Deputy Flood is in possession and the Deputy has 50 minutes left of the time allotted to him.
Financial Resolutions, 1987: Financial Resolution No. 3: General (Resumed).
Debate resumed on the following motion:
That it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision in connection with finance.
—(Minister for Finance).
In adjourning the debate yesterday I was about to address myself to the question of the suspension or abolition of the home improvement grants and certain housing grants. In particular, I wish to refer to the £5,000 grant for local authority tenants who surrender their local authority houses.
The best of order, please.
At the time this grant was introduced it was pointed out to us that there could be very considerable social consequences arising from its introduction. Indeed, many community and social workers and other involved in trying to build up new communities in new local authority housing developments in certain areas, particularly in my own constituency of Dublin South West, pointed out again and again the disastrous social consequences which could arise from the introduction of the local authority house surrender grant. Unfortunately, at that time there was not in position a proper local authority tenant purchase scheme. It was felt by many of us at that time that, had such a scheme been in position, many people who wished to own their own home and who found themselves renting local authority accommodation would prefer to buy their local authority house. Of course, in the absence of a tenant purchase scheme this was not possible and it is for that reason we have had the spectacle in certain local authority estates, particularly in and around Dublin, of empty houses being vandalised because of the drain of tenants from local authority housing estates who were moving out under the £5,000 scheme.
There have been repeated calls during the past number of years for this scheme to be abolished. Regardless of the rights or wrongs of the abolition of the grant in question at this time it gives an opportunity to local authority tenants to purchase their own local authority homes. We would certainly encourage this as there is now in position a tenant purchase scheme. I hope the Minister in due course will have another look at the scheme which was introduced by the Coalition Government, to tighten it up in certain respects and to make it more possible for tenants to purchase their own local authority house.
The measures taken in this budget begin the process of rebuilding the economy and we can only do so by reducing significantly the costs of output. In that way I am convinced we can go to foreign markets and sell our goods and services to the benefit of the economy because they will be competitive. We must adopt a more aggressive and positive attitude in seeking out new international markets. We must research the potential abroad for our products and services. Our own management at home must recognise the range of opportunities which exist on the world market which are presently being taken up by our more aggressive competitors in Europe and elsewhere.
We are a small country but we have many competitive advantages. We are located in the EC and therefore have access to markets. We have a good and sound infrastructure including airports, telecommunications, transport and computer technology and skills. Above all, we have an educated people capable of acquiring new skills through retraining and realising new potentials. Too often the workforce alone are called upon to make considerable sacrifices in the creation of employment and too often they draw an unfair amount of criticism because of their attitude to industrial disputes and their resolution.
We have in recent times noted an increasing willingness on the part of workers to adopt very reasonable conditions in agreeing to changes in work practices so as to secure existing jobs and in many cases create the conditions for increasing investment in their particular industries. We have seen local communities and community organisations taking an active interest in trying to protect existing jobs. We had a very clear example of this in recent times.
The Tallaght Community Council in my own constituency took the initiative in trying to resolve a very serious dispute in Packard Electric. By their actions they ensured that most of the workers participated in taking a decision with regard to a package of changes which the management were trying to introduce. In so doing, the Tallaght Community Council helped in no small way to protect more than 1,100 jobs in that area which are so badly needed at present. I applaud the council for their action in this regard and would suggest to other community organisations around the country that they might become similarly involved when difficult local situations develop, so that the problems in relation to threats to jobs can be highlighted for their potentially disastrous effect on the community.
Management, too, have their responsibility in this area. We need a more enlightened approach from management in seeking new opportunities for industrial development and expansion. Management must be more aggressive in seeking new markets abroad for their products and services. They must not reach the point where their energies are confined solely to defending their share of the market at home and abroad. Too often it seems that management are content merely to hold what they have in foreign markets. Real efforts will have to be made to expand opportunities abroad for further exports.
An aggressive and sustained market identification programme must be adopted by our native industries to enhance their penetration of foreign markets where, undoubtedly, opportunities exist. We have considerable natural resources and this is recognised. Fianna Fáil's commitment to developing these resources and skills will certainly lead to direct job creation. The further downstream processing of our natural resources, whether they be from the seas around our country or from our land, increases the number of jobs created. The very important aspect of added value also arises. This is particularly important where the finished product can be exported or where it is used for import substitution.
The reorganisation of Government Departments as announced by the Taoiseach should lead to greater cohesion in our efforts to achieve essential growth and to create the climate for ever-increasing exports. It must surely be agreed by all in this House that it would have been necessary for any Government to tackle the problems of our public finances and bring them into order. The Minister for Finance begins on the road to recovery for the country. There are few soft options anymore in this matter. We in Government cannot give in to single interest groups. We will all have to bear some of the unpopular decisions that must be taken to get this country of ours back to economic stability. The public finances will have to be managed properly from here on. The productive areas of our economy must be boosted. Borrowing and the cost of our national debt must be progressively reduced and these are the targets set out by this Fianna Fáil Government.
The Minister has rightly decided that our public services are costing too much. To achieve cost cutting, we must look at the wasteful areas of expenditure and curtail some of the schemes which we have traditionally acknowledged as being essential. It has been stated that public service pay, standing at £2,840 million, is a staggering figure and even with the previous Government's embargo the size of the public service in terms of numbers employed is quite enormous.
While the PAYE taxpayer does not get any tax band adjustment in this budget, it is reasonable to expect that in getting our public finances into order it will be possible for the Fianna Fáil Government to introduce changes in PAYE rates as early as possible in the future. This is in line with the various programmes set out by us leading up to and during the election campaign.
We have a great number of large buyers through their involvement in retail businesses, in the construction industry and other aspects of economic activity here. The buyers and purchasers in these establishments should consider more carefully where they place their orders. They should consider very carefully as they write their purchase orders to foreign companies and should address themselves more particularly and more specifically to the need to buy at home, to purchase raw materials, goods and services wherever possible in this country. They need to have a certain bias in favour of purchasing Irish-made goods, services available here and raw materials. The Buy Irish campaign, which seems to move in fits and starts, has all but disappeared from the mind and perception of the public. A new campaign should be launched by this Government to spell out clearly the need to buy Irish at all times and to ensure that more and more jobs are created. It is not good enough that we should see such a huge volume of imports coming in, in practically every area, when it is clear to all that much of what is being imported can be purchased locally. It is, therefore, important for users to make contact with manufacturers and other suppliers here so that between them they can work out how best native Irish industry can supply the needs of our purchasers.
The people demand that action be taken now. I believe they are prepared to accept that a difficult situation requires firm and decisive action. They are prepared to make sacrifices provided they can be assured that their sacrifices on this occasion will not be wasted, as has so often happened in the past. Let us in this House put aside our political differences in so far as our common objectives are concerned. Our objectives ought surely to be the creation of worthwhile jobs so that more and more of our people can return to work, or as in the case of young people, can commence their working lives and we can begin to halt the drain of emigration which has returned to curse this country once again.
There has been generally an acceptance for some time that particular action with regard to the curtailment of expenditure is necessary in order to bring about the kind of economic environment that would benefit the country both now and in the future, in order to provide opportunities for our young people and to ensure that we can offer future generations something to look forward to. It can fairly be said that if all the political parties and all interest groups here over the past 15 or 20 years had taken account of the need to provide for what was then the future, probably we would not have had the kinds of problems about which we have spoken in this House and which the country has experienced over the past number of years. Probably now there is a consensus, or near enough to a consensus, in regard to the problems facing the country. One must also compare the kind of consensus that existed just before the recent election, what the public were being told then and are being told now. Some political parties, in fairness to them, attempted to set out as clearly as they could exactly what the circumstances were and what they were likely to be after the election.
As people drove along the national primary and secondary routes they saw large posters and billboards exhorting them to vote in a certain fashion and thereby have the problems that beset them alleviated. The public did respond by voting fairly substantially for two political parties who prior to the election were in opposition. Those two parties achieved a total of 95 seats. One would assume that the public would not expect to have been let down so quickly after the election in regard to the promises made by those two political parties before the election but there are substantial grounds and increased evidence to show that not only have the public been let down already but that there is a fair chance they will be let down even further in the future.
I wish to refer to the differences between the budget we are now debating and the one which was issued and published by the outgoing Government. It was indicated by the minority Fine Gael Government in January that certain curtailments would have to be made in health, social welfare and various other areas. The reaction from the party who are now in Government was not one of recognition of a problem or support of any indication other than that they would do things differently and better and that there was a better way. When they were pressed on this at the time they had very little to say in regard to specifics other than that they would not be drawn and that things would be different. I refer to the debates which took place in this House during the past 12 months. I am thinking in terms of various debates during Private Members' Time on cutbacks in the area of health as they were seen at that time, debates on teachers' pay, on agriculture and various other issues which arose, not in the long distant past, but during the time immediately prior to the last election. If one was to have regard to what was said during those debates by the then Opposition, one could assume safely that things were going to be extremely different, greatly improved and that as a result the people would have a much better lifestyle and a much higher standard of living.
The realities now seem to contrast fairly dramatically with those proposals. The electorate were promised one thing and they are now getting something else. I mention this because it is a dangerous thing for politicians of one party or another to trifle with the electorate in that fashion. It gives the impression that by supporting a party with a particular philosophy prior to an election people can expect to have their hopes dashed afterwards. This does nothing either for democracy or stability. I hope it is something we will not see in future elections.
I wish to refer to the health cuts which were much publicised when the previous Government were in office. Scarcely a day passed when there was not a major hue and cry in relation to a certain hospital or discipline within the health services that was under threat. Day after day and night after night in this House we heard about the impending doom and gloom that was about to descend on those services. Every moment we expected to hear about hospitals closing and day by day we were told they were about to close.
Naturally one would have assumed that that being the case, there would be no fears in that regard after a change of Government. However, the reverse is the case. A typical example of this is the County Hospital in Naas. Despite all the scares this hospital had adequate funds to run its services for the past four years during the previous administration. The Minister at the time saw fit to introduce, implement, encourage and support a plan to upgrade and extend services to such an extent that the first stage of that upgrading has been approved and is hopefully ready to be implemented. It is peculiar that at present one ward in that hospital is closed. It is a small hospital and the closure of a ward can have a major impact on the input that hospital has to the services. There are other similar cases throughout the country. I hope the present trend does not continue.
I know the Minister opposite is familiar with the health services and I hope he will convey to his colleague, the Minister for Health, the dangers of pursuing policies of curtailment of that nature with regard to small hospitals. Such policies will result in the closure of hospitals. A policy of not replacing staff who are on maternity or other leave or of not relocating or develoying staff is strangling the services. If allowed continue, that kind of policy is the ultimate conclusion will be a complete decentralisation of hospital services. Only the very large regional hospitals and the very large hospitals in Dublin city will survive because they have the resources to cushion themselves against that type of policy.
The embargo on staff in relation to hospital services is going to cause serious problems in the same fashion. This embargo has the same effect as virtually closing half of the services. If the type of staff embargo that is now being talked about and seriously considered is strictly enforced and allowed to continue I can see no help for the smaller hospitals. In any event rural areas will suffer to the greatest extent.
The £10 charge for hospital beds which was discussed last night will hurt the sector of the community who now seem to carry the entire burden of taxation. We hear much talk in the House about the burdens on the PAYE sector. This charge hits the PAYE sector more than anybody else. It hits the people who do not have medical cards, who have to pay, not only health and educational services, but for all their services. The people in the middle income group seem to have to carry the burden of responsibility for everything. They will have a further burden put on them by the imposition of this charge. This will not be to the benefit of the services or of the people whom we had hoped were going to receive some recognition from the Government.
As junior spokesman on Agriculture and the Food Industry I should like to refer to the impact of the budget on this sector. First, I should like to refer to agriculture in general. Prior to the recent general election, two political parties campaigned vigorously on the basis of their proposal to abolish farm tax. The proposal sounded very attractive and it was very attractive in certain quarters. I suppose it is right to say that as a result those political parties achieved electoral success. What is the outcome now? Have the farming community received the kind of injection by way of enthusiasm, financial support or recognition that they expected? The abolition of the farm tax has aggravated a situation whereby the smaller farmer felt that he or she was paying the bulk of the taxation that was being paid by agriculture.
Numerous references have been made during the past few years to those highly efficient and hard-working farmers who operate small farming units and who, both under the old system and under the system the Government now propose to revert to, pay the bulk of the taxation which is being paid by the agricultural sector. They now find that the Government propose to ensure that they do so in the future. The small farming units were well prepared and had readily agreed to accept farm taxation in the fashion proposed by the outgoing Government. That has been reversed and it is not to the benefit of those small farming units. In recent times it has been indicated by certain farming organisations that those farmers were of the opinion that they would much prefer to operate on the basis of the farm tax rather than on an accounts system, a farm profile system or any other system that required a massive amount of bureaucracy and which was highly expensive from the point of view of Government and the Revenue Commissioners and from the point of view of the farmers themselves. The only people likely to benefit from the system which is again proposed by the Government are accountants. Anything that adds to bureaucracy or administration is not to the benefit of production or higher output.
There is another element which is serious also and it is this: when the general public see Governments or political parties responding too readily to any interest group they automatically get the impression, and rightly so, that there must be some considerable clout in that area. It is advisable to change that system for a number of reasons. First, there is the growing tension between urban and rural communities. There is a strong suspicion, and not without some justification, that only the urban or the PAYE sector are paying any taxation. There are considerable grounds for furthering that belief by virtue of the recent changes in the taxation system and by virtue of the abolition of the farm tax. Within the farming community there is a dispute as to whether farm tax was a good thing. The highly productive and efficient small farmers would have operated far better under the land system than under any other system. That was agreed. However, it has now transpired that the PAYE sector has seen the removal of the taxation system which was opposed by another sector in the farming community and have seen a change in Government policy. That is dangerous, it is divisive and it is destabilising at a time when this country can do without destabilisation. In future it would be well for Governments of any particular hue to remember that the community is made up of many sectors and one should not readily respond to one or the other without having regard to the overall impact.
Another area which I should like to refer to briefly is the food sector in which I have a particular interest. This is the first budget introduced by the present administration but I would hope that in future financial proposals the Government would see fit to give the kind of recognition to the food industry that it deserves. I know that the Minister of State at the Department of Agriculture and Food has alluded to his own proposals to improve the production, labelling, grading and marketing of vegetables and meat to ensure that Irish products not only keep their record in quality in the foreign markets and on the shelves of supermarkets in other countries but also to improve and expand those markets and to encourage new consumers to take an interest. One way to achieve that is simply by producing quality products. If there is one thing this country is readily adaptable for it is the production of beef, dairy products and vegetables. In those areas we have a natural advantage over all competitors both within Europe and outside and it is something on which we do not capitalise nearly enough.
While I accept and welcome the indications from the new Minister of State as to his intentions regarding the food industry, we still have to hear details of his proposals and of his financial support for them. I am aware that little has come of late by way of hard evidence to suggest that the food industry and the Department of Agriculture and Food will be run on a sound financial basis or that they will have any finance of their own on which they can rely to do what the Minister of State propose and hopes should be done. I support the suggestion and aspiration of the Minister and of Minister of State that the food industry be developed along the lines they have indicated. It will be difficult to develop it to any great extent unless a separate budget is made available, separate entirely from the other workings of the Department and which would not only include the administrative problems that exist but should also be capable of funding the marketing, the supervision and the grant-aiding of projects in the food industry. It is time to consider the possibility of taking all the grant aid and incentives for the food industry into a single department, since it happens to be the area where there is likely to be greatest scope for advancement in the future. By any standards the agricultural and food industry is crucial to our economy. This sector alone employs over 40,000 people and generates a major share of the £2 billion annual agricultural export earnings.
Recognising that and also the Minister of State's aspirations for the industry in the future, I can see no reason why a proper financial structure could not be set up to deal with the entire food industry. Applications for grant assistance, or research and development, or for product development, or whatever the case may be, which are at present being dealt with by the IDA, could now be dealt with by the food industry department and as a result there would be a faster response and a greater understanding of the problems, having regard to the special role the sector could play in follow-up and final marketing. I mention that because presently there are considerable incentives available to any industrialist or any would-be food processer to get assistance from the Department through FEOGA and the IDA. To my mind it would be far better if all these arrangements could be brought under one umbrella and that one department could single mindedly follow the problems and deal with the contingencies that arise in the food sector from production right through from preparation, packaging and processing to marketing. In that way that department would be in a better position to concentrate on the issues and to identify problems as they arose.
Incidentally I know some time ago that it appeared that the uptake of grant aid in the food processing sector was very poor. That information came from the IDA itself. I wonder why that is the case, because we need jobs, we need investment in the food processing sector and we certainly have in the country all the technical qualifications that are required. One must assume that there must be some other reason. From the number of inquiries that I made it seems that many applicants for grant aid feel that the wave of bureaucracy and red tape they must encounter in the course of their application is such as to dissuade them from proceeding at all. If that is the case I suggest that there is a serious problem which needs to be dealt with urgently. At a time when the country needs jobs desperately we should look very seriously at the prospects of giving the power to a single department which should operate independently but in co-operation with other relevant departments. It should have its own budget so that it can do its own research and follow up the inquiries that come to it. It should also have ready access to all the marketing outlets and all the other data and information that might be necessary. It could thus short-circuit some of the long drawn out investigations that have to take place under the existing system.
If we are to achieve what is possible in the food industry it is obvious that we must have a quality product that is produced under the best possible circumstances and conditions. That is the greatest possible marketing boost we can have. I think the recent disclosures on the television programme "Today Tonight" regarding the meat industry were sufficiently serious to warrant an immediate investigation by the Ministers in question, and I mention the Minister for Agriculture and Food, the Minister for Health and the Minister for the Environment. They should investigate the slaughter of animals and the offering for sale of meat and the conditions under which that takes place. Even the suggestion, as we saw on that particular television programme that something untoward might happen could do irreparable damage to the consumer industry within the country. It could do irreparable damage outside the country also and for that reason I think a special effort should be made now to ensure that the usual inspections by the health board staff will be stepped up and no quarter whatever given to people who flout the regulations in the fashion suggested in that television programme. If that were allowed to continue or were known to be happening within the country — I know it could not happen in relation to exports — it could do irreparable damage.
There are sufficient regulations in force, for example, the Public Health Act, and the Diseases of Animals Act which can be readily brought into force to ensure such occurrences do not happen. It is essential that those regulations be rigorously enforced to ensure that a repetition is not possible. Incidentally, I know that the Minister for Agriculture and Food proposes to make certain changes to ensure higher standards in those areas. I think the quicker this can be done the better.
I wish to deal with some other points encompassed by this budget. Listening to the Opposition last year one found that public enemy number one was unemployment, and taxation followed very closely behind that. It is true that they were and are very serious problems and that has not changed. Public enemy number one now seems to be interest rates. Interest rates are high and have been unacceptably high for some time. It is also true that interest rates dropped dramatically last year during a certain period; they dropped in previous years likewise and they will probably drop this year. It is possible that the present administration wish to give the public the impression that the drop in interest rates, which is likely to come over the next number of weeks and months, is a result of specific action on the part of the Government. It must be remembered that we had drops in interest rates before. The question to be answered is, what determines how long the interest rates remain down? As we all know, there are factors other than those which can be controlled by the Government. I hope the Government will not claim credit for a dramatic decrease in interest rates when, in fact, it will only be a repetition of what happened last year. The question is whether interest rates can be kept down on an ongoing basis. That is where the greatest benefit will be derived for the economy. It will benefit investors, industrialists, agriculture, the PAYE sector and the entire economy. Interest rates affect everybody.
High levels of taxation have been mentioned frequently in debates in this House, particularly the burden on the PAYE sector. It is true that levels have been unacceptably high and remain so. One would have expected some kind of relief in the recent budget and I am sure the public were astounded when this was not the case. The sting in the tail was that mortgage interest relief was reduced by 10 per cent, affecting in particular young families who have found it very difficult to make ends meet in recent years. This was an amazing decision in view of the impression given previously by the Opposition. Few people can understand why the Government should have seen fit to increase taxation in that area. The reduction in the mortgage interest allowance is simply an increase in taxation for people who are working and giving employment to the building industry and other sectors by taking out mortgages to build or buy their own houses. One cannot understand why this was done.
Some will attempt to justify this move by saying it was proposed by the Commission on Taxation. This is true but many other proposals were also made by the Commission and I am sure it was not intended that these proposals should be implemented selectively. Neither the Government nor the public can select the points they like and implement only those which are of immediate benefit to them. The Commission on Taxation have produced a number of very comprehensive reports which need to be considered seriously but instead the Government appear to have taken the first step towards removing mortgage interest relief. I hope for an assurance from the Minister that there will not be a recurrence in future years. This action on behalf of the Government bodes ill for the hard-working sector of society who are being very hard pressed by taxation and have to pay for virtually everything. When their allowances are being eroded in this fashion they may come to the conclusion that it is not worth working hard and taking out a mortgage and may become more disillusioned than they are already.
The PAYE sector may regard the withholding tax as a genuine attempt to ensure that a certain level of taxation is taken from the private sector and the self-employed. The reality is that in very many cases the people working in companies dealing with State agencies are themselves PAYE workers and may be under protective notice at present. This proposal will mean that a certain amount of money will be borrowed from the firm for a period of time. Many State agencies are not regarded as the fastest people to pay. If this proposal is to be implemented as well as that unofficial policy of delaying payments, the repercussions could be far more serious than anyone has anticipated. In drawing up the Finance Bill the Minister should take account of the fact that State agencies are so slow to make payments.
Anyone listening to debates in this House during the past year would have imagined that the incoming Government would immediately have abolished the DIRT tax. When in Opposition they said it was a disincentive to investment, causing a further black hole, an exodus of funds and a deterrent to investors. The impression was certainly created, not only in this House but at public meetings prior to the election, on posters and in the media generally that this problem would be tackled. This was not to be the case. The public, having elected a Government, have to accept that this issue, which appeared to be crucial some time ago, no longer has the same importance in the mind of the Government. It is an amazing turnabout but no more so than many others. We used to hear about selective tax cuts and reflationary measures which would ensure that the economy responded to the needs of industry. None of that has happened nor is it likely to happen.
There was one sector which confidently expected a considerable improvement in their circumstances. We have heard that Fianna Fáil were the backbone of the construction industry. When the election was mooted it was expected that a change of Government would be of tremendous benefit to the construction industry. It was readily admitted by the industry that times were tough and it must have been greatly disappointed by the new Government's decisions. The system of grants which had been put in place by the previous administration was abolished at the stroke of a pen.
At least 1,600 people who applied between 24 March and 31 March when the announcement of the abolition of the home improvements grant, the builder's grant and the house surrender grants was made, faced the proposal of refusal of their applications. It was further proposed to refuse the applications of those who applied for home improvement grants where no inspection had been carried out. It was the most peculiar way to reward the building industry by a political party who repeatedly over the course of years stated publicly and privately, within this House and without it, that the building industry was a major one and that it needed an input of funds. In fact, it was proposed to inject £200 million into the industry in order to do the job that allegedly was not being done by the previous administration. However, the peculiar thing the Government did then was to reduce the amount of funding that was already there to the extent that at least the 1,000 plus people I have mentioned will be disappointed by virtue of the refusal of their grant applications. Also people who had previously applied for grant assistance where valid applications were made are going to be refused.
Again I appeal, as I did the other day at Question Time, to the relevant Minister to consider the legal position of those cases. If a scheme is in operation and within the period of the operation of that scheme — and until a public announcement is made to the contrary — a person makes an application which is valid at the time of the making of the application, and particularly if the application is acknowledged, that implies a certain contract on the part of both parties. It is up to the applicant to fulfil his or her part of the contract afterwards because he or she cannot do that until afterwards. On the compliance by the applicant with regulations the second part of the contract comes into play whereby the agency making the scheme available — in this case the Government — must be prepared to accept responsibility for the application. I accept fully the Government's right at any time to announce the termination of any scheme on a particular day, but the right to make that termination retrospective is dangerous and very difficult to unravel should it be challenged in the courts.
Those grants I have mentioned, namely, the home improvements grant, the house surrender grant and the builder's grant payable on completion of a house are virtually equally involved. The Minister should reconsider his decision to see whether it will be possible to meet the applications that were valid and acknowledged by his Department prior to the announcement. That would involve an extension of the closing date from 27 March to 31 March which would ensure that all those people who had made their plans, who probably had financial facilities made available to them and who had themselves contracted with builders in order to carry out the work, would not be disappointed and would be able to have the work concerned carried out.
Incidentally, I am not so sure about the cities, but in rural Ireland there is a great need still for the continuation of the home improvements grant scheme. A great number of houses in the country are tenanted by elderly people, or people on social welfare or low fixed income, who are not in a position to carry out house improvements of the type required without the grant assistance we are talking about. Many houses still have no basic sanitary facilities or even the basic comforts of draught-proofing or dry-lining or that kind of thing which is now essential in very old houses. Therefore, perhaps the Minister will reconsider that scheme and so restore some of the confidence the previous administration had generated carefully in the construction industry and the past four years, which confidence has now unfortunately been dashed.
Another area deserving mention is local authority financing which again is very much an issue at present. Unfortunately, many people were given the impression that the party now in Government would abolish local charges at the stroke of a pen and provide an alternative system which would not militate against the ordinary householder or taxpayer. Amazingly, nothing like that has happened. We are still in the same situation. We still have to find finance for local government and we still do not have it and no other means has been found. All we are getting at present is vague references to the fact that perhaps a review of local authority financing will be undertaken and that it is up to each local authority to consider whether they require to introduce local service charges or whatever. That is rather at variance with what was said by that party when in Opposition.
I wonder — I do not wonder any longer, I know — why the public become disillusioned with politics and politicians. It is because politicians say one thing and do another and, unfortunately we have only too many examples of that. This is one of them. Finance is difficult to come by in the local authorities. I know that full well as a member of a local authority, and I know full well how difficult selling a means of financing local authority to the public is, but if a political party decide on a line of action at one time and then decide for reasons of expediency to change their minds, that can only be extremely damaging from the point of view of confidence by the public in administrations. Unfortunately that confidence must have been shaken again and again by the Budget Statement we are now discussing.
I do not want to delay the House unnecessarily. I would like to hope that in this House at least a change will have taken place. In the past four years when we were on that side of the House on many occasions I saw opposition purely and simply for the sake of opposition and of political expediency. This country does not need that at present and the further we can get away from it the better. Now that the positions are reversed we hope on this side of the House to be able to produce and provide a constructive Opposition, constructive in what we have to say to the Government, and to the public as well, which is important. I hope we will be able to provide an Opposition which will not unnecessarily hype up the expectations of the public by one means or another, by suggesting to them that we have various means of doing things other than the Government of the day have that would be less punitive or less of a burden. The bottom line must be that all politicians tell the public exactly what can be done and how much it will cost. That honesty has been sadly lacking in the past number of years. I hope we on this side of the House can do our bit to change that. We have already shown that we will. I would be very worried if I thought that people were being asked to make sacrifices so that the Government could make savings over a short period in order to boost the economy coming up to a general election. I would be worried if all the hardship and the sacrifices were piled up in such a way as to keep a nest-egg warm for the Government party so that they can come before the public with this nest-egg clutched in their hot little hands and expect the people to forget their hardships, thus giving the Government an electoral boost. I hope that will not happen.
There have been many suggestions over the past number of years about the failure of the political parties and the system and there have been many criticisms of politics, politicians and the institutions of the State. Many commentators have suggested that the country is in a bad state and that there is no hope either for the country now or in the future. I do not accept that. It has also been suggested that the cause of our problems was the pursuit of Civil War politics. I reject that too. Our problems do not result from Civil War politics but from the pursuit of crazy economic policies and attempts by political parties to pander to the needs of powerful groups. I am no supporter of Civil War politics but when those politics were in vogue the people pursuing them would not have dreamt of becoming involved in the crazy economic theories which have proved so costly to this country. The politicians of 30 and 40 years ago would not have allowed themselves to be pushed into the economic corners that Governments and politicians have been pushed into over the past number of years. The commentators and the punters will criticise politicians and political parties for allowing this situation to develop yet the same people make these demands repeatedly. Having made demands many times in such a way that it was virtually impossible for institutions or Governments to withstand them, it is not reasonable to criticise those who accede to the demands. They say in the US that Reaganomics are the order of the day. Crazyomics have been the order of the day in this country for the past 15 years or so.
If one salutary lesson can be learned it is simply that the Government of the day or even the Opposition parties of the day should recognise by now the dangers and the pitfalls of responding too readily to sectoral interest groups at any time, regardless of how strongly they make their case. There are many valid cases being made but our problems have largely arisen from a too ready response by political parties or by the Government. If a new attitude is adopted by political parties and if they have the courage to face up to their real responsibilities and do what is right, a lot of the problems we are facing now and will face for many years to come will become less of a burden because at least we will not be storing them up for the future. I hope that political parties who before elections proclaim there is a better way which is obvious to them before elections, will find the better way on election to office and will have a better way of showing us that than I have seen yet.
I welcome the very encouraging remarks of Deputy Durkan in calling on all of us to take a very responsible attitude to the development of the nation. Indeed, this budget is designed to stop the rot in our public finances, to reduce the national debt, to restore confidence in investment, to reduce the high interest rates and to tackle the massive unemployment with which the country is faced at present. The difficult measures we have taken to contain public expenditure were essential in the national interest, in the interests of the people, of those at work who are over-burdened with taxation, of those who seek employment and a rightful place in the community and of those dependent on social welfare, the widows, old age pensioners, the handicapped and others. Unless we took the measures contained in the budget the future security and welfare of those groups would be seriously at risk. Nevertheless, we were able to protect the position of those dependent on social welfare.
Having done this, having secured our financial and economic base, we are now committed to the task of immediate and urgent development along the lines set out in our Programme for National Recovery. We published some of those measures on Sunday last. We will now be pressing on urgently to take further action in other areas of potential development. I assure the Deputy that we will make every effort to restore pride and confidence and a sense of achievement to the nation. I call on all Members to recognise the need for national recovery and to support the effort of the Government which are directed towards this end. In the interests of our people we have an obligation to put the nation first. Already there are signs of new hope and confidence. We learned from financial circles that money is flowing into the country. We know that the position in relation to interest rates has improved. The key, one month inter-bank rate has fallen by approximately three percentage points from its March peak. The bulk of this fall has taken place since the budget.
I advise Deputy Durkan and others in the House of an observation of a porter working in a highrise building in Dublin city which he brought to my attention recently. When I asked him how he judged economic development particularly in the Dublin area he replied: "I watch out for the cranes; there are only four of them there now." He said he would be watching to see how many more would be there within a short time. He is right because he will see development. If one watches the skyline over Dublin one will see cranes because there will be development taking place there. That is the commitment of this Government. That man, in his simple direct way, pointed to a key indicator not confused with changing interest rates or other factors.
This budget constitutes the first step in the Government's programme of national recovery. I believe there is now a general realisation of the very difficult situation the country faces and a general acceptance of the need for effective policies and firm leadership to turn this difficult situation around. That is what the budget is all about. We have charted a course for the future and, having done so, we have taken the management decisions necessary to ensure that the course we have charted is followed. In the programme we put before the people during the election campaign we set out very clear proposals for national recovery.
I must say to Deputy Durkan that we said approximately 90 per cent of the measures proposed by the previous Government would have to be implemented. I am very clear on that and was very conscious of the fact at that time. What we have done in this budget is to soften some of the worst effects of some of those harsh measures and their impact on ordinary people, particularly those who are dependent on social welfare. What we have done in this budget is to accept the mandate, or indeed the challenge, given us by the people by putting our programme into effect. In the short three week period available to us to form a budget, this basically meant considering the options which were available in the light of the previous Government's proposals and the need to put the economy on a firmer footing. Even more important, we had to ensure that, in adopting measures necessary to get the public finance into better shape, the weaker sectors of the community were protected. This we have done.
We have to accept the need to contain the overall level of public expenditure. There is nothing ideological about this. The measures which have been taken were taken because the country and the economy require them. Like any household we can in the long term spend only to the limit of what we can afford. Where there has been overspending we had to take corrective action to stop the rot and restore confidence. The level of expenditure we can afford depends on the performance of the economy. Clearly our present levels of expenditure and debt are not affordable and corrective action has had to be taken. A few figures illustrate this point.
Total current Government expenditure as a percentage of GNP has risen from less than 30 per cent in the early seventies to over 41 per cent in 1980 and to nearly 50 per cent in 1986. This resulted in an increase in the current budget deficit from less than 1 per cent of GNP in 1970 to 8.5 per cent in 1986. The decisive action taken in the budget will reduce this budget deficit to an estimated 6.9 per cent of GNP this year.
If we want to understand the underlying strength of this budget and its impact on our financial position, we need only look at the difference between last year's outturn of 8.5 per cent, the target set out in this budget of 6.9 per cent and that of the previous Government of 7.5 per cent. Therefore, we have set a target for ourselves which will ensure that our financial position is stable and that our economy is one in which investors can be confident. Even a small drift away from the 6.9 per cent would still leave us well below the target set by the previous Government. That is a measure of just how seriously we saw the need to tackle our finances at this time.
Such action was necessary so as to ensure the firm base which is a prerequisite for national recovery. As the Taoiseach said last weekend, future budgets will continue to impose the discipline needed in the public finances. The Exchequer borrowing requirement must be reduced. It is estimated that, on foot of the measures taken the Exchequer borrowing requirement, as a percentage of GNP, will be reduced from 13 per cent in 1986 to 10.7 per cent this year. Some may argue that this is a tough target but what is the alternative for this economy whose national debt now stands at £25 billion and costs the State nearly £2 billion annually to service? There is none.
The budget has given a new sense of direction to the economy. It was the first step in harnessing our resources more effectively and efficiently. No longer can we adopt an ad hoc approach to public expenditure programmes, for example, by funding areas every year only on the basis that the programme is there. We must ask, on an ongoing basis, whether individual programmes in their present form are appropriate any longer. We must look hard at their objectives and see if these are being met. Where they are not, we must be prepared to take corrective action. Given the scarcity of resources, we have a responsibility to ensure that programmes are properly targeted. The current economic climate dictates that it is now more than ever important that we recognise the need for good housekeeping, effectively by the control of public expenditure. The corollary to this that the Government will be in a better position, especially in the long term, to meet the real emerging needs of the people.
Of course the budget is about much more than controlling the growth of public expenditure. The Government's strategy is also directed at achieving growth in the economy. This two-pronged approach is the essential difference between this budget and what went before. The fiscal measures taken in the budget to bring Exchequer spending under control are inter-linked with development measures which will lead to faster economic growth. There are already very definite positive signs in the economy. Exchequer borrowing is being reduced, capital is flowing back into the economy — which is a sign of increasing confidence — inflation has slowed to around 3 per cent and interest rates are coming down. The fall in interest rates would not have been secured without the restoration of confidence in the economy. If the present trend continues there will be scope for further falls in interest rates leading to further enchanced prospects for investment and employment opportunities.
There is now a general awareness of what needs to be done in the interests of the country and a positive attitude towards constructive action. In this regard the Report of the National Economic and Social Council entitled "A Strategy for Development 1986-1990", in my view is a watershed. The fact that the council, which is representative of the main interest groups in society including the trade unions, employers and the farmers, could reach unanimous agreement on a set of wide-ranging proposals in the areas of macro-economic policy, tax reform, development policies and social policy is a most important development. The Government have accepted the principles adopted by the NESC as the basis for a medium-term programme for the next three to five years. We are, therefore, in the situation of having a consensus among these different interests. This means that we are already a long way towards achieving solutions. It is not a consensus of the sort I referred to earlier but a real national consensus among groups with widely differing aspirations and objectives on the measures which are required to be taken in order to put this country back on the road to recovery.
There are, of course, growth potential areas. One of the essential elements of the Government's strategy is our development programme. Our objective is to secure greater employment through determined programmes of development in sectors of potential growth. These sectors have been identified as manufacturing industry — with special emphasis on science and technology-based industries, international services including financial services, agriculture and the food industry, horticulture, forestry, marine products and marine services, tourism and mining. Development opportunities and investment packages in these sectors are being vigorously pursued. Although we can not throw money at investors we can provide incentives, effective management support and a climate of action and confidence.
There is considerable potential for growth in the area of science and technology. Higher priority for this area will have beneficial spin-offs for industry in the creation of a better capacity to adapt to change and will, in itself, create new sources of wealth and jobs and lay the foundation for a more developed high technology economy.
In the area of trade there is a need to recreate a climate that strongly encourages enterprise, with special emphasis on developing small businesses and on self-employment. Key elements here include the extension of IDA efforts to include indigenous manufacturing industry, the development of export services, export trading houses, the reduction of export costs and the fostering of group marketing schemes.
There is considerable scope for development in horticulture. This is a largely untapped area and one where better organization and cohesiveness among growers and others involved in the industry would yield significant results. The immediate setting up of An Bord Glas and the appointment of a chief executive indicate the sense of urgency with which the Government are tackling this area. The early provision of competitively priced natural gas will give a major boost to this sector.
Food and forestry are two additional sectors with expansion potential. Forestry has long been a neglected resource and it offers immediate prospects for increased employment as well as considerable scope for import substitution. This country has the potential to be self-sufficient in timber, to develop valuable export markets and to create a range of timber related industries which will generate employment.
We have centred all functions relating to the potential of the sea in the new Department of the Marine. We are unusual in that as an island people we have never exploited our marine resources to the full. Clearly, we can no longer afford to neglect them. There is considerable scope in the areas of sea fish farming and mariculture industries. The overall objective is to exploit the potential of our marine resources to the maximum extent.
Tourism is one of the biggest sources of employment in the country. It is a key industry in the utilisation of native raw materials and a major earner of foreign exchange. Bord Fáilte estimate that tourism generated in the developed world will grow by between 7 per cent and 8 per cent in real terms by the end of the century. We have the ability to achieve even higher growth by a programme of cheaper access fares to offset our geographical location, by aggressive marketing and by ensuring that the standards of tourist facilities and services are of the highest quality. There are quite a number of positive developmental areas that we can engage in without delay.
In regard to social welfare expenditure I would now like to turn to my own area of responsibility and to outline how the measures taken in that area link in with the Government's overall strategy. The first thing that strikes one in talking about social welfare is the enormous amount of resources which are involved. Gross social welfare expenditure amounted to almost £2.5 billion last year, of which the Exchequer contribution was over £1.5 billion. Over £400 million of this was in respect of the Exchequer's contribution to the social insurance fund. There has been an enormous growth in the number of social welfare beneficiaries and in expenditures. Gross social welfare expenditure has increased from around 7 per cent of GNP in 1970 to over 15 per cent in 1986. The Exchequer expenditure on social welfare as a percentage of Government current expenditure has increased from less than 15 per cent in 1970 to over 19 per cent in 1986. Thus an increasing amount of our resources is going to finance social welfare.
Over one-third of the population are social welfare beneficiaries, which indicates a high dependence on State funded services.
Given the increasing proportion of resources being allocated to finance the social security system, the question of what we can or more appropriately what we cannot afford has to be addressed. The financial stability of social security schemes has been under pressure in many countries from two sides: 1. the increase in expenditure arising as a result of persistent high levels of unemployment and changing demographic structures; and, 2. the flow of income revenue has been slowing down due primarily to the decrease in the number of persons at work.
Ireland is no exception to these trends and when one takes account also of the particular economic difficulties which this country faces it is obvious that social welfare as well as other areas of public expenditure must come under closer scrutiny to see whether there is scope for redirecting expenditure. The previous Government proposed to restrict certain social welfare schemes and the savings arising from these proposed restrictions were embodied in their budget figures. Having examined their proposals we could not accept a number of them, in particular the proposal to reduce from 15 months to 12 months the duration of entitlement to unemployment benefit and the proposal to increase the waiting days for disability benefit from three to six. We accepted the reduction in pay-related benefit to 12 per cent and also, but only in a modified form, proposals for more restrictive contribution conditions for certain social insurance benefits. Some restrictions had to be made but in making them the Government have been very careful to protect those who are in greatest need.
In the present financial situation the scope for increases in expenditure is very limited. In this context the major provision made in the budget, namely, the 3 per cent cost of living increase in all weekly rates of payments from mid-July, is a major achievement. It meant that an additional £19 million had to be found over and above what had been provided for by the previous Government for an increase from November as they had proposed. I fully accept that a 3 per cent increase is a modest one in terms of the actual amounts of cash increases which are involved. The increases must be seen, however, in the context of the economic problems facing the Government and what the country could afford at this time. The total cost of the 3 per cent increase is £30 million. The cost of advancing it to July is £19 million. Most objective commentators would agree that to get the increase in July is far better for widows, pensioners and other beneficiaries than to have to wait until November.
The increase we have provided will at least maintain the real level of payments of over 700,000 social welfare recipients and are in line with the expected rate of inflation over the year ahead. This increase also maintains the significant rise in the real level of social welfare payments that have been achieved over the past decade or so. Over this period there has been a real increase of over 44 per cent in payments to the long term unemployed. Other long term payments have increased by over 50 per cent and short term payments by about 34 per cent. Our objective is to at least maintain social welfare benefits in real terms and we have previously demonstrated our commitment in this regard. I might say it was the increases given by previous Fianna Fáil administrations which contributed most significantly to the general level of real increase which has been achieved over the past decade.
In regard to family income supplement, in view of the limited scope at present for additional social welfare expenditure there is a particular onus on us to ensure that whatever additional resources become available are used in the most effective way possible and directed to those recipients with the greatest needs. In this regard I was particularly happy that it was possible to introduce significant improvements in the family income supplement scheme. This scheme was intended to benefit people in low-paid employment and to reduce the disincentive arising from the fact that people in low-paid employment could in certain circumstances be financially worse off than people on unemployment benefit. The scheme is specifically designed to help families of workers who are only marginally better off in employment. The scheme, however, has never had the impact which was originally intended and the number of people benefiting from it has been far lower than the original estimates.
People often talk about the group who are just above the lowest paid, workers with families. Here is a measure which is designed specifically to help this group in society, but very few Deputies are prepared to say that this is a good measure, that they are very glad to see it and that they will tell their constitutents about it. I would advise Deputies to look carefully at this measure because the rates have been significantly improved. This can be of considerable value to those people who are so often mentioned in this House, people who are not on unemployment benefit people who are working but who are on low incomes and find it hard financially to manage with three, four or five children. This measure has been considerably improved in the budget with their interest in mind.
In our Programme for National Recovery we stated that we would review the workings of this scheme, and while the measures provided in the budget may help to broaden the scope of the scheme I will also be examining the scheme in an overall context to see how it can be directed more effectively to those for whom it was intended. I will be looking in particular at the other potential gains and losses involved where people take up low-paid employment because it is only by looking at all of the elements involved, including the tax element and the question of access to other services, that it will be possible to identify how best we can help people in this situation.
In all of this a primary consideration must be the need to direct our efforts towards increasing employment and creating the environment in which this can be achieved. I would now like to refer to an item in the budget which is in my own area of responsibility, namely the Jobsearch programme.
A great deal of interest has already been expressed in the programme and as the Minister with direct responsibility for its implementation I welcome this. I would like to take this opportunity to emphasise that the programme is intended to be a measure of very positive assistance for the long-term unemployed. It is the first time that the various State agencies involved, namely the Department of Social Welfare, the National Manpower Service and AnCO, have come together in this way in order to co-ordinate their service in the interests of those who need them most. These agencies have responded in a very enthusiastic manner to the Government's initiative and are taking the necessary measures to bring the programme fully into operation without delay.
There can be no doubt about the need for us to use our resources in support of the Jobsearch programme. Long-term unemployment is the greatest social problem facing this country and we will not be complacent about it. Studies are showing that long-term unemployment is not just a problem in terms of the waste of human resources which it involves; it is also a major contributory factor to bad health, violence, family breakdown and so on. The loss of morale and self-esteem which long-term unemployment brings with it means that those involved are by that very fact in a much worse position when it comes to seeking work or putting themselves forward for job or training opportunities.
The whole thrust of the Jobsearch programme is to improve the prospects of the long-term unemployed by giving them direct help either in securing a job or a place on one of the employment or training programmes. The whole process is designed to be of maximum assistance to unemployed people and I am happy that the scheme is being generally accepted on that basis.
By the end of December next 150,000 of those on the live register, especially those who are unemployed for quite some time, will have been interviewed. This is a very big undertaking. This process has already begun and the letter which is being sent to each individual clearly sets out the purpose of the programme and what it is designed to achieve. At the interview with the National Manpower Service officer each person will be helped to assess his or her strengths and discuss the options which are available. They will be given priority at that stage for any jobs that are available. Those who do not get jobs at that stage will be considered for a priority placement on a Manpower programme such as the social employment scheme, the enterprise allowance scheme or an appropriate AnCO training course. Forty thousand places on these programmes have been specially set aside for the long-term unemployed.
Those who have not got a job and are not referred to a manpower programme will then be considered for a place on the Jobsearch course itself. This course involves a four-week programme of career advice, backed up by training in interview skills and assistance in self-presentation. The course will also include a detailed and professional assessment of aptitude. Course participants will be given free access to newspapers, telephones, typing, travel allowance and postage to assist them in seeking employment. The whole Jobsearch exercise will be conducted in an atmosphere which is helpful to the participants. A total of 12,000 places are being made available on Jobsearch courses.
I want to make it clear that this programme is designed to assist unemployed people and that those critics who see the scheme as a method of "getting at" unemployed people in some way or other are mistaken in their view. Some people who are called for interview or subsequently for a course may not turn up for it. Where this happens their social welfare entitlement will be reviewed as is the normal practice and indeed as is required under the law. Such persons will, of course, have the normal right of appeal. I want to emphasise again that the thrust of the scheme is to be of help to the unemployed and the programme must be seen as part of the Government's overall strategy of improving the supports for the long-term unemployed who are genuinely seeking employment.
Another major provision which was included in the budget was the extension of the treatment benefit scheme to the dependent spouses of insured workers. This is something which I myself raised a number of years ago and I am very glad to have been able to bring the proposal to fruition. The proposal was among those included in the budget of the previous Government and I welcome their support on its introduction. I have no doubts about the merits of the proposal and about its importance in terms of providing a much needed benefit particularly to women in the home. Where family incomes are limited and there are many competing demands on resources, it is often the case that important areas such as dental treatment which can involve considerable cost are neglected. The fact that treatment can in future, in the case of dependent spouses of insured workers, be provided under the social insurance treatment benefit scheme will mark a major advance for the families of insured workers. My Department are making the necessary arrangements for bringing this measure into operation in October next as provided in the budget.
Concern has been expressed by the Irish Dental Association about the extension of the scheme. I will be meeting the association on Monday next to discuss the implementation of the new arrangements and to explore the implications for their members. I understand the possible fears of some dentists in the face of the transfer of private patients into the social insurance system. However, there is very wide support in the Oireachtas and in the community generally for this measure and there have been consistent demands for it from various groups, particularly those representing women who are working in the home. I am confident that the extension will come into operation in harmoney with the dentists and opticians and their associations.
Taken together the measures for social welfare included in the budget represent a major achievement in the context of the difficult situation facing the Government. There are a number of other major developments in the social welfare area which I intend to bring to fruition in the coming year and I would like to take the opportunity of referring briefly to some of them at this point.
On Tuesday I had the pleasure of launching the first report of the National Pensions Board on the regulation of occupational pensions schemes. The publication of this report represents a very important step in the development of pensions policy in this country. The board under their Chairman, Mr. Brian McCracken, SC, did a very thorough and professional job in producing this report. The report looks at the whole area of the pensions provided by occupational pension schemes, i.e., schemes outside the social insurance system, and makes recommendations in the areas of transferability of pensions entitlements where people change jobs, financial security of pensions schemes, disclosure of information to scheme members and the overall supervision of monitoring of pension schemes. The board were widely representative of those involved in the occupational pensions field and the fact that the board were able to reach agreement on such a wide range of issues is of major importance and should mean that the proposals in the report will command a wide level of general acceptance.
I am now undertaking a process of consultation with interested parties with a view to bringing forward definitive proposals as soon as possible. I do not anticipate that the consultation process will be difficult or protracted and I envisage having a package of proposals arising from the report available by the autumn.
The area of transferability of pension rights is one in which I am particularly interested and proposals in this area are specifically included in the Fianna Fáil programme. That programme also includes a commitment to regulate the operation of occupational pension schemes and I will be pressing ahead as quickly as possible with giving effect to these commitments.
Apart from the specific issues raised in the report, we must also look at the whole area of pension provision to see where we can make progress towards better pension provision for all and a greater streamlining of the system. The role of occupational pension schemes in this regard will be very important. According to a recent national survey, some 520,000 people or 61 per cent of employees are covered by these schemes and, apart from the importance of these schemes as schemes of income maintenance, they also represent an important element of personal saving and investment. To ensure that these schemes provide adequate and secure protection for those covered, their operation needs to be regulated.
We must also, however, look at the longer term role of these schemes in the context of a national pension scheme, including, for example, how the benefits of such schemes might be extended to a greater number of people. The National Pensions Board have now gone on to examine the whole question of a national pension scheme, including the role of occupational pension schemes and I look forward to receiving their proposals in this area in due course.
Another area in which I hope to make progress quickly is in the reform of the Social Welfare appeals system in line with the commitment given in the Fianna Fáil programme. It is necessary at this stage to address the problem of perception which exists in relation to the present system and to make more explicit the independence of the system. The Commission on Social Welfare referred to this perception problem and recommended that, to get over this problem, the appeals office should be set up as a separate executive office of the Department. I am broadly in agreement with the commission's approach in this area and I am having detailed proposals prepared at present.
I am also concerned to ensure that the appeals system is simplified as far as possible for people who want to avail of it. It is essential that claimants have available to them as much assistance and information as possible both in regard to the appeals system itself and how it works and also in regard to their own particular claim and the basis for the decisions made in their case. Only in this way can we ensure that the administration of the system is made more fair and more efficient.
It is perhaps in the administration of the social welfare system generally that the best prospects exist for making significant progress in the short and medium term. We emphasised in our programme the need for a better managed and more humane social welfare system and, indeed, the Commission on Social Welfare made a number of important proposals for improving the delivery of the services. I am satisfied that there is considerable scope for reform in the administration and delivery of social welfare services that will not have significant cost implications but will be of considerable benefit to those who avail of the Department's services.
One of the areas in which bureaucratic barriers can be broken down and the delivery of the service simplified and expedited is the means test. As Deputies will be aware, my Department operate a range of means tested income maintenance schemes — 12 in all — where the means test is carried out by social welfare officers. In addition, the health boards operate a further three schemes where the means test is carried out by community welfare officers. What is required is that any duplication of effort in carrying out these means tests is eliminated and that they are integrated in such a way so as to directly benefit the social welfare client. My Department will be reviewing the area of means tests with those objectives in mind.
In the context of improving the delivery of services, I am considering the development of the "one stop shop" concept for social welfare services. Let me explain what I mean by "one stop shops". I am proposing that all the social welfare needs of clients can be met from one centre based in the locality — the social services resource centre. In addition to the normal employment exchange services, clients would have access to current information on social welfare claims, general information on the full range of schemes and services provided by the Department, on the spot assessments for qualification certificates, which is means testing, in order to qualify for unemployment assistance as well as current information on job opportunities, placements and courses which are available through the National Manpower Service. All of these should be possible with modernisation and computerisation in different areas. They should be brought together to facilitate the persons seeking advice, information and support from the social services sector.
The personnel involved include the employment exchange manager who is responsible for making payments, the social welfare officer who investigates means, the community welfare officer who decides on entitlements to supplementary welfare allowance, and the placement officer who advises on jobs, placements and courses. The various personnel would operate as a co-ordinated team with the objective of meeting the needs of the client as quickly as possible within the one location. This approach to the delivery of services is consistent with the recommendation of the Commission on Social Welfare which came out strongly in favour of a comprehensive local service being available to social welfare clients. We should think in terms of the needs of the clients and of bringing the services to him or her instead of requiring people to attend different offices seeking information on services.
A limited "one stop shop" arrangement is already in operation in my Department in three locations and is very successful. Based on this experience I am most anxious to extend the concept to other offices around the country where this is feasible and as accommodation and computer facilities become available. A number of offices are under consideration at the moment and I will be making an announcement in this regard in due course.
There is one other matter in particular to which I want to refer. This is the question which I raised in my speech to the House on the Social Welfare Bill and which has evoked a considerable amount of comment subsequently, namely, what can be done about deserting husbands who do not meet their obligations to support their families. The statements I made in this regard have also been misrepresented by some people who saw it as a campaign to harass deserted wives. This is totally incorrect. The fact is that the NESC recommended that the State should have power to award deserted wife's benefit and itself pursue outstanding maintenance claims on the husband. The Commission on Social Welfare endorsed this.
The decision is that I have directed my Department to examine ways of pursuing deserting husbands with a view to requiring those who can to make a contribution to the taxpayers' cost in maintaining their wives and children. At present in order to become entitled to deserted wife's benefit or allowance the wife must have shown that she has made reasonable efforts to try to locate her husband and to prevail on him to contribute to her support. Once this can be shown then my Department make the appropriate payment to the deserted wife.
However, the requirement under the Act that once the deserted wife's benefit or allowance is put into payment the wife must continue to make efforts to seek maintenance is much more difficult for the wife to satisfy. This requirement can cause considerable difficulties for the wife who already has enough problems in trying to rear a family without the support of her husband. It can also result in compelling wives to make contact with their husbands at a stage where they may feel that their own and their children's interests would be best served by their not having to enter into new and possibly acrimonious exchanges with them.
These difficulties result in husbands who are in a position to contribute to the maintenance of their wives being allowed to escape their obligations and the taxpayer has to meet them instead to the tune of £41 million in 1987. In my view it is now time that the State took on the task of pursuing these husbands. This could involve my Department applying to become a joint applicant with the maintainance creditor, i.e. the wife, and subsequently pursuing, through the courts, if necessary, maintenance payments from the husband which are outstanding. The State's role in this regard, of course, would be provided for in such a way that it would not in any way impinge on the rights which the wife would have to pursue her husband for maintenance. Changes in the Family Law (Maintenance of Spouses and Children) Act, 1976 and in the Social Welfare Acts would be required to give the State this power. Detailed consideration will also have to be given to what the most cost effective procedures would be for enforcing the rights the State would be given, for example, through the attachment of earnings. Discussions will now take place between my officials and officials from the Department of Justice with a view to bringing forward proposals to Government on the matter as soon as possible.
I would like the Deputies to be clear on what is the intention. It is intended that once the matter of the deserted wife's benefit and allowance has been settled it will be allowed to rest. The present legislation puts an obligation on the wife to pursue the husband further and on the Department of Social Welfare to pursue her to pursue the husband further subsequently. Nowadays the Department of Social Welfare do not do that but if you get down to the strict interpretation of the legislation you will find there is an obligation on the Department to do so.
What I am proposing is that once a person has gone through the process and the deserted wife's benefit or allowance has been granted, particularly in cases where the husband is financially well off, the State will pursue such husbands to recoup from them some of the funds for the taxpayer. That proposal is consistent with the proposals outlined in the report of the Commission on Social Welfare and in the report of the NESC.
Does the Minister intend to do anything as regards equality for husbands so that they will be eligible for a deserted husband's allowance?
The word we should probably be using is "spouse". It is more difficult to use that word continuously because in practice it is principally deserted wives.
Only.
Principally, it is wives who are deserted but that is a question which would have to be considered in the same context. These are some of the major issues which I will be addressing in the months ahead. I have had not the time to go into the many other issues and Deputies may ask why I do not speak about other issues which are important. I will on other occasions speak about the many other issues which are important in my Department. Here we are speaking specifically about the budget and its impact and effect, about the position of the Department of Social Welfare in relation to the budget and the position of the beneficiaries.
These are only some of the major issues which I will be addressing in the months ahead. The measures provided in the budget indicate the Government's commitment to protecting the position of social welfare recipients and directing resources to those in greatest need. These same principles will guide the future development of the social welfare services. Some might ask why I, as Minister for Social Welfare, should say so much about development and the need for development. One reason is I carry collective responsibility in the Cabinet and the second reason is that that development is particularly important to the Department of Social Welfare as it is from those developments we will see the opportunities for creating jobs which we want to see particularly for the long-term unemployed. It is from the efforts which are included in the budget that we hope to see the developments which will make it possible to achieve more of the things which we seek in the Department of Social Welfare. A great deal can be done in the present circumstances at little cost and in many cases at no cost. I will tackle these problems and questions as urgently as I can.
It was interesting to hear the Minister for Social Welfare state he believes the budget has been successful. I intend to show that the budget has been a failure. I have no doubt the reason why he is of one mind and I am of the other is because our expectations from a budget are different and to a large extent our goals are different and the method and way in which we would wish to reach our goals are also different. The Minister clearly puts all of his faith in private enterprise creating a buoyant and prosperous economy and thereby providing, he hopes, job opportunities, not jobs but job opportunities.
I have argued many times in this House that reliance on private enterprise has failed in the past and continues to fail today. We have seen over generations since this State gained its independence the reliance on private enterprise, both at the beginning of the life of this State in terms of free trade and subsequently, under Fianna Fáil behind high restrictive tariff barriers. Irish capital by and large has failed to provide for the development of this economy. The fact that one million Irish-born people are living in Britain is adequate proof, if proof were needed, that private enterprise has failed in this State. The fact that we are again exporting tens of thousands of young people to England and the United States is proof that private enterprise continues to fail. Despite all of the pious hopes and aspirations of various Ministers for this budget and not just the Minister who has just spoken, I have no doubt that unfortunately I will be proved correct yet again that private enterprise will fail and will continue to fail.
The policies of this and previous Governments have quite literally been to throw money at private enterprise in the hope that they will create jobs. One thousand million pounds was given by way of subsidies and grants of one kind and another to private enterprise in the past year, yet our unemployment figure is above 250,000. That is the official figure and it does not take into account the tens of thousands who have gone to London and Boston. Recently I spoke to an Irish-American whose parents were Irish who was visiting Ireland for the first time in his life. He told me that in Boston where he lives there are 50,000 illegal young Irish people. For anybody to say that private enterprise has a good record or that we can expect, on the basis of the track record, that they will change that situation can be described as nothing but a pious hope.
The Fianna Fáil budget has the support of both the Fine Gael Party and the Progressive Democrats. Those parties have been taking up various postures in relation to one aspect or another but, by and large, they support the direction in which the budget is going. We have achieved, in effect, a new national coalition, a coalition urged on us for many years by the Confederation of Irish Industry and by various journalists of one kind or other, both economic journalists and editors of various newspapers who have a specific interest, presumably, in this kind of approach to the economy.
The budget specifically has failed to tackle tax reform. It has failed miserably to tackle realistically the creation of jobs — real, sustainable, productive jobs. It has effectively also failed to move society in any way closer to what one party in this House, the Fine Gael party, have sought — a just society. It certainly has no intention to, nor could it conceivably move society towards a socialist society, the kind of society to which I would aspire.
Let me give an example of the kind of injustice under which PAYE taxpayers suffer at present. In 1981 the PAYE sector paid 87.7 per cent of the Government's income from income tax. In 1986 this percentage had increased to 90.3 per cent. Over the same period the number of PAYE taxpayers fell by 8 per cent, so we have an increasing proportion carried by the PAYE sector which itself fell by 8 per cent. In 1981 employers and the self-employed paid 11.2 per cent of Government income from income tax. In 1986 this percentage had fallen to 8.2 per cent and over the same period the number in this category fell by only 1.4 per cent, as against a fall of 8 per cent in the PAYE sector. Effectively, the PAYE sector suffered a reduction of 8 per cent in numbers and were charged an increase of 2.6 per cent in their total income tax bill.
The employers and self-employed suffered a reduction of 1.4 per cent in numbers, but their total income tax bill was reduced by 3 per cent. It is important to note that in terms of the numbers, employers, self-employed and farmers amount to almost one-third of the number of employees. The actual numbers in 1985 were: PAYE taxpayers, 816,900 paying 90.3 per cent of the total income tax; employers, self-employed and farmers, 288,300 paying 9.7 per cent of total income tax. Those figures give some idea of the scale of injustice suffered by the PAYE sector.
The news this morning brings it home even further when we hear that apparently, although it has not been confirmed so far as I know, a circular has been issued by the Revenue Commissioners to tax inspectors that VAT arrears are not to be pursued if they are more than three years old. This is at a time when the health services, education services and the poor of our society are being attacked left, right and centre under the terms of the current budget. It is interesting also to get a picture of what we are talking about when we are talking about unpaid taxes. In May 1985 the figures of unpaid tax given by the Comptroller and Auditor General were as follows: self-employed, £201 million; employees' PAYE and PRSI — that is deductions made by employers but not returned to the State — £104 million; health and youth employment levies deducted by employers and not paid, £17 million; corporation tax, £207 million; taxes on capital not paid, £25.9 million; VAT, which is already collected from the consumer by various enterprises around the State and not repaid, £149 million; other taxes of a variety of natures, £3.5 million, totalling £707 million.
That is not a figure taken out of the blue sky. The Comptroller and Auditor General, the person who, with his staff, is responsible for keeping the accounts of the State in order says the £707 million due and payable by a variety of employers and so forth has not been paid. When you consider the extent to which we are attacking our health and education services and those who are in need, it is nothing but a disgrace that in this budget the Government propose to set up a task force of 25 specialists to bring in £10 million of that £707 million. How many years do we think it will take to collect that total amount at a rate of £10 million a year? It will take 70 years to collect it, that is, assuming that all taxes falling due over that 70 years are also collected, because clearly the way things are going and from the way in which this Government intend to tackle the economy, that figure will increase rather than decrease.
It is also significant that while the Government in this budget set up a task force for 25 specialists to tackle unpaid taxes, there has been a reduction of 850 in the number of revenue staff in the past five years. This is a reduction of 11 per cent, at a time when tax avoidance and evasion are growing, as it the black economy. It is hypocritical, simply a nod in the direction of the PAYE worker who is carrying the bulk of the weight and is now clearly being asked to carry the bulk of the cost of the economic crisis which various Governments have presided over in recent years.
The budget failed to address itself to the question of job creation. The Jobsearch programme has been introduced with great flurry with a proposal to interview 150,000 long term unemployed people. Do the Government honestly expect us to believe that is a realistic approach to unemployment at a time when the unemployment figures are climbing and when tens of thousands of people are emigrating? Do they believe that by interviewing 150,000 people of the 250,000 on the live register this will in some way create productive jobs, give the economy a boost and will in some way improve the morale of those who have been unemployed for up to ten years? It is an insult to attempt to put that idea across as in some way tackling the job crisis in the State. It is an insult to the tens of thousands of people who have been thrown on to the dole queue over the last number of years. It is an insult to the young people who are coming out of schools who have nothing facing them only the boat to London or who have to sneak off to Boston, New York or wherever they can hope to hide and who are exploited in poorly paid jobs.
The Minister in his speech said:
There are already very definite positive signs in the economy — Exchequer borrowing is being reduced,——
we know that.
——capital is flowing back into the economy, which is a sign of increasing confidence, inflation has slowed to around 3 per cent,——
I thought the Coalition Government had been claiming an inflation rate of 3 per cent last year but perhaps it depends on who is doing the figures.
——and interest rates are coming down. The fall in interest rates would not have been secured without the restoration of confidence in the economy. If the present trend continues there will be scope for further falls in interest rates leading to further enhanced prospects for investment and employment opportunities.
I have already indicated how I differ fundamentally with the Government in relation to how they see the economy developing, in what direction it should develop and whom they should depend on to develop it.
The idea that falling interest rates is going to create jobs is one of the fallacies which has been promoted for a number of years by a variety of interests. The Confederation of Irish Industry have been quite vocal in promoting this idea. The Progressive Democrats and the Fine Gael Party have been promoting this idea for some time. It was only during the last general election that I heard Fianna Fáil specifically promoting the idea. They seem to think that interest rates are the be all and end all of our economic problems and that if we get interest rates down jobs will flow. Interest rates must be got down and they say the way to do this is to cut public spending. We now know what cutting public spending means. It is what The Workers' Party have been saying for some time — an attack on essential social services. Public spending must be got down at all costs even if it means dismantling health services, social services and our schools irrespective of the effects these cuts will have on the poorest and weakest sections of our society.
There is no evidence to show that reducing interest rates alone will lead to more jobs. I refer the House to a booklet on a study of the economic situation published in 1985 by socialist economists and entitled Jobs & Borrowing — Where the Right is Wrong, although clearly it will not have the same view of how things should be done as would people on the Fianna Fáil, Fine Gael and Progressive Democrat benches. This booklet examines the actual situation that existed. Under the heading “Private Investment Discouraged?” they state:
Public borrowing at home is said to push up interest rates and make borrowing by private industry prohibitively expensive and this leads to job losses.
After bank interest rates rose in late 1984, this argument received much public attention.
The Confederation of Irish Industry blamed "excessive government spending" for rising interest rates. "The only real solution is to cut government spending. Failure to do this will squeeze out of the credit market the productive base of the economy which provides real sustainable jobs."
That is a quotation in the booklet from the The Irish Times of 7 December 1984. The booklet goes on to say:
However, it is by no means clear that the rise in interest rates at that time was caused solely or even primarily by government borrowing at home.
Peter Bacon, formerly with the National Planning Board, analysing the rise in interest rates in Business & Finance magazine (13/12/84) concluded: “it is difficult to sustain the view that interest rates are rising simply because the public sector is crowding our private sector expenditure by the manner of its borrowing”.
More important than government borrowing at home was a drop in the country's foreign reserves (or holdings of foreign currencies). According to Bacon, the reserves had fallen partly because the government was borrowing less abroad, and partly because there had been a sharp drop in flows of private capital from overseas into Irish banks. The private capital had been attracted elsewhere because of rises in US and UK interest rates earlier in the year.
In explaining the fall in external reserves, Bacon could have added another factor — repatriation of profits by multinational companies in Ireland.
The December 1984 jump in interest rates provoked an immediate outcry over government borrowing because at that time Irish rates appeared to be going against the international trend, since US and UK rates were falling. However, Bacon's analysis shows that the interplay of international money markets is more complex than that, and it is important to look to international developments to explain movements in Irish interest rates. The Central Bank always does so. In its November 1984 commentary, the Central Bank noted "the increase and subsequent decline in domestic (money) market rates during the summer months was probably attributable, in the main, to external developments". The Central Bank also noted that the rise in real interest rates in Japan, West Germany and the UK "appears to be higher than would be expected on domestic grounds alone. It seems reasonable to conclude, therefore, that part of the reason for the real interest increase in these countries is the influence of the prevailing high rates in the US."
That, if nothing else, is a counter argument to the idea that interest rates can be influenced to any significant degree by what the Government have done in the budget. It is an argument for not putting our faith in cutting back on public spending simply to reduce our borrowing from the domestic market thereby hoping that interest rates will fall and that, as a result, our well meaning altruistic private capitalists will invest their money in job creation ventures in Ireland. There is no evidence to show that any part of that equation is correct.
Let us take the experience of the past ten years. If you take the three month inter bank rate as the gauge for interest rates the rate in 1979 was 18.5 per cent when unemployment was below 100,000. In 1980 the rate went down to 13.56 per cent but unemployment went over 100,000. The interest rate in 1981 was 18.75 per cent but unemployment climbed to more than 140,000. Interest rates in 1982 dropped to 12.5 per cent but unemployment continued to march towards 200,000. Interest rates generally remained at about 10 per cent until the end of last year but this did nothing to halt the increase in unemployment which continued to zoom towards more than 250,000. The notion that the fall in interest rates is going to create some kind of boom in job creation is utter nonsense. There is no evidence for it on the basis of what has occurred during the past ten years. There is no reason for believing it will happen on the basis of our experience with Irish capital in the past 60 years. I should like to quote again from the booklet, "Jobs & Borrowings":
The government's demand for money to fund borrowing certainly does put some upward pressure on interest rates but it is by no means the only reason why Irish interest rates are high. And even if interest rates were lower, there is no evidence to suggest that this would lead to an upsurge in investment in the productive base of the economy or the provision of real sustainable jobs. It should be added that the government subsidises lending by banks to industry through tax-avoidance lending, so that industry actually borrows at a lower rate than it appears.
That means at a rate lower than the rate declared by the banks. Not only is the nonsense pursued that interest rates will create some huge development in job creation but the Government, strangely enough, have attacked one of their more strident supporters, the building industry, in this budget. Perhaps it is a demonstration of Fianna Fáil's confidence that Fine Gael and the PDs will support them in the budget that they felt able to do that.
There is hardly a building worker in the country but who up to now believed that Fianna Fáil were good for the building industry that whenever Fianna Fáil were in power the building industry took off. That was never the case and that myth can no longer be peddled by Fianna Fáil. They have abolished, by and large, the house improvement grants and have slashed the capital available for the building of local authority houses. There are 26,000 people on local authority housing lists. There are all kinds of developments required in our cities, not only in Dublin, Cork, Limerick and Galway, who are all crying out for development. The previous Government established a commission to improve the image of Dublin city centre. I argued strongly against that commission on the basis that Dublin Corporation, if given the powers and money the commission were being given, could do the job, at least as well if not better, given their experience and the staff they employed. This Government did not abolish the commission, they simply took the money from them. If they have any respect for Dublin city or any regard to the fact that it will commemorate its millennium next year, the money and the powers which were made available to the commission should be given to Dublin Corporation to ensure that next year we will have a city of which we can be proud.
Fianna Fáil fought the last election on the slogan that there is a better way. That implied criticism of the Coalition Government and it also implied that things would be better for everyone if Fianna Fáil got into power. There were posters everywhere saying that health cuts hit the old and the sick, that the only growth we have had in the past four years is a growth in the dole queues and all sorts of similar slogans which simply stated the facts. They indicated nothing about what Fianna Fáil would do about the atrocious record of the Coalition Government. Neither did they specify who would benefit from the better way that Fianna Fail were telling us about. The general message was that everybody would benefit from the better way but the budget sorted out that foolish notion fairly quickly. Fianna Fáil certainly make for a quicker way of grinding the working class into the ground and of ensuring that those who are better off get away scot free, are left untouched.
The right wing ideologues are delighted with the budget. It has created the national consensus or, as I call it, the national coalition, they have been looking for for many years. The Progressive Democrats and the Fine Gael Party are still sitting on the Opposition benches but we have seen them often enough trooping into the "Tá" lobby with Fianna Fáil during the past few months to know what exactly is going on, that we have a national coalition in everything but name and that when important decisions are made they will troop in and make sure that Fianna Fáil remain in power. It has been interesting to watch Fine Gael and the Progressive Democrats trying desperately to find some points of disagreement with Fianna Fáil on the budget. Their only complaint mainly has been that Fianna Fáil have stolen too many of their clothes. Meanwhile the working class are learning a very harsh lesson in political cynicism. They must feel that the election was a sham because having decisively rejected the Fine Gael budget, or draft budget as they now call it, they find that not only is that being implemented but that it is being implemented in a much more harsh way by Fianna Fáil who conned them into believing they were offering a better way.
Who exactly has benefited from the Fianna Fáil's better way of impoverishing the working class and of leaving the wealthy to their own devices? Farmers, for instance, were asked to pay a derisory £9 million in land tax and they will not be bothered with that little bill anymore. The large property owners and speculators still will not be asked for any significant contribution to the State's finances. The tax evaders still will not be chased seriously for the sum of over £7 million that they owe. The super-rich still will not be asked to pay wealth or capital taxes and will continue to pay the same rate of income tax as the average industrial worker — with of course the added advantage that they can pay their accountants to doctor the books, so that even then they pay little or nothing. Companies which earn profits still will pay only a fraction of all income tax paid within the State.
Who has lost out? People who become sick or unemployed have lost out. They will get lower benefit payments and they will have to wait longer to get them. People who need outpatient services or hospitalisation will have to pay £10 per visit and £10 per day respectively, and many will be forced to join the VHI to cover these costs. PAYE workers will pay more income tax, an extra £300 million this year, because of the failure to increase the tax bands. They will pay extra PRSI and health contributions and the new health charges and the new VHI contributions. People dependent on social welfare will get a miserable 3 per cent increase in July, which will not match the increase in inflation and will certainly do nothing to improve their living standards. We have no pleasure in saying that we were right to predict that Fianna Fáil would do exactly the same, but worse than the Coalition have done. It will continue to get worse until such time as the working class of this country decide to build and support a party which is an alternative to the right wing politics being pursued by the three major parties in this House.
We are utterly opposed to the national coalition which exists in this House now and which seeks to make ordinary working class people worse off, and makes them pay for a crisis they did not create. It was not the working class people of this country who borrowed £25 billion, or who made all sorts of rash promises in 1973, 1977, 1981, 1982 or 1986. We are specifically opposed to the new hospital charges, which effectively mark the end of any move towards a free health service. In fact it moves closer to the privatisation of medicine in Ireland. The effects of the new charges will force thousands of workers into the VHI and will pave the way for new and higher health charges. It is a move away from the provision of our health services on a tax-based method to an insured-based method. It will harden the creation of two levels of health care in our society: a private health care service which will be first class for those who can afford to pay for it, and a continuing deterioration in public health services for those who cannot afford to pay for the Blackrock Clinic. Also we are strongly critical of the failure of this Government to improve the real living standards of people on the lowest grades of social welfare. The Commission on Social Welfare showed that in 1985 terms a person needed between £50 and £60 per week for the basic necessities of life in Ireland; in today's terms that would be between £54 and £65. By July 1987 a person on long term urban unemployment or assistance benefit will receive £37.80 per week. That is about 60 per cent of what the Commission on Social Welfare believed was adequate to survive and have not a luxurious life by any means, but simply the basic necessities of life. There has been no increase in child benefit. The Commission on Social Welfare pointed out that there was an urgent need to improve the level of child support
I have dealt already with the whole question of the nonsense of Jobsearch, and interviewing 150,000 unemployed people to try to create the notion that the Government are doing something about joblessness. The Minister for Social Welfare seemed quite annoyed that anybody should suggest that the Jobsearch idea was anything other than a method to help the unemployed. As far as I am concerned it is a scheme to try to reduce the live register, by disallowing persons who do not turn up for interviews or who for whatever reason are unable to participate in the training schemes which the Government say they will provide.
The Minister referred also to the family income supplement and he was critical of some Deputies in this House — he was not specific as to who — did not promote the family income supplement scheme among their own constituents. Since the introduction of the family income supplement scheme I have urged this Government and the previous Government to use the tax offices to distribute forms to those who need them for the family income supplement. It is fairly obvious to me at any rate, and it must be obvious to the Minister, that the tax office has a record of everybody who is working within the tax net. People who are on low income come within a certain category in the tax office and if they are below a certain level of income they do not pay tax. I am told the income tax office is computerised and I cannot see the problem in issuing forms for the family income supplement to those men and women in the tax net who are assessed for PAYE and whose income would qualify them for the family income supplement. The Minister in the previous administration gave undertakings that he would examine this problem. I would ask the current Minister for Social Welfare to look again at this problem. The expected take-up of this scheme was fairly large. If I can recall correctly the figure provided for the first year was something in excess of £20 million; I am not sure of the exact figures but the actual take-up was a very small fraction of this. Clearly the Department of Social Welfare believe there are tens of thousands of people who come within the terms of the family income supplement scheme. Obviously they are not getting it either because they do not know about it or the amount of money they would get is too small to bother with. But at least they should have the opportunity to apply for it. In my view the simplest way that can be done is for the Revenue Commissioners to issue family income supplement forms when they are issuing tax-free allowance certificates. It should be a fairly simple procedure to pinpoint those who will get a tax-free allowance certificate which shows nil tax due or a tax-free allowance which is such that they will not be liable for tax. Obviously these people would come within the family income supplement scheme.
As I said earlier, this budget has been a failure for me but obviously it has been a success for the Government and also for the Progressive Democrats and the Fine Gael parties. It has been a success for them because the line, the attitude and the ideology that they have been promoting for the last four or five years has become the dominant ideology, that our State services, the public sector and the State companies should be run down; that the State must no longer take responsibility, in so far as they can avoid it, for the least well off in our society; and that the State has no responsibility or no direct responsibility for job creation. To my mind that is a recipe for disaster in this society. I have no doubt that the national coalition parties who are now co-operating so effectively with each other will experience the anger of the working class in the next general election.
I welcome the opportunity to make my first speech in this House in support of the recent budget. When the Minister for Finance introduced this budget to the House, he was but firing the opening shot in the difficult battle yet to be fought in order to get this country back on its feet economically. It must not and cannot be a series of internal skirmishes where sectional interests selfishly seek to subjugate the national aim and frustrate the national will. It must not be a war of words or a flexing of political muscle in this House. It has to be a coherent national effort where the slogan "Ni neart go chur le chéile" binds us all in resolute opposition to every economic force and every economic factor on the national or international front that militates against the economic progress we all so ardently desire and so desperately need.
There are countless examples in history where seemingly insurmountable odds have been overcome by resolute and singleminded national striving. This budget has been generally acknowledged as a tough budget and only those who blindly pursue political opportunism have questioned its correctness as a series of measures to pull this country out of the mire of international indebtedness, literally by the seat of its economic breeches.
There is no victory without sacrifice. There is no sacrifice without pain. But victory is sweet and the fruits of victory are worth all the striving and all the effort. Ultimately if we follow this path of restraint rather than the highway of self-centred greed, we shall see the dole queues diminish, the tax burden dissipate, the emigrant ship go into dry dock and the grip of foreign financiers loosen perceptibly to the national and personal advantage of all.
To get on the right road to national prosperity we must not spurn wealth creation nor allow our drive forward to be trammeled by ideological shibboleths. We must create wealth through a greater emphasis on value-added manufacturers, internationally traded financial and other services and the exploitation of indigenous advantages such as are expounded in Fianna Fáil policy and given form, shape and purpose in the package of major development projects announced by the Government this very week.
As a representative of Dublin North, I welcome the announcement of the extension of the national grid through Dublin north county to Dundalk. Public representatives in Dublin North have for many years been anxious that the horticultural belt should have the chance to use well priced natural gas. Many farmers in the north county have converted from oil to solid fuel and I hope the Government will provide some sort of package to enable these farmers to make the best use of this important national asset.
Job creation and wealth creation are the Siamese twins of a sound national economy. They are the essential tasks and essence of the private sector. They cannot exist in a vacuum. However, they must be backed by the brave and decisive policies of the Government whose special role, indeed central role, is to create the climate of confidence and stability in which the seeds of enterprise grow and flourish. This is the way to raise living standards and improve the lot of every individual, every citizen old and young, every family rural or urban.
As a basis we must accept and believe that the budget recognises that the priorities for the Government are to reduce borrowing, reduce the public debt and reduce the burden of public service expenditure. Without success in these areas the Government will have but a limited capacity to support and assist the productive sectors of the economy or to reduce the burden of taxation. These productive sectors are the wealth producers and therefore the key element — indeed the sole element — in getting this country moving again, in increasing employment and providing the basis for improved living standards.
During the Taoiseach's speech he asked Deputies like myself to express our views on possible areas of job creation and the development of the economy. I would like to draw the attention of the House to areas which have considerable potential for economic expansion and job creation. They are tourism, community enterprise and fishing, but not necessarily in that order as different areas are more conducive to one than the other and we must get the whole country moving.
The tourism industry is a major industry in every respect. It is, in effect, an export industry attracting additional money into the country. In size of earnings the tourism industry is equal to the dairying industry. It is an important job creator, having 40,000 employed. The benefits of tourism do not end here but percolate throughout the economy.
The concept of a tourist as a person who comes to us merely to gaze, a transplanted spectator from another land who wishes to feast his or her eyes on our ledendary greenness, is outmoded, outdated and a commercial heresy. Such a concept is blind to the potential of tourism and so limited that it truncates the opportunity value of the tourist trade. A tourist is a spectator and also a special, indeed a unique, consumer.
We must provide attractive opportunities to our tourists to spend their money on services that give full satisfaction, maximum enjoyment and the incentive to return. We must encourage the purchase of quality Irish goods, both wearables and souvenir durables. A country which has such gems in its national collection as the Tara Brooch, the Derrynaflan chalice and other priceless treasures made by Irish craftsmen using ancient technology, must surely in the closing years of the 20th century be capable of providing souvenirs of such irrestistible crafted quality that the demand for them would create jobs of high quality in abundance. Yes, let us see the consumer potential in the tourist trade and exploit it through the full value of quality products, avoiding the shoddy vampirism of the quick buck.
The industry has a small import content. It is a very substantial user of home-produced items such as farm products, craft goods, food and drink. If the tourism trade grows, it stimulates and helps other important sectors. In particular it provides outlets for self-employed craft workers, which is something we should encourage and build on.
The greatest problem facing the expansion of the tourism industry is seasonality. In many parts of Ireland, particularly rural areas, this will remain a fact of life, but it does not mean that tourism jobs in these areas could not be successfully combined to the benefit of both agriculture and the craft industry. On the other hand, in population centres the seasonality aspect must be tackled through the provision of wet weather facilities and special interest facilities. In this regard I welcome the measures in the budget to extend the business expansion scheme to the tourist industry. This scheme is ideally suited to tourism which requires and has now been provided with a more attractive basis for investment than it has previously enjoyed. It is my hope that the Minister will allow this concession to be applied as freely and widely as possible, so as to reflect the needs of the industry and to encourage a substantial inflow of investment which is needed. If loopholes develop they can be closed off.
Another important and welcome aspect of the budget is that it provides a better climate for tourism and helps our competitive position by holding VAT and tax levels and by keeping inflation low. I hope these measures will be an additional spur to the marketing efforts of Bord Fáilte.
It seems hardly necessary for me to reiterate that money is tight and will continue to be very tight and in that regard it is essential that the very best use is made of existing funds and resources. I point out to the Minister for Finance that very substantial resources with considerable tourism potential are in the hands of Departments of State and local authorities. These include forests, the canal system, historic buildings and monuments and many others. Most of these facilities are operated at present at almost a total drain on the public purse. The Minister might look at these resources and let it be known that they should be examined for commercial development potential. Many of these areas could be opened up to commercial development in partnership with the private sector by way of joint venture or licence arrangement.
The OPW, who are within the Minister's Department, are investing heavily in centres such as Glendalough and Glenveagh. These centres are admirable, but an innovative commercial approach is now necessary so that centres like these can include restaurants, craft shops and other commercial facilities which will both cut the cost of the operation to the State and provide opportunities for the private sector to create jobs and increase earnings. Where this is not done then, as in Glendalough, illegal trading by unregistered and casual dealers takes place on an extensive basis to the detriment of the project and the State. Only minor policy and management changes would be necessary to open up what I believe is an area of substantial opportunity. On a recent visit to Glendalough I saw up to 20 of these illegal traders. With some small investment in the area itself, with space being provided and so forth, the State could benefit and the area could be enhanced. It is not in keeping with areas like Glendalough or other such projects to have the entrances to the castles and so on taken up by illegal traders, and that happens throughout the country.
I would like to see local authorities, as in England, take a wider view of their development role. A very limited amount has been done in too few instances by too few authorities. I would like to mention a couple of authorities who have made plans. In Kilkenny a plan was set out three or four years ago to upgrade the city of Kilkenny and win the tidy towns competition. With the help of the private sector and the local authority this plan was put together and Kilkenny won the tidy towns competition two years ago. The value to that city of the winning of that competition is recognised to be £1 million in the first year after winning it. Because of the enlightened approach taken by the Kilkenny authority anyone who visits that city can see, for instance, the upgrading of the shop fronts there. I hope some similar project will arise for Dublin city centre.
I commend Dublin County Council for what they have done in the past couple of years in the purchase and development of estate properties. I have in mind my town of Malahide and the castle there. The purchase of the area of ground and the castle has meant that up to 34 people are working there and 80,000 people visited the castle last year. In the recent past the council bought Newbridge House in Donabate. Having given a licence to the Dublin Eastern Regional and Tourism Organisations to run both these houses, they set up the criteria for Newbridge to be as successful as Malahide in attracting visitors. I have no doubt that the knock-on effect Malahide Castle has for Malahide will be repeated for the Donabate-Portrane area of north county Dublin by Newbridge House. I look forward to being involved in helping the council to develop these projects even more. I see an opportunity for all the commercial owners in Malahide from hotels to shops to capitalise on the fact that last year 60,000 to 70,000 foreign visitors came to Malahide Castle. By their action the council have preserved and made available tourist amenities of incomparable quality right on the nation's doorstep. This is an example of how existing resources may be harnessed in the interests of native and tourists alike.
New resources must also be created in appropriate circumstances. Local authorities can play a decisive role for example in Dublin city. The local authority might provide a suitable serviced site for hotel development that would attract overseas and local investment. I am aware that the site was selected but I suggest that the selection hardly shows an understanding of what a new, modern hotel requires in order to have a better than even chance of commercial success. By contrast, in Birmingham a local authority site has attracted three applicants and a modern hotel is now to be built. That will create 350 new jobs with the spin-off effects for local suppliers and shops and, more important, the new hotel will make a major contribution to the urban renewal of the city.
Again, I welcome the fact that our Minister for the Environment, Deputy Flynn, suggested recently that the Custom House Docks side would be ideal for the possibility of hotel development. As a northsider, I think it will have a tremendous effect on the city of Dublin. I encourage that and I hope it will be part of his plan.
There are many areas open to local authorities for exploiting opportunities in conjunction with and in support of the tourist industry, an industry which can work for us in many ways. European countries believe that tourism will provide up to 10 per cent of new job targets in the years ahead. Even industrial economies like Britain have now recognised and are exploiting tourism as both a job and revenue creator. Our targets for jobs from this sector should be no less ambitious.
I have a few headings here of other areas which I believe with the right direction can lead to the right type of development for our country and a real chance of job creation. The application of the Jobsearch scheme and the social employment scheme to tourism should be encouraged. The rationalisation of marketing by semi-State bodies such as Bord Fáilte, Aer Lingus, inland transport and SFADCo, particularly in the USA, should be aspired to and the companies I have named should be brought together in some way. The Government will have a major report on this in about the next month.
I see a real opportunity for us to develop our ideas for the countryside in the agri-tourist area. We should maximise our efforts in the EC to encourage the EC to come up with positive schemes to assist argiculture, to develop tourism enterprises and to lessen dependence on milk production which is adding to our food surplus problems. I would like to see development of agri-based self-catering accommodation by encouraging the renovation of abandoned cottages for the accommodation of visitors. I say this in the knowledge that in France the idea of using old farmyards and old stables has been maximised. These have been renovated for self-catering holidays with great success. I know of a Welsh project which is so successful that the people behind it are now in Ireland looking for land with half a dozen to ten cottages together at the foot of a mountain in the wilds of the west where the idea of rough shooting could be supported as a tourist attraction. There is a great opportunity for us to maximise our efforts in the EC to bring about some of these developments that I have mentioned. I hope the Minister will look at the suggestions I have made. Certain benefits will flow from his budget proposals and further benefits can be obtained from policy and management changes along the lines I have outlined.
I will now move on to the fishing industry which is one of our great unexploited resources. As an island nation surrounded by productive and clean oceans, particularly on our west coast, we have unrivalled opportunities not only for sea fishing but for fish farming and for the production of shellfish for the lucrative European market.
The fishing industry has been performing well in recent times. There has been an improvement in the repayments on loan accounts to BIM and there is a renewed interest in the building of new vessels. The decrease in oil prices and the hardening of fish prices has contributed to this. All of this has contributed to confidence. Exports are now worth over £100 million a year and the home market has shown a 16 per cent rise between 1982 and 1985. Irish fish are sold now in about 30 countries worldwide.
In future strategy, the life line for development is more fish. This strategy must be followed within the confines of the Common Fisheries Policy. There is need for research to negotiate for higher quotas because of the developmental status of the Irish fishing industry. There is need for research to improve TACs. The exploratory fishing programme operated by BIM has shown great results and this should be supported. Fisheries must develop non-quota species such as scad, horse mackerel and indeed many other fish. There has to be more fish west of Ireland than we know about. Exploratory fishing is the answer. Because we are not taking up all available quotas, it will be very difficult for our Minister to make any progress in seeking extra quotas. There is an absolute need for us to take up all available quotas.
It is imperative that we get the maximum amount of money from Brussels to achieve these aims. In regulation 4028/86, which is the structures document, there is a total of IR£649 million available over the next five years for all member states. Ireland has done well in the past from EC schemes. It must continue to do so in the future. Ireland can benefit further to construct fishing vessels and to modify existing vessels. It can also benefit from exploratory fishing and marketing especially. There is money also available from Brussels to engage in scientific research. Competition between member states for this money will be very keen. Therefore, it is imperative for the Minister to ensure that the required state funds are made available to benefit fully from EC programmes. For example, under the new regulation for every £1 million spent by us to build or modify a vessel £3.5 million can be claimed from Brussels.
I welcome the fact that already our Minister, Deputy Daly, and our Minister of State, Deputy Pat Gallagher, have been to Brussels and have secured the promise that the EC Commissioner for Fisheries will come to Ireland in the next week or two. I hope that when the Commissioner has an opportunity to assess our potential in the fishing industry, he will help to make our Minister's job easier, when we go back looking for support for our development programmes. There are many unexploited fish species off the west coast of Ireland. Also there are huge quantities of fish being taken by other member states and indeed by third countries. We must get our fair share of this and we must have the boats to do so.
At the moment there is a lot of talk about the marketing of fish. As a member of a family involved in the fishing industry for four generations, I have a knowledge of this area. I served on BIM for a number of years. I suggest that the selling of fish is a specialist area. There is a problem in the fishing industry in relation to selling the product so that it arrives in the best condition possible. I hope the Ministers will take note of those points when they finally make up their minds as to the role of BIM in the marketing of fish.
When I was on the board of BIM a couple of schemes were initiated which have been a great success. The board opened a new market for mackerel in Egypt and it worked very well. Embassy and the board co-operated very closely in gaining a substantial contract which was very beneficial to Irish exporters at a time when other markets were very difficult. Indeed, the Minister will recall that he led the delegation on its first visit, with officials of BIM.
There should be incentives available for fish producers who wish to go to Europe or elsewhere to sell our produce. Another idea that should be pursued is that of having a permanent food hall in our country. I know that up to £0.5 million is spent by the agencies in setting up our stalls in London and the USA in various food fairs. A food producing country such as ours should give serious thought to having a permanent food hall in Ireland where people could show off their wares to the buyers of the world.
I am glad to be able to say that fishermen in Skerries fishing port who during my time on the board of BIM, like those in many other ports, were going through a very difficult time in relation to repayments on boat loans due to very bad oil prices and fish prices, are now up to date in their repayments and they stand out as a beacon at the moment in relation to the repayment of loans. The catch there is receiving its fair price now and I hope that will continue for many years.
In relation to the notion of community enterprise, there is no difference in intent between the Industrial Development Authority and the Youth Employment Agency when they speak about job creation. However, it must be said that the emphasis in funding by the State would tend to favour companies from overseas. This is of itself important and necessary. It does, however, impart a certain exclusiveness to external investment and we must ensure that this philosophy does not detract from or minimise in any way the necessity to foster, encourage and financially support on at least equal terms the development of enterprise, rooted in native talent either in the technological or business domain.
I am a strong adherent of the view that such talent abounds in our land. Irish nationals do very well when they go abroad. Is this because other countries have better support structures and an attitudinal climate to enterprise which we somehow lack? This must be at least part of the answer and, I would contend, a significant part. The way out of this bind is through community endeavour.
Enterprise units should be responsive to the industrial and commercial climate of the new age. They should be forward looking, forward planning, forward thinking and to the greatest possible degree they should be research-oriented. The popular concept of technology is usually centred on the wonders of now but the experts tell us that the frontiers of science and technology are advancing rapidly at an alarming rate. We are told that they will advance by a factor of 100 within the next five years. Such developments are self-accelerating and looking beyond five years we can only guess what will be the achievements and effects of technology.
Information systems, medical science, transport, manufacturing technology are all set to leap forward. We do not want to be left at the starting gate as our competitors crash through the finishing tape. Enterprise and education for enterprise are absolutely essential and side-by-side we must enhance our marketing capacity. It is an exciting prospect but if we only get excited while others get involved we will be doomed to international dependency.
There are, or course, some useful financial supports in place. Their effectiveness is lessened by virtue of the need which community groups have to spend a high proportion of support on infrastructural provision. A major item is the provision of workshop space. Of necessity a major portion of community funding must go to the provision of work space where Irish entrepreneurial skill and enterprise may evolve from the seed of an idea to the prototype stage and, finally, to the consumer market. Community enterprise groups in the EC, particularly in Italy and Spain, have created large numbers of businesses with a high productivity record. But it must be remembered that the route to job creation is very cost-effective.
In Ireland the community enterprise concept is new and remains on the fringe of job creation. One of its inherent problems is the relatively high capital cost of providing workshop space for the incubation of business ideas. There are at present approximately 300 such community groups in Ireland, with between 70 and 80 sited in the city of Dublin. It is estimated that by the year 1990 there will be 500 groups working within the community at large. Some of the present schemes are excellent. I have had five years experience with the Malahide youth training and employment group. We are in communication with many other such groups throughout the country.
It is considered that the acquisition of a high street property is essential to the success of such groups and, even if a community raises say, £30,000 to £50,000, there remains a sizeable balance to be met. On many of our trips abroad it was said that the idea of a factory sited in a green field did not add up to a general perception of a communioty enterprise. Therefore, most such groups are endeavouring to find some building within the town commercial centre where they can develop their ideas. Some modest transference of suitable agency funds would be sufficient to provide that additional impetus for the development of community enterprise, particularly in areas of high and low technology in the communications and engineering areas, bringing it nearer the core of job creation.
I might propose that a State agency funding loan over a period of say, ten years with a low rate of interest be made available to building or renting work space. Alternatively, I would suggest a grant of £5,000 per 1,000 square footage up to a maximum of, say, 5,000 square feet to be made available. In both cases a State agency could take up a share in the property, if purchased, or in its rights, if leased. Such a proposal would relieve communities of the burden of paying for work space, in turn releasing all community funds for the development of community projects to take place within a particular workshop. It is my belief that this could be a key element in converting community enterprise from a fringe, space-filling exercise to a genuine creative force which, in its future development, could become a central and cost-effective factor in the creation of indigenous industries.
Throughout the constitutency of Dublin North there are towns stretching from Skerries to Rush, Portmarnock, Malahide where communities have been working for the past two to three years collecting moneys but who invariably discover that the purchase of a suitable property would cost between £150,000 and £200,000. The proposal I have just advanced should be examined so that such communities would not have a £200,000 loan hanging around their necks over the lifetime of their workshop. It is essential that the capital cost be reduced. All workers seconded from the Youth Employment Agency will verify that there is no shortage of people with good ideas who, if given the chance within sheltered accommodation to get their business enterprise off the ground, would yield dividends by way of job creation. I have submitted this proposal to the relevant Departments. I hope somebody will examine it and ensure that available resources are transferred to that purpose.
As this is the first time I have spoken in this House I could not allow the occasion to pass without making reference to the purveyors of doom, gloom and pessimism who think it is the smart and in-thing to speak derogatively and negatively about all things Irish, from culture to commerce, education to employment, from the economy to ecology, in short about every facet and fact pertaining to the welfare and wellbeing of the nation. We got a bad press worldwide during the last election. We must not look to foreign sources for the root of this ill-founded negative thinking. Its seeds are sown in this House, in our media and in every pub and club where people assemble. We insult ourselves, our ancestors and posterity by being self-derogatory as though it was incumbent on us as Irish nationals, to minimise national achievement and criticise national endeavour.
This is a great country. Its potential as a manufacturing and service centre is mildly reflected in recent balance of trade returns. However, our penetration of European markets is weak. It is time to examine our strategies and agencies which have been tardy and lethargic in achieving a sales volume that would take up the slackness in our economy and generate employment, thus bringing into the workforce at home those highly and expensively educated young people who might otherwise have to deploy their talents in other lands. This country is all our competitors would wish for in its highly educated and richly talented youth population.
We have rivers, seas and pastures whose cleanliness and greenness are unique in Europe. We have tremendous potential for production in agricultural, horticultural and fisheries sectors. We have uncrowded friendly openness especially attractive to tourists. We have an infrastructure that lends itself to improvement and expansion. With so many advantages to overshadow our current difficulties any failure on our part to rectify our economic ills, whether by way of failure to act or our propensity to seek soft options, would amount to treasonable negligence.
I might conclude with a suggestion. In recent times it has been customary to have international years to mark signal groups or worthy endeavours such as The Year of the Disabled, International Youth Year and so on. I suggest that 1988 be heralded as Irish year of national confidence and pride.
The Chair would like to compliment the Deputy on his maiden speech.
I join the Chair in congratulating Deputy Wright on his first contribution to the House which was remarkable in its lack of derogatory reference to past performances. I was encouraged by the way in which Deputy Wright looked to the future. At the end of his speech he identified a variety of prominent features which would lead one to believe that the future of Ireland is safe, that we have just one endeavour, that is to get our finances in order. He is perfectly right there. What is required of any Irish Government is to instil confidence in our economy.
However, I believe one must look back and ascertain what it was that brought about our present huge national debt and whether any efforts were made to resolve those difficulties. It is safe to say that during 1986 there was a serious attempt made to reduce Government expenditure. But, in the autumn, there was a destabilisation of our financial markets, resulting mainly from inaccurate and totally unfounded statements on the part of Members of this House. Here I am not excusing my own party. Much of the hysteria generated resulted in a totally unwarranted increase in interest rates. I should add that Fine Gael Deputies contributed to that as well. Indeed, there were individuals on the other side of the House also, even one Minister of State, who were totally irresponsible in talking about rising deficits.
I am not going to predict that the Government target of 6.9 per cent of borrowing for current public expenditure will not be reached. I hope it will be reached. The present team have taken on a difficult task. Having listened to the Minister's speech one is doubtful about whether it is possible in Ireland at present to have accepted the policy decisions that will be necessary to bring about this reduction in current expenditure. The Taoiseach, Deputy Haughey, said in 1979 that we were living beyond our means but there are people who still believe that this country is not in financial difficulty.
Deputy Wright is correct in saying that we should all work together. Deputy Desmond has been wont to point out in recent times that 90 per cent of the people in this House believe in free enterprise and in proper interest rates and that there should be a free market and a combination of private and public enterprise to create jobs and sustain employment. We all have that aspiration but we find it very difficult to reach a consensus on how it should be done. In present circumstances the attitude of Fine Gael to the budget is possibly the nearest you can get to national government.
Last night a motion on health charges was taken in this House. Fine Gael proposed an alternative system of raising revenue in the area of health but it was rejected by the Government. However, in the interests of the taxpayer and of the people who fund most of these operations, Fine Gael abstained on the vote. That was a very responsible attitude to take towards resolving the present serious financial problems. The media do not seem to take this matter seriously. They do not properly accept that we are living beyond our means. For current expenditure we will borrow in excess of £1,400 million. In the UK where the population is almost 20 times greater the figure in this respect will be £2.4 billion. In other words we have to borrow £680 per person to keep the State going whereas the British have to borrow less than £50 per person. Therefore, is there not a great task facing the Minister for Finance and the Government, whoever may be in power, if they hope to put some money aside to improve the climate for new industry and new enterprise?
I hope we do not have a repetition of the previous Fianna Fáil Government. When they were last in power they were smitten by the GUBU factor. The present Government, and I regret this very much, have already introduced explanatory techniques. I am being generous when I say that the outgoing Government also had some mysterious references in the budget as to how they would produce savings. They had a heading in the budget entitled "Efficiency". In the figures published by the Minister for Finance, efficiency has been well catalogued in the Department of Health. In the Department of Education there are different references to greater economies, greater efficiency and revised packages when stating how the Department will be run. There is no explanation as to what policy decisions will be made. People in this House have the experience of the outgoing Government in dealing with problems in the Department of Education.
There was a certain hysteria during 1986 about the payment of outstanding moneys to teachers. They are still claiming that money. Unfortunately, the Minister for Education has stated already that the teachers are entitled to the £75 million. She is putting unnecesary pressure on the Minister for Finance to provide this money. The Minister for Health, by outlining to the management of the health boards and to the leaders of the health organisations where the cuts will be made, is being totally honest. The time has come for the Minister for Education to state clearly what her intentions are. There is a greater chance of success if she indicates quite clearly what her policy decisions are. This would have a roll-up effect. It would increase the confidence of the financial sector on which this budget strategy is placed. There are two or three areas which are very doubtful and these techniques are not helping.
In regard to the £25 million withholding tax, from all the calculations that have been made it is very doubtful if the economy will be a net beneficiary of any of this money. When explanations are given as to how the £25 million withholding tax will be dealt with, most of these firms will have their affairs in order by the end of September or October and will be able to point out that not alone have they not been able to make a profit but that they have incurred losses during the last number of years. They will also point out — I am sure most of the Deputies in this House have received correspondence in this regard — that they intend to lay off a number of people. Unemployment is a terrible thing. Forcing employment through taxation techniques that will not yield anything further by way of revenue for the Exchequer cannot be upheld. I ask the Minister for Finance, before he introduces the Finance Bill, to have another look at the withholding tax and to see if some other system can be introduced to bring in revenue because I do not think this scheme will work.
There was also the announcement of the intention to develop a site belonging to the Ports and Docks Board with a new scheme of financial incentives being offered to foreign banks to set up business in Dublin. I regret Shannon Airport was not given the opportunity to expand their offshore banking scheme which is already in existence. These new announcements will undermine ten years work undertaken by the development company. The Central Bank put all sorts of problems in their way and I understand the Department of Finance were not enamoured by the advance of these offshore banking companies, but the arrival of such companies in our area would herald a great opportunity for the large numbers of young people who have been trained in new technology in the NIHE and in our secondary schools.
Shannon has a growing young population which is proportionately higher than in Ennis, Limerick or anywhere else. This new town was established in the sixties and has a population of about 12,000 with a disproportionate number of young people. Hopes had been high that the financial services, which would be attracted to Shannon under the new regime published in 1986, would prove very attractive because the amenities were already there — the industrial estate, the airport, third level education institutions and new technology in Shannon and Limerick. I was very disappointed that the Taoiseach did not ensure that our area would get at least a breathing space of two or three years to develop. Pandering to people in the centre city area, as far as the Port and Docks site is concerned, is not going to help. The Central Bank held up progress in Shannon for ten years but other countries took advantage of these financial services, especially offshore banking, ten years ago, and they are firmly established now. The Taoiseach is aware of this because he implied he understood it in speeches he made from time to time. As a Clare Deputy I ask him to impress upon the financial institutions that there are real opportunities in Shannon which could be exploited.
I have spoken on every budget since 1982 and you, a Leas-Cheann Comhairle, were in the Chair when I made my maiden speech. At that time I appealed to the then Minister for Finance to take another look at VAT on hurleys and rates on community buildings, such as GAA and other sporting clubs. I was disappointed that relief was not given in any budget since 1982 and I appeal once more to the Minister to have another look at these areas. This is an opportune time to make such a gesture especially when there are so many unemployed. It is gratifying to see unemployed people in Dublin and in the provinces jogging. They have a healthy regard for themselves and sport is one outlet which is very necessary in these depressing times.
I was disappointed that the Minister did not put more onerous conditions on the sale of mature forests to the value of £3 million. In his reply he should give the House a clear undertaking that this money will not go directly into the Exchequer and the Department of Finance. The selling of semi-mature forests should create more employment and lead to more planting. I believe the real purpose of the proposal was to improve this neglected area of forestry. The Minister might consider giving tax incentives to people who are prepared to invest private funds in forestry. The current sale will attract insurance companies, and some others who are interested in the private side of forestry development, who will be pleased to avail of this softer option. As I said, the Minister should consider giving a tax incentive if there is to be a claw back on these funds.
The budget has dealt a mortal blow to the construction industry. One of the real problems facing that industry is their belief that the State will get them out of all their difficulties. More than two-thirds of the income of the construction industry comes directly from the State. I believe the construction industry were beginning to realise that they needed an opportunity to invest and I wonder if the Minister would encourage consortia of the construction industry to borrow on the European markets at more favourable interest rates, or if a scheme could be brought in, similar to that which is applied to agriculture, to provide funds for builders so that they might get involved in the speculative market.
I hope the withdrawal of the house improvement grant scheme will not have a detrimental effect on the small businesses and the small builders, who had begun to see a little light. Perhaps when the Minister for the Environment is drawing up a new scheme he might consider these people.
Limerick West): I wish to join with you, a Leas-Cheann Comhairle, in congratulating my colleague, Deputy Wright, on his fine maiden speech.
Budgets are seldom greeted with loud acclaim. Instead, there is the inevitable wave of post-budget criticism. In difficult times, when the correct decisions are hard, the fundamentally correct strategy of the Government may be lost sight of in the breaking swell of adverse comment.
The current budget, prepared by the Government in the extremely short period of time available, is but the first step of a strategy which will take us out of the economic whirlpool in which we have been for far too long. It will bring about a badly needed change of mood and emphasis. It is a source of great encouragement that a majority of the people understand and accept the provisions of the budget.
The degree of consensus about the seriousness of our continuing economic situation in the recent past was almost frightening and certainly most depressing. The prevailing mood did nothing to inspire our young population who are now a dominant force. They need to have hope and confidence in the future and they are looking to our political leaders to provide it. In the past, the dominant note was negative and there was no promise or prize held out to spur on a people full of the impatience of youth.
With monotonous regularity the previous Government and the media reminded the country of the economic and social ills — the level of the national debt, the high interest rates, the disproportionately high level of public expenditure, the high unemployment and poor employment prospects and the various symptoms of social unrest. Many marginal issues dominated Government time. Root causes were referred to but not tackled. Particularly absent was a thrust towards what is positive and vital to halt the decline, restore self-esteem and set the country again on a path of economic growth.
The Government do not underestimate the difficulties. They have been totally realistic in their assessment of the situation but their focus will be on creating the right environment for growth and restoring national confidence. Their ideology will rest on hope, not on doom and gloom; on vital controls, not on unfettered bureaucratic restrictions. It will also rest on priority areas for action, not on a morass of countless tasks beyond the range and proper scope of any Government. There are already encouraging signs that the thrust of this Government's policies is producing the promised results. Interest rates are falling and financial experts agree that they will continue to fall based on the confidence of the financial sector in the Government's strategy and unshakeable determination.
The economy is back under control and those who count know this. A good example of positive Government action producing results is the effect that the budget has had on the outflow of punts on shopping trips to the North. This unpatriotic practice, which cost the State dearly and which devastated the natural level of trade in the Border counties, has been virtually wiped out. The money involved is now in circulation in this part of the country, to the advantage of everybody.
The Cabinet meeting last weekend produced another set of examples which showed that the Government are geared to positive and effective action. Among the measures agreed were the extension of the natural gas pipeline to Drogheda and Dundalk, a major marketing drive for native industry, new directions for the forestry industry and a financial services centre for the Custom House docks site in Dublin.
Deputy Carey need have no worries with regard to the development of Shannon Airport and the Shannon Development Company. The Government fully support——
I am concerned with the financial difficulties in that regard.
(Limerick West): We will support it positively in the years ahead. We did so in the past and it is part and parcel of our policy of decentralisation. Many more measures were agreed at the meeting which will be announced in the very near future. This is an action Government. We are doing what needs to be done, not talking about it. We are laying the base from which long term results will be achieved. Above all, we are producing the leadership and the task requires the same level of effort from everybody. It must be a team effort and we need the support of all sectors if we are to reach the targets we have set.
It is in a spirit of practical patriotism that I appeal to employers, trade unions and farm leaders to set aside their sectional interests for the good of the nation. Let us together rebuild the economy because that is the only way forward. I am glad to note that there is a steadily increasing understanding of this among the social partners. It is important to remind ourselves of the need for change and the vital importance of adjusting to it. The 20th century has brought a rate of change which was never previously experienced. The effects are felt in the physical environment, the economic climate, the traditional regional structures and indeed the whole social fabric of society. The world has become a much smaller place. We are no longer an island nation free to shut out world wide changes and survive in glorious isolation. We have long been affected by what happens in our neighbouring island and we are also affected by what happens in the council chambers of Europe and the seats of Government across the Atlantic, the Pacific and Indian Oceans.
Our ability to rely solely on traditional values and products no longer exists. We dare not ignore what happens in the Pacific, no more than we can ignore what happens across the Irish Sea. Of special concern to us in the context of change is the openness of our own economy and in traditional products and markets, the surpluses of primary agricultural products, the influence of multinational corporations and the continuing impact of new technology which, of course, add to the current internationally high level of unemployment.
Debate adjourned.