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Dáil Éireann debate -
Thursday, 18 Dec 1986

Vol. 370 No. 15

Supplementary Estimates, 1986. - Adjournment of Dáil: Motion.

I move:

That the Dáil on its rising on 19th December, 1986, do adjourn for the Christmas recess until 2.30 p.m. on Wednesday, 28th January, 1987.

There were many positive developments throughout 1986, the year under review, and it is worthwhile to refer to some of them.

In August 1986, consumer prices were only 3.1 per cent higher than in August 1985 and import and wholesale prices have been falling. The international price of oil is now only about one half of its level at the beginning of 1986. The rate of inflation had already been moderating and is now at its lowest level for almost 20 years. The prices of many products have fallen including petroleum products, air and ship fares, and electricity both to industry and the consumer. The prices of many items in the average shopping basket have moved upwards very little if at all. The simple truth is that many of those at work, with the favourable income tax changes in the budget of 1986 and lower inflation, are better off than they would have thought possible at the beginning of the year.

Since the Government came into office inflation has fallen from 21 per cent to about 3 per cent now. This has meant that wage packets now go further——

Are there copies of the Tánaiste's speech available?

I am working from notes in accordance with the precedent of the House.

Is the Tánaiste reading from a script?

I am reading rather assiduously from notes.

At least he wrote it himself and did not have it written for him.

Along with the income tax changes in the budget of 1986 there certainly has been some real income growth for most of those at work this year. This year also the balance of payments deficit on current accounts as a percentage of GNP will be at its lowest level for many years. We are now far removed from 1981 when the State had a balance of payments deficit equivalent to 15 per cent of national output. At that time, we were consuming at home not just the equivalent of what we were producing in Ireland, but some 15 per cent more as well. That could not have gone on without a crisis, but this Government and the previous Coalition Government were prepared to tackle the overall economic problems and a serious collapse was averted. The balance of payments deficit this year is likely to be in the region of 1½ per cent of GNP which is tolerable for a country at our stage of development.

This year also saw the successful continuance of many of the Government's social policies. Social welfare payments were increased in July and again the rate of increase was ahead of the expected rate of inflation for the year following the increase. Social Welfare has been a major priority for the Government since we assumed office, and our record of increases is unique in Europe. That is not to say that social welfare payments for many individuals and families, particularly for those on unemployment assistance, are adequate and satisfactory. The publication of the Report of the Commission on Social Welfare during the year was of considerable benefit in highlighting the importance of an adequate basic payment, and in identifying priorities for action in the years ahead. There is a strong case for a careful rationalisation of many schemes and for the elimination of anomalies. The commission's report will be a benchmark document for all those involved in making political choices in the future. It will not be possible, for financial reasons, to implement the commission's proposals all at once, and the report showed an awareness of this limitation. In addition, some aspects of the report will need full and careful evaluation.

Major progress has been made in solving the housing problem. The number of people being housed in local authority dwellings in recent years has been significantly higher than previously, and the average waiting time for local authority housing has been slashed. Also, many people with comparatively modest incomes have availed of the schemes designed to assist home purchase, particularly for the first time housebuyer, through the Housing Finance Agency, the £5,000 grant scheme for local authority tenants, and other grants and subsidies. The house improvement grant scheme is proving to be of major importance in renewing construction activity and will continue to provide a major stimulus in 1987.

Within the limits of the financial resources available, the Government has taken many initiatives over the last four years to stimulate enterprise, investment and employment. The National Development Corporation is now established and working and I expect that the corporation will in the medium term play a major role in Irish economic life by initiating projects itself, through joint ventures with the co-operative and private sectors, and in building up strong indigenous Irish companies as the Telesis report has suggested.

The enterprise allowance scheme has helped over 15,000 people to move to self employment from unemployment. The social employment scheme has been a major innovation and in the first year of its operation exceeded its target of involving 10,000 people, who were able to break out of the cycle of long term unemployment and to return to the dignity of working. Local communities and participants have reacted very positively to this development. Also, many other initiatives have been taken in the area of training and special schemes, for example, the community training scheme which is concentrated on young people in deprived urban areas, and the social guarantee for youth which is aimed, in the first instance, at early school leavers with no qualifications and who have been six months unemployed.

The list of incentives aimed at assisting private enterprise is many and varied. Measures aiding enterprise have featured in many Finance Bills such as schemes to aid research and development and the investment of outside capital in small business, and to foster profit sharing. Special attention has been given to many of the State commercial enterprises. New equity funds have been put in where appropriate, and revised policies which often involved changes and difficult decisions for both management and workers, have been promoted when necessary to secure the future of the enterprise in question.

In 1986, the rise in unemployment has slowed down, but it still remains the critical national problem which poses a major challenge to both Government and to all elected politicians. In dealing with it, we have to take account of the overall situation of the public finances, and must seek to get our priorities chosen inside the framework indicated by the size of the national debt, the interest costs of servicing present and past borrowings, and the need to contain the overall borrowing requirement.

Speaking for a moment as Leader of the Labour Party, it would be wrong for people in this House or outside the House to get the impression that members of the Labour Party do not need to worry about subjects like the current budget deficit. Nothing could be further from the truth. If we are to argue that public services should be maintained at their present level; if we are to fight effectively to protect jobs in those services; if we are to avoid leaving a mountain of debt for our children to climb — if we are to do any of those things, then we must concern ourselves immediately with the public finances. To ignore the problems of debt is not socialism; it is gross irresponsibility. As a matter of interest, that is precisely what the Progressive Democrats have done in their so-called "Blueprint", which they published recently. In their anxiety to win votes, they chose to ignore the debt mountain completely.

The difference for us in the Labour Party is not in whether the country's debt should be controlled; it is in now that should be done. In attempting to reduce expenditure, we have to reject cuts whose only attraction is that they are administratively convenient, and therefore provide quick revenue savings.

We must also reject cuts which promote inequity. The basic principle for us has to be that those who can afford to bear cuts must be the first target. It is fashionable on the right to argue that programmes should be eliminated because they are being abused by a small minority. This applies particularly in the social welfare area. Our response must always be that the many must not suffer from the sins of the few. Abuse must be rooted out wherever it exists, but that must be done in the interests of promoting justice and not at the cost of social justice. In other words, the achievement of growth, in our mixed economy, requires both strategy and partnership, interwined in a concerted attack on the priorities.

One many ask what does partnership involve, especially in this context? It is possible to use the word in two ways — to see it as a bland aspiration, always to be talked about but never achieved. Or we can see it as something real, tough, viable and necessary in our present situation. I would like to spell out how I see it.

Partnership ideally means trade unions, employers, farmers and Governments sitting down, in a locked room if necessary, to decide what the real priorities are, and to agree the measures necessary to pursue them. But it also means more than that. It means an end to farming organisations whinging and protesting about the very modest tax demands made on them. It means an end to employers demanding cuts in public spending on every sector except their own and taking a more enlightened attitude to the reinvestment of profit. It means a more socially responsible role for banks and financial institutions. It means the very wealthy, and the owners of substantial assets, being prepared to make a contribution commensurate with their real means. It means an end to the disgraceful and unpatriotic shifting of money for speculative purposes. It means trade unions taking a new attitude to pay, to competitiveness and to restrictive practices.

Perhaps above all, it means a sharing of efforts, a sharing of sacrifice and a recognition that those who cannot carry any more burdens should not be asked to.

I am not suggesting that the struggle between different classes, and between different strands of opinion in society, can or should be put aside for all time. I do not believe that will happen until our society is fundamentally different from what it is now. But in the immediate future, there has to be common ground among all of us on the need to address problems that affect us all. Development — perhaps even survival — requires a commitment now to set aside sectional interests in the pursuit of growth with equity.

If we are to take tough decisions, and sustain them, they must be accompanied by moves towards more equity throughout society. And one of the areas of greatest inequity in our society at present is in the area of taxation. I have made the point, many times in the past, that the size of our tax burden is not our major problem, but the distribution of that burden — the fact that too many PAYE workers are carrying too many people who do not pay their way.

We urgently need major tax reform — not wholesale cuts across the board. We need that reform in a number of ways. We need, for instance, to face up to the disparities between those who pay through the PAYE system and those who are self-employed. We cannot any longer ignore the situation in which whole sectors are virtually free of tax. We must ensure that methods of collection of tax are thoroughly overhauled, to put a stop to the gallop of the parasites who are being carried by the rest of the community.

All of these things require a different political will — none of them, for instance, will be effectively tackled by the new right politics that are becoming fashionable. They also require a change in attitudes throughout the community as a whole. We must stop making heroes of tax swindlers and begin to see the black economy for what it is, a bolt hole for people who are content to let the rest of the community carry them.

There are businesses, and employers, in the community who are in real trouble, who have fallen into very difficult situations because of the market conditions with which they have to cope. There is no point in our making targets out of people who have genuine problems, because by doing so we only compound them and spread them wider. But one of the aims of an efficient tax collection system must be to prevent such problems reaching a point where they become insoluble.

I will refer now to certain issues related to the Department of Energy for which I have responsibility. The Sellafield Nuclear Reprocessing Plant has frequently been the subject of discussion in this House. Deputies will be aware that the Government for quite a long time have been concerned about the safety of the Sellafield plant in view of the frequency of incidents there and its history of bad management. The report on Sellafield published last week by the UK Health and Safety Executive has more than justified the Government's concern. The report is a damning indictment of the operation and management of the Sellafield plant. Since its inception the plant has been plagued by incidents and problems. British Nuclear Fuels Limited have now been given one year to meet the requirements of the Health and Safety Executive. The history of the plant gives us no reassurances, however, that even in a year's time Sellafield will be in a position to meet the stringent standards necessary for the nuclear industry. It is now time to call a halt. Reprocessing must stop at Sellafield.

The report of the UK Health and Safety Executive more than justifies the adoption by the Dáil on 3 December of a resolution calling for the closure of Sellafield. The adoption of this resolution was conveyed by the Taoiseach to the UK Prime Minister at their recent meeting.

However, it would be a mistake to concentrate on Sellafield to the exclusion of our belief that the nuclear industry generally must not only be safe but must be seen to be safe. The Government are aware that there is growing support in Europe for an inspection force. The Government intend to pursue this idea unrelentingly. I feel that the report of the Health and Safety Executive on Sellafield must strengthen the realisation that monitoring of safety standards at national level is simply not enough, given the potentially grave consequences that can arise from a civil nuclear accident.

The Chernobyl accident has prompted the international community to improve co-operation in the areas of information, assistance and safety. In September, member countries of the International Atomic Energy Agency, including Ireland, adopted two international conventions, one on Early Notification of a Nuclear Accident and the other on Assistance in the Case of a Nuclear Accident or Radiological Emergency. On the question of nuclear safety and radiological protection, the agency are planning to expand their activities in these areas and Ireland, having been elected to the board of governors of the agency for the next two years, will be using its influence to support these activities.

Following the Chernobyl accident an inter-departmental committee was set up to assess its affects in Ireland and to take whatever protective measures were necessary against any radiological consequences resulting from the accident. Later the committee turned to consideration of the improvement of measures to cope with a nuclear accident. An emergency plan is being finalised by the committee and will be submitted to the Government shortly. In the context of this plan, consideration will be given to the further requirements of the Nuclear Energy Board. Deputies will be aware that provision has been made for additional resources of nine staff and some £600,000 to help the board cope with monitoring and other demands in the wake of Chernobyl.

Deputies, of course, will be aware that because of the dramatic slump in the price of oil the past 12 months have been difficult for the oil exploration industry. In some ways, of course, lower oil prices have been beneficial for our economy — for example they have helped to ease inflation and improve our balance of payments position. On the other hand, however, they have created difficulties for companies involved in Ireland's exploration programme and, indeed, have led to enormous cutbacks in oil and gas exploration expenditure worldwide. Even in mature oil provinces, where reserves are well established, exploration and development activity has been greatly affected.

Despite this troubled and uncertain international background, I am very pleased that a satisfactory level of exploration offshore Ireland was maintained this year. Seven exploratory wells were completed and, in addition, approximately 5,000 km of seismic was shot in 1986. While these wells ensured that the impetus of our exploration programme was not diminished in this difficult year, unfortunately they did not result in new commercial discoveries although one of them, 50/6-1, flowed oil and gas on test. The results, therefore, continue to give encouragement and have added considerably to our knowledge of our offshore basins. On present indications, at least three exploratory wells will be drilled next year. Other wells are very likely but I cannot, at this stage, accurately forecast the level of drilling in 1987.

In this regard I am hopeful, that the adjustments to the 1975 licensing terms which I announced in September last will help to influence exploration companies to maintain the impetus of our exploration programme. As Minister for Energy I have fairly met and cleared the main preoccupations of oil companies while fully protecting the national interest. There is no longer uncertainty about the State's intentions on equity or carried participation. The steps which I have taken in relation to our terms have been positive and I believe that they have strucks the right balance between the concerns of the oil companies and the interests of the State.

Deputies will be aware of the encouraging results being obtained from drilling operations at Galmoy under prospecting licences granted by my Department. While it is too early to say what the final outcome will be, I am hopeful that the results obtained to date will provide a useful stimulus to increased investment in minerals exploration generally.

It is my intention to publicise within a matter of days a study by the Geological Survey of my Department on the coal potential of the Kish Bank Basin. At the same time, I propose to indicate my Department's readiness to consider applications for prospecting facilities in the area.

One of the other events during the year which deserves comment is the emergence of a new party in the shape of the Progressive Democrats, who have embraced the political and economic ideas of the New Right. They now sit — we cannot see them now because they have not come in yet — with the great populist party of this House who have also flirted with the rhetoric of the New Right. Fianna Fáil still deal in promises which, though less copious than those of 1977, are still a recipe which could damage the political and economic independence of this country seriously. Their offspring, the PDs, are marginally different in that they trade in myths rather than promises. They will spread the myth that you can reduce the social welfare Estimate without hurting anybody — some nonsense of helping the deserving poor at the expense of the undeserving poor. They can assert this with a confidence born of ignorance and a fearlessness born of arrogance.

The PDs have stated that they will cut the social welfare and health Estimates. Such candour is admirable. It represents not just the thinking of their own party but also represents much of the thinking of Fianna Fáil though they are too cute to be caught saying any such thing. At some time in the coming year Fianna Fáil will be putting their policies before the electorate.

I know that Fianna Fáil, with all their new-found commitment to prudence in public expenditure, will not ask the Irish people to take them on trust and will cost each proposal in preference to hiding behind rhetoric like "restoring confidence". Confidence has yet to bake a loaf of bread or pay an electricity bill.

The second myth put forward by the two parties opposite is that they can prune the public service and in doing so reduce taxes. "Pruning" is an insidious deception by those politicians who have consistently denigrated those working in the public service. What they mean is throwing people out of work. They would have you believe that working in permanent and pensionable employment which provides a stable environment for the raising of a family is in some sense less patriotic than working in the private sector. They undermine public servants by implying that they are a burden on the taxpayer while conveniently forgetting that these people pay their fair share of the national tax burden.

It is not Irish public servants or others working in the semi-State sector who have shifted large sums of money out of this country to avoid paying their fair share of tax. But then Fianna Fáil are going to do away with deposit interest retention tax if they are ever again in Government.

In 1978 before I was a member of Dáil Éireann I heard that the then Minister for Finance was cheered to the rafters in this House by the Fianna Fáil backbenchers when he abolished a very modest measure of capital taxation in the wealth tax. I was astounded then that these men and women, mostly from humble backgrounds, could cheer the abolition of a measure which would have affected only the very wealthy, a level of wealth to which very few on the Fianna Fáil backbenchers could ever hope to aspire.

I am wiser now. When they promise the abolition of DIRT I know that these decent men are only puppets and that behind them are the property speculators, the oil barons, and the gaming machine operators whose creed is the quick buck and whose coinage is the quality of life of the ordinary person. What the people on the benches opposite are afraid to admit is that if wealth tax had been left in place, it would now be making a substantial contribution to the Exchequer and the level of income tax consequently would be significantly less.

In the interval after this House adjourns, the Government will be working towards the presentation of our fifth budget, with a view to placing it before the House in late January. I do not wish to pretend to the House that the preparation of next year's budget will be an easy task. The parameters will call for strict control of public expenditure and, as I have already said, the task will be to apply that control in a way that is equitable and fair.

It is my aim that a number of things should be capable of being said about the 1987 budget when it is introduced. The first should be that if that budget calls for sacrifice, the sacrifice involved will be spread across the whole community, with those most able to bear sacrifice being the first asked to do so, and those who cannot be asked to carry any more burdends being protected.

The second thing I want to be said about that budget should be that any sacrifice involved should have a clear purpose. That purpose has to be threefold: the continuing task of ensuring our integrity as a country in our dealings with foreign banks; the regeneration of our economy to enable the jobs we vitally need to be created; and another impetus to the task we have undertaken of creating much greater fairness in our tax system.

These objectives, of course, are widely shared, but they are capable of different interpretations, and different views and philosophies can be brought to bear on the job of achieving them. The tasks will be to endeavour to reconcile those different views and philosophies, if that is possible, in order to produce a budget meeting the objectives I have outlined.

The Government have now been four years in office. Disagreements between Labour and Fine Gael during that period have been about worthwhile issues and not on conflicts between personalities. The last few months have been difficult for the Government in terms of Dáil business but the record will show that much important legislation has been passed or progressed.

A general election is coming — it will take place in 1987. In that election, I will lead an independent Labour Party, putting forward coherent and radical policies to deal with the issues that concern our people. I intend to come out of that election as the Leader of a party who are committed to their own growth and development and to ensuring that major issues and priorities such as employment and the need for tax equity are kept at the centre of the political stage. After that election. Labour will continue to play a full part in the democratic processes of this country. We will never compromise in any way the interests of the people we seek to serve.

The speech of the Tánaiste and of the Leader of the main Opposition party shall not exceed an hour. The speech of any other Member, except the Taoiseach, shall not exceed 30 minutes. Deputy Lenihan has 30 minutes.

One aspect of the Tánaiste's speech on which I will comment is its total unreality vis-à-vis the very real necessities and requirements of Irish life at present, politically, economically and in terms of the public finances. It is the air of unreality to which I refer that permeates the whole of the Tánaiste's speech which I have read and listened to. Reality in Irish politics is what the public require today. They want to know what people in charge in Government will do, first of all, about jobs. The fact of the matter is that we have practically 250,000 people out of work and the public want to know what will be done in regard to that matter. They want to know how investment can be stimulated, public and private, so as to have more people in gainful employment. That is what people want to hear about. That is the essential need of today. We have a growing workforce, particularly of trained, educated young people with fewer jobs for them. Apart from the lack of jobs at home, there is the aggravated factor of emigration. This means that public finances are being pumped into the educational and training system, with people, rightly, availing fully of those facilities, training and educating themselves. However, they are then forced to emigrate and there is a transplantation of the best brains of the country in increasing numbers.

People want to know how we conduct our affairs in the EC. No matter how it is projected, the fact of the matter is that the Government's flawed negotiating position in the EC has resulted, finally, in the Minister for Agriculture being sidelined in recent days to a position in which at least 2,000 to 3,000 jobs in the food processing industry will go. That is fact. The only positive benefit from our membership of the EC has been the growth of a food processing industry through the co-operative movement, and off-farm employment which is all important, and should be, particularly to the Labour Party and the Tánaiste. Yet a decision has been reached in Brussels which will mean that 2,500 jobs — in County Cavan, County Monaghan, County Kilkenny, County Cork, County Kerry, County Limerick — where our basic food processing industries are located — will be lost by reason of bad negotiating skills on the part of the Minister for Agriculture and the Government who carry collective responsibility.

In regard to public finances there is inadequately revenue at present being unfairly collected by the Government from fewer people, a shrinking workforce paying PAYE to sustain a Government who know they are collecting less from them because there are not sufficient people working and in a position to pay. There is no point in talking about reforming the taxation system, making it more equitable, unless one increases the general workforce. Unless there is more investment, more people at work, more profits and salaries, more incomes generally in our community, to talk about tax reform is idle talk. I repeat that one is just talking about collecting taxes from a shrinking number of people in a society where investment growth is not taking place. That is factual. I am endeavouring to bring an air of reality into a debate that quite plainly has gone off the rails completely on the basis of the Tánaiste's cosmetic introduction and his total refusal to face up to basic realities.

Another reality, is the existence of high interest rates. It should be acknowledged that farmers will not increase production and businessmen will not expand their operations or be persuaded to progress in terms of providing employment unless interest rates come down. The fact of the matter is that interest rates are too high and constitute a total deterrent in our economy at presents as far as expansion and development are concerned. The effect of this on local authorities, health boards and semi-State bodies throughout the country is also evident. Apart from the finances of the Government, all of their finances are in very serious disarray. What we are carrying at present is a bureaucracy at central and local government level in the State-sponsored bodies, none of them having the required funds to engage in the developmental and expansive activity within the public service that is so essential.

Not alone do we have a sickness in the private sector but we have it in the public sector also. Basically this stems from a Government who have lost their political will, a Government who must go. As was said on several historic occassions in the British House of Commons: this Government must go and, in God's name, go. They have lost all moral authority to rule. There is no longer any moral legitimacy obtaining as far as this Government are concerned. I say that advisely. Indeed I am trying to give them some good political advice — the sooner they go the better it will be for them because they are daily diminishing their authority, diminishing respect for public institutions in this country, giving rise to a tide of cynicism that will sweep them into oblivion not just for one term but for the remainder of this century. It is happening already.

I want to give them some sound political advice. The sooner they go the better for themselves because when this happens to a Government there is absolutely no point in pursuing the futile endeavour of clinging on to office and power for the sake of clinging to office and power. Political power is there for a purpose, the purpose of exercising good. We may disagree about the good we do when we exercise political power. That is legitimate, but it is not legitimate to cling on to political power for the sake of being in power and office, and that is what we are witnessing at present. It is very sad. I have never seen any other example of insensitivity such as the present Government and Taoiseach show in this regard. That is quite apparent to anyone with a feeling for the nuances and sensitivities of the people and with a knowledge of what is going on out there in the world. It is impossible for any of use not to recognise that this Government and Taoiseach have lost all respect. They have failed on so many criteria.

In the last analysis democracy, particularly parliamentary democracy depends on moral authority. Democracy is not the most efficient system of government. Parliamentary democracy is not the most efficient way of handling national affairs. The only basis for parliamentary democracy and parliamentary government is a moral basis. Sustained by the people it has a legitimacy. When not sustained by the people it has no legitimacy, and this Government today are not sustained by the people. Why they cling on at the moment is the most baffling political question I have ever encountered. Any self-respecting Government in any parliamentary democracy in the world in their position would have gone months ago. The Taoiseach and the Government are doing a very grave disservice in this respect to Irish public life and to political institutions. They are inducing in the public mind a high degree of cynicism and disregard for political institutions and for the parliamentary democratic system. It is quite clear now and fully proven what Deputy Liam Cosgrave meant when he talked about the mongrel foxes taking over.

He said something about Fianna Fáil——

Through their professional handlers the Government embarked in a cynical way on a campaign of vicious personality assassination in politics. We had never seen this until the past few years. It will not work this time and I am glad to see that idea coming home to roost. I warn the Fine Gael Party, if they want some political advice, to stay off that one because the people are totally disenchanted with that approach to politics. They want policies now to deal with the real economic and social problems. They will not wear any policy or policies of character assassination directed at personalities in regard to the Leader of our party or others. The public are now concerned with the harsh and tough realities of coping with life and with having people in charge of Government who are concerned about them and their problems. They will not wear any character assassination policy through this coming election campaign. That is another bit of free political advice that we give the Fine Gael Party.

In Ireland today we want to restore hope, faith and confidence in our community and in our economy. We want to ensure that there is a mood out there that will induce the businessman to borrow money and expand enterprise, that will induce the farmer to invest in his land and people to work overtime and help to expand production in the firm. We want a degree of hope and faith that can restore confidence and ensure an expansion of investment and a real input at every level.

I was amazed to hear the Minister for Energy of all people, second in command of the Government, Leader of the Labour Party, pouring some scorn on this philosophy, but basically confidence is at the heart of all expansion and development. Unless there is a high degree of confidence there will be no investment, expansion or development. At the core of all economic theory is the psychological engine of confidence and if that does not exist there will be no investment, no expansion and no development. Investment, expansion, and development flow in natural order from a restoration of confidence, and that depends on the restoration of national morale. There is a basic intertwining between confidence and investment so that you have a practical partnership between restoring national morale, confidence, investments and material progress. They are all wrapped up together in one package.

If national morale is not restored and the confidence generated, then you will not have economic progress or rectification of the financial aspects that have beset our public, business and commercial finances in recent years. The most serious thing this Government have done has been to damage the national morale in that sense, and I say this advisedly. I have been out over the past few weekends talking to people in my constituency. On every doorstep I see a total retreat from confidence and a total cynicism and total scepticism about the capacity of institutions here, particularly this institutions and the Government, to cope with the problems that beset our community. We all here would agree about that.

We must restore confidence that this House and the Government can do something about the problems, and we must be seen to be able to do something about them. We must introduce a programme that the people can back and which will give them hope for the next four or five years. We are in the dying days of this Government and we, as the next Government, must restore faith and hope in the country's future. It will be our main purpose to do that in a programmed way over five years. We need the will of the people to give the Fianna Fáil Party a clear overall majority and when we secure that mandate our political will will be to manage the country's affairs efficiently and effectively in co-operation with the various social partners in the community, the trade unions, employer organisations and farming organisations. I hope to be in a position to participate in that endeavour. I can assure the parties who comprise the present Government that we will undertake that job in a fearless manner and that the only criteria will be the national interest. The incoming Fianna Fáil Government with a clear majority, unhampered by fragmented associations, will carry out their job in the national interest.

All of Deputy Lenihan's old friends will have noted with some concern the unusually muted tone of his speech. I will give the House my interpretation of it. I detect underneath the rhetoric, which I have heard before from all parties, something which, I fear, is naked terror. I strongly suspect that Deputy Lenihan has not got a cat's clue what he would do to put the economy to rights if he found himself over here again. That judgment must fall with the same strength, if not more, on all of his colleagues, certainly if one is to judge from the speeches which they emit from time to time.

Deputy Lenihan is a brave and senior distinguished politician. He knows that he enjoys the affection of most people in the House, if not all, and I would like to be numbered in the majority in that respect. It is sad when Deputy Lenihan and myself are facing each other to hear someone so experienced and so senior displaying this naked terror, but, nevertheless being willing to go in and bat for his side; and able to produce nothing more in the last Christmas Adjournment debate of this Dáil than the weary, old, political bump-and-grind that he has been practising since he was a student.

However, I agree with the Deputy in some of what he said, and I cannot dissent from the sombre note he struck. The despondency and cynicism which he believes he has identified on the doorstep is there. The Deputy is right in saying that people are sceptical in a measure which perhaps formerly was not the case about what the political system can do for them. I have always been amazed at the naive optimism of the electorate who imagine, or allow themselves to be persuaded, that a change of Government will mean a substantial and sudden improvement in their material lives. No amount of experience seems to disabuse the electorate of this pathetic belief. It was visible in 1973 and in the first election in which I ran in 1969, although at that time we did not get a change because my friends in the Labour Party decided that the sixties was the time for Labour to go it alone. It was just the moment when the dominance of TACA and that kind of mohair interest would have made a socialist participation in Government peculiarly important; but that was the moment they chose to go it alone. Otherwise the Government certainly would have changed in that year. I do not pretend that it would have made a great difference, nor indeed was that year felt on the material plane as being a very hard one. There was that optimism in 1973, again in 1977, again in 1981 in the summer and again in early spring of 1982. I accept from Deputy Lenihan that a somewhat more sober mood has supervened with the electorate.

I ought to draw attention to something which is much nearer home in the sense of this Parliament. That unease, that leaking of confidence from the system, is visible in patterns in this Chamber. I have been in Leinster House for about 18 years and I certainly do not remember any Dáil in which there were as many as eight Deputies voting either regularly or occasionally against the party on whose ticket they were elected only four years previously. The Progressive Democrats contain four former Fianna Fáil Deputies and one former Fine Gael Deputy. In addition we have Deputy Glenn most recently, Deputy Treacy of somewhat longer standing and I think Deputy Bermingham on one occasion voted against the Government as well. In addition to these documented cases, there have been three or four cases where Government Deputies have at least made threatening noises which naturally a Government must take seriously. These are all symptomatic of the individuals and their concerns and anxieties but, taken as a whole, that picture is symptomatic of something more widespread and deeper. Nobody here is in a strong position to deny what Deputy Lenihan said, even though naturally his remarks were directed, and had to be directed because of the rules of the bump-and-grind game, at his opponents — the rules which applied with particular strictness in the Fianna Fáil Party, which forbid any objective speaking or any objective assessment of a situation.

Most politicians are partisan. It is only natural to stand up for ones side and stick to the people who have stuck to oneself but that loyalty can reach a point where it is against the public interest. That is the case in the party opposite. I am sorry that Deputy Lenihan's general expressions of concern about public cynicism did not extent to a more dispassionate examination of the scene around him, of which his own party and their record are a very significant part, probably the most significant part. I suppose I could be accused of indulging in the old game by saying that, but I believe it.

One of the reasons for the despondency is that although they have had a hard time over the last four years people see nothing else in prospect but a party of which they have all too good a recent memory. I was struck a couple of weeks ago by a speech made by an independent member of the other House, Senator Shane Ross, addressing a university society. I want to stress that he is not a member of a party, so far as I know. He has no party political axe to grind. I do not intend to be offensive to him when I say that perhaps it is the best of his play not to be so, elected as he is for a university constituency. He addressed the Dublin University Philosophical Society a couple of weeks ago, and he did not put a tooth in it when he came to analyse the reasons for despondency in the financial world, in which he is an expert, in the stockbroking world in particular.

He said, and it may have cost him votes to have said it, that the reason the despondency he had mentioned was present was the universal fear in the financial side of the world of what was likely to replace this Government if they were to go out. He said that while the Fianna Fáil Opposition have been smugly enjoying the Government's discomfort at the state of the economy and the financial community's response to the attempted sale of billions of pounds of Government stock, they should realise that, if there is one thing the financial community fear more than the tricky ideology of the present administration, it is the return of an irresponsible free spending Fianna Fáil regime.

He was speaking of a financial world virtually every man and women in which voted against Liam Cosgrave's Coalition nearly ten years ago. The financial, industrial and commercial world to almost a man and woman voted Liam Cosgrave and Richie Ryan out. They must be down on their knees now sobbing for the chance of having Richie Ryan and Liam Cosgrave back, along with the economic indicators over which they presided. They must be kicking themselves, if they have that much objectivity, at the lunacy which induced them to ditch a Government who were presiding over economic indicators all of which had been coming right for two full years before the election; and a Government presiding over a State which was enjoying, and had been enjoying for two years before the election, three times the current European growth rate; but because they did not want to pay a wealth tax — what was wealth tax? — and because they did not like to be vulnerable to a wealth tax, which was a social affectation at the time —"Aidan and I are destroyed with the wealth tax"— they voted out, and contributed money to a system of voting out, that Government.

That community has learned better, and they have learned better the hard way. They now have a representative in the shape of an independent Senator who is not afraid to speak the truth about this. He said: that the prospect of the Opposition attaining power with its reckless record in state finances, and its refusal to spell out a financial policy document which, if it encompassed all the extravagant promises made, would expose them to ridicule, have left many members of the business and financial community in a state of cynical despair, that the refusal of the Fianna Fáil Party to play any role in the present economic crisis apart from taking naked pleasure in the Government's predicament make them totally unsuitable for taking the financial reins of power. A more damning judgment on an Opposition from an independent source I have never read. I do not remember anyone speaking about this party like that while we were in Opposition. I do not even remember anyone speaking about the Labour Party in such terms, although many must have felt it.

If I were an independent voter and if I were being asked, or if I was weighing up with myself how I would cast my vote, I would take to heart something which the former English Prime Minister, Mr. MacMillan, said in 1983. I may be excused for quoting a British Prime Minister seeing as Deputy Lenihan was not ashamed to quote the Protector himself. Mr. MacMillan in 1983 was and still is a retired senior statesman. He was then 90 or thereabouts. He was asked by someone who knew well, as all the press know, that he is not an admirer of Mrs. Thatcher, although of course he is a conservative, how he would advise voters in that election of 1983. He said: "Prudent children stay with nurse, for fear of meeting something worse". That may be a humble level on which to place any government's position with the voter, but that is the basis on which even the most uncommitted and switched-off elector must look at the contest which is now fast approaching.

I want to emphasise in connection with the quotation I made from Senator Ross, that I do not recall seeing any member of the Financial community springing into the columns of The Irish Times to contradict him. I do not remember calls from his professional body for his resignation, or for his withdrawing what he said. On the contrary there was, as I feel I am entitled to interpret it, a gloomy silence of assent.

No one on the far side, or even what I might call the unorganised opposition outside, wants to face the serious realities of our situation. Deputy O'Kennedy, from whom I expect we will be hearing during the course of this debate, made a speech on State finance about ten days ago. He said the Government had to do somethings which was the key to the problem, namely, to shift expenditure and resources from the current to the capital side. He listed a few weary old chestnuts on the capital side such as VAT and new arterial roadways, which I am not disputing we need —— indeed, have seen more of them under this Government than I can remember in any four years put together previously. He listed these capital projects on infrastructure which of course are important; but not one word about which section of the current budget he would prune. That kind of junk politics is not worth a curse to anybody. If Deputy, O'Kennedy has nothing better to offer by the way of financial strategy than that kind of empty blather he would do far better, and do himself more credit, by maintaining a modest silence.

Getting away from Fianna Fáil altogether and moving over to the non-party opposition represented to some extent by the unions, they are no better. They are not willing to face facts either. At the end of 1984 or thereabouts the ICTU put out a document, a campaign for jobs, which was a very large and detailed document on job creation. It was instantly responded to by Fianna Fáil who naturally took it on board as they take everything on board. Where politics are concerned they are morally porous, they are permeable. Any kind of pressure group anxiety, greedy demand, will trickle through their carapace. The ICTU put out their document, which instantly Fianna Fáil got in behind. Their set of priorities for job creation would make a cat laugh. I lampooned it in this House richly at the time, and I am not going to go back all over it now. One of their items relating to job creation was "the elimination of sexism in the classroom". That may be a wholesome object in itself, and if I knew what it was I might well approve of it, but it has nothing to do with job creation. That of course is a consideration too banal for the great brains in the ICTU.

The ITGWU put out a document this morning after launching it yesterday with a pugnacious speech from Mr. Carroll. It is a letter with an embossed letterhead which is signed by the general president, the vice president and general secretary, with facsimile signatures, in case we would doubt the authenticity of the document if it did not carry them. They are inviting Deputies to let their members know their attitudes towards a whole lot of ideas on which the attitudes of the ITGWU are visible from the way in which the questions are framed. One of the questions is as follows:

Do you agree that the next budget should increase funds for the public construction programme in order to build roads, houses schools and so on?

Where is the money for the increased funds to come from? These are considerations which are beneath these geniuses. The only suggestions they have for increasing revenue are to catch up on tax evaders, with which we all agree, and to increase the level of taxation on the self employed, including farmers.

I have no doubt that some farmers, maybe a lot of farmers, have got away with murder compared with the PAYE section down throught the years, but if farming is all that much of a snip why are people running out of it? How is the farming population dropping drastically and contributing to the unemployment problem if farming is such a goldmine? That is apart from the figures which the farmers give, or which objective statisticians arrive at, in regard to farm income. There is no goldmine. I have no sympathy with farmers' intransigence in relation to taxation, and I have no doubt that if there was a better and fairer tax collection system some more money could be got from them, and also from the self-employed; but it is lunacy to think that we can cover the country with vast arterial motorways, with schools and so on, merely by milking the self-employed. The self-employed are leaving the country as well as everyone else. If the place is such a goldmine why do they not stay and continue riding on the pig's back?

We are asked by the ITGWU to remove the embargo on public service recruitment. The public service has twice the number of people it had when I was a student, notwithstanding that this is the era of computerisation and mechanisation of all kinds which has made much service employment redundant in private industry. It does not appear to have had any effect in the public sector. The mobility within the service, which should in a sense be the answer to the problems in the taxation office, seems impossible to achieve. What is the reason for that? Why do the ITGWU not take their analytical scalpel to immobility in the public service and how hard it is to get staff from one office to another?

As regards the CII, I recognise the truth of the allegation that they look out for themselves and are willing to cut down all public expenditure except that devoted to their own interests. They are not saints, any more than anyone else. But it is important to point out the contrast between the tone which the CII were taking ten years ago in Liam Cosgrave's time and their tone now. They do not say that what we need now is reflation, or hint that with a new Government there would be an injection of capital or confidence into the system. On the virtual eve of a general election — for all they knew their message to their members on 25 November might have been their last message before the whistle blew—— their headline is "public debt stifles economic growth". That is a fact which seems so obvious and immovable that it could not escape notice. While I do not give the CII any special credit for drawing attention to it once again, I welcome their sober note. They recognise, and keep on saying, that what has given asthma to our economy is the burden which the State carries. Asthma which restricts the flow of oxygen, I am not sure whether to or from the lungs but Deputy O'Hanlon will enlighten me, reduces the mobility and the manoeuvrability and strength of the whole body, and in the same way the colossal burden which the State carries, given the numbers it employs and the vast demands made by its debts on it, restricts the State's ability to do the very things Mr. Carroll, Mr. Browne and Mr. Kirwan want.

It is because this State has allowed itself to be saddled with too many tasks and too many people that it is not able to put vast sums into the areas where I and everyone else want to see more money invested. That is the reason. The longer we go on giving into demands that we should increase the grant for this or that, take on some new scheme, expand the public sector, nationalise this or that, and so on, the worse things will become. We must break away from this.

If the House were to sit down and say, "Let us shed the party mantles for a moment; how will we get clear of the situation we are in?" it would be seen that it cannot be done without curing the asthma which is crippling the State's body. Opposition parties sniping and snarling at the Government and saying they are skinflint will not get us anywhere. The Government are skinflint and are penny-pinching, and no one should be ashamed of being penny-pinching or skinflint with public money.

That is what the Taoiseach meant when he spoke about having agreement on the parameters of the budget — naturally he does not expect the Opposition to support every line of the budget — and if he meant that I applaud him. Until that is understood, and we have a consensus across the House which rules out political competition along the lines of "We will spend more money on this and put more money into that," the State will continue going downhill.

There is a limit to how far downhill we can go. There is a stop somewhere. I am anxious that the stop is provided by us and that we will still have a free system when that happens. I am anxious that there will still be free elections and free institutions. I am very anxious that we will not arrive at the position where the democratic parties which are here, and which enjoy a high profile which is flattering to their personalities, and so on, will no longer run our affairs. I am very anxious that our affairs will not be run by the IMF or by the Cubans.

I do not say that lightly. At the rate we are careering downhill financially and Governmentally, taking 20 years together, we are not far from revolution.

I know that as one gets on in life one tends to be pessimistic about things. I remember my father, when he was about my age, talking very gloomily about the outlook for the State. That was in the late fifties when we were on the threshold of a 12 year boom. But I do believe we are on a slope which will not continue indefinitely. There will be a stop somewhere. I am anxious that we will be in charge of arranging that stop ourselves, and that our institutions will survive such a stop.

What can be said for this Government, apart from the general reflection I advanced based on Mr. Macmillan's dictum, is that they have kept the show on the road for four years without scandal. I have disagreed bitterly with many things the Government did. I considered the composition of the Government was ill advised — I will not offend my two colleagues on this side of the House by going over the reasons for that again — but having formed the Government with the support of the Dáil majority, and making allowance for the fact that mistakes were inevitable they can claim to have kept the show on the road without doing anything base and without doing anything to make anyone ashamed to be a citizen of this State. That was a nice change from our experiences in 1982 and further back.

We can claim to have made a general advance in regard to Northern Ireland. I do not make any exaggerated claims for the Anglo-Irish Agreement, but it has had the effect, at the expense of unionists susceptibilities, of rescuing the nationalist vote from the hands of the IRA. That is where it was heading. Deputy O'Hanlon knows that. If it did not do anything more than that, that would be an important achievement.

It sickens me to find that in the face of that Government's achievement it can be belittled in the terms I sometimes see. Any international agreement implies doing business with another State. It implies give and take. Any agreement with the British in relation to Northern Ireland necessarily implies that. I saw a report in The Irish Times today of an occasion at which a nosegay of gems from Deputy Haughey's speeches were published between two covers and introduced by the Nobel Peace Prize winner, Mr. MacBride. I do not want to say anything wounding about Mr. McBride for whom I have a reason to have personal regard. Let me put it this way, Deputy Haughey countenanced on that occasion opinions being uttered, obviously and plainly directed at this Government, which I consider outrageous.

Mr. McBride is quoted as saying that "we were now faced with a problem, a problem in dealing with some of our lesser politicians, namely, that they tend to be influenced by the slave mentality, and to seek a solution which ignores the sovereign rights of the Irish people to the island of Ireland. This seems to be what is happening at the present time in Anglo-Irish relations".

Where is the slave mentality? I make no special point about that gentleman because perhaps he did not consider those words very carefully and I am certain that those opinions are echoed at closing time in many a lounge bar in this country. How can language like that be used about a man who has given the best part of his life, and certainly far more than this the rest of this House put together, to trying to mend the North of Ireland? Is this the best thanks he can expect? Naturally he does not expect unanimity of approval, and I do not give it to him myself in regard to some other aspects of Government policy, but in this regard how can language like that be used? How could it be said that a compromise reached with the British in regard to Northern Ireland, the sole purpose of which is to stop the savagery there, exhibits a slave mentality? How can it be said that the ability to utter blather at Bodenstown ought to take precedence over the anxiety to rescue even a single human being in the North? But Bodenstown will go on because it is part of the Irish people, and we have to live with it. Let us keep it as small a part as we can. Let us not be ruled by these empty slogans and empty terms of abuse about the sovereignty of the Irish people.

There are people who have been uttering this blather for 80 or 90 years, all their lives, and where has it got them? Have they converted a single Unionist mind, let alone won back one single inch of Northern territory? The answer is no. Let us try something else, and, if it has to mean compromise that is what life is made of, in particular, that is what politics is made of. If they did nothing else in their four years I would vote for and support this Government for that.

No Government in the history of the State is more discredited than the present Fine Gael-Labour alliance, not alone for their failure to deliver on the promises they made coming into power but also because of the manner in which they have held on to office, particularly in the past few months, doing deals with backbenchers and making U-turns, even though they must know that public confidence is completely eroded. The Government's two main planks on coming into office were that they would deal with unemployment and that they would bring about financial rectitude.

On unemployment, there are 70,000 more people unemployed now than there were when the Government came to office, an increase of 40 per cent. Consider the 50,000 young people who have emigrated over the past two years — and this is very obvious if you go about rural Ireland where practically every football team is unable to field 15 players because some of their best players are on the streets of New York and London. If you add in such schemes as the short term social employment schemes and all these people who are on temporary employment, then the figure of those who have not permanent employment is astronomical and something which must be very frightening for all of us. On those short term employment schemes I fail to understand why there should be so much stop-go.

The social employment schemes gave long term unemployed people the opportunity to have work, but I do not know why this stop-go method is necessary, particularly as two-thirds of the money is recoupable to the State through savings in social welfare savings, a certain amount of tax collected and an allocation from the European Social Fund. I fail to understand, for example, why Monaghan County Council wrote to all employees in accordance with the terms of the scheme, telling them that their employment would be terminated from 26 December. Why it should be 26 December I fail to understand. Perhaps it was to minimise the effect of the reality, telling them that when they went home for Christmas they would not be coming back.

The same applies to the enterprise allowance scheme. At present, a number of people are anxious to participate in that scheme and be paid an allowance, having come off the unemployment register and taken a job or created some work opportunity for themselves. Because the funding allocated to that scheme was exhausted towards the middle of October, these people can no longer participate in the scheme and rather than give £50 a week and allow people to create activity for themselves, the Government would rather in some cases give £68 unemployment assistance. There is no logic in that. When the Government were introducing and implementing these schemes they should not have allowed that situation to develop.

I was very interested to hear Deputy Kelly quoting Senator Ross and indeed, himself in wishing for a return of Richie Ryan as Minister for Finance. Everybody in this House knows, including Deputy Kelly although I have never heard him admit it, that borrowing on a large scale started with the Coalition Government of 1973-77. Indeed, the highest percentage of GNP was borrowed in 1975 and was praised in this House by prominent members of the present Cabinet, including the Taoiseach who was then Minister for Foreign Affairs. It is also true — and Deputy Kelly did not allude to this — that since this Government came to office they have borrowed £12 billion, which is greater than the total amount of borrowing by all previous Governments in the history of the State. That, I have no doubt, is what has eroded confidence outside — the unparalled level of borrowing of this Government.

Senator Ross and Deputy Kelly need have no fears. The return of the Fianna Fáil Government will bring about stability in this country and will restore confidence. I have no doubt a five year term of Fianna Fáil Government will bring about the sort of progress that followed the failure of the Coalition Governments in the fifties, after which we had 15 years of uninterrupted economic progress throughout the sixties and early seventies.

In introducing and implementing their taxation policies, the Government gave absolutely no thought to the consequences. Nowhere is this more obvious than in the case of the Border economy. Four years ago, in November 1982 when the Coalition Government came to office, whatever traffic was crossing the Border was coming from the North to the South to shop. In their first month of office the price of petrol increased by 35p a gallon and the result was that motorists living along the Border crossed to petrol stations north of the Border for their petrol. Later they began to take their wives and families to do their shopping, particularly at weekends. In many instances they were purchasing goods that would have been much better value at home. The people further from the Border then thought they were missing something and busloads of people started going north. As many as 150 buses go from the Republic to the town of Newry on certain days. It is hard to quantify the loss of revenue to the State but it has been estimated at £200 million per annum and it is know that 57 petrol stations along the Border have closed over the last two years. It is also estimated that petrol stations along the Border from Louth to Donegal are selling up to £4 million worth of petrol per annum to persons from the Republic.

The loss of revenue and jobs, especially in Border areas, is something about which we should be very concerned. The economy of Border towns has been decimated as business has been reduced drastically and it has been getting worse each year since the Government came to power. The Government did not give any thought to their policy on excise duties, particularly when the price of petrol was reduced world wide on a number of occasions. Even then, the Government decided that it was not in the interest of the people to benefit from that reduction and they increased excise duty, in other words, they held on to the money which resulted from a reduction in the price of petrol although it belonged to the people and would have minimised, to some extent, the serious consequences of Government policy in Border areas. The Government and the Taoiseach had no interest in what happened in Border areas in terms of the economy.

It is significant that there is no input from a Border constituency to the Cabinet, the first time in the history of the State that this has happened. This is part of the problem because the Government do not know the consequences of their disastrous taxation policies in Border areas. There are excellent crossBorder development committees in the east, west and mid-Border region and I appeal to the Minister concerned to ensure that any moneys available, either through the International Fund or the European Regional Fund, non-quota section, will be fairly distributed along the Border. In the past, over 50 per cent of the European tourist orientated fund went to Donegal. I do not begrude it to Donegal but available funds should be spread more evenly across the Border region.

This week in Brussels the Minister for Agriculture was negotiating on our behalf and the result of those deliberations was disastrous. Since the Government came to office, the number of people employed in agriculture has dropped from 196,000 to 169,000. We all know that farmers' incomes have dropped considerably over the last two or three years, in the last two years there was a drop of 21 per cent in their incomes. The constituency which I represent has the dairying industry as its main agricultural activity. However, the Government have not fought to ensure that negotiations in Brussels would bring about a result which would be in keeping with the philosophy of the founding fathers of the European Community. When we went into Europe we rightly expected that the ideal of the European Community was that there should be equality and economic opportunity throughout the region and that the weaker regions in the Community would be supported. We were recognised as one of the weaker regions and I fail to understand why the Government or any Minister could accept the fact that we should get the same quota system for milk production and the same reduction in our milk quota as other, better developed, economies such as Germany and Holland.

The average holding in the dairying industry in the western counties consists of about 15 to 30 cows producing about 750 gallons of milk per annum, fed mainly on grass. Compare that with the European industrialist farmer who has 3,000 cows locked up in a shed all the year round, producing 1,400 gallons of milk per annum and fed on cheap foodstuffs imported from south East Asia, probably produced by slave labour. Why should we agree to a quota system whereby we would suffer exactly the same penalty as the Germans and the other European industrialist farmer with his large herd? That is against the spirit of the European Community and I am quite satisfied that the Minister did not use his muscle to ensure that proper consideration would be given to our farmers. That is only one example in the dairying industry but I highlight it because it affects my constituency most. The same applies to beef and other areas of agriculture.

The Taoiseach was in our constituency recently — it was reported that the Minister for Agriculture was there also — and said that Cavan-Monaghan would be included in the more severely handicapped areas. In answer to a question in this House on Wednesday, 22 October 1986 the Minister for Agriculture said:

As was announced on 28 August, the Government have decided to initiate a further review of the disadvantaged areas for the purpose of extending the boundaries and reclassifying existing areas. The position in the different areas throughout the country will be most carefully considered in that review.

How could members of the Government make such an announcement in my constituency? The IFA also said they were told by the Minister that these countries would be included in the more severely handicapped areas but the Minister could not have been in a position to say that if no decision had been made and if the Government were only reviewing the situation.

Deputy Kelly said he would like to see more investment in roads and of course we are all in agreement with that because there has been a total under-investment in them. The condition of roads is deteriorating very rapidly and our county engineer, who could not be considered political in any sense of the word, told us at a county council meeting that it would take £25 million over the next five years to maintain the county roads in Monaghan because they have been starved of funds. We all realise that money is scarce but the method by which the Government allocated the last funding for roads was most peculiar. They decided to allocate the money, not on the kilometre of the roads in the county but on the basis of the percentage uptake of the water rate. Therefore, a county like Monaghan with five local authorities, the county council and four urban councils, and a very small public water supply, came very badly out of that decision. They received £27,000 which was about 180th of the total allocation of £5 million. What sort of bizarre thinking could induce anybody to allocate money for roads on the basis of the amount of water rates collected? You might as well allocate money on the number of sheep dipped in a year. It has no relevance whatever to the condition of the roads or the needs of a particular county. Even at a time when money is scarce the Government could have found a more sensible and pragmatic way of allocating funding for the roads.

This morning the Tánaiste said the waiting time for a local authority house has been slashed. That is correct. We all agree with that, but it is no credit to the Government. The main reason was emigration. There are not so many people looking for local authority houses at present mainly because of the large numbers of young people who have left the country. He also referred to Sellafield and the Governments desire to see Sellafield closed. On three different occasions in 1986 Fianna Fáil put down motions in Private Members' time calling for the closure of Sellafield. On the first and second occasions the Government could not see their way to support those motions but on the third occasion, after most alarming reports were produced across the water, the Government decided to accept our motion, and the Taoiseach has let the British Prime Minister know of our desire to see Sellafield closed. This is another indication of incompetence on the part of the Government who should have been in possession of much more information about the situation than the Opposition were and they should have supported our motion earlier in the year. It would have made a difference had there been a unanimous voice from this House last March when this subject was first raised.

This week we had the Extradition Bill and again the Government refused to accept very reasonable amendments. We see it as the responsibility of the Government, and in particular the Minister for Justice, to protect Irish citizens. We cannot have confidence in the British system of justice. We are concerned about the Birminghan Six, the Guildford Four and the Annie Maguire case. We are particularly concerned about these miscarriages of justice. What is equally serious at this stage is the ineptitude of the British Government in the face of new evidence to deal with those cases. It is only right that we should be concerned about extraditing citizens of this State to a jurisdiction in which we have no confidence. It is not necessary to say anything about the way justice is administered in the Six Counties, because we discussed this on a number of occasions. I fail to understand why the Government could not accept the very reasonable amendments put forward by Deputy Woods.

The consultative document on health was circulated this week. That is not a Government policy document, it is an elaboration on the statement made by the Secretary of the Department of Health to a World Health Organisation meeting in Dromoland Castle some months ago. At that time we said it was extraordinary that a public servant was the first to articulate what appeared to be the Minister's thinking on the health services. Now we have a more elaborate production, in many ways more vague than the original statement of the Secretary of the Department. He spoke very strongly and clearly about the central pivotal role of the Department in the administration of the health services. He was talking about something which has been the thrust of the Minister since he came to office. The new document is not as strong on the question of the pivotal role of the Department. The wording is changed.

We are opposed to more centralisation in the health services. We believe that more centralisation will lead to a diminution of local authority input and the voluntary input at local level into decision making in the health services. That is totally in conflict with the Government's stated policy of more devolved administration to local authorities and for education. I do not know if this represents Fine Gael policy or Labour policy, but I believe there is conflict between the two parties in Government on this. On a number of occasions the Minister for Health came into this House and told us he had made submissions to Government, and one of those submissions was on the reorganisation of the health boards.

While the document published yesterday states that in a country this size we have too many health boards, it does not state what proposal has been made to the Government about a reduction in the number of health boards. But we are all of the informed opinion that the number of health boards the Government wish to see is three — one going all the way from Carlingford Lough to Carnsore Point. Having a central administration is something we would be totally opposed to because in terms of availability of service, the people on the periphery would suffer, as we have seen so often in so many other areas of Government activity. The document also suggests that the time may have come when the tax allowance on VHI premiums should be abolished. We would be opposed to that move at this time because it is the right of individuals, if they wish to pay for their own private health care, to do so. It is significant that many VHI subscribers are entitled to full free health service. The people who subscribe to the VHI have already made their contribution to the health service both through taxation and their health contributions. We do not have a nationalised comprehensive health service for everybody. It is important not to forget that, because there has been a thrust by this Government to try to polarise private and public health care into two separate compartments. We have had a good system of integrated health services over the years which has served the nation well, but if we were to polarise them into two separate compartments the public patients would suffer because if supplies were scarce, the specialists, such as heart surgeons, would opt for the private sector and they would be lost to the public patient. Some thought should be given to this before we rush into doctrinaire socialist ideology that is not very pragmatic at the end of the day.

We saw what happened in Beaumont Hospital which should have been opened three years ago. It did not open because the Government would not allow the consultants, at their own expense, to build their own private facilities on the campus Fortunately the Government have seen the light and are allowing the consultants to built private consulting rooms on the campus at their own expense. This is in the best interest of the public patient because if there is an acute emergency at 3 p.m. or 4 p.m. in the public hospital the consultant will be on the campus. This Government tried to force the consultants out to Bray, Dún Laoghaire or somewhere else where they would be one or two hours away from the public patient. There was no logic in that.

We support the part of the document that deals with the prevention of illness and the promotion of a healthy lifestyle. It is also significant, and it should not be forgotten in this House, that the first Minister for Health who made a positive contribution in that regard is the present Leader of our party, Deputy Haughey, when he was Minister for Health. He was criticised for it in this House and again in recent times by the Minister for Health. In the debate on the Supplementary Estimate I dealt with the current state of the finances of the health services. I fail to understand why the Minister did not give us the correct information in this House and thus allow a proper debate on the financing of the health services. He introduced a Supplementary Estimate of £1,000 at the same time as each CEO in the health boards stated that the aggregate deficit this year of all health boards will be £30 million. We should have dealt with that on the Supplementary Estimate. The Minister said on 27 November that the overdraft was £12 million. To quote a figure like that is not living in reality. The Minister refused to answer questions in this House on the estimated deficit.

The health boards are having difficulties with the banks. The Western Health Board have given authority to the CEO to change banks because of the financial difficulties arising from the fact that the Minister did not face up to the reality of what is happening. They have increased their overdraft facilities to £10.5 million for the current year. We are not allowed to have a debate on that in this House because the Minister was not prepared to tell us exactly what is happening.

As I said at the outset the Coalition Government have lost all the confidence of the public. They failed to deliver on their promises and they did a number of U-turns. While on the surface it appears in this House that the parties in Government are not too critical of each other let us look at what is happening. I will quote from a report in The Anglo Celt on the Fine Gael selection convention in Cavan where a Fine Gael councillor, when speaking about the deficiencies of the Government, stated: “The fault lay fairly and squarely with their partners in Government, the Labour Party, who threatened and stonewalled when Fine Gael endeavoured to take corrective measures”. That is what is happening throughout the country. The Taoiseach should accept our amendment in the interest of the nation and he should dissolve the Dáil at some convenient date in January.

I should like to comment on a number of references that have been made to the voting problems of this Government. I find it strange that those remarks are made by speakers across the floor as they, when in Government on previous occasions, were dependent on a much more fragile voting position. A Government led by Seán Lemass in the early sixties, widely regarded and accepted as being a successful Government, were kept in power for a long period by the votes of Independent Deputies. It is possible for a Government to govern and to remain in power with a slender majority or even when they are in a minority. This Government still have many things to do. I do not think the broad assumption that we will inevitably have an election in the New Year is necessarily in the public interest or will necessarily happen. Of course it may happen.

There is a saying in politics that things change only when they have to change and where change involves difficult and unpalatable choices that, I am sure, is largely true. Nobody in public life relishes bearing bad news or imposing restraints on the people who elected them. Yet, we have to ask ourselves whether in the long term we serve the interests of the country or of the people who elected us by pandering to every whim and to every lobby. For well over ten years the country has been living beyond its means and successive Governments have presided over that. Strong pressure groups have grown and battled with success to get their way. Governments and Oppositions alike have all too often competed in their willingness to accede to that kind of pressure. The electorate, too has joined enthusiastically in that merry-go-round. Successive elections have been fought on the basis of who appears to be offering the best bag of goodies. I question whether that is in the long term interests of the country.

Ironically, there is a widespread perception that this Government have been constantly imposing harsh and massive expenditure cuts on a hard-pressed electorate. That perception is probably the source of the Government's current unpopularity. Yet, if one looks at the stark reality of the figures, it is clear that the process of getting the economy back on to a sound footing is only commencing; it is certainly not finished. That is a stark reality that will face the Government, and all future Governments well into the next decade. In the current year the total amount spent by the State on capital and current expenditure will amount to £9.9 billion; the total amount collected in revenues from all sources will be approximately £7.7 billion, leaving a gap of £2.2 billion which has to be borrowed. That means that for every pound spent a quarter of that has to be borrowed. There is nothing wrong with a level of borrowing, particularly for investment in capital projects from which a satisfactory return can be obtained. That is something prudent and something we should do. We are not talking about eliminating that level of borrowing but about reducing it to manageable proportions and about avoiding, in the not too distant future, borrowing for consumption for current expenditure.

If the spending policies of this so-called "cutback" Government continue into 1987, the amount to be borrowed will grow still further to £2.4 billion. The country cannot continue along this road which, if unchecked, will lead to economic and social disaster. If there is truth in the saying that change only occurs when it has to, then I believe we have reached that point and changes must now occur if for no other reason than that they have to. That is the background against which the 1987 budget has to be framed. It is unique for a Government to find themselves, in the year of an election, facing that kind of challenge.

While it presents the Government and the country with some agonising choices and very unpalatable options, I do not think it should be viewed with pessimism but rather with some relief that we are now changing direction and taking the high road to real and sustained economic growth and recovery. In this process of getting the national finances into better shape in order to speed up economic growth we have to try to preserve a delicate balance between freedom, fairness and wealth. We spend a lot of time in this country on ideology and on philosophical debates about those three words. The conservatives, the so-called right wingers, many of the captains of industry and commerce, consistently focus on giving priority to freedom and to wealth. The liberals, and so-called left wingers, the trade unions and some of the social groups, consistently focus much more on freedom and fairness. It is the challenge and the business of Government, particularly in a period of very scarce financial resources, to build a bridge between those conflicting points of view and to try to bring together the concepts of freedom, fairness and wealth creation. Without that we will not get the consensus and community cohesion necessary to tackle the major challenges facing us. We will not get the sectoral groups to back off in the interests of the country.

Getting the State's finances into better balance is not in any sense an end in itself. There is a growing awareness throughout the community that unless and until that job is substantially accomplished we can never realise our potential or fulfil our aspirations. If in the forthcoming budget we can send out a clear message to the country that Government borrowing is going to be reduced and that the process will continue until we regain full control of our national finances, then people can look forward with confidence. They can look with confidence to a lowering of interest rates, even in the short term, by reason of that signal and message and, in time, to a reduction in the heavy burden of taxation. Falling interest rates and the prospect of a reduction in tax — not necessarily the reality because it is not realistic to hold up the prospect of instant tax reductions — will give confidence to the institutions and people who, in the end, determine interest rates. If the Government's policy is announced loud and clear interest rates will begin to fall on the basis of confidence. A consistent policy of reducing public expenditure will permit in time reductions in taxation, particularly on the PAYE sector and in the area of personal taxation generally. Those two things will be the sparks which will regenerate confidence and growth in the economy. For those two reasons — there are others — we must face up to tackling the excessive levels of State borrowing. That cannot be done without a resolute and consistent policy of reducing public expenditure in the national interest.

Such a policy will rarely be popular and leadership of a high order, leadership more interested in leading than in lasting, will be required. I am not referring to political leadership only but sectoral leadership. This is a matter for the whole community but, particularly, for the leadership of the Government. In that context there is no substitute for leadership by example, particularly example from politicians. If the political leadership of the country, irrespective of its hue, feels that in the national interest substantial expenditure cuts and sacrifices are essential, as they now are, people will accept that message more readily if it is accompanied by some signal that politicians are leading by example and applying expenditure cuts to themselves as well as to others. In the public mind there is no substitute for leadership by example. We all know from our attendance at meetings throughout the country that the subject of leadership by example comes up. It is something we should not ignore.

I should like to turn to the problem of unemployment. It is only platitudinous to go on to say that this is the biggest single problem facing us because that is self-evident. I hope that in the months and years ahead unemployment will continue to be the priority of the House and of successive Governments. We will have to do something more positive and effective about creating jobs. Unemployment is a difficult question because we are confronted by a difficult set of circumstances, a world in which technology is replacing labour and in which many of the pressures of competitiveness are forcing people to shed labour. On top of that we have an expanding population. Without making any political points about this, we must accept that we have a difficult problem to confront. However, we have to find solutions because the problem must be solved substantially in this generation. We cannot wait and the unemployed cannot wait.

We have all sorts of schemes and they are useful and helpful in our time of crisis but they are not the source of any solution. The solution can lie only in rapid economic growth. For a small island economy with a small population and a small internal market it is inevitable that we must export if we are to grow. We have to export at a level and at a rate unprecedented in our industrial history. Therefore, we have to lift our sights to many new challenges and targets. If rapid economic growth driven by exports is to be our objective we have to look to see where we are going wrong and what we should be doing.

I came across an OECD survey of 25 developing countries recently which ranked the countries in order of their competitiveness and performance in the export markets. In that league of 25 countries we were placed 20th and under the headings of marketing and sales we were placed last of the 25. That type of statistic can be viewed pessimistically or optimistically. I would like to view it optimistically on the basis that if we are that far down the table anything we do constructively will help us to move up the ladder. Therefore, there is huge room for improvement in our attitude to competitiveness, marketing, producing and selling our goods. The Government, or any Government, cannot win this battle on their own. If the private sector is to be the engine of economic growth, as I believe it should be, there is an argument for less rather than more Government. I do not think people should look to the Government for the answers to unemployment but the Government have a job to do. It is their job to create the environment and the climate for recovery and to do the things that they, and nobody else, can do.

I will refer briefly to the sort of problems that we, an island race, face and for which only the Government can find a solution. We are saddled with certain disadvantages such as transport and communications links with our main market in Europe which are inevitably much more expensive, time consuming and less efficient than those facing the Europeans trading in Europe who can truck their goods from one country to the other. That is an inbuilt problem here. We have customs procedures and energy costs, infrastructural limitations, smaller problems like insurance costs and, of course, the entire management of our public finances which so affects business, particularly the manufacturing industry, inflation, interest rates, tax policy and so on.

The Government should not try to do everything. Instead, they should try to target our resources into producing, for example, a cost efficient air and sea transport system in and out of the country. In such a system the concern of the Government should be more for the user than the provider in order to minimise the cost of getting in and out of the country — either our people or our goods and services.

I have heard many comments that our customs procedures are archaic, that in many instances in which the State itself is not getting any money out of the processing of documentation within the EC, where there are no duties in some instances, people are still being put through an unwieldly and lengthy process. That needs to be dealt with if we are to make our customs procedures more efficient.

Our energy costs are out of line. Industrialists consistently complain about this, with good reason. Our energy costs impose a very heavy burden on industrialists by comparison with their competitors in Europe. The Government, therefore, must concentrate on a more coherent energy policy generally. They must ask the semi-State energy providers to effect savings. In the very nature of a monopoly there is always a temptation for inefficiencies to grow. It is endemic to monopolies that the sharp edge of competition is blunted in time and that all sorts of desirable things are left undone, but the price of the end product, in this case energy, often tends to get lost. Therefore one has to question the efficiency of those organisations because our energy costs are out of line.

There are reasons for that. The ESB have to provide a grid for a sparsely populated country. They say they have to pay levels of rates and so on which comparable competitors do not have to pay. However, we must look very hard at our energy providers because we must get energy costs down if our manufacturers are to survive, grow and expand exports in a very competitive world.

Our roads system requires attention. Our limited financial resources should be put into capital projects which will yield good returns. I consider that one of the best repositories for investment is a good roads structure. Lack of that, of course, affects our competitiveness.

A less substantial problem is the growing cost of insurance. We have to look resolutely at the means of tackling that problem in so far as it is within the power of the Government to tackle. Many people believe that the high cost of insurance is connected very much with our legal process as well as to the fact that our insurance market may not be sufficiently open to competition. Another issue affecting our manufacturing industry which must be tackled is industrial relations and the introduction of new technology. The adoption of high technology in Ireland is frequently and invariably associated with job losses, at times with good reason. It is significant that those countries which have welcomed new technologies and embraced them with enthusiasm are those that have the lowest levels of unemployment and the highest success rate in international markets. That is particularly true of those in the Pacific Basin, led by Japan. Though our traditional industrial practices are more rigid — that is a feature of Europe — it is a feature that must be tackled, and we as a young developing industrial nation could give a lead because I suspect it is more difficult for the older industrial economies of Britain and Germany to change.

However, even they are changing and we are being left behind when we should be giving the lead. IDA advertising campaigns always project us worldwide as the young Europeans, people who are up and going, people with good ideas, people who are not afraid to face change. We need to prove that in the workplace, on the factory floor. The challenge of new technology is a challenge to management, to the shop floor, to the trade unions and, in the end, to the Government.

Consequently, the Government should take the lead in promoting dialogue between management, employers and trade unions with the object of agreeing new procedures and an industrial relations code appropriate to the needs of the last decade of this century. Governments have talked a lot about that but these matters are deterrents, not the only ones, to our growth. They are all part of our rigidity in work practices, reluctance to accept change without a very heavy price, sometimes when it is not advisable to pay it, and that needs to be changed not only in the interests of employers but of all our people. The Government and the social partners must sit around a table and produce a more appropriate industrial programme so that problems of the present and the future can be tackled.

If the Government fail in that they should not be afraid to legislate because the unemployed are not very impressed with the arguments of one side or another in this debate: they are interested in getting jobs in industry and the services, and we have to facilitate them by breaking down the barriers and the rigidities that we have been talking about.

Cork suffered more than most communities from the haemhorrage of jobs, for instance, Fords, Dunlops and others. That has left a very deep wound in the community. Of course, it is not unnatural to blame the Government for everything but the Government have not been slow in making decisions about Cork and investments there. It is not within the power of the Government to coerce Fords or Dunlops to stay anywhere. It is not within the power of the Government to force industries to stay open. All the Government can do is to create the infrastructure, the climate and the incentives. On the basis of those criteria this Government have not been found wanting.

I should like to mention major decisions taken and investments made in relation to Cork. Despite job losses, a number of major industries have been brought into Cork through the efforts of the Government and the IDA, in the chemicals, electronics and other sectors, modern, high technology industries that hold out hope for the future and which have produced more jobs, by a considerable margin, than were lost in Fords and Dunlops. Decentralisation of the decision-making process in relation to small industries took place a couple of years ago under the direction of the present Minister for Finance. We now have growing small industries developments all around the city and county of Cork as a direct result of the decentralised IDA small industries division in Cork.

The Government also funded the construction of a new enterprise centre which it is hoped will be the seed bed for many new small industries in the region. The Government have maintained a massive level of development under the Cork harbour development plan and have saved Irish Steel Limited by a huge vote of confidence at a time when that industry could very easily have collapsed. Infrastructural investments in Cork have been extremely large by any standards. Physically the face of Cork has changed more in the last five years than in the previous 50. The first bridge in my lifetime was built in Cork approximately 30 years ago. This Government have built three bridges across the Lee in their lifetime, the third is about to be opened shortly. We have rebuilt much of the quay walls which were practically falling into the river, brought about by heavy traffic. We have created a new roads structure, a tax system whereby people in the private sector have invested in multi-storey car parks and we have completed the deep water berth at Ringaskiddy. It will be seen that this Government have a strong and deep commitment to Cork. Now that most of the infrastructural work is done I hope the region will be seen to be a more attractive location for modern heavy and light industry.

Government expenditure in Cork has not been confined to the economic and industrial sectors but has covered also the provision of schools, expansion of the health facilities at a number of hospitals, the Regional, the South Infirmary and others, the construction of a ring of Garda barracks around the city, the provision of housing and, more recently, their vote of confidence in the region by way of the provision of funds for a new ferry to the United Kingdom. I want to reject the notion that because Cork has gone through a difficult time this Government have not supported Cork, because the reverse is true.

There is one thing on which we can all agree in the House, that is that this nation is in a very critical condition. Because of that I would hope that our response, particularly on the part of Government, would be worthy of our role and obligation to meet that challenge and deal with the problems in a positive and consistent fashion. One thing we can do without in this debate is any element of distortion, any personal animosities, any attempt to create a climate of distrust on the basis of personal allegations. That should not be the privilege of anybody in this House or, indeed, outside of it on our behalf at this point. For that reason I want to have two matters cleared in advance. In the first instance, I might refer to a document that has been issued on behalf of Fine Gael in the Cork area. Perhaps Deputy Coveney is aware of it. I imagine the Taoiseach is aware of it.

Not in my constituency.

Then Deputy Coveney clearly is aware of it.

I am aware, yes.

It is a most unsavoury document circulated by Fine Gael to their convassers and organisation. It is meant to be a guide to canvassers. It purports to say under the section dealing with Fine Gael policy, that it is vital during the election campaign that each canvasser should be fully familiar with Fine Gael policy. Then, in four of the most unsavoury paragraphs I have ever read or witnessed in public life, it launches into what can only be said to be a libellous attack on the Leader of the Opposition, a character assassination of an order I regard as totally outrageous, totally and utterly unfounded. Incidentally, the document is issued in the name of the chairman of that constituency, a prominent Cork businessman, and other organisors and PRO people. The chairman, I am told, was recently appointed by the Government to the board of Fóir Teoranta. If that is the kind of thing that gentleman is going to contribute, or the Fine Gael Party, to Irish politics, I would like the Taoiseach now——

That is a deplorable document.

It is, but it has been issued in the name of Fine Gael. I want the Taoiseach to come into the House and not only condemn it but condemn those who are responsible for it.

Have it retracted.

Have it totally retracted. As long as we engage in this kind of thing in the name of what is described as Fine Gael policy, if that kind of approach constitutes Fine Gael policy, it is a very sad reflection on the kind of election campaign we will have and, indeed, on the people's prospects. I hope the Taoiseach will use this occasion to repudiate formally this outrageous, unsavoury and libellous document.

The second point I want to make in that connection is that there has been, on other fronts, a fair bit of distortion and misrepresentation, emanating from Government, of our position. I will just take the example of Deputy Kelly who seems to be wheeled in from time to time, with his flow of words and oratory, to smear Fianna Fáil with things they have not said or done and things they do not propose to do. I want to refer particularly to a misrepresentation of a statement I made less than two weeks ago — which I stand over — when I spoke of the need for a redeployment of public expenditure on priority targets for national development needs. It is self-evident that that requires to be done. I propose to illustrate it to some extent. Deputy Kelly chose to interpret that as Fianna Fáil going on a spending spree, Fianna Fáil being reckless and irresponsible, when we were being deliberately responsible with a view to ensuring the reduction, if not abolition, of wasteful current expenditure and a redeployment of resources toward the capital programme so urgently needed. Deputy Kelly chose to misrepresent that.

I want to indicate now where there is scope for a reduction in current expenditure that has been grossly expanded under this Government, to wasteful effect, where Fianna Fáil, with a proper sense of priority of the use of our resources, human, physical and natural, will concentrate on a comprehensive programme for national renewal and development.

It is very clear, as we adjourn this Dáil, that we are adjourning for the next election. This Government have no intention, no hope of or capacity for bringing in a budget. I shall give some examples of this, on which they may want to comment, apart altogether from the reality of the expectations outside. Let me point to just one item — current expenditure where the Government are proposing a reduction next year of £300 million. We are told by really informed sources that if one is to reduce the current budget deficit next year to 7.5 per cent of GNP, one would have to reduce current expenditure by £400 million. These are not my views. They are the objective views of independent analysts.

How can this Government purport to reconcile that stated intention — we have heard many such in their years of office — with the present position? Already they are leaving for the incoming Government an inheritance they do not propose to face because they would not be capable of doing so. Take one current expenditure item alone: house improvement grants. The total cost of those grants from the amounts sanctioned in the Department of the Environment is well in excess of £250 million; the amount provided in the Estimates by this Government this year is £25 million. That means that the Government who sit at the table next year on that one item alone on the current side will face an immediate shortfall of £225 million. I want to point also to the transfers from this year. Postponement of public sector pay, which was represented by this Government as a measure of their discipline, is a problem of this year transferred to the Government of next year. Even if we never take into account special pay awards that may arise next year, already public sector pay commitments for teachers and others transferred from this year to next will amount to not less than £300 million. Even those two items, public sector pay and one item in the Department of the Environment, represent over £500 million, and this Government tell us that they are going to reduce current expenditure by £300 million. From what, I ask? This Government parade their programme on fiscal rectitude and whatever.

I do not propose to depress people further in referring to unemployment, emigration and the awful grinding effect of poverty that is in every home of the lower income groups as we call them now. There is a certain lack of awareness in this House of the extent of that problem which gives rise to psychiatric breakdown and in some instances, to suicide. It is hard to say that in this House but it has happened in my constituency. This Government's management of the economy and their fiscal aggregates have led to a decline in the economy as I will illustrate.

When this Government came into office the total current expenditure was less than £5 billion for day to day spending. As they leave office — and leave it they will — total current expenditure has increased by over 40 per cent to £7 billion, and the Government talk about controlling wasteful expenditure. In the time available to me I will give one or two examples of where that money has been spent.

When the Government came into office the total Vote for current expenditure in the Department of Labour, for instance, was £70 million. As they leave office the total Vote for the Department of Labour is £171 million, an increase of 140 per cent in current spending in one Department that we can all acknowledge is certainly not being put to effect to generate employment, employment activity or investment confidence, and this Government dare to question us when we talk about redeployment of current expenditure from wasteful current expenditure of the kind they have indulged in to priority targets in the capital programme. That example alone demonstrates even in the last days of this Government that they realise suddenly that they had better start to amalgamate and do something about it. They know full well that every young person out there is frustrated with the failure of any of these agencies — who have benefited so much from this splurge of public expenditure — to do anything meaningful for them. They are leaving in droves and going to countries where those support agencies do not exist because in those other countries effort is rewarded, investment is encouraged and there are no support agencies to make a timid impression of trying to create employment when the whole direction of Government policy is the other way.

(Limerick East): Do I take it that the party opposite are going to close down AnCO?

The Minister can take what he likes at this stage. He can take his bags with him as well if he likes while he is at it.

(Limerick East): The Deputy made a specific statement. Is he going to close them down?

I never said any such thing but we will make better use of them than the Minister has done.

(Limerick East): Will the Deputy answer a specific question?

The Minister has made his contribution. Since I am asked that question, let me say that in the course of the allocations we will find a much more meaningful role for AnCO in terms of management direction, marketing programmes and really developing the strength of our young people. AnCO can have a real role in joint ventures and training consultancies overseas. We will not only find their role we will use them to effect and not continue on the basis on which the Minister has been acting, in training women to be metal workers——

(Limerick East): Will the Deputy cut their budget?

This is the same nonsense that we get from this Government all the time. We have plans, imagination and commitment and they cannot even——

Minister, allow Deputy O'Kennedy to proceed, please.

(Limerick East): Is the Deputy saying that we are going to prevent AnCO from training women?

I said that we would not encourage them to train women as metal workers as the Government are doing. Let me come to the consequence of that splurge in current expenditure which is to no effect. It is not surprising that as a consequence of that we have had an increase in taxation in an effort to fund the unrestrained growth of the current budget under this Government. The increase in taxation is of the order of 50 per cent of total taxation since this Government came into office. It was £4 billion when they took up office and is now just over £6 billion. At one time income tax accounted for 40 per cent of that total budget and now it accounts for 46 per cent of a bigger area. In view of the lack of any comprehensive programmes for development, the splurge on the current budget spending side and the growth in taxation, is it any wonder that we have had the decimation in the economy that we have witnessed over the last four years?

It must and will change. Fianna Fáil propose to ensure that in our priorities the strength we have will be used for a new national renewal and redevelopment. What are those resources? They are first our young people who are being condemned to leave their own place and condemned, so to speak, to success anywhere but in Ireland, and succeed they will whether it be in Australia, Canada, New Zealand or wherever where they are welcome across every range of sector that is part of the enzymes of growth. I will give some examples of where there will be a dramatic change under Fianna Fáil. We will enlist that, our greatest resource, as we have done twice previously in the history of this nation after the depressing experience of previous Coalitions, into a major new dynamic drive for national development.

The best example is in the area of marketing. Our marketing performance is deplorably weak. Deputy Coveney even underlined that fact this morning, and it is obvious to anyone who examines it. Nonetheless, we require to strengthen it and introduce a new direction into our marketing. Marketing is nothing more than skilled, resourceful personnel with the tools to exploit the market opportunities. We need language facility and marketing training courses linked to industry through AnCO. We should be familiar with the way of life of the people in Germany, The Netherlands, France and so on. That is a central part of Fianna Fáil policy. For a small tax incentive of about £1 million which is minuscule in the context of the total tax bill we could put 5,000 people in the marketplace feeding back information to our industries so as to exploit the opportunities of the Continent. The only thing this Government are aware of about our young people is that they have too many problems. The problems are not too many for us. The young people are our potential and we will use them to the advantage of the nation.

The difference between us and the Government is also evident in our attitude to our national resources. What is required in the marketing of agricultural products is an integrated programme for food and agricultural development. Marketing is also relevant. We will have an integrated food and agriculture programme which will ensure that through new technologies, added value and food processing the producers will in future be guided by market demands and opportunities. For too long we have ignored market requirements and now the primary producer is being told that he is producing a surplus. We have advantages in terms of soil and climate and in the general perception in Europe of Ireland as a producer of pure quality goods. Other countries brand their products with Irish-type names and we have not even the imagination, under this Government, to do anything about it. The Minister here is at least as responsible for that failure as anybody else.

(Limerick East): We export 50 per cent of GNP and that is twice the European average.

Will the Minister allow Deputy O'Kennedy to proceed?

How are we getting poorer?

Deputy Brennan is right. The growth in any export area has been in the foreign multinationals while indigenous industries have totally declined.

(Limerick East): That is not so.

I will give one example. In Germany our exports represent £16 per head, in the Netherlands it is £48 per head. If we were to reach the same level in the Federal Republic as we do in the Netherlands we would increase our export value by £2 billion, so why do we not do so?

(Interruptions.)

You can make your contribution later.

(Limerick East): There are more people in Germany than in the Netherlands, so it has to be lower.

(Interruptions.)

Will the Minister just sit——

Will the Minister allow Deputy O'Kennedy to proceed.

There is a very good reason and it is because we have not the capacity to be familiar with the marketplace in the Federal Republic and that has been confirmed by businessmen and politicians in the Federal Republic. The reason we do better in the Netherlands is because English is the language most used, whereas it is not in Germany. That is one of the realities we must tackle.

We will redeploy public expenditure from the wasteful trends we have seen under this Government. One area crying out for a major reallocation is in relation to infrastructure. There is a huge cost disadvantage particularly to Irish manufacturing industry as a result of our inadequate road infrastructure. Our cost per operating hour in terms of running a commercial vehicle is on average 25 per cent more than in Europe. Even the rate of movement on our national roads network is 25 miles per hour on average as compared with 40 miles per hour on average in Europe. This has emerged from studies conducted under origin and destination studies carried out by the Department of the Environment. That explains why our transport costs represent 8 per cent of total manufacturing cost as against 5 per cent in Europe. We are burdening our manufacturing industry with an extra 50 per cent over the transport costs of our competitors in Europe and we are doing this because this Government deliberately decimated the capital programme, particularly as far as the road infrastructure is concerned.

We can see the evidence of it every day of the week, not only in terms of tragic accidents but in terms of the extra input costs for Irish manufacturing industry. This has been a deliberate policy of the Government in what they claimed to be fiscal rectitude in their early days. Nobody screamed when they cut the capital programme because it does not take effect on the first day, but everybody is screaming now because of the state of the roads.

(Limerick East): The programme for roads was not cut.

Of course it was.

(Interruptions.)

The Deputy has six minutes to conclude.

(Interruptions.)

Will the Leas-Cheann Comhairle tell the Minister to allow me to conclude? The Minister will be remembered for his contribution to Irish politics. The Minister's vindictive contributions will be long remembered after he has left this House.

(Limerick East): They were good solid contributions.

We intend to do a project analysis in relation to the capital programme for roads, tourism, gas pipelines and so on, to ensure that each of the 50 projects in the roads area in particular, in the gas pipeline, and in tourism will be analysed and put into action immediately. Tourism has been an international growth area over the past four or five years but it has been totally ignored by this Government. There has not been an attempt to maximise the benefits from the international growth in tourism which has the added attraction that all the currency we would earn through it would be foreign currency which would be of major consequence to our balance of payments and reserves. Japan has been ignored as a huge potential market for this country. Fianna Fáil will not ignore it. Australia, with its ethnic ties with this country and as it celebrates its 200th anniversary, has been ignored by this Government. We will not ignore it because the potential is enormous, even if we were to do no more than use the many groups, the Dubliners, Clannad and so on and put them on tour to generate a renewal of interest in Ireland. That is only one of 100 examples. We can make the country move. The Government just sat there and moaned and groaned and referred back to Fianna Fáil of ten years ago. The people will not forgive or forget the Government.

The Government deliberately brought down the ceiling on the semi-State sector which is a very important engine of growth in our economy by appointing to every board two civil servants to oversee their actions and to report back, to cut back and bring the dead hand of bureaucracy on what were meant to be engines of growth, as they always were under Fianna Fáil. I could give many examples. I resisted that suggestion when I was Minister for Finance for that reason but this Government did not.

The development role of the ACC has been totally and utterly repudiated by the Government. Farmers are in dire straits. Their only instruction is to go after them, get them out on the roads and evict them; you are not doing your job unless and until we see them on the roads. They are being forced to do what was never part of their responsibilities. Fianna Fáil will change that because their only role is as a development corporation having funds available at reasonable interest rates for development in priority areas.

Is it any wonder that a Government which has attacked the very basis of investment confidence should then witness the consequences of it in the unprecendented interest rates we now have of the order of 13 per cent? If, for the purpose of getting extra tax by way of DIRT, you attack the financial institutions insurance funds and pension funds, you will drive money out of this country as you have done so that there is nothing available for private investment and the public purse which must be satisfied soaks up every available penny. Gilts offer over 13 per cent but are not being taken. If gilts through the Government are offering 13 per cent, is it any wonder that interest rates in the private sector are crippling investment in agriculture, industry and every productive area.

I have just given a flavour of what will be better because it needs to be. I can assure you that the Fianna Fáil proposals are not based on promises, as has been alleged. They are based on a very comprehensive analysis of what our strengths are, and we are determined to exploit and explore them in the interests of this nation which needs them so badly.

Limerick East): The key to reducing unemployment lies in our competitiveness. The living standards and the number of jobs in Ireland depends, ultimately, on our success in selling against international competitors. As a nation we must compete for employment.

We cannot ignore this fundamental need for international competitiveness. Larger countries may bend rules and use protectionist measures to temporarily protect local inefficiences. For Ireland this is not on. We must seek to be better competitors. We earn our living standards by our success in export markets. Our pay levels must adapt to changes in the pay costs among our competitors. When exchange rate movements place overseas competitors at a temporary price advantage, we ignore the implications for our pay and other costs at our peril.

It is not just those sections of the economy directly exposed to international competition which must respond to these forces. Inefficiencies in the sheltered sectors will act as a drag on the competitiveness of other sectors and reduce the standard of living of all Irish people.

Similarly, the appropriate size of the public sector is dependent on the wealth we create. It is too large when it results in excessive taxation and pushes up rates of interest to the detriment of productive investment.

The last 20 years have been marked by extraordinary changes in the shape of the Irish economy. During that period we have witnessed a very rapid growth in industrialisation. A massive structural change has also taken place. The growth of industry has been marked by an increasing emphasis on areas involving high technology and requiring highly skilled Irish workers.

Nowhere, can the significance of these changes be seen more vividly than in the export performance. In 1965, exports from Ireland were valued at 24 per cent of GNP. Twenty years later their value had risen to nearly two-thirds of GNP. The total amount traded, the combined value of exports and imports, is now much higher than GNP. This level of trade means that Ireland, and in particular Irish industry, competes to a greater degree for international markets than all but a very few countries in the world. No longer is the focus of Irish trade on exchanging agricultural commodities for new machines. The core of our trade is represented by head-on competition to sell similar types of industrial products against producers in other members states of the EC and further afield.

I would like in that context to mention the excellent work which is being carried out by Coras Tráchtála in their marketing endeavours throughout the world, especially in Europe. The fact that our export performance enormously exceeds the EC average is an indication that while certain Irish industries have weaknesses in marketing, Córas Tráchtála are very strong indeed. When Deputy O'Kennedy spoke about educating young Irish people in marketing he must not have been aware of the programmes which are now available in the NIHE in Dublin and in Limerick and especially the recent programme in marketing in the NIHE in Dublin which involves students spending up to a year in the particular target market in continental Europe. It is a course which will fill a gap and provide well qualified young people to Irish industry, both indigenous and offshore.

Our export drive can continue very strongly in the years ahead. We must export to survive in this country. The home market is far too small to provide employment for our people and to provide us with the standard of living we have grown to expect and aspire to. We must see ourselves as trading into that very sophisticated market of 320 million consumers in Europe. We must build on our strengths and performance to date. That performance has been very good.

To do as Deputy O'Kennedy has done and pick per capita exports to the Netherlands and to compare and contrast them with per capita exports to West Germany is a cod statistic. Obviously, if you take total Irish exports to West Germany and divide them by 50 million Germans you are going to come up with a smaller per capita export than if you divide a similar or a smaller amount by between 12 to 14 million Dutch. To compare per capita exports to a small country and a large country casts no light on the topic whatsoever. If you divide our exports to the United States by the number of people in America you will come out with a very low figure of per capita exports to the United States of America, which still accounts for 12 per cent of our total exports. It is the kind of cod statistic which Deputy O'Kennedy has used throughout his speech to support generalities and I must say he was very short on specifics.

The key to our success lies as I have said in our ability to exploit our strengths and in particular the talents of our people. It is not enough to be competitive in an Irish context. Irish firms must compete against the best producers in Britain, West Germany and Italy while also maintaining advantages against competition from newly industrialised countries.

Structural change does not take place in a tranquil environment, however. The future of a business must be built in today's environment. The wide fluctuations in interest rates and exchange rates have resulted in serious and immediate difficulties for the competitiveness of a significant number of firms. While these difficulties are short term, a failure to adapt to their implications could have major adverse effects on employment.

The immediate impact of the rise in the value of the Irish pound against sterling is to raise the price of Irish produced goods relative to competitors based in Britain. The size of the increase over the last year has been of the order of 14 per cent. It is very difficult for a company on a year to year basis to take a rise of 14 per cent. Obviously, in selling into the UK it is very hard to be competitive when exchange rates alone account for 14 per cent. It is also hard to compete on the home market when UK companies have a 14 per cent advantage. It is an extraordinary high level of change in a 12 month period. There are very few products whose export markets could bear rises of that magnitude. Similarly, production for the home market will find itself at a major price disadvantage against products originating in Britain.

The benefits of a stronger exchange rate will be captured in lower rates of inflation and lower interest rates. A recent study by the Central Bank suggests that these benefits may take up to two years to be realised. What I am basically saying is that if you are into a hard currency policy as we are — and there is no question that we would even consider a devaluation of the pound — the adverse effects flow very quickly from the neighbour who is at an advantage, especially when it is a big economy like the UK. The benefits are time lagged. It will take a while. Irish industry has a problem with exchange rates. It is 95p and 96p against the £ sterling. There will be an enormous advantage in the medium and long-term but it will take a while. The only immediate option for many firms to maintain their markets is, therefore, to reduce their prices which, in turn, must involve a squeeze on costs or profits. The scope to reduce profits among the type of firm most severely affected by these events is very limited. The most recent survey of the profitability of indigenous companies in manufacturing industry found the average for all companies to be 2.5 per cent of sales. What little scope there is to squeeze profits in firms is likely to choke off the investment necessary to build future competitiveness and secure long term employment in these firms.

Typically, in an Irish firm raw materials costs are equal to around 60 per cent of the value of output. These costs are not generally susceptible to domestic control as they come in the form of imports or, as in the case of much agricultural produce, at price levels which are maintained regardless of domestic economic circumstances. The largest component of the value added by the firm is the payroll cost. It is the cost of wages and salaries, therefore, which will be a key factor in determining whether companies successfully adapt to the price-cost squeeze consequent to exchange rate movements.

In many of the firms which are in competition with firms based in Britain there can be little scope for payroll increases. Recent figures quoted of pay agreements involving annual rises of 5 per cent to 6 per cent may be sustainable in enterprises with rapid productivity growth and a strong presence in other EC countries. For companies which are dependent on competition against UK producers, rises of this magnitude will have serious consequences for employment and must be seen as too high. They will provide a further impetus to the reduction in employment in the traditional sectors of Irish industry.

Over the past five years we have seen companies in the traditional sectors increase their productivity, in order to maintain competitiveness, by reductions in the size of their workforces. In part, pay rises for those in employment have been paid for by the removal of others from the payroll. It is a crude but effective response to the ebb and flow of international competitive forces. Unfortunately, it is more "ebb" than "flow" with the contraction of the workforce in response to pay and other cost pressures reducing the potential for subsequent expansion.

Basically, what I am saying is that companies instead of looking at individual wage costs are looking at the total payroll cost. Those exporting to Britain at present cannot take wage increases of 5 per cent and 6 per cent per annum on top of the difficulties which the strong exchange rate has given them. In order to reduce the payroll cost they will shed workers. There should be a great awareness among those who negotiate wage agreements that if indigenous firms exporting to Britain settle for 6 per cent or 7 per cent this year they will reduce payroll costs by having more redundancies. A higher wage for some means no jobs for others. That is the bottom line and should be stressed again and again.

Ensuring the cost competitiveness of the traded sectors requires control of more than pay costs. The public sector imposes costs through taxation and charges for services and also through its impact on interest rates. The sectors of the economy sheltered from international competition, for example, in the areas of banking, insurance, legal fees, distribution and restaurants affect the cost structure of the traded sectors and the standard of living of everyone.

The Government have already set out their targets for the public finances in 1987. The achievement of the target for the current budget deficit will involve significant cuts in public expenditure, and the levels of service from the public sector which we have become accustomed to. As long as we endure such high levels of unemployment combined with excessive levels of borrowing, however, there is no case for defending one of the root causes of the problem.

Put simply, the original objective in expanding the public sector has backfired. The build-up of public sector employment and services in the seventies, in anticipation of subsequent accelerated growth of employment in the private sector, has had the opposite to its intended effect by choking much of the potential for growth.

To put it bluntly, Deputy O'Kennedy's analysis of interest rates is accurate even though interest rates are less than they were when he left office. The way to get interest rates down is not through more public expenditure programmes, whether on the current or capital side, but rather to cut public expenditure. The budget and the Book of Estimates we envisage bringing in at the end of January will involve cuts in public expenditure which will bring the Exchequer borrowing requirement down to 11.8 per cent — the current budget deficit is 7.4 per cent. In the first four or five months of the year that will have the effect of bringing interest rates down between 4 per cent and 5 per cent. That does not leave any scope for pretending that you can shake out the public sector because there is waste in it. The waste has been eliminated by and large. If you want to cut public expenditure you have to cut programmes. The theory that you can get massive savings without hurting programmes is total fallacy.

While I agree with what Deputy O'Kennedy said about interest rates, he lacks the will to do anything about them. He did not say anything today which would suggest that he, if Minister for Finance, would do anything more than exacerbate the problem and increase interest rates to the historic levels they were at when he left office.

I do not have to repeat the problems brought about by high rates of taxation. The growth in the tax burden was halted in 1984. Its reduction now requires significant progress in reducing public expenditure.

There are some home truths which can be put simply. You cannot have increased public expenditure and reduced taxation at the same time unless you borrow more. Everything the Government collect in taxation is spent on services — on education, health, social welfare and so on. On top of that, another £2 billion is being borrowed. To promise increased public expenditure and reduced taxation, as Deputy O'Kennedy did, does not add up. You cannot form the equation unless you put in the X factor which is more borrowing. If you borrow more you are not doing your job. You increase public expenditure and drive interest rates up into the twenties.

A further serious problem which can be traced to the imbalance in the Exchequer finances are the high rates of interest I have just mentioned. These rates of interest are a terrible burden on home owners. They are also a major constraint on investment.

International studies suggest that successful companies require a real return on investment, that is, the return net of inflation, of between 3 and 8 per cent, to be successful. The Department of Finance guidelines on public investment decisions look for a real return of at least 5 per cent.

At present, available projects with this level of return can only be undertaken in the confidence that current rates of interest will fall significantly. In recent months investors have been faced with real rates of interest in excess of 10 per cent.

The causes of these high interest rates lie in both national and international circumstances. The main cause which is under domestic control is the high level of public sector borrowing and the accompanying speculation that the country's indebtedness will rise further. The details of how the Government intend to implement their 1987 budgetary strategy will allay these concerns. This announcement in the New Year will exert a downward pressure on interest rates. We can look forward to major reduction in domestic interest rates during the first half of the year. The value of this for home owners and investors provides ample justification for implementing the necessary cuts in public expenditure.

I stress again that it is not a question of shaking out public expenditure and finding money hidden in the corners. The crock of gold theory of economics is in disrepute. If there is to be a cut in public expenditure there must be policy cuts. Programmes must be cut or reduced. That is the only way to bring down interest rates and the only kind of policy, pursued for a number of years, which will reduce taxation. That is the strategy we must adopt. If we have reduced interest rates and a downward trend in taxation then there will be investment in risktaking areas. That leads, as it has done in the strong economies, to job creation after a while of sustained growth.

We must continue to promote competitiveness in the private sector. I should like to refer to what we are doing in that area. The key instrument of public policy in the services sector has been and will continue to be the promotion and monitoring of competition. I have already referred to the need for the public sector services to compete against the yardstick of the best international practice. A similar criterion must be applied to the private sector. In this context I have already circulated the Restrictive Practices (Amendment) Bill which is intended to streamline the operation and extend the scope of current competition legislation. It is intended to allow restrictive, uncompetitive and unfair practices to be tackled in a more speedy and effective way than heretofore. It gives the agencies involved in this process greater powers for this purpose.

The Bill opens highly regulated sectors such as the banks, transport, telecommunications and electricity to review under the monopolies and restrictive practices legislation for the first time. The very fact that such questioning can take place should give an incentive to these enterprises to achieve higher levels of efficiency and consumer awareness. Deputy O'Kennedy remarked on our high transport costs but could have gone on to talk about our high electricity costs also and high banking charges. This Bill opens those areas to competition for the first time. It is about time that was done. The fact that these companies can be inquired into, in the same as can any private sector company in the economy, will have beneficial effects. The effects of competition in these semi-monopolistic areas will be very effective indeed.

The Restrictive Practices Commission have already looked at a number of areas where further competition might be promoted. They are currently engaged on an extensive review of restrictive practices in the professions. I need not take up the time of the House on the Adjournment Debate to talk about that. They have commenced the review. I expect them to report to me in the New Year on certain practices in the accounting and engineering professions. Some weeks ago the commission announced the commencement of their study into the legal profession, which will cover all aspects of restrictive practices which might appear to be anti-competitive. The commission have also submitted a report in recent months on the operation of cable television services in Dublin. I expect that the reports of the commission's review of the Restrictive Practices (Groceries) Order will be published within the next month.

It will be clear from the foregoing that the Restrictive Practices Commission have been particularly active in the last year and are likely to be increasingly so. In this way there can be positive steps towards the identification and removal of barriers which impede competition and efficiency throughout the economy. The argument that I am putting forward, to give it again in resume before I proceed with some other points, is that we are a small, open economy, we have 3½ million people on this island, we have very high standards internationally. We are not among the top players but we are in the top 20 in the world in terms of living standards. We have very good services for our young people. We have a problem — we cannot have real jobs for all the people that we have in the country at the moment. Added to that, we have a certain standard of living and aspire to a higher standard. Those aspirations cannot be fulfilled on the home market. The only way it can be done is by creating more goods and services in this country and selling them abroad. To do that we have to be competitive.

The main argument I am putting across today is that we need to be competitive because we are competing with every economy in Europe, and many of the new economies in the Pacific Basin, in the market place. The primary market place is Europe, but we must also sell in the United States and further afield. If we cannot get interest rates down — and I have given reasons why they are high — we will not be competitive. If wage costs are too high, we are not going to be competitive. If we cannot compensate for strong currency in the UK market, we are not going to be competitive. Irish industry exporting into the United Kingdom will be at a disadvantage and the only way that it can recover the advantage is by cutting costs further. The main area in which to cut costs is wages and salaries or to give very low increases in 1987. Any company that gives a 6 per cent or 7 per cent increase — and they are negotiating at that level at the moment — will have a shake-out and will reduce payroll costs by having more redundancies, and that is not the direction to take.

As well as being competitive in the manufacturing area and the private, open, competitive sector, we must look also at the sheltered sections of the economy. I am using the resources of my Department, through the Restrictive Practices Commission, to look at the banks, the building societies, the insurance companies, the cost of electricity — any areas open so that restrictive practices are taken out and the cost to Irish industry, the extra burden of cost imposed by the sheltered sector on the open competitive sector, will be reduced. We can be very effective in doing that and making very effective progress.

I should like to refer now to another area of my Department which might be of interest. I have responsibility for science and technology to a certain degree and attended Research Councils of Ministers meetings in Brussels. I am concerned that there is such a lack of appreciation of the critical importance of science and technology in our economic development and their contribution to job creation. It has been recognised that science and technology as weapons for economic and social development have very wide horizons. However, I want to concentrate here on those aspects of science and technology which relate to innovation and the enhancement of competitiveness and value added in manufacturing industry and services.

Compared with most of our EC partners, Ireland was a late starter in the area of science and technology. It still lags behind and is in serious danger of falling further back. For example, our investment in research and development per head of population is about one-fifth on the average of the EC as a whole, allowing for disparities between the level of development between member states. This means that compared with the more advanced states, of which West Germany is the most obvious example, the gap is even wider.

In his comments in this House on 2 July 1985 on the European Council meeting which had just taken place in Milan, the Taoiseach referred to the emphasis between the completion of the internal market of the Community and the promotion of a technological Europe. He also mentioned that the three major concerns of Europe centred around the problem of economic growth, our ability to tackle unemployment and the way in which Europe is falling behind technologically. I should like to quote from what he said, which was:

This can and has been exaggerated but there is need for action to ensure that industry located in Europe can take part in the market of the future.

We in Ireland cannot afford to be left out of or fall behind in that race.

The importance to Ireland of an effective and comprehensive EC programme of research and development, particularly in the area of high technology, has been emphasised in the recent explanatory guide on the Single European Act. which has referred to the appreciable benefits which we derive from existing Community programmes such as the ESB programme on information technology. Whereas the larger member states seem to regard the Community's R and D programmes as complementing national programmes, that does not apply in our case. We look very much to such programmes to provide valuable new scope and opportunities to firms in this country.

Again to summarise what I am saying, if we do not invest more in research and development, if manufacturing industry in Ireland does not invest more in research and development, it will not remain competitive in the medium term. If it becomes uncompetitive, again we shall not be able to sell into the market place against the prime competitors that we have. In that context, the House will already be aware that Ireland is a participant, along with 18 other European countries and the European Commission, in the EUREKA Programme of Collaboration for Research and Development. This programme, initiated by France and Germany in the summer of 1985, is broadly complementary to the research and development programmes of the EC. Unlike the EC programmes, however, no control fund exists for the benefit of participating enterprises — indeed, there is a strong aversion to such funding on the part of many of the participating countries.

It is recognised, however, that the position of small and medium sized enterprises requires continuing further attention. Ireland has already played a leading part in ensuring that the role of small and medium sized industries is fully reflected in the declaration of principles governing EUREKA. Since the inception of the EUREKA programme, over 110 projects have been announced, 39 of them at yesterday's conference in Stockholm. Of the number, two have an Irish interest, one is a project involving the IIRS in partnership with a production engineering research association in Great Britain to reduce the cost of machine vision systems and advance manufacturing operations. The European Commission has also expressed interest in this project.

Despite strenuous efforts by the National Board for Science and Technology, it has not been possible up to now to involve Irish firms or research institutions in the many EUREKA projects. There are various reasons for this, such as the scale, nature, profitability, the lack of research orientation of Irish firms and also the fact that one of the existing EC programmes is a more attractive option and that funding is available. However, efforts to involve suitable Irish interest in the EUREKA programme will be maintained and the fact that EUREKA now have a permanent secretariat based in Brussels should also be a help.

One of the attractive dimensions of EUREKA to Irish firms is that it provides the possibility of links with firms in small countries outside the EC such as Norway, Finland, Austria and Switzerland. This must be a significant advantage to the Irish manufacturing industry. I should like to see a bigger participation rate by private companies in Ireland in the EUREKA programme. If research and development is offshore in the United States or West Germany, we will not have strategic units of companies in this country and indigenous Irish companies will find themselves out of the ball park very quickly. We must invest in research and development and the private sector, in its own interests, must invest in research and development in the manufacturing industry.

People always think of the lives of countries in terms of centuries and that great historic changes in their economies take place over timescales of hundreds of years but that is not true. In 1906 Argentina was in the top four countries on a league table of per capita income in the world and the UK was second. The UK is lucky to get into the top 20 now and Argentina would not make the top 100. West Germany and Japan rose from the rubble of 1945 to become the two greatest economies in the world. A couple of more interesting points are worth mentioning. In 1966 Japan had a per capita income one fifth of that of the United States and, despite the great growth in the United States over the last 20 years, in statistics published a month ago, Japan has now passed the United States in terms of per capita income.

Singapore had the worst slums in South East Asia and race riots in the streets in the middle sixties but now their GNP is stronger than ours in an area about half the size of County Dublin. If we follow the strategies I outlined, the timescales for turning around the economy do not have to be very long and an enormous amount can be achieved in timescales of between four and ten years.

Clearly, we are not debating whether the House should adjourn but whether the Government should adjourn and we have tabled an amendment to that effect. We are reviewing the Government's achievements — or non-achievements — not only over the past eight weeks but over the whole four years they have been in charge of the management of the country. In approaching this assessment, let me suggest that we put ourselves in the position of shareholders in a major company in the private sector. From time to time, those shareholders have the opportunity to review the success or otherwise of the management team entrusted to run the company from day to day. At those times, the shareholders ask themselves what targets were set by the management and to what extent did the management achieve those targets. They also ask if the management have a clear sense of direction for the future and if that direction is the best for the country or — in the analogy — for the company. Most important of all, they ask if the management have the ability and the will to move quickly enough in the direction decided on. These are the questions which prudent shareholders have to ask. They are not idle questions because if the answers of the management are unsatisfactory the shareholders' course is clear. It is their right, indeed their duty, to give the management their cards and to install another management team which, in the judgment of the shareholders, might do a better job. We are the shareholders in Ireland Limited, what is our verdict, as shareholders, on the present management?

I want to look at the question from two angles. How have the management performed in relation to the targets they set? Have the management a clear sense of direction and is their way forward the best or is there a different route towards the fulfilment of the aim of our nation? The outcome of this examination will be quite clear and unequivocal, the message from the shareholders of Ireland to the management of Ireland Limited is that it is time to take the P45s and move over. In that regard, I will look at the situation as it was in 1982 and how it compares with today. Public spending has increased by 16 per cent since the Government came to office; taxation went up by 12 per cent last year alone and the national debt has gone from £12 billion to approximately £23 billion in four years. In 1982 we were told in the election document that the current budget deficit would be eliminated by 1986. Two months later, we were told that the current budget deficit would be eliminated by 1987. Two years later, having had the opportunity to study the books and to calmly decide on their own targets, the Government announced that they would aim for a current budget deficit of 5 per cent of GNP by the end of their term in office which they assumed would be 1987.

In the 1986 budget, two years later, the Minister announced that he had again moved the target, this time to 7.5 per cent of GNP and today I heard him talking about 8.4 per cent. How can you run a country when the budget deficit target is moved five times in four years? You cannot play a game if you keep moving the goalposts which is what the Government have been doing.

In 1982, when the Government took office, 215,000 people were employed in the manufacturing industry. I stress that this industry is the wealth creating sector of the economy although it is fashionable now to talk of service industries. Today, one would imagine that the numbers working in the manufacturing industry would have doubled or trebled but they have come down to 185,000, nearly 33,000 fewer people working in the wealth producing section of the economy. The picture I am painting is of the shareholders of Ireland looking at Ireland's management.

In 1982 the unemployment figure was 170,000 and today it stands at over 240,000. I listened carefully to the Minister talking about international circumstances. Many countries are having major difficulties but the unemployment rate throughout the EC today, our major trading partners, is 11 per cent. Our unemployment rate is about 18 per cent. That 7 per cent difference must be due to the internal management of our economy as opposed to any external factor which might be responsible for up to 11 per cent of this figure. How do we explain the other 7 per cent? Clearly that is a problem for management to consider.

What about the outflow of money? Some £1.5 billion seems to have left the country by various devices. This does not say much for the operation of our exchange control measures. I was a little disappointed that we did not have an opportunity to debate the Exchange Control (Continuance) Bill this morning — it was passed by formal agreement — but I would like an opportunity to debate the effectiveness of the exchange control regulations. We have put a financial barbed wire around the country by introducing exchange control regulations which say that we cannot take money out of the country. How did £1.5 billion get out of the country if these exchange control measures are in force, and monitored by the Central Bank and the financial institutions? That question needs to be answered. It is clear from that figure that the business people and the people with money to invest have taken their money out of this country.

In the early eighties approximately 1,000 people came into this country annually — we had net immigration. This happened not 40 years ago or even 20 years ago but four short years ago. Each year 1,000 people came into the country but last year 31,000 left. That is some switch around. Before any Minister jumps in to mention the international recession, I must point out that there is no international recession. America is recovering, Japan is doing well and oil prices have come down. There is not an international recession in the western world, the contrary is true. The western world has been improving. If this is what they produce in an international recovery what kind of performance would the management of Ireland Limited have given us if there was an international recession? In the seventies about 14,000 people were coming into this country every year.

Interest rates are clearly at an all time high because of the Government borrowing policy. If the Government are in the gilt market borrowing and chasing money, that will push up interest rates. That is the real reason for high interest rates. I get annoyed when I hear Minister after Minister talk about the international situation being the cause of high interest rates. That is not so. Interest rates internationally are slightly over half what they are in this country. If we are being affected by international conditions I would be very pleased, especially if they were those international rates which give us low interest rates, low unemployment figures, low emigration figures and interesting and substantial growth figures, but clearly that is not happening. The Government are the main cause of high interest rates here and their argument does not stand up to professional analysis which suggests that interest rates here are imported. Perhaps on another occasion we can go into this in more depth.

The effects of high interest rates are clear. After companies pay their staff, their second biggest item of expenditure is interest repayments. This is bleeding most of our small manufacturing companies dry. I suggest that if interest rates were at the European level there would be a far lower unemployment figure because companies would stay open. They would not feel they were just working for the banks and trying to make ends meet. I want to knock on the head the idea that the international recession is pushing up interest rates and unemployment, and that that is inevitable. It is not inevitable. It is the result of four years poor management, lack of imagination and creativity.

Last week I asked the Minister for Finance how many people now pay more than the standard rate of taxation. He told me there were 864,000 tax-paying units. When the Government came to office there were 865,000 people in the tax net. The Minister might say that they have let more people out of the tax net and that is a superficially attractive argument, but the reality is that the tax take was up 12 per cent last year alone. There are fewer people working now than there were in 1982, and from the Minister's figures it is obvious that there are fewer people paying taxes. If there are fewer people paying taxes and the take from tax is up, one does not have to be an economist or a accountant to figure out that the incidence of taxation has increased dramatically. The standard rate of tax in this country is 35 per cent. When this Government came to office in 1982, 33 per cent of Irish people paid income tax over the standard rate. The figure today is 42 per cent an increase from 33 per cent to 42 per cent in four short years. In the middle of all that there is devaluation, the index of indebtedness has increased from 103 points to 145 points. The retail sales index was at 92 in 1982 and it is now 90. The point I am making is that under every heading — public spending, taxation, debt, manufacturing, jobs, emigration — the Government have not met their targets, particularly in the area of unemployment.

The people of Ireland are the shareholders of this country. They installed in management, for four short years, the Coalition Government. I am not comparing the present situation with that which obtained in 1982. I am comparing the targets set by the Government in 1982. This Government have attacked Fianna Fáil time and time again about what they inherited. Let me tell them something about that. The total debt of this country is now £23 billion. It was £12 billion when we handed over the reins of office. It took 60 years to build the national debt to £12 billion but this Government doubled that figure in four short years. That must be put on the record. Before I conclude, I want to move the following amendment to the Government's motion:

After "1987" to add "and requests the Taoiseach in the meantime to advise the President to dissolve the Dáil".

Debate adjourned.
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