Deputy Dowling is in possession ar feadh 20 nóiméid.
Financial Resolutions, 1986. - Financial Resolution No. 13: General (Resumed).
Last Wednesday when coming to the end of my speech, I referred to the contribution made in this House by the Minister for Agriculture speaking in the budget debate. He referred to the difficulties he experienced in Europe, particularly with regard to the production of milk, beef and grains. These are three of the most important commodities as far as our economy is concerned and any difficulties, especially in relation to price increases or with regard to quotas, would have a very serious effect on our economy.
I want to refer to the cessation scheme as proposed by the Commission. That scheme would have a considerable adverse impact on the economy. It must be totally resisted by the Government and the Minister would have the full support of every Member of this House in opposing any such scheme. It poses a severe threat to our national interests. One would regard it as having almost the same dimension as the super-levy when first introduced. I would see it as the thin end of the wedge if the Commission was able to pursue a policy of this nature with regard to meat production, above all in relation to this country. We could see more punitive measures introduced at some later stage.
Milk accounts for 33 per cent of gross agricultural output and is directly responsible for the employment of 11,000 people. At a time when unemployment is at a critical high level we should not accept any measure of that nature. All the farming organisations have unified in their condemnation of such proposals. They have asked the Government, the Minister and all with any power or sway within the European scene to resist this measure. One could refer to the levy and the deal drawn up with the special concessions which we were given and for which we fought very strongly as being completely violated by the present proposal. I was somewhat disappointed that some additional funding was not provided in the budget to enable a restructuring scheme of the order of that now being pursued by some of the co-operatives; not all the co-operatives are co-operating in this regard.
It is only now that we are beginning to realise the full impact of the super-levy and its effect particularly on young farmers coming into milk production or farmers who are in the process of expansion, who have reached a quota level and cannot get sufficient additional gallonage to enable them to pursue milk production properly. I impress on the Minister that under no circumstances must there be any falling back from the position adopted and supported in 1984, a position for which we fought so strongly.
I referred very briefly last Monday to the three major areas within the budget — borrowing, taxation and unemployment. I want to refer now very briefly to taxation. There are major changes in the taxation system which are directed essentially towards easing the burden of income tax payments generally and especially on the PAYE sector. We have seen for so long the crippling burden particularly on the PAYE taxpayer and this budget has attempted to redress the situation somewhat. The Government have decided that substantial reductions in income tax should be the priority. These will result in increases in disposable income and will encourage higher economic activity, contrary to what the Opposition might claim. To provide the revenue needed for these increases, it is essential to increase substantially the tax yield from the activities of the financial institutions and I shall refer to that later. We are now aware of the principal changes that are taking place in the income tax area. Perhaps the most important is the dropping of the 1 per cent income levy which will cause a considerable and very welcome reduction in the level of taxation across the PAYE sector. The personal allowances have been increased, perhaps in line with inflation, but we should like to see more increases there. However, there is a reduction in a full year of about £200 million for the PAYE sector and about £121 million in the current year.
There has been considerable criticism of the national plan, Building on Reality. This Government have attempted in a very urgent way to reduce the level of taxation on the PAYE sector in line with what was proposed in that plan. Over the period of the plan, which will operate for almost one more year, that will continue to be done. The income tax packet in this budget goes way beyond what was promised and committed to in the plan. Taken in conjunction with the increase in child benefits these are welcome improvements for the taxpayer. The Opposition have continuously drawn attention to the fact that the income tax yield in 1986 will be considerably higher than it was in 1985 and that perhaps is so, in arithmitic terms. I am not afraid to quote the figures for the House. In 1986 the post budget yield will be of the order of £2,356 million whereas the outturn for 1985 was £2,103 million. That is a predicted increase of £253 million. What we have not taken into account and what the Opposition do not refer to is the fact that wages have increased even faster now in real terms than inflation.
When Fianna Fáil were in office from 1977 to 1981, and in particular in the latter two years of that term of office, inflation was running at two and three points above 20 per cent. In May of 1982 it was running at 23.4 per cent and wage increases were of the order of 10 per cent, so in real terms there was a reduction in what people were earning. Consequently, although one might refer to the fact that taxation was not increasing at that time, in reality it was increasing at a high level.
What has given rise to the greatest level of criticism, not necessarily only from politicians but from other sections also, has been the taxation of financial institutions. This is a change of major proportions. The existing arrangements for the taxation of deposit interest are unsatisfactory and have been a source of considerable friction as institutions claimed that their competitors enjoyed an unfair advantage. I referred briefly to that last week. We have a 28 per cent retention tax on investments in building societies. Banks did not have that retention tax and they have been demanding that the situation be changed and a more equitable tax introduced. That has been done now, but there are anomalies. All forms of taxtion bring anomalies with them.
In the Finance Bill we will have an opportunity to bring in amendments which can change and rectify any penal anomalies on certain sections of the nontax paying community. I refer in particular to the savings of pensioners, children or even charitable institutions. In a postbudget submission the Minister pointed to the fact that these savings could be put into Post Office saving investments, the credit unions and Government gilts and would not attract taxation, unless there was already a liability for taxation. Even though people may not understand or may not wish to understand this, under existing law children who may have piggy bank account are liable to taxation if their parents are liable to taxation. There is no major change there. In fact, there is tax avoidance in this area which has gone undetected for a considerable time.
What is happening now is that the Revenue Commissioners are admitting that they failed to collect the level of taxation due on deposit interest over the years and now they are advocating a system whereby at least they will get something on a retention basis. I suggest that the Minister for Finance seriously examine ways and means of not imposing taxation on anybody who is not liable to pay tax. I do not believe such a system would be difficult to operate. In America each taxpayer has an obligation to submit a return at the end of the year and get a balancing statement. Many taxpayers do the same thing here. It should not be difficult for a person who is not liable to pay tax to submit a form and demand a refund. I do not accept that administratively that would be difficult. It would be far more difficult, more time consuming and need more manpower to collect the different taxes under this system. Again, I strongly suggest the Minister modify and amend the anomaly which clearly exists in this type of taxation.
There have been changes in the capital taxation system, and not before time. Many people in industry are crippled because of taxation and this is acting as a serious disincentive to additional investment in jobs. This is something we must look at very seriously in the years ahead. This will not be easy to do, but it will be done piecemeal. Unemployment is still very high. In the early eighties it was rising at the rate of 40,000 each year and now it is rising at approximately 5,000 a year. That is an unacceptable level. Every effort should be made to improve direct investment in industry in a way that will provide real and sustainable jobs. In the value-added tax area there were considerable modifications made last year, to the advantage of a large section of industry. This year the Minister has gone a stage further and has given a considerable boost to the tourist industry which I hope will respond by providing the necessary jobs.
I would like to refer to the health provision under this budget, and in particular to the closure of hospitals. There was a debate in this House on the announcement made by the Minister for Health. We all know what he is trying to do but what is important is how he can achieve that, given the funds available, and at the same time provide the best possible service. The closure of psychiatric hospitals piecemeal is not the best way to approach this problem. There have been consultations, particularly in relation to the proposed closure of St. Dympna's. I am confident that that hospital will not close and the Minister should make a statement to this effect as soon as possible to allay any fears particularly of people who have been institutionalised over a long period. I also ask him to announce, as soon as possible, the date for the commencement of the regional hospital at Ardkeen, Waterford. That has been on the stocks for a long time. This hospital is very badly needed. The South-Eastern Health Board area has not done well in relation to capital projects — other health board areas have done better.
In conclusion, this budget is in harmony with the objectives set out in the national plan. It aims to achieve the best possible balance between the obligation to improve public finances and to improve the climate for full employment. Also, it marks further progress on the reform of the taxation system. This reform had already begun. It began last year, has been carried into this year, will be carried into 1987 and will continue to improve as years go on, irrespective of what Government are in office.
The constraints imposed on the Government in preparing this budget have to be acknowledged. There was little room for manoeuvre because of the difficulties of the final situation. These difficulties will not go away overnight, irrespective of what the Opposition say. Despite this, however, the Government have recognised the urgent necessity to reduce the burden of personal taxation and the largest income tax reductions for several years are being made. I congratulate the outgoing Minister for Finance. I am sorry his Ministry has been changed because I thought he was a remarkable Minister. I welcome the new Minister who has the ability to carry on where his predecessor left off. They are both very capable, able and diligent and I am confident that the country will benefit from their experience and commitment.
I believe this budget contains nothing to relieve the air of depression which has affected people in the last three years. It could be described as a plus and minus budget. There was no incentive given to people out of the recession which has deepened over the past three years through the mismanagement of this Government. This budget is a continuation of existing Government policies. Indeed the year 1985 could well be described as the worst year in history for this nation and its people, a year in which economic growth was at a standstill and unemployment reached its highest ever level. The outlook is indeed gloomy with the provisions of this latest budget. As far as this Government are concerned people no longer count. The Government are endeavouring to save this country at the expense of its people and their families; they are engaging in a bookkeeping exercise.
Government economic policies are breaking up family life, placing the family under severe pressure, even undermining its existence. It should be remembered that the family comprises the basic fabric of this nation and that of future generations. This Government's crazy policies and poor management are breaking up that fabric. Yet they claim to be the most progressive Government with regard to social issues. If their economic policies were geared towards helping the family then those social issues would no longer constitute a problem.
I was amused to hear my colleague, Deputy Dowling, talk about the relief given to taxpayers in this budget. I would call such relief lollipops or pennies from heaven. They are an insult to the over-taxed, indeed, to the heaviest taxed people in Europe. The pennies from heaven being handed out by the Minister for Finance are an insult to their intelligence. The rate of taxation is unbelievably high here. A single person earning approximately £10,000 per annum is paying 60p in the £. In addition, he must pay contributions to a widows' and orphans' fund, PRSI, levies on income, employment and health contributions, all of which mean that such a person pays over 20 per cent in the £ on top of his highest tax band. The net effect is that such a single person takes home approximately £5,500 or 55 per cent of his total income. Nobody on the Government side could contend that such a single person is not over-taxed. I would contend that he is one of the most heavily taxed people in Europe today. How could such a single person save money to purchase or build a house when he may get married? It is impossible for any worker on such a salary to save sufficient for the years ahead.
The position becomes worse as one's salary increases, when there is a larger proportion taken by way of tax. For example, a man earning, say, £15,000 per annum will take home only a little over 50 per cent of his salary. This means that when people want to get married they will have insufficient moneys saved to purchase a home. In turn that means such people must borrow and today £25,000 will cost approximately £330 a month or £80 a week. Most people are unable to carry such repayments which means that their wives must remain working in order to pay their mortgage and put food on the table. Working wives are regarded as being well-heeled but the truth is that they are the new poor in our society. The Government have introduced subsidies, grants and so on to alleviate the problem. The problem itself is brought about by the system of income tax under which people are not allowed to retain sufficient of their earnings with which to build their futures. There is, instead, a merry-go-round of civil servants handing back something taken unjustly in the first instance. That is the crazy situation which obtains.
One sees vacancies for posts advertised in the newspapers but the hard fact is that they are worth only 50 per cent of the stated salaries because the remainder goes to the Revenue Commissioners. We can see also that the family, as a unit, is being undermined by Government policies. I will give two examples of what I mean in regard to interest relief. Take a person who is endeavouring to provide a member of his family with third level education and who needs to borrow money for that purpose. There is no relief given in respect of interest paid on any such loan. It is a disgrace that people endeavouring to do the best for their families in difficult circumstances are not allowed claim interest on the loan to educate them while, at the same time, wealthy business people can claim interest on extra investment by them to increase their wealth. I appeal to the Minister to recognise the good work being done by families.
Another area in which relief could be granted is in regard to loans for the purchase of cars, the second largest investment any householder makes, the costs for which can have a dramatic effect on any household budget. A car is a necessity today for most households, particularly for people lucky enough to have a job. This Government have not allowed relief in respect of interest on car loans. This has resulted in people purchasing secondhand cars because of the high loan repayments on new ones. It would be of advantage to Government revenue if people purchased new cars because the amount of tax on them is much greater. Such relief would lighten the burden for most householders. Motor tax has been increased again this year and motor insurance premiums are sky high. Often in country areas when young people are offered jobs, in order to get to and from their place of employment their parents must buy them a car. In many such instances the cost of insurance is greater than that of the car, and I am not exaggerating. I appeal to the Minister to give this matter some consideration.
It will have been noted that in order to qualify for a grant for home improvements the necessary work must be carried out by a registered builder, the aim being that all taxes due are collected. I would ask the Minister to consider some such subsidisation for the family, by allowing people to claim expenses against income tax in respect of, say, doctors', dentists', solicitors', accountancy and veterinary fees. At least some proportion of such fees should be allowed against their income tax liability provided receipts for such expenditure are retained. This would introduce more equity into the taxation system for the already hard-pressed income tax payer. It would also assist in the determination of the income of some of those professional people who are regarded as not paying their fair share of taxation. In this respect I apologise to nobody. There are many professional people who are becoming richer daily at the expense of the ordinary taxpayer. Regardless of the amount of revenue I believe that justice should be seen to be done. By allowing the ordinary taxpayer some element of those expenses the Government would be catching those fat cats in the tax net, especially when there is so much unemployment and gloom about.
I might make a few suggestions by way of summing up. The tax allowances should be higher to give people a start in life. Such a move would help to do away with many of the subsidies and so on that have been introduced to help people. Subsidies would not be needed if there was a decent tax relief for the over-taxed. Parents should be allowed to claim on the interest on loans borrowed to educate their children and people should be allowed claim for the interest paid on car loans. People should be allowed to claim some portion of family expenses, such as those for doctors, dentists, solicitors, accountants, vets and auctioneers. I appeal to the Minister to consider those suggestions.
I was shocked today to hear the Taoiseach's response to the request by Deputy Lenihan to allow Government time to discuss the serious crisis in agriculture. I made a similar appeal on two occasions last week but without success. I appeal to the Taoiseach again to allow Government time to discuss a crisis that is getting worse daily. The milk super-levy negotiations were handled very poorly but that problem will look like a storm in a teacup compared with what will happen if there is not support for beef intervention and if there is a levy on grain. Those two issues will have to be sorted out to the satisfaction of our farmers or otherwise we will be back to where we were in 1974. Our cattle trade will collapse, farmers will suffer and thousands of jobs will be lost.
It is disappointing to note that agriculture was scarcely mentioned in the budget. The grant-in-aid for 1986 for the Farmer Apprenticeship Board has been severely cut. I heard the chairman of that board on radio this evening being critical of the Minister for Finance in regard to that. There has also been a cut in the allocation to ACOT. I expect that before the year is out some of our agricultural colleges will have to close down, adding to the litany of closures that the Government have been associated with or the cause of in the last three years. Many industries, colleges and hospitals have been closed down by the Government. I appeal to the Minister to consider the hardship he is imposing on the farming community at this critical time. The farming community will have to pay if they request assistance from agricultural advisers and later they will have to pay land tax. When considering those charges we must remember that farmers have had to contend with a drop in their income in the last five or six years, something that no other section of the community has had to face.
I am disappointed with the banks and lending institutions who in the last six to nine months have been quietly but viciously putting great pressure on small farmers, small businessmen and those who borrowed money in recent years. The banks and lending institutions must accept a lot of the blame for the state of our nation today. In the mid and late seventies money was forked out to almost everybody by the banks. One could buy a farm, or half a dozen farms, over the phone but now when things are going bad the banks and lending institutions want to put everybody to the wall. The Minister for Finance should have a hard look at the way the banks are treating our people. Letters are being sent to decent hard working people who because of a reduced income as a result of decisions made in Brussels are unable to meet their repayments. Some of them, as a result of brucellosis and TB in their herds, have lost a lot of their stock. Those people are getting the rough end of the stick from the lending institutions.
I was annoyed to read recently that the Agricultural Credit Corporation, a bank set up for the purpose of providing finance for the agricultural industry, have now decided to utilise money, provided at a cheap rate by the European Investment Bank, to stabilise their own finances at the expense of the farming community. It is a national scandal that they are to cook the books again, like the Minister for Finance, at the expense of the ordinary farmer. That organisation is putting pressure on farmers. The story about the EIB money was reported in the Irish Farmers' Journal this week.
The Opposition should be given time by the Government to highlight the dangers that face the farming community. Our views could be used by the Government in their efforts to get a good deal in Brussels. I have not been a Member of the House for long but during my time here I have seen a lot of time wasted on silly things by both sides. The effect of a reduction in the support of intervention for beef will be severe. In 1986 100,000 tonnes will be covered and that figure will increase to 150,000 tonnes in 1987 and 200,000 tonnes in 1988. The crisis will deepen if we do not go to Brussels and demand special treatment for our farmers.
A study by the IFA has shown that there would have been a price drop of 13p per 1b if the 400,000 tonnes of beef sold into intervention had been sold on the EC market. The potential loss to producers has been estimated at £147 million or 36 per cent of net income. That is a shocking position but yet the Taoiseach does not consider it important enough to debate in the House. It will be debated on the day after the fair but fairs and marts will be very scarce if the issue is not debated in the House in the next couple of weeks. The figures I have given show the serious problems affecting Irish farmers, meat factories and the many people employed in the meat industry. This is the most serious threat to the country for years. Since 83 per cent of our beef is exported the effect of the EC move will be far greater on us than on other EC countries. It will be more serious than the super-levy, the effects of which are being felt throughout the country. Milk is being poured down the drain because farmers cannot sell it.
Another problem facing Irish farmers is that our exports to Third World countries are not as strong as we would like them to be. The Taoiseach should treat that as a major problem. He should address himself to the large amounts of beef imported into the EC from outside. That represents a major problem for Irish farmers and the Community as a whole. There will have to be a successful outcome to that problem.
I read an article in today's issue of The Irish Press under the heading: “Exporters lose out at top Fair”, which stated:
A major Irish meat company is selling its products from a stand housing the British food section of the giant Alimentaria Food Fair in Barcelona, because there was no State encouragement for Irish representation, it was claimed yesterday.
As a result, Irish food exporters may already have lost access to vast new markets in the Mediterranean and Latin-American world, Irish businessmen at the fair believe.
Mr. Bill Maher, sales director for the £100 million per year Master Meats Group, said that he had to take a stand in the British foods area because Córas Tráchtála (CTT) and CBF, the livestock and meat board, showed no interest in getting Irish company's produce into this vital "shop window".
That is a shocking state of affairs. Are we facing a collapse of the meat trade? The article continued:
"We feel that we are obliged to come here in the interests of the Irish farmers and indeed, the Irish economy. This market is vitally important and it is the springboard to other markets which have been closed to Irish exporters", said Mr. Maher.
"But if we had to come here and sell under a Russian flag, we would do that, because we see it as very important for Irish food processing to get out here and sell. It is really disappointing that CTT and CBF do not seem to realise that."
I fully agree with the statements made by Mr. Maher, and it is shocking that we are not debating it. Mr. Maher also said:
Other meat companies, including the Anglo-Irish group, Dawn Meats and Halal, were also represented at the Alimentaria Fair hoping for a slice of a new Spanish market worth £20 million this year (but expected to grow to over £100 million within the next decade).
However, they all complained that their business negotiations are seriously hampered——
Long quotations are not in order because it would become the other man's speech instead of that of the Deputy.
I was just highlighting the position. Mr. Maher said that their business negotiations were seriously hampered by the absence of an Irish stand where they could carry on business in a professional manner.
A senior executive of CBF, Mr. Aidan Archer, arrived in Barcelona last Sunday and he said that it was expected that Ireland would be strongly represented at the next Barcelona Fair in two years time. Live horse and you will get grass. With 250,000 buyers from 70 countries present, it was felt that this year, with Spain's entry to the EC, was the time to get a foot in the door. Unfortunately, CTT and CBF seem to be asleep in their over-heated offices as they did not support the industries who would like to have displayed their goods.
I will now deal briefly with the reduction in ACOT's budget. In 1985 it was £18,335,000 and this figure was reduced to £17,296,000 in 1986 — a reduction of 6 per cent, or £1,039,000. This is a very serious reduction and, when inflation is taken into consideration, it is a drop of 12 per cent in real terms. When we look at the general administration of the Department of Agriculture we see that the cost in 1985 was £62,855,000 but that the estimate for 1986 is £66,837,000, or an increase of 6.33 per cent. In other words, civil servants can decide to increase Estimates for their own Departments by 6 per cent and to reduce the estimate for ACOT by 6 per cent. Their increase of 6 per cent will cost an extra £4 million, but the reduction in the Estimate for ACOT will cost only £1 million. Salaries are estimated to rise in the Department by just over £3 million and travelling expenses are expected to rise by £0.5 million, a total of £3.5 million, which is an increase of over three times the reduction in ACOT's budget. That is a national scandal.
The total budget for agriculture is £229,145,000 and the general administration cost is put at £66,837,000, an increase of 30 per cent. We now know where the money is going — not on the farmer but on well heated offices for civil servants. The figures show that the reduction in ACOT's budget at 6 per cent is the highest percentage cut on anybody under the Department of Agriculture and shows how the civil servants in Dublin view any service to help farmers. They can have an increase in their own Estimate by 6 per cent but reduce a vital service by 6 per cent. The closer the Department get to the people they really depend on, farmers, the greater the cut. In the eyes of civil servants the farmers are just a nuisance. However, there is an old and true saying that when the farmers are down the nation is down.
I hope the Taoiseach, the Minister for Foreign Affairs and the Minister for Agriculture will go to Brussels and strike a hard deal there. In the national interests I wish them well because thousands of jobs depend on farming. We should add Government Departments to the many white elephants like CIE because of the cost of their general administration. There is no penny pinching in Government Departments but there is penny pinching in regard to anything which affects agriculture. This will affect the advisory input to farmers and it could not have happened at a worse time with quotas on milk production and talk of quotas in beef and cereals. The only way farmers have of increasing their income is through increased efficiency and it is in this area that the cut in ACOT's budget will affect the advisory service to farmers. It would be interesting to know what the IDA services cost the taxpayer. Why should the farmer be penalised because he needs advice? His income has dropped over the last five years——
They are paying too much tax.
Most of them do not have a taxable income. I do not know about the farmers in County Louth. The Deputy has put me off course but the Government have put the country off course. I wish to emphasise that it is very unfair of the Minister for Agriculture to allow the Minister for Finance to be penny-pinching in regard to agriculture, especially with the advisory service at this critical time. It is very hard on young farmers unless they have a good milk quota, because they cannot grow beet. There is not much profit in beef although there is a little leeway in regard to sheep production. A farm today does not provide a very good livelihood for many farmers and that is why they need an advisory service. It is strange that, when ACOT established a specialised advisory service, the administration in Dublin should see fit to cut that budget by 6 per cent. Every rural Deputy should exert as much pressure as possible on the Minister to alter the situation. About 15 years ago we had only four or five advisers in each county and, because of the cut in the budget, the same situation will apply this year.
If you look at the reduction of £1 million in the Estimate for ACOT and compare it with the prison service, you will see that salaries, wages and allowances in 1985 were £31,929,000 and in 1986 they will be £37,529,000, an increase of £5.6 million or 18 per cent. Salaries, wages and allowances in other Departments are increased by 9 per cent and it shows the confidence which the Government have in agriculture. Is it any wonder that we get a poor showing in Brussels when our own Government treat agriculture in this manner? Many schemes have been discontinued in the past three years though these schemes were fought hard for. Included among those are the lime subsidy scheme, the AI subsidy scheme and many others in respect of which moneys could be got from Brussels. Instead, for the purpose of a bookkeeping exercise and to satisfy civil servants those grants were discontinued. Apart from the loss to the farmers this involved also job losses. The lime industry is almost at a standstill and with thousands of cows being slaughtered throughout Europe as a result of the super-levy, there is now a crisis in the beef area.
Regardless of who are in Government, we are entitled to special consideration in the areas of beef, lamb and milk, products that do not require any imported materials. We got no special deal so far as the super-levy was concerned. We made a hames of that and became the laughing stock of Europe. We did not get the sums right and were left in the position of having to return the following year to have matters rectified instead of being in a position then to look for something else.
I appeal to the Taoiseach to ensure that at least a one day debate takes place in the House to allow us the opportunity to support himself and the Minister and to urge them to go to Brussels in an attempt to work out a deal that would save jobs as well as saving the livelihoods of farmers.
I compliment the Minister's predecessor on this budget and I wish him well in his new post. I wish the new Minister well also in his post. I am confident that he will continue the good work of his predecessor.
The general appeal of this budget must be viewed against the backdrop, not of the budget of last year or of the previous year, but in terms of budgets of a number of previous years. Listening to Opposition speakers in this debate so far decrying this year's budget one wonders whether we are talking about the same provisions. I say this in the context of the budgets of, for instance, 1979, 1980 and 1981 when the people opposite had control. These same people are bemoaning a shortfall in the Estimates this year of between £45 million and £55 million but they did not appear to be surprised when only a few short years ago the overrun could well have been to the extent of £150 million or even up to £500 million. The people opposite seem to have forgotten that. However, it may be a sign of the times that even a small overrun or difficulty now attracts so much attention from the Opposition. This proves that at least they recognise that the Government are set on the course of doing a difficult job and are intent on completing that job.
Obviously, the Opposition have the right to criticise errors, overruns or shortfalls but in doing that they should have regard to previous performances by their members when they held the various portfolios in Government. As I said here on another occasion, all I can recall about the 1970 budget is that turnover tax, as it was known then, was increased from 2½ to 5 per cent.
Opposition is the basic stone of democracy but when I came into this House first I had difficulty in understanding why the Opposition should oppose at all times. Presumably, because of the system we operate, the party I represent behaved in a similar way when they were in Opposition though I should like to think that was not the case. We should be much more careful when we oppose because opposition for the sake of opposition can leave many people, particularly the young, disenchanted with politics. Therefore, we should oppose for the right reasons only.
During the past three years there has had to be a certain amount of curtailment of expenditure in various areas but in that context the Government are doing a good job by way of this budget. We hear persistent calls nowadays, both from the Opposition benches and from elsewhere for greater cuts in public expenditure and for the obvious consequent realignment of our financial affairs. Regrettably, what has been lacking in terms of all those calls has been any indication as to where the cuts might be made. Many Members call on the Government to deal with white elephants but few are prepared to accept the culling of the white elephants if they should happen to exist and thrive in the constituency of the Deputy concerned. That is another matter we must face up to whether we are in Government or in Opposition. Cuts are obviously necessary and when they are made they are bound to hurt some people.
This Government have probably taken the best course possible in the circumstances. When they came to office a few years ago they had the option of enforcing large scale cuts of a very severe nature which would have had a dramatic impact on the whole economy. We hear claims from many quarters today that that would have been the right way to solve our problems but, if the Government had taken that line, would that sharp short medicine have resolved our difficulties? I should think not. Shortly after the Government coming into office and prior to their first budget they announced some minor cuts in the school transport area. The announcement necessitated the elected representatives attending various constituency meetings in an effort to explain the reason for the cuts. This was at a time when there was a general call for cuts in public expenditure in an effort, and a laudable effort, to reduce taxation. Those calling for those cuts were not prepared to accept that they would hurt each and every one of us and would leave many people worse off. In those circumstances the Government did very well to embark on a slow process of turning the economy around and enabling us to reap the benefits of the changing winds of the world economy.
It has been done admirably. This country is poised to take full advantage of whatever benefits will come from changes in the world economy. If a different policy had been followed, if for instance the massive cuts which some people had advocated had been implemented, I have no doubt that there would have been unemployment on a scale we have not yet had to comprehend. That would have been disastrous. I compliment the Ministers involved in formulating the policy which has brought about a position where we can take advantage of changes occurring outside this country.
The provisions for public pay in the budget this year and the previous year were in dramatic contrast to provisions for public pay made in the previous five or six years. During his speech the Minister stated:
The Government's pay policy is that pay increases in Ireland should not exceed the rate of pay increase in competitor countries and that, within this framework, the free collective bargaining system should continue to have regard to the ability of individual employers to pay and to the likely impact of pay settlements on employment. There was a welcome moderation in the level of new pay settlements in Ireland in 1985. This progress must be maintained ...
That is probably one of the most important features in this and the previous budget. For many years we failed to compete in the market-place in the export arena. Slowly but surely our economy was being futher constricted and ground down. It could not be and has not been allowed to continue. In 1985 for the first time since the forties we were able to register a trade surplus, at a time when virtually every country in the world was having economic problems.
I wish to refer again to the area of unemployment by comparing the position here with that obtaining in a couple of other countries. Speakers opposite have said that we have 240,000 people unemployed, which is a sad and desperate situation which cannot be allowed to continue. Let us consider the case of West Germany where a few years ago they did not have an unemployment problem, yet today they have almost three million people unemployed. Only last week we had reason to speak with representatives from New Zealand where ten years ago they had no unemployment but now they have 100,000 people unemployed. Ironically some of those countries would appear not to be in the same position to capitalise on whatever upturn comes in the world economy. If we consider our own position in relation to those other much more sophisticated and vibrant economies, we have done reasonably well. We have come a distance without creating too much hardship for people but at the same time imposing a certain amount of restraint without which this country could not continue. Somebody from outside the country might have had to solve the problems if we had not succeeded in doing so.
The budget makes provision for social welfare increases across the board from next July. The main feature of this is quite simply that people who are in the less well off sector of our society will at least have their living standards keep pace with inflation and the cost of living generally. A major feature in the past three years is that people in that sector have received increases each year which have been more than sufficient to compensate for the rate of inflation. That is as it should be.
The budget also provides for the introduction of the promised child benefit scheme — £15.05 for the first five children and £21.75 for each other child. There has been much criticism about the Government's policy towards the family and some controversy as to whether certain groups should have received the kind of assistance they have been given. I know that single parents and deserted wives have been mentioned as getting too much from the system. In my constituency I deal with quite a lot of queries from deserted wives and single parents, as well as from the elderly and those generally in need of social welfare payments of one kind or another. One has to deal with the problem at that level to recognise fully the needs of those people. I do not believe that any girl wilfully becomes a single parent in order to get a particular type of social welfare payment. I do not think a wife becomes a deserted wife in order to claim the deserted wife's allowance. In my experience situations arose which were completely outside the control of the individuals themselves and it is fortunate that our society is at least compassionate enough to recognise their position and do something for them. We would be lacking in Christian charity unless we were so doing.
The budget provides for a reduction in VAT on meals in restaurants and hotels and this should be of considerable benefit to the tourist industry, including our own native tourists. Perhaps we might see that reflected in our own restaurant in this House.
The hotel and catering industry has been lobbying consistently for this type of reduction. It has now been reduced from 23 per cent to 10 per cent. Notwithstanding the gloom and doom approach by members of the Opposition, the hotel and catering industry is grateful for the measures taken and has pledged itself to be in a position to respond to the extra market during the summer months. The same reductions also apply to a number of other services including the electrical area, hairdressing, laundry and dry cleaning services, etc. Incidentally, hairdressing is a sector which is extremely labour intensive and has absorbed thousands of young people who have an opportunity to serve their time to a trade and can provide themselves afterwards with a job. This is something we should encourage and it is laudable that it is provided for in the budget.
One of the other reasons we have a right to be optimistic at present is the fact that inflation is down considerably. This has been brought about by careful handling of Government finances. One must remember that the inflation rate for quite a number of years was considerably in excess of what it was in most other European countries. I say that in answer to those who now claim that the only reason inflation is down is that it is down worldwide. We always had a fraction of an inch over other countries but now we are in a different situation and in a way in a more competitive position than ever before. It looks as if the trend will continue, in which case we will be in an even better position in another year or so.
I referred briefly to unemployment. A number of schemes which were provided for in the budget are now beginning to show some success. I am talking about the enterprise allowance scheme and the social employment scheme. It was never anticipated that they would be as successful or have as great an impact as they have. In all the towns around the area in which I live there are people doing the kind of jobs that they were not in a position to do previously. Local authorities now have access to funds and can employ people under the social employment scheme to carry out the necessary environmental works which have been affected for the last ten years or so. It will take a couple of years for the country to receive the full benefit of that scheme. It is commendable that the scheme was introduced and that it is working so well.
A number of Opposition speakers, not only in relation to this budget debate but over the last couple of years, mentioned again and again the sad position of the construction industry. I do not want to dwell upon it too long now. Never in the history of the States was there so much money and so many schemes available to the construction industry to utilise and capitalise on. Never was there such a scheme available that would be of such benefit to the community. For far too long we ignored the fact that there were a large number of dwelling houses which needed restoration and where people concerned felt that they did not have the necessary finance to undertake the massive work that needed to be done. In the last few weeks 43,000 people got approval for this work. The value of this in terms of jobs is about 10,000 for the year. If that does not have some impact on the construction industry then I would be very seriously concerned about exactly what the problem is in that area.
In the last couple of years there were quite a number of schemes introduced. For instance the person who surrendered his local authority house received a grant of £5,000. If he was a tenant purchaser he received £2,000 new house grant on top of that. Those people are also entitled, depending on the loan scheme, to £3,000 mortgage subsidy. Comparing that with the assistance available to the construction industry five, six or ten years ago when the only assistance available was the £1,000 grant and, prior to that, £750 or £900 grant depending on the circumstances of the person, it has improved considerably. The industry needs to reassess its position. I believe that the problem is that the market is oversupplied. The amount of money now being made available to the construction industry is such that it should be making a greater impact than it is.
Interest rates, like inflation, have stabilised and lowered and are still coming down. From my dealings with local authority loan applications, interest rates are now similar to those that prevailed in 1976. I did not hear anybody talking much at that time about the high interest rates even though they were high. We are now living in an era ten years later, and the Government have done exceptionally well in bringing about the situation which exists at present.
Much has been said about agriculture, the effects of the budget on agriculture and the failure to do something more in this area. While everything in the garden — no pun intended — is not as rosy as one would have liked, given the climatic conditions which the farming community had to bear last year, nonetheless there is still a great deal of confidence. There are plenty of markets abroad for our produce if the Government and the Minister responsible are prepared to look into the market-place and seek them out. That has been proven very successfully over the last few years.
I would like to refer again to some of the things which people generally do not recognise. One hears criticism of the Government regularly and if I was sitting on the opposite side of the House I would not be as sensitive to it. For example, social welfare expenditure amounts to £2.5 billion per year. Over 37 per cent of the population are in receipt of social welfare of one kind or another. That is why it is very important to recognise that all schemes put in operation by the Government must have an impact on the number of people unemployed. No country can afford to have such vast numbers of people unemployed. For that reason the general thrust must continue to be to try to alleviate that problem.
Health is another area which was referred to by other speakers. The expenditure on health amounts to £1.2 billion per annum. As a member of a health board, I feel I should comment on some of the things that have been said in relation to the handling of this area over the last couple of years. I think the Minister has done a very good job.
Much heat has been generated by discussion in recent times on the proposed closure of certain mental hospitals. It has been the policy of most of the health boards over the last ten years to deinstitutionalise psychiatric health services. They have been pursuing that policy very well and very forcefully and have called on various Ministers and on different Governments to introduce a means whereby that target can be achieved. However, when the Minister decides that the time has come to phase out the existing old-fashioned unfit structures and replace them with community based psychiatric services, there is immediate uproar. Unfortunately, the general public did not get a chance to know the full story. Statements have been made by people who have fears which may not be genuine and by people who fully recognise the situation and who were advocates for the changes that are now being brought about. There was never any question of the Government or the Minister closing mental hospitals and throwing the patients out on the road. That will never happen. The policy of the health boards and of the present Minister is to replace those old-fashioned unfit buildings with smaller community-based institutions where patients can receive a far higher standard of service than anything that has been conceived of in the past. I will not go on any longer about that as I appreciate it would be more appropriate to a debate on a Health Estimate. If one had time to go into the conditions which prevail in a great many psychiatric institutions it would give rise to great shock. It should be a prerequisite for every Member of the Oireachtas to pay at least one visit to some of the major psychiatric institutions and they would be in a position to speak with firsthand knowledge on the problem.
A group of people with whom I sympathise who do not receive a great deal of public attention either at budget time or at any other time are lower paid workers, workers on a salary of perhaps £5,500 or £6,500 per annum. Many of our local authority workers are in that income group. When people criticise those who work for the local authorities they often do not recognise that in many cases these people would probably be at least as well off financially if they did not work at all. A great deal of credit is due to those who work on the local authority system, to those who work on our roads putting down anti-skid sanding at night and all the other work which we take for granted. If these people were not doing that work we would soon recognise the importance of the service they provide.
In relation to the proposals in the budget to improve the taxation system, everybody recognises that taxation here at 36 per cent of GNP is excessive. We must also accept that the tax on the PAYE sector is unbearable. It was generally recognised this year that the time had come to recognise the position of the PAYE sector and to make some concessions. The Minister in his budget did just that. I listened to Deputy Byrne a few moments ago decrying the fact that sufficient tax concessions are not given; but, after all, the concessions amounted to £121 million in the current year and it will be £205 million in a full year. By any standards that is a reasonable concession in a single year. Rome was not built in a day. Our problem did not materialise overnight and it will take us a long time to get out of this financial mess. It cannot be remedied overnight and any Government attempting to do so would only exacerbate the situation. The Government and the Minister have recognised the position of the PAYE taxpayer by giving concessions. I hope this is the first of many. This concession was constructive and it is in recognition of the levels of taxation applicable to the PAYE sector. When Members of the Opposition talk about tax concessions I hope they will recognise that in the past their own performance in relation to the PAYE sector was not always spectacular when giving concessions.
I am mainly concerned with two areas, tourism and the building and construction industry. Contrary to Government expectations, at the beginning of last year the performance of the economy turned out to be almost flat during 1985. The economic growth rate as measured by GNP has increased by a mere ½ per cent. Industrial output increased by just over 3½ per cent in 1985 compared to a growth rate of 13 per cent a year earlier. With this slowdown in the growth rate it was inevitable that unemployment would increase last year. The increase continued into 1986; and since the Minister delivered his budget speech the numbers unemployed have exceeded 240,000, or almost one in five of the labour force, for the first time in our history. An area that has suffered more than any other area in the recession is the building and construction industry. The collapse of this sector, where many small and medium sized builders have gone out of business, has been extraordinary. The extent of the collapse can be shown by two stark statistics. The sale of domestic cement has fallen by 40 per cent between 1979 and 1985. In 1979 total domestic sales of cement amounted to tonnes. Statistics have been prepared to prove that the building and construction industry is dying. There has been a major decline in the numbers employed in this sector. Only half the people employed in building and construction in 1980 were still employed by that sector five years later. According to the CSO, taking employment in building as being equal to 100 in 1980, by 1985 this index had declined to 55.8. The bleeding of our resources of men, materials and infrastructure must be stopped if we are to continue to aspire to being a developed industrial country. There is little to suggest that the contents of this budget will do anything to halt and reverse the decline in this central area of the country's economic life.
All the evidence points to a further decline in building and construction this year. Spending on the public capital programme in 1985 did not reach the level planned for in the 1985 budget. At £1,693 million public capital spending fell short by £83 million of the Government's expectations last year. Having underspent last year, what have the Government planned for this year? Have they intended to make up the ground lost last year? No, they have not. Instead there has been yet a further cutback in public capital spending. The total public capital programme has been cut by a further £11 million this year to £1,681 million. Taking account of inflation that represents a further drop of some 5 per cent in the volume of public capital spending this year. I am not alone in canvassing the view that building output will fall again this year. The Central Bank in its bulletin published a week before the budget had this to say:
For 1986 building output may fall again although the decline is expected to be a small one of about 1 per cent. Some further decline in private housing is expected.
The Central Bank concluded:
On the basis of the outlook for activity in 1986 no improvement in the employment situation can be expected. However, given the limited decline in output now in prospect any further fall in employment is likely to be small.
The financial constraints on Government spending are undeniable. It would be irresponsible for any Deputy to call for major expansion in public capital spending in the present financial circumstances. Spending for spending's sake, whether it be on current or capital programmes, may increase employment today but at the expense of even greater unemployment in the future. Having said that, it must be accepted that the Government have shown a remarkable lack of foresight and imagination in their approach to capital spending. If the State does not possess the resources to give the building and construction sector a lift, it should be seeking imaginative ways of including the private sector in participating in undertaking new and needed capital investment projects: roads, bridges, flyovers and by-passes are much needed. The lack of investment on roads in recent years is now beginning to show through in the rapid deterioration of their surfaces. The country still has no highway system making the passage of goods, raw materials, machinery and exports difficult from one point to another. These bottlenecks have economic costs both in terms of lost time and often loss of export orders.
There is scope in this area for a major partnership between the State and the private sector in the provision of a first class highway system. The State would benefit by improving the nation's infrastructure at relatively low cost while still living within the constraints of public finances. Through tolls the private sector could be guaranteed a reasonable rate of return on the investment they would surely be prepared to make. It is hard to understand why these successful experiments have not been used to forge a much more generalised response in terms of partnership between the State and the private sector. The implementation of such a strategy would have two major benefits. First, it would serve to direct much of the free resources now languishing in the gilt markets or in the money markets towards the creation of something physical, useful and lasting. Secondly, it would give a spurt to the building and construction industry raising both employment and output in the process. But unless some imaginative action is taken to support the building sector it will simply not exist as we know it when times improve and demand picks up.
Tourism is the second area of the budget I would like to address. Despite the buoyancy of last year's tourist season, tourism generally has turned in a relatively poor performance over the last 15 years. Yet it is an area where Ireland is uniquely fitted to make a success of this industry. In the tourism industry Ireland's lack of an industrial past is not, as in so many areas, a hindrance to development. Instead it is a positive help. We have a relatively unspoiled environment, clean air, low population density and possibilities for outdoor activities such as golf, fishing, shooting, horse riding and many other sporting facilities. Ireland has major links with countries which enjoy a high standard of living and thus generates much tourist business as an additional beneficial factor.
The Minister's decision to reduce the rate of VAT on meals and touring coaches, which was referred to tonight, from 23 per cent to 10 per cent from 1 July will help the tourist industry to some extent but it is by no means enough. These concessions will cost £11.5 million. However, the Minister has more than outweighed the good by introducing a 2 per cent increase in the standard rate of VAT from 23 per cent to 25 per cent. This will bring in £77 million this year or seven times the amount of the concessions granted on meals and tourist coaches. It seems peculiar, to say the least, that the Minister has postponed the reduction of the VAT rate on meals until 1 July next or approaching half way through the tourist season. Anyone in this House who sees logic in that should not be here at all. This has created a situation whereby VAT on meals will rise from 23 per cent to 25 per cent before falling back to 10 per cent in July when the tourist season is tapering out. I would urge the Minister to reconsider this excessively complex situation and to cut VAT on meals to 10 per cent at the same time as introducing the increase to 25 per cent in the standard VAT rate.
The reduction in VAT, however, deals only with the tip of the tourist iceberg. A much broader strategy needs to be formulated and much stronger than was proposed by the Government in their White Paper on tourism published last year.
There are two inescapable facts attached to tourism. First, the principal constraint on a cost-conscious tourist intending to visit Ireland is the high cost of VAT. Number two, access to Ireland is too expensive and it is deterring droves of would-be tourists. I speak particularly of air transport. A central objective, therefore, must be a reduction in air fares. Unfortunately, the Government through the Air Transport Bill, do not seem to accept this because they seem to be turning their face away from reality. Ireland's tourism policy must be based on the fact that we will never be a sunbound destination. We must tailor our tourism policy to meet the demands of specialist tourists, those interested in sport, particularly fishing, or the enjoyment of unspoiled scenery and countryside.
I should like to deal briefly with the tax on deposits provided for in the budget. The effect of this proposal will mean that voluntary organisations will have to pay tax in future. Surely the Minister must know that such organisations make a tremendous financial contribution to helping such worthy causes as the fight against cancer and other diseases such as polio. I could continue all night to refer to the great work being done by these organisations who are now caught in the 35 per cent tax net. The services those voluntary organisations contribute to should be financed totally by the Government. I ask the Minister to review this appalling attack on voluntary organisations when he introduces the Finance Bill.
Many Members during the debate referred to savings and small savers. Savings lead to wealth and to investment in industry. All Governments should offer incentives to savers, but what have this Government done? They have proposed that banks, An Post, building societies, the ACC and so on will be required to deduct income tax at 35 per cent on deposit interest. I fail to understand the logic of that. The Government talk continuously about creating employment, about incentives to invest, but they attack those who want to save and to invest.
Banks will tell you that they are bulging with money but nobody is coming in to take money out to invest in industry. There is no longer the incentive to invest. It is a tragedy to say that hundreds of people who in other circumstances would be prepared to invest prefer to put their money in the bank and sit back and enjoy the interest and the security rather than invest in employment creation enterprises. I am surprised at this attack by the Government on the small saver. The Government should be encouraging young people, particularly, to save. In Cork we have suffered the worst of the recession. Many of our traditional industries have been closed, Dunlop, Ford, Verolme. Many people worked in those industries all their lives and made every possible effort to rear and educate their families. They were told to invest their redundancy money to ensure the future of their families. What has happened? The Government will take back 35p from every £ of their income.
I ask the Minister to give serious consideration to this budget proposal. The new Minister for Finance had experience of industry and I hope he will see the disastrous effect this will have on investment and consequently on job creation.
We hear that the economy is improving. This does not seem to be happening throughout the country, especially among local authorities. I was glad to hear the Minister for Energy today talking about lower charges by the ESB. As soon as oil prices were increased some years ago the ESB were very quick to put up prices but it has taken a long time before a Minister for Energy considered the reduced cost of oil and gave some concession to the general public.
This does not apply to the ESB only. I ask the Minister to consider a reduction in gas prices in Cork and Dublin. Oil affects the production of gas and I hope that in the next few days the Minister for Energy will announce price reductions for natural gas in Cork and Dublin. This would help local authorities when they are striking rates because it could mean less expenditure on public lighting and other such services. Most local authorities pay about £1 million annually for public lighting. That is one way to prove to the public that the economy is on the upturn. It would create confidence and help people to believe that there is a future in this nation rather than feeling of depression of those who are working, but particularly those who are unemployed. The time has come for this or any other Government that sit on the benches on the far side to create incentives and take certain capital investment risks which must be taken to bring the nation out of its present depressed state.
The Taoiseach has said on many occasions that the economy is improving, so let that reflect itself in industry, in price control and in the reduction of the cost of electricity and gas. This would give the uplift which is needed now in the industrial world. They are what I hope to hear the Minister for Finance saying in his reply to the debate.
I urge on the Ministers involved to take note of my suggestions with regard to the building construction industry and tourism and that these suggestions will receive careful consideration.
Unfortunately, I have very little time left this evening. I had hoped to let my friend, that well-known judge of beauty contests, Deputy Browne, contribute, but he is young and his time will come.
I thank the Deputy.
I want to express regret at the departure of Deputy Dukes from the very important position which he held. As a Border Deputy I had no reason to be grateful to the Deputy, but he is a tremendous young politician, probably the most able in the country. His real work will not be recognised probably until ten years have elapsed, as in the case of Richie Ryan, who had to endure all types of abuse by the public but who today is regarded as one who had positive answers to Ireland's problems a decade ago. Deputy Dukes's real work will not be gauged for a number of years, but I would like to pay tribute to the job he did in guiding us through a very traumatic period of our economic development. We had inherited an appalling mess from the Soldiers of Destiny who produced the 1977 manifesto, which will rank as the most despicable document ever produced on behalf of the Irish nation.
The nation's problems were very severe when we took office and the Government have applied themselves in a very responsible manner. Having said that, I come from a depressed area, the Border region, which has been described by the European Economic and Social Council as the most underprivileged and deprived in western Europe. My area has been ignored over the last 17 years. It has borne the brunt of the Ulster troubles on behalf of this nation and successive Governments have done little or nothing to alleviate the terrible economic distress felt in the Border counties.
On a national basis, our problems continue to escalate despite the very best and honest efforts of this Government. The twin problems are unbelievably high taxation and the increase in the unemployment figure. That figure of around 240,000 is open to question due to the very extensive black economy, but the fact is that there are thousands of young people leaving schools with little or no hope of gainful employment in the future. That must be a matter of deep concern to all political parties. The present stereotyped policies of dealing with unemployment are obsolete and the time has come for a radical reappraisal of the economic situation. On previous occasions I called for the implementation of job sharing and the abolition of overtime. I also believe that the Government should introduce an attractive tax-free incentive for people in the public sector to retire at the age of 55 years. This is the only way in which we can really create employment for our young people who are in serious need of some hope of employment.
Another area about which I would wish to express concern is that of social welfare. I suggest that we are fostering a social welfare dependence which is out of proportion to the size of our population. We are a country of three and a half million people and there are one million social welfare beneficiaries. This is an unbearable burden on the small and decreasing number of people who are working. It accounts for the tremendous amount of money taken out of the wage packets of those who are PAYE workers. Again this is one of the reasons for the very active black economy in our midst. In that connection I draw the Minister's attention to the recent exposé in the Sunday Independent of the massive social welfare fraud taking place in the Border areas, which accounts for a figure in the region of £25 million per annum, despite the Minister's denials and half admissions. The scale of social welfare fraud is horrific. If the true extent were known, it would cause a revolt among the PAYE workers and those who pay taxes. The recent fraud in the Border area is undeniable. I have in my possession a report compiled by a social welfare investigation officer which clearly indicates that a sum in the region of £25 million is being pilfered by North of Ireland pirates who are putting their hands into the pockets of PAYE workers down here. This is deplorable and cannot be allowed to continue. At a time when we are cutting down and closing hospitals and teacher training units, it is regrettable, to say the least, that we are allowing that unbelieveable sum of money to leave our economy. The Government must do something to close the avenues and prevent money of this nature from escaping. Many of the recommendations made in that report have been ignored by the Government. They are afraid that if we open this Pandora's box it will be seen that the situation is totally out of control. There has been a certain ambivalence towards social welfare fraud. This is not just confined to Border regions. It is widespread.