Dáil Éireann debate -
Friday, 26 Jun 1987

Vol. 373 No. 15

Estimates, 1987. - Vote 3: Department of the Taoiseach (Revised Estimate) (Resumed).

Debate resumed on the following motion:

That a sum not exceeding £6,998,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of December, 1987, for the salaries and expenses of the Department of the Taoiseach, including certain cultural and archival activities and for payment of certain grants-in-aid.

—(The Taoiseach.)

Minister for Industry and Commerce (Mr. Reynolds)

I would like to take the opportunity to give details of the Supplementary Estimate which Deputies have asked me to do in the course of my short address to the House. It is well known and recognised, and is part of our Programme for Economic Recovery that we were going to put strong emphasis on research and development. In regard to the carrying out of that commitment, we all recognise we need to strengthen and make much better use of R and D structures to enable Irish firms and Irish products to attain an increasing percentage of the keenly competitive world of marketing in both goods and services. Therefore, it is in that context that I will provide the details of the allocations made under the new subhead Y which has been included for the first time in my departmental Estimate.

A provision of £1.18 million will be made for essential equipment in the Institute for Industrial Research and Standards and the National Microelectronics Research Centre. The provision to the Institute for Industrial Research and Standards will enable it to acquire much needed test equipment to give Irish industry a range of services needed in today's circumstances. Some of this equipment will be new to the institute and more of it will replace equipment that is now long out of date. Some of the equipment with which the IIRS is working today is so far out of date that it takes a day to complete a test which a modern piece of equipment could complete in a few minutes. This is the area of up-dating our technological infrastructure that is so vital if we are to take on board the new technologies that are available in the world today.

The programme for technological innovation encompasses a number of new initiatives. One of these is an expansion of the so-called teaching companies programme. This new programme subsidises the placement in industry of well qualified graduates in engineering and in science. These graduates will maintain links with their parent institution and the programme provides for support from that parent institution to the graduate in respect of research and development matters arising during his employment.

A further element under this programme will be the expansion of the higher education-industry co-operation scheme, administered by the NBST. This programme as its name implies, supports joint research projects in which both industry and universities participate. My intention is to broaden this programme and to enable our research institutes such as the IIRS and the Agricultural Research Institute to participate in joint projects with industry. Under this heading I will also provide funding to the National Microelectronics Research Centre to assist industry in developing ASICS — application specific integrated circuits. The trend in the electronics industry worldwide is towards the use of these application specific integrated circuits for the simple reason that when an integrated circuit is designed specifically for one application the result is better performance, less supporting circuitry, and hence a cheaper and more competitive product.

The third main theme under this new science and technology development programme is the establishment of programmes in biotechnology and in advanced manufacturing technology. I cannot understand why the previous Government failed to recognise the important role biotechnology can play in new developments. I was amazed to find there was no provision made for proper adjudication on the corporate tax structure of biotechnological projects. Many approaches had been made to the previous Government but they did not recognise the significance of these projects. The importance of these projects was made clear to me very shortly before the Finance Bill was printed and circulated and I am glad to say that my colleague, Deputy Ray MacSharry, responded to this approach to give Ireland the opportunity to develop in the biotechnological area. Anybody who knows anything about the real world will know that companies were not prepared to invest when they did not know what their likely corporate tax would be. The Minister for Finance put a definition into the Finance Bill so that the 10 per cent corporate tax will apply to biotechnology developments in the area of plants. The view of the Revenue Commissioners was that plants are not living matter and as such the 50 per cent corporate tax would apply.

The establishment of a national biotechnological programme in particular has been awaited for some time. We lost three good biotechnological projects to another European country simply and solely because there was no biotechnological infrastructure in place in any of our institutes of education.

The Government have now established phase I of a national programme and funding will be provided in 1987 to three university centres — University College, Cork, for food biotechnology and to UCG and NIHE, Dublin, for work in the diagnostics-cell-culture fields. These particular disciplines within biotechnology have been selected for funding under phase I of the programme because they are the most promising areas for rapid product development. A director of the biotechnology programme will be appointed in the near future and will be mandated to prepare a programme of action for 1988. I should also add that the advanced manufacturing technology programme is being initiated in four university centres this year, in UCD, in TCD, in NIHE, Limerick, and in UCG. There will be a number of appointments under both of these programmes in the centres in question. All the appointments made will be on a contractual basis and will focus on securing the appointment of individuals who can liaise between the industrial world on the one hand and the third level institutions on the other.

If there is one unifying theme running through the various schemes which I have just outlined it is the identification of ways and means of improving the scientific and technological skills in industry in this country which have been badly lacking for many years. Perhaps the greatest challenge facing Irish manufacturing industry today is to take advantage of the new technologies available — information technology; biotechnology; advanced manufacturing technology and developments in new materials. These new developments are bringing about a revolution in product development and in the practice of manufacture world wide. I see this new programme as an essential step in insuring that Ireland keeps pace with these developments.

The National Software Centre was established by the Industrial Development Authority in 1984. I have provided £600,000 out of the reallocated funds in the Department of Industry and Commerce Vote to this centre and I would like to assure the House that this is purely a reallocation of funds and entails no extra money on the Exchequer. It is another demonstration of the Government's commitment and conviction that we have to seek better value for money in the areas in which we are spending it and we have to spend our scarce resources in the areas which will complement the type of development we have specified as not alone necessary and essential but offering the best hope for the development of indigenous Irish industry.

My duty and priority in the Department of Industry and Commerce is to take the opportunity when the Dáil is in recess to set down and rewrite certain aspects of our strategy for industrial development. We can always learn lessons from failures or mistakes that have been made in the past. The failure of Hyster has focused in on what can happen and the high risk that is involved in international investment. By its very nature industrial development and investment is a risky business but we should not think that because we have had failures now and again the area should be abandoned.

We have to look at the success rate as against the failure rate. The success rate of US investment coming to Ireland for the past five to six years is shown in the region of a 4 per cent to 5 per cent failure rate as against a 5.9 per cent failure rate in indigenous industry. Let us balance the debate. It was despicable to see a former Minister for Industry and Commerce and a former Minister for Finance try to raise this question, out of total hypocrisy, because I could not label it as anything else. Four and a half years after the event he said he knew that the project was wrong in the first place, he knew that the wrong decisions had been made. He sat in Government for four and a half years as Minister for Industry and Commerce and Finance and he expects the people to believe that he could sit there on a decision which was made prior to his taking office, when one could reasonably argue as to whether it was legally in place at the time he took office, but not a word was uttered. He opened the factory and gave it all the praise in the world and four and a half years later when something goes wrong he says "I told you so." That is poor form for any Irish politician.

Hyster was a setback but the House should remember that it was recommended in the Telesis report for industrial strategy and industrial development as a company coming in with all its key functions. It is for the company itself to explain why it failed. Quite clearly from what I saw at the end, and from what I knew at the beginning, there was a complete shift in the development of marketing strategy. Instead of developing a whole marketing structure in Ireland to sell what would be a new product for the nineties in robotics and high racking storage. it was left to agents around the world who were normal sellers of conventional forklift trucks. That was a weakness. There was also a leverage management buy-out in 1984 and I have little doubt that that contributed in its own way towards the financial pressures which could come in any company in the earlier years after a leverage management buy-out. We all know that if we could build a stronger indigenous industrial development structure that would be the best long term development. We cannot ignore the fact that we need international investment but we need to be more selective about it. The areas I should like to point to for priority in the future will be those of data processing and software development. The recent Government decision to establish a financial services centre in the Custom House Dock site in Dublin is a clear indication of where our priorities lie and marched side by side with every possible development in indigenous Irish industry, and the food sector was the obvious one to start with.

The questions which were raised by a former Minister for Industry and Commerce were despicable to say the least. A man who had a proven track record for many years, who has penetrated the export markets of the world, was begrudged the smallest grant ever given to anybody in the food sector, because he was so successful. We are very flaithiúl in approving grants for foreign multinationals coming into this country but we despise and begrudge our own. That is part of the problems of this society, that success is despised.

I hope in the term of this Government we will create a better atmosphere for investment. The decisions we are taking are tough and they point in the right direction. Interest rates have come down but not as fast as we would wish to see them come down. The report of the Central Bank augurs well for the future and we can hope to see more reductions in interest rates over the coming six or seven months. Not alone would that encourage more investment and set the climate for more investment but it would also have its own spin-off for people who have mortgages.

I heard people with bleeding hearts and politicians from the other side of the House referring to taking 10 per cent off the mortgage interest relief. They know full well that when you reduce interest rates by 1 per cent or 1¼ per cent you give back the same benefit that was taken. Are we ever going to wake up and realise that the world does not owe us a living, that the Government cannot provide the services which were available in the past until, in the first instance, we get the finances of this State into order and at the same time get economic growth going in this country? There is no other way forward. The road to success is export led growth and import substitution. In that regard we have taken another innovative decision in setting up export trading houses to correct an acute weakness that is part and parcel of the failure of Irish indigenous industry to get into the export markets. I hope that innovation will be taken up.

I have instituted and, only two weeks ago, opened the first office abroad in Lexington, Boston, for group marketing for small Irish companies. Five Irish companies now come together, share the office, the overheads and they have a share in the marketplace. That is the type of innovation seen from this Government, more can be expected and more will be heard from us during the summer holidays than has been heard in the past three months. We will take advantage of that time to do the job that some parties in this House tried to ensure we could not do as Ministers during the last four to six weeks. They were more interested in petty politicking than letting us get on with the business of managing the economy.

An Leas-Cheann Comhairle

I thank the Minister for his co-operation and I call now on Deputy Spring.

Mr. Spring

Like the Chair I want to thank the Minister for Industry and Commerce and Deputy Hussey for their considerate sharing of time, which indeed is limited, but I can assure you that that will not restrain me.

The performance of the Minister and many of his colleagues strikes me as the type of performance we get from "born again Christians". I have sat through the past four years and defended myself against attacks and assaults both inside and outside the House. The consistency of the Opposition was that nothing was right, it was monetarist, it was Thatcherite — those words seems to have lost meaning during the past few months.

I make no apology to anybody for my conduct in this House. I respect the office of Ceann Comhairle and the incumbents at any particular time and the way business has to be conducted in this House. The shenanigans — as it has been described by the Minister and other speakers today — the performance of the Labour Party and other parties has been unavoidable because of the failure of the Whips of the two major parties to structure the business of this House in a fair manner. I have written to the Taoiseach and the Ceann Comhairle in the last 24 hours pointing this out. I believe that unless we come to grips with the ordering of business the situation will be chaotic in the autumn. I hope this House will resume in September because there are many serious issues facing us and I hope we can order our business better. The Minister and many speakers from his party were talking about the bounce, excitement and the confidence which is on the streets. I wonder if, during the last four months, they realised what they were doing and what the effects will be. They have increased the PAYE burden by 15 per cent and abolished the farm tax. They are in the process of sacking almost 4,000 health workers. They have doubled the waiting list for health care. They make the poor pay for getting sick. They have cut many workers' rights in half. They have frozen children's allowances. They have abolished home purchase and improvement grants. They have increased council rents and charges. They have broken pay agreements which they were going to honour in full — in fact they were going to double them last year. They have abolished local services, sacked workers and done many more things besides.

Is this the better way which the posters around the country last year indicated? Is that the better way Fianna Fáil were talking about, the better way they promised the electorate? Many thousands of people who voted for Fianna Fáil in the last election were perhaps expecting, in their naivety, a better way as has been referred to by the Taoiseach. They were voting for a party who said they cared, who were going to make the economy grow. They wanted a party who would put people back to work and not out of work as is happening.

The U-turns on policy form quite a litany at this stage. There were U-turns on the economy, on PAYE reform, on growth, on the building industry. We could not count on one or two hands the number of bricks thrown at us in this House in relation to the poor building industry for the past four years; it seems to have been forgotten completely in the last four months. We have had U-turns on the cuts in public expenditure, on the Single European Act, on the Anglo-Irish Agreement and indeed on constitutional reform. The Taoiseach proudly has led his gallant band across the ploughed fields of Ireland in the last four months. Of course Fianna Fáil were in Opposition then and they are now looking for responsible Opposition. Just like Fine Gael and the Progressive Democrats Fianna Fáil in office believe they can only recover by attacking the weaker sections of our society and by cutting the worker's rights in half, as they have done. This is what we have seen in the last four months of the Fianna Fáil Party's actions in Government but it hardly does justice to the despicably unfair nature of their approach. What is most unfair about it, more unfair even than the individual components of the savage attack enshrined in Fianna Fáil's series of U-turns is that the Government who are putting it forward do not believe in the approach they are taking. If it even reflected some hint of Fianna Fáil Party ideology, I would say it had some hint or shade of integrity, but ideology appears to be an alien word in the Fianna Fáil language. This package has only one purpose — to capture the arrogant and unfeeling philosophy of the plastic alliance of the Right wing parties.

Fianna Fáil knew when they were preparing their budget that the more savage the attack they mounted on the rights of working people, the more support they would have from Fine Gael and the PDs. Their calculation is proving to be correct, but that was not difficult, since the Right wing parties have never made any secret of their callous philosphy. They can see now that they had been caught somewhat with their pants down — to put it mildly — and it is interesting, if unedifying, to watch them at constituency level trying to put distance between themselves and the policies they support in Leinster House.

The sad spectacle of the last days in this House, when the conspiracy between Fine Gael and Fianna Fáil reached new depths, has reduced the practice of parliamentary opposition to meaningless proportions. We in this House will have only ourselves to blame if people take to the streets in ever increasing numbers over the coming months, as the destruction of the health services is accompanied by the dismantling of equality of opportunity in education and by the disappearance of many local services which are an essential part of the fabric of community life. If people cannot look to the Opposition to provide meaningful and rational alternatives to the mindless cutters and destroyers on the Government side they will have to look to their own resources.

The Taoiseach may well exult in the fractures he has caused among the Opposition parties, with the naive assistance of Fine Gael. But he should not be deluded — the political parties on this side of the House may be divided but there is a growing anger and resentment among the huge community of ordinary families who are outside this House. The Taoiseach's financial backers may be pleased at his performance, but the pain and suffering he is causing will not easily be forgotten by the great mass of people who believed they were voting for something worthwhile — for hope and maybe for some imagination — when they voted for him. One should take stock of what happened on the streets of Dublin and of most of the larger towns during the past few days and on Wednesday of this week. The scale of the numbers on the streets in opposition to the Government's health policy speaks for itself. The Government would need to take note of what is happening. The nursing staffs, the people working in hospitals and their union — in a very orderly manner — were portraying their disgust and their fears about what the Government are doing in relation to the provision of an adequate health service.

As the effects and consequences of Fianna Fáil's 1987 budget unfold, it is becoming clearer that it is a savage and merciless document. It has been said that one of the first marks of a civilised society is that it affords to the sick and the disadvantaged the basic human right of a measure of dignity. By that standard, a society run by Fianna Fáil, with the support of Fine Gael and the Progressive Democrats will not be civilised.

In one fell swoop the budget began the process of dismantling the fabric of a society that was moving slowly and painfully towards being a progressive one. The cuts in social welfare, health and education, will result in a divided society, in greater poverty, and in the resurrection of inequality even in areas where it had begun to disappear.

There are no saving graces in the 1987 budget. It does not attempt to address in any way the massive problem of inequity in our taxation system. It ignores — indeed, it will make worse — the growing scandal of emigration. Not only does it lack basic compassion, it also lacks imagination and is totally devoid of courage.

In a recent speech, I tried to make the point that one of the illusions this Government have tried to foster is that they are attempting to pursue economic growth and are using the National Economic and Social Council's recent report on this subject as a guide. I believe strongly that it is necesary to explode this illusion, because it is not possible to build the consensus necessary for a concerted surge of economic growth without a basic commitment to fairness that would sustain that consensus.

As I said, you can search the financial programme of this Government from top to bottom, without finding anywhere within it a shred of fairness. That is a sad reflection on the present Government.

It might well transpire that the Government are able to cobble together some kind of an agreement with unions, farmers and employers. Indeed, I had high hopes that such a social contract might be possible but as things stand it will be a meaningless, short-term document, unable to sustain itself in the face of the inevitable pressures that will build up as the impact of the budget and of the Government's general approach begins to eat into the living standards of ordinary people, and to tear away at the rights to which they are entitled.

Where is the fairness in the health charges, for instance? How does any Government with even a shred of social conscience seek to justify a situation where all but the very poorest members of our society are expected to pay for a basic right, a right that has almost been enshrined as a guarantee for a generation? How can this be justified, while at the other end of the scale the Government are still giving full tax relief for the most expensive VHI plans to the wealthiest people in our community?

Where is the fairness in closing down public hospitals, depriving women of vitally needed service, doubling waiting lists, sacking health workers in their thousands? How can this be regarded as fair, when private, luxury medicine is being encouraged to boom on the back of a massive State subsidy?

Where is the fairness in the obscenity of women having to queue, in clinics intended for the treatment of sexually-transmitted diseases, for routine tests that can help to avoid cancer?

And where is the fairness in the education cuts? Despite the recent denials by the Minister for Education, it is abundantly clear that she intends to target the most disadvantaged sectors for her cuts, in order to avoid, as much as possible, taking any heat from the better organised pressure groups. The children of travelling people, working class people who were availing of second-chance education are now the groups who must subsidise the children of wealthy parents as they attend their private schools.

And it is clear now also that under the approach of this Government, access to third level education is going to become increasingly the preserve of the rich. The thousands of students who are just completing their leaving certificate examinations in the fond belief that they may be able to go on to some form of third level education, are in for a rude awakening. They will discover in the very near future that the points they are aiming for in their examinations are hopelessly inadequate, because of the tremendous squeeze on places that will result from staffing cuts in this area.

Where is the fairness in the abolition of the land tax? That particular decision was a slap in the face for the thousands of PAYE workers who voted for Fianna Fáil in the last election; who voted for them because they believed the fine words and the promises about tax reform and about a reduction in the PAYE burden. They have their answer now. The first consequence of the budget for PAYE workers was to increase the burden on them by perhaps 14 or 15 per cent. And the second consequence will be to reduce even further the small contribution made by farmers.

Fianna Fáil are consistent. It is very much the same actions and axe they took in 1977 when they abolished the wealth tax. This is more than unfair. It is also absurd. There is a very substantial number of farmers in this country who believe that the land tax was a fair way of dealing with the whole issue of farm taxation. I believe that they are probably the majority of farmers. But they are in the main small farmers, not the ranchers who have led the campaign against the land tax and who previously led a campaign against the rates on farming and who will continue to use their very considerable muscle to frustrate any attempt to extract any kind of contribution from them towards the solving of this country's financial problems.

Where is the fairness in the cuts that have been made in social welfare? Rights that people have paid for for all of their working lives are cut in half at the stroke of a pen or in some cases removed altogether. The worst crime in Ireland in the future will be to become unemployed. If you lose your job in the society we are creating now, you will be doubly penalised — the loss of meaningful work in itself is not enough; you must now be regarded as a waster, as one who did not deserve the job you had.

The Government have now set up a scheme which is closely modelled on schemes operating in some of the most backward and anti-social States in the United States of America. There, it is known as Workfare but the public relations experts employed by this Government decided that was not a catchy enough title. It did not cover up the real intent. Therefore, they decided on the name Jobsearch. It is difficult to imagine how anything could be less appropriate. They also took a lead from the genius who decided that the way to deal with the huge problems caused by Windscale was to call it Sellafield. Jobsearch has nothing to do with searching for jobs; in fact, it is quite the opposite. It is a search for the jobless, a programme designed to intimidate them into deciding not to claim the benefit to which they are entitled. It ought to be a matter of shame to all of us that we are allowing this workhouse mentality to creep back into being.

An Ceann Comhairle

Perhaps the Deputy will now conclude.

Mr. Spring

Yes. While I would have wished for more time, I realise that the Order of the House is to allow the Minister for Foreign Affairs to speak now. Let me say in conclusion that the Government are surviving by the least of margins and I can assure them that the intensity of the opposition which this party have exerted on them in the past few months will be continued. Every action and every policy which this Government bring to the House will be examined in a very critical manner and we will continue to provide critical opposition. I do not believe that what they are doing is in the best interests of our society. In the short term, not to mention the long term, it will prove to be far more divisive than successful.

Minister for Foreign Affairs (Mr. Lenihan)

I should like to comment on a matter which, in my view, brought credit to this House and all parties in this House, that is, the whole matter of European affairs and the Single European Act on which a broad consensus emerged among a great majority in the House and eventually among the public, the national and international economic situation relevant to that and the measures taken today by the Government to achieve economic recovery within the ambit of our European membership.

On Wednesday morning I met the Italian Foreign Minister and I lodged with the Italian Government our Instrument of Ratification of the Single European Act. With that I deposited the Declaration by the Government on Article 13 and Title III of the Act which sets out the Government's position on economic and social cohesion and in regard to Ireland's policy of military neutrality, both areas that have a broad consensus of agreement here in the House. I have written also to the Foreign Ministers of all our Community partners and to the President of the Commission informing them that we have deposited the Instrument of Ratification and transmitting to them the text of the Government Declaration.

The Single European Act will come into effect throughout the Community on 1 July 1987, very shortly. I am pleased that the matter has now been resolved following the prompt action of the Government in proposing a constitutional amendment to permit ratification of the Act and following on that the clear reaffirmation by the Irish people of their commitment to Ireland's membership of the Community.

The Single European Act represents a challenge and an opportunity for Ireland and, indeed, for the Community as a whole in the years ahead. Commitment and determination will be required to face that challenge and to seize that opportunity. This Government will ensure that Ireland's interests are fully protected and promoted in the implementation of the Single European Act and in the development of the Community of which we remain a fully committed member.

A number of discussions will now arise within the Community on basic issues such as the achievement of economic and social cohesion, the financing of the Community and the future of the CAP. These are all matters of concern to Ireland. Having ratified the Act, we will remain as equals at the negotiating table within the Community, representing Ireland's interest and making, as Ireland always has done, a constructive contribution to the resolutions of the various important issues under discussion.

The result of the referendum demonstrated that the Irish people remain fully committed to membership of the European Community and to our full participation in its future development. The public debate on the issues provided an opportunity to examine and reflect on our position in the Community and in that respect was a positive aspect of the matter. Seventy per cent of the voters decided that our continued full participation in the Community is in our best interests. It is now up to the Government and the Irish people — whether, as politicians or farmers, as employers or trade unionists — to make the most of the opportunities of Community membership which have been enhanced by the Single European Act. No one believes that membership of the Community can of itself provide a simple solution to all of the problems we face as a nation. It is, however, clear — and the Irish people recognised this in the referendum — that it is only as a full and equal member of the European Community that we can best overcome those problems that face us in the social and economic spheres.

I should now like to turn to some economic matters both on the national and international scene. In considering the economic problems of the country, the perspective adopted by this Government is straightforward. We are not just running an economy; we are governing a country. There has been in recent years a corrosive and debilitating loss of confidence on the part of many Irish people in their own country and their own future generally and individually. Much of the damage has been self-inflicted. There would sometimes, it appears to me, seem to be in some quarters a peculiar vice which consists in a tendency to believe that everything will always work out for the worst of all possible worlds and that, if the other fellow thinks otherwise and wishes to do something about it, he is a fool to do so. An important part of our task in Government is to change that attitude, overcome these self-defeating approaches to create a climate where imagination, incentive and optimism are encouraged and rewarded. It is time to put an end to the sway which the begrudger and knocker holds over large parts of the public imagination. In concrete terms, the Government have in a few short months taken a number of steps. Our strategy, includes the following: (i) to encourage a shift in resources to the private sector and the wealth creating sector of the economy; (ii) to provide the best conditions for the inflow of capital into the country, for lower interest rates, and for higher investment; and (iii) to enable people to plan in the certainty that there will be no change of direction by the Government.

Turning to the first point, it cannot be over-emphasized that the potential for economic growth in the country and for the creation of gainful employment for all will never be realised as long as the country is saddled with an ever-increasing public debt. There is no option about this: the public debt cannot simply be contained; it must be drastically reduced. At the moment, a substantial amount of the revenue collected by the State is not being spent on job creation, on the provision of social services or on the development of housing, roads and other essential amenities. It is being spent on debt repayment. To continue to do this would be to mortgage our own future and that of our children, to discourage external investment, to perpetuate high unemployment and to push the country gradually but inexorably towards bankruptcy. Such a scenario is intolerable. The Government have not proposed and do not propose to cut public expenditure blindly across the board. Rather, they seek to achieve judicious and necessary reductions while preserving the core infrastructures of the essential services. This inevitably means that a lot of heart searching is necessary. It requires a fundamental and sometimes painful analysis of Government policies and the manner in which they are carried out. It then requires the implementation of those policies and consequent changes which some people may naturally find difficult to accept. We have become used to a certain standard of services. Bluntly, in many cases it is a standard which we now cannot afford.

What the Government can do, while moving to bring about the essential reduction in public expenditure of which I have spoken, is to ensure that sacrifices to be made are broadly spread across all groups in society and that, at the same time, those most in need will be protected. We can neither show favour to any sectional interest in society, nor can we allow the conditions of those who are worst off to deteriorate.

This policy of bringing about a reduction in public expenditure is perhaps the hardest part of our task in Government and it would be idle to pretend that our work is anywhere near being completed. I am happy to note, however, that it is already bearing fruit in a number of tangible ways. Inflation is at its lowest rate for 20 years and may well fall even further. Interest rates have already fallen in a few brief months due to our policies. The trend appears to be that they will continue to fall further before the end of the year. This is one of the objectives to which I referred earlier and I need hardly stress its importance in the economic, financial and social senses. It was universally recognised that the cost of borrowing money, in real terms, was prohibitively high and acted as a powerful brake and blockage on the economy, especially on the further development of indigenous industry. The fall in interest rates which we have already witnessed in a short period is dramatic evidence of the confidence of the financial community in the new Government and their policies.

Another problem which bedevilled the economy in recent years has been the existence of the so-called "black hole", the unexplained financial outflows which last year reached the staggering amount of £1,516 million. There can be little doubt that lack of confidence in our economy as well as lack of confidence in the policy and the stability of the previous Government played a major role in these enormous and damaging outflows of capital from the Irish economy last year. I am confident that the latest figures, which will soon be available, will show a dramatic return of capital into the economy. Those who may have expected a further devaluation of the Irish pound will continue to be disappointed. The Government remain firmly committed to a policy of monetary stability through the EMS and no adjustment is envisaged.

Indeed, the issue of exchange rate stability is of great importance to a small export dependent economy like our own. Recent fluctuations in the rates of major world currencies were a matter of concern to us and, in common with our partners in the European Community, we welcomed arrangements made under the Louvre Agreement last February to bring some stability into currency markets, particularly with regard to the dollar. It would be appropriate for me, while on the subject of exchange rate stability, to say again how much we would hope to see our most important trading partner and nearest neighbour, the United Kingdom, in the EMS.

That would be a major stimulation to our economy in obvious terms but particularly to the United Kingdom economy. It is in the broad interest of the two islands, of Europe as a whole and of international trade generally that this should happen.

Such a move would lend new authority to the EMS and further enhance the emerging role of the ECU as a tradeable currency in international dealings. It would be particularly to Ireland's benefit in reducing the exchange rates risks associated with trading between our two countries and that is of very great importance to us.

I believe that the reductions in public expenditure, the reductions in interest rates, low inflation, the return of capital which has left the economy and an increasingly attractive climate for investment make possible the third strategy to which I already referred — that people should be able to plan in the certainty that there will be no change of direction by the Government.

The steps taken so far are painful but necessary and, as I have shown, have already led to beneficial results. They are steps designed, in toto to make possible the rejuvenation of the Irish economy. In a sense, however, these steps alone would do no more than create the necessary preconditions: in fact, the Government's role goes much further. The Government are not omnipotent in the economic area and there are no miracle solutions, but they have nonetheless a role of fundamental importance to play in the promotion of that careful and sustained growth which alone can take the economy out of its present difficulties and offer hope and a gainfully employed future to our people.

One of the factors which cannot be ignored by any Government in dealing with a country's economy is the state of the international environment. This is particularly true in the case of Ireland because of the exceptionally open nature of our export dependent economy which is very much affected by developments beyond our shores. The OECD's latest economic outlook which has just appeared makes interesting reading. Under the title "Co-operative Policy Action to Restore Satisfactory Growth", the introductory chapter of OECD Economic Outlook No. 41 opens with the following assessment:

The economic situation has deteriorated in recent months and OECD projections to the end of 1988 point to little improvement. Slow growth, high unemployment and large payments imbalances are likely to persist. Recent downward movements in the dollar, which occurred despite unprecedented interventions in exchange markets, have led to rising inflation expectations and higher interest rates in the United States. These developments together with growing tensions in international trade relations and continuing debt problems, have increased the risks of a worsening world economic situation.

This gloomy scenario is a matter for concern. Growth is threatening to stagnate and imbalances have arisen at international level through the existence of enormous trading surpluses, on the one hand, and a high budgetary deficit and large foreign debts, on the other, while international trade disputes, persistent unemployment and technological changes in developed countries have increased the pressure for the adoption of protectionist policies, with the accompanying slow down in trade which this would undoubtedly entail.

Ireland has responded to these difficult international developments in several ways. In common with others, we strongly favour the encouragement of stability in international currency markets. I have already referred to the important role of the EMS in this regard. We are also concerned about the danger of protectionism, which is a superficially attractive option for any country which experiences rising unemployment. It is dangerous in the sense that it harms trade and we are a trading country. It must be obvious that protectionism would be disastrous to an export dependent economy such as our own. Ireland has consistently worked through the GATT to promote the maximum liberalisation of trade. At the same time, we do not favour sudden and disruptive changes in markets such as agriculture. In our approach to the international economic scene, change at a moderate pace is the keynote.

Perhaps the lesson to be learned from the current international situation is that a small country may find it difficult to improve its position in the short term through adjustments in macroeconomic policy. The sixties were a period of general growth on the world economy and in those days it was, indeed, largely true that a rising tide carried all boats. The present situation is different. Ireland, through its membership of the European Economic Community, has a safeguard in that we can promote growth within the Community and therefore we do not have to face these problems in isolation which would be a disastrous position for us. As I have pointed out, the Government for their part are taking major steps in the right direction. When the up-turn in the world economy comes, as it must, Ireland will be better placed to benefit from the change.

The Government, in accordance with the policies outlined in the chapter on growth in their programme, have also already taken a number of major steps to develop new and additional sources of employment based on the exploitation of existing and in some cases hitherto underdeveloped national resources, particularly in the services area.

Services are an area of major importance already, employing as they do twice as many people as manufacturing industry but they clearly possess enormous potential for further development both at home and for the generation of export earnings abroad.

The financial services sector is one striking example being as it is a significant part of all modern economies. The changing shape of the financial industry worldwide offers an opportunity for a major expansion of economic activity here and, of crucial importance to us, the creation of new highly professional and technical jobs. We have in the past experienced employment growth in this area but we are far from exhausting the potential and we are determined to go for growth in that area because it is one that is particularly appropriate for our young people who are emerging from education establishments or who are still training in them.

The jobs that will be provided will go a long way to reducing our unacceptably high level of unemployment and they will be of the type sought after by our high quality business and economic graduates who in recent years have seen their only prospect as emigration, a very sad factor.

The Government's decision to establish an international financial services centre in Dublin, together with the creation of a high-powered committee to advise on setting up this centre, is evidence of our commitment to developing the financial services sector in Ireland. We believe we have already inbuilt advantages in terms of language, time zones and the calibre of our young well-educated workforce. It is also Government policy to ensure the best available facilities in terms of infrastructure, accommodation and communications all of which will be indispensable to the success of the project.

Already some of my ministerial colleagues have been bringing news of this important new development to potential participants from abroad. In the course of my forthcoming visit to the Federal Republic of Germany, I will be adding my own voice to the promotional effort.

The second services sector to which I wish to refer is that of tourism. Once again this is an area which the Government have lost no time in revitalising. Our programme laid particular stress on the tourism sector precisely because of the multiple positive effects it can have for the economy, through the creation of employment and the use of native raw materials in increasing our foreign earnings potential. In May the Minister for Tourism and Transport announced a programme of measures including low air fares and reductions in hotel prices. These measures combined with the provisions in the Finance Bill to encourage greater investment in tourism facilities through the business expansion scheme, are designed to have an immediate impact and to assist the tourism industry to recover from recent setbacks. An inter-departmental tourism policy coordination committee under the chairmanship of the Minister of State at the Department of Tourism and Transport, is currently engaged in co-ordinating all public sector activities in the tourism field and in examining ways in which exisiting contributions might be enhanced.

There is clearly a need to wait until the end of the season before we will be in a position to assess the full impact of the measures we have undertaken, but we are encouraged by what we have seen to date. Figures for January to April 1987 show that business from Britain is up by 17 per cent, from mainland Europe by 16 per cent and from the US by 20 per cent. Such increases are good news for the economy and good news from a sector which suffered so badly last year.

There is, however, a further reason for continuing our efforts since in recent years the amount of money spent by Irish people abroad has been greater than our receipts from foreign visitors here. It would be our hope that not only greater numbers of foreign visitors continue to come here but that more of our own citizens would holiday in Ireland. I appeal to all Deputies to take that to heart.

The Government have also, and I shall only refer to these in passing, placed a new emphasis and significant thought and resources into the development of new opportunities in agriculture and horticulture. The importance of the sea as a resource has been highlighted by the creation of a Government Department to deal with marine affairs for the first time in the history of the State. Science and technology is a priority area with increased Government assistance and a co-ordinated approach to research and development and manufacturing. Appropriate administrative packages are being put in place to facilitate all of the above developments.

Notwithstanding the difficult international economic situation I described earlier there has been further good news on the economic front as far as we are concerned. I refer to the figures for our exports in the period January to May of this year, and particularly in May itself, which showed strong export growth against reduced imports. I need hardly remind Deputies of the critical importance to the economy of exports, a sector which contributes over 50 per cent of our national income and secures two out of every three Irish jobs. Last month total exports reached £1,037 million, the highest figure ever recorded for a single month and producing a record monthly trade surplus of £189 million. The surplus of £408 million so far this year is over twice as large as that for the same period last year. Deputies will be pleased to hear that this Government do not intend to take exclusive credit for this very impressive performance. This is a Government who mean business, but I take this opportunity to salute the Irish exporters who in difficult conditions and against strenuous competition in their overseas markets have done so much in recent years to alleviate the worst effect of our economic difficulties. I would further like to take this opportunity to assure exporters of my full support and that of my Department both in Dublin and through our diplomatic missions abroad in their efforts.

Good government involves more than a correct analysis of the problems faced by the country and the policies most likely to solve them, important as these are. It is also about inspiration, credibility, determination and consistency.

Taken together, the policies which this Government have designed and started to implement are intended to put right the serious difficulties of the public finances, to preserve and use more rationally the range of essential social services provided by the Government, to protect the position of the underprivileged and to take direct and indirect measures towards the creation of a climate where economic development and employment may prosper.

In undertaking this task the Government are fully conscious of the fact that Ireland is a society in transition in a quickly changing world. We have moved from being a predominantly agricultural society to a modern industrialised State which, while retaining agriculture as one of its most important activities, now has a highly diversified, technologically sophisticated export led economy with a young and skilled workforce. Our education system is second to none. Our telecommunications system is one of the most advanced anywhere. The process of transition is necessarily painful, the more so as it coincides in our case with a period when technological changes are making it necessary to redefine our approaches to employment. In common with other countries we are finding the adjustments to the new conditions to be very difficult. We are further conscious of the fact that these necessary changes are taking place against a highly complex international background which does not allow any room for complacency or lack of vigilance.

In such circumstances there is not only a need for precision and clearsightedness about the ends to be achieved and the means to achieve them, but also for the political will, political skill and determination to carry this task through. I can assure the House that the Government have all of these qualities. I further believe this is what the Irish people and all concerned sectors of the economy are seeking and ready to support at this time. We have laid the foundation needed to sustain the country and we are proud this is being done by Fianna Fáil. As I said, we have already laid the foundation needed to sustain the country and to carry it and its people forward into the nineties when the full flowering of our present policies should see a strong and resurgent economy operating to its fullest potential both at home and abroad.