budget deficits and all the other wearying figures in that discredited document. The Minister of State, Deputy Nealon, is in the House so I will refer to the local radio Bill. It is not because Deputy Cluskey sits on the third row of the Government benches that we have not seen that Bill since July last year when the Second Stage debate was adjourned. It will not be resumed while this Government are in office.
The Government were not to have any interference in the affairs of semi-State bodies. We had interference in the RTE Authority, the position of the Director General; there was interference in regard to the position of the CBF Director. We do not know where we are in regard to B & I and the Tara-Bula affair. Our foreign debt in 1982 was £5 billion. By 1985 it had reached £8.4 billion.
I will deal with crime statistics. We have record prison suicides, record prison breakouts and prison drug addiction problems. Look at the public service pay bill that was to be got under control. In 1982 the pay bill was £1,982 million and in 1985 it stands at £2,484 million, another growth industry. We have still another great Government record, the number of empty IDA factories, 336 in 1985. We have 45,000 people unemployed in the building industry.
Let us look at the Government's record in regard to farmers, the feed voucher scheme, the nitrogen subsidy scheme, the Shannon relief scheme, tillage relief. Farmers lost £40 million and got £2 million in compensation. They are being crippled by the Government. Last year saw a drop of 16 per cent in farm incomes in real terms. Farmers' real incomes dropped to their lowest level since 1970. All the farmers have got from this Government is a reduction in Government expenditure on agriculture — underspending on the farm sector of £47 million, with a doubling of the disease eradication levy.
In 1985 there was no growth in GNP, when it ground to a halt. All in all, it is a pathetic record. The budget was introduced by a Minister for Finance who was unceremoniously fired while the debate was proceeding on his budget. He was replaced by a Minister for Finance who was unceremoniously fired by Dáil Éireann when he brought in a budget imposing VAT on footwear and clothing. We had the Taoiseach last week misleading the House on the firing of two Ministers of State.
We have a Government led by a Taoiseach who in 1985 described the budget introduced then as one that had come to grips with all problems and told us that employment was on the increase but we all know that unemployment stands at 240,000. There is only one thing for the Government to do, for God's sake get off the backs of the Irish people. They are clinging to power by their fingernails. The Government are not being led by the Taoiseach from Dublin 4, but by the Minister for Health from Dún Laoghaire. That Minister thumbed his nose at the Taoiseach recently. The Taoiseach is incapable of carrying out his constitutional responsibilities. He has reneged on his constitutional functions and is not worthy to rule our country.
My appeal to the Government is to go. They have lost the support of the Irish people. According to the latest opinion poll more than 70 per cent of those questioned indicated that they do not have any confidence in the Government. The Government should go so that the electorate can vote into office a single party Government who will provide stability for the country, who will create a climate for economic growth where investment and profit will not be dirty words. That single party Government will provide hope and jobs for our young people and proper incentives for the farming and industrial sector. The Government should go so that the country can continue with the growth experienced under Fianna Fáil. We can no longer tolerate this discredited Government whose Taoiseach is so dissatisfied with the performance of individual Ministers, even the Minister for Finance, that he has moved them around.
We should not forget that the Government are led by a Taoiseach who misled the House last week and tried to correct that without a fulsome apology today. As the Leader of my party said today, he is a Taoiseach who should at the minimum be considering his position rather than flying off to Madame Tussaud's to see himself in waxwork style. Many people believe that the wax image would be more effective than the real thing.
I welcome this opportunity to contribute to the budget debate. It is important to outline the difficult economic problems the country faces and will have to face for some years to come. Our financial position remains difficult particularly with so much money being needed to repay loans that were taken out some years ago. It is because of decisions to borrow abroad some years ago that certain strait-jacket taxation measures have had to be adopted. I hope the measures in the budget will in some way loosen the strings on that strait-jacket. We are all aware of the difficulties our people find themselves in and of the fact that unemployment has risen. We will only surmount those problems if we have collective action by the Government backed up by constructive leadership. Our problems will not be solved by simple rhetoric. It is my view that some elements in the budget will mean a cash injection into the pockets of many people and that in turn will help to create many extra jobs.
It must be remembered that the Coalition inherited a difficult financial position. We have had to cope with external factors which were outside our control. We must pay special attention to the fact that there is a clamour for a reduction in taxation. The taxation benefits in the budget will cost £200 million and represent a shift in emphasis towards indirect taxation. It is important that we explain to the people that benefits in taxation result in cuts elsewhere in the public service. It is important, as taxpayers demand, that we get better value from money spent. When we spend public money we should be extra vigilant and more cautious, particularly at a time when money is scarce.
Before we agree to any spending cuts we should go into all the details and bring forward alternatives or other proposals. The bull in the china shop approach will not have the desired effect or help the public to recognise the need for cuts. The public realise that in regard to the pay bill for the semi-State sector, and the various Votes for the different Departments, savings can be effected and money better spent. The method of spending adopted five or ten years ago may not be the best one today. We must consider the consequences of decisions and have adequate consultations.
Regarding recent announcements of hospitals closures, while it is clear that some of the changes were already well known, what is important is that available moneys are spent properly in the health services area. It is important also that any apprehension or fear on the part of the patients concerned or their relatives be allayed and that adequate provision be made for the patients in the areas affected. One cannot simply move patients overnight without prior adequate consultation.
Much has been said about the provision of moneys for community care facilities but this is a question also which must be thought through to its conclusion. It sounds fine to say that patients should be returned to the community. We hope that in many cases it will be possible to do this but there will also be cases in which such a move would not be feasible. Those of us who as public representatives are approached regularly by constituents anxious to find places in hospitals or nursing homes for their elderly relatives realise that there are people for whom medical attention is imperative. I trust that in relation to using available moneys in a more efficient and effective way, there will be full discussion and consultations in the areas in which changes are proposed. We accept that change is necessary but change must come about only in an orderly manner.
Regarding the proposed closure of Carysfort Training College, not all the questions have been answered. The case has been made that the reason for the closure is changing needs, for example, that not as many teachers are required now as was the case some years ago. We can all accept that. We can accept, too, that more money may be needed for such areas as in-service training and in other areas of education but no case has been made for closing a training college overnight and for telling those who have served the State well that they are no longer needed. That is why I say there must be prior and full consultations in relation to all these matters. A certain element of teacher training should be continued in a college in which the State has invested large amounts of money. Surely we must not allow the loss to the taxpayer of the large amount of money that was invested in this college several years ago. I trust that in the coming weeks there will be full discussion on this matter.
There are unanswered questions in the matter of what is to happen to the staff of the college. It may be possible to move some of them, if that is what is desired, but people who have given a lot of service to the State and who still have a lot of service to give should not be told suddenly to get out. There must be adequate alternative proposals fo the use of this college. We are all aware of the large amounts of money voted for education and we are aware, too, of the need for changes in some areas of the education system, for instance, in that area of pass subjects for the leaving certificate which are a total waste of time and are probably not useful to students leaving school today. It is important that full discussions take place with the relevant authorities and the Departments concerned and that there be discussion also of such matters as were apparently raised with the Department some time ago but which, possibly because of some internal way of handling matters, were not on the agenda for the meeting concerned. It is time for a change in the education field. Perhaps it is time that even the Department look at themselves.
The money being spent on education should be considered in the context of all areas. We must ensure that the taxpayer gets the best return possible for his money. We must ensure that when there is a proposal for a saving in some Department we consider whether there are other areas of that Department or whether there are other Departments where the money could be utilised. It has not been established in the case of the proposal I am talking of that a large amount of money is involved. At least, it may not be large in terms of the huge amounts that go into State spending and into the whole of the semi-State sector. All these other areas must be considered. If there is a full examination across the board, it will be found that savings can be effected in many areas. In this way there will be a saving to the taxpayer in terms of the transfer of the savings to other areas and this may result also in more efficient State bodies. It is clear that some of the objectives of the semi-State sector need to be changed. Some of these bodies were set up ten or 15 years ago but circumstances have changed in the meantime. At times of scarce financial resources we must use to the greatest advantage possible the money that is available.
In this budget the Government have gone some way down the road towards bringing about a better balance in the taxation system, towards reaching a stage where there is a reduction in the overall level of taxation. For instance, the higher rate of 60 per cent has been reduced to 58 per cent and there is an increase also of £100 in personal allowances. In addition the bands have been altered but a special welcome has been given to the abolition of the 1 per cent levy. These measures will go some way towards putting money in people's pockets. In that way they will have some discretion as to where and how they spend that money.
No doubt there are people who would have wished the Government to go further but the reality is that tax savings have to be made up by way of increases in other areas. While there has been a shift in the way in which this is done, we must realise that the problem cannot be solved overnight. Therefore, the Government would have been reckless to have made a drastic and sudden move in an attempt to court popularity.
Debate adjourned.