Financial Resolutions, 1988. - Financial Resolution No. 4: 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.)

When I spoke the last day I expressed major disappointment — not at what was in the budget but at what was left out — and I felt there were many missed opportunities such as the chance to realise major capital from Irish Life, to provide major tax reform, to deal with the structural problems of the economy and to develop certain pivotal sections of the economy.

The overall budget strategy of the Government seems to be flawed in respect of one element of their cuts in expenditure, the excessive cutting of capital expenditure, which is now down to somewhere between 1 per cent and 2 per cent of GNP. This is a perilously low level just to replace existing facilities, not to speak of providing for all the infrastructural development which is required. This is very much out of line with what Fianna Fáil said in Opposition leaving aside their promise to reduce VAT on construction to 5 per cent, and also to give £200 million to the construction industry.

In my constituency of Wexford, we have been notified that there will be no new houses, schools, roads, drainage programmes or bridges this year. All development has come to a standstill and only existing contracts will be honoured. A major opportunity was missed for creativity by the Government because there are a number of projects, such as the Army headquarters and certain roads, which could have been pursued by way of joint venture.

I believe that the capital is available from the construction and financial sectors for such joint venture activities which would stimulate investment in the construction sector. A budgetary decision is not necessarily required to bring forward some of these projects which the construction industry could finance at a reasonable rate of interest, equivalent to Government stocks at present and it could have been, all round, very worthwhile.

An area in relation to unemployment which worries me — and there has been very little public comment on it — is the proposed change in corporation tax. This has been put forward as a minor reform of the system whereby the standard rate is being reduced from 50 per cent to 43 per cent; capital allowances will no longer be fully allowed — only 50 per cent of them will be allowed. Many people are experts on the amount of money which businesses pay in profits tax but know very little about how businesses accumulate profits. I suggest that a detailed analysis of capital allowances would show that such a move by the Minister is in the wrong direction. For example, if I have a small business and I decide, after a couple of years of profitable trading, or in the start-up stage, to buy property, to buy a shop or a facility. I cannot write off one penny of that investment against my profit. If I spend £50,000 on a premises I cannot write off one penny. There is no depreciation against buildings for the services sector. If you reduce further the capital allowances on things like vans, vehicles, cash tills, modernising of premises and so on — if you do away with the capital allowances by 50 per cent — you will put a lot of start-up small businesses who would not heretofore have had a taxable liability for corporation tax into the tax net. For the larger business there is no major change. If you change the equation a little bit on one side and a little bit on the other side and you see the net effect in 1988, there is no increase or decrease in taxation. I feel that the change will hit small businesses which are starved of capital in the early stages and who will not be able to write it off. I ask the Minister to tread very warily and to ask the Revenue Commissioners to monitor the effect on small business and to consider a two tier structure for corporation tax for small businesses as against larger businesses as defined by turnover of say, £250,000 or £200,000 per annum. If we are to be serious about generating indigenous growth in the economy we must look at that possible danger.

An attempt was made in this budget to tax pension funds at 6 per cent. On the surface this may seem reasonable but, in fact, it is altering the game rules of various forms of pension income which are already well established. For example, it is already the case that anyone who is in receipt of income from a pension is taxed in the normal way vis-à-vis the income tax code on that. It strikes me as extraordinary that the Government on the one hand should give a fixed rate of return in relation to those bonds and, having done that, they are now changing the rules. Most of this pension income is generated not from the productive sector of the economy but through the Government's stockbroker and through the Stock Exchange. It strikes me that that is unfair and it should have been done a year ahead. It should be signalled now that from next year the changes will be made. This would be a lot fairer to those people who are living on small, reducing incomes or pensions who would have been able to plan ahead, or the fund managers could have planned accordingly.

In relation to some small sectors in the economy which made budget submissions to the Minister I am particularly disappointed that the VAT rate on certain elements of leisure and labour intensive sectors, such as the growth sectors of the economy, have not been reduced. I refer specifically to the VAT rate on snooker facilities. There is no doubt that there are many unemployed people and others who have a lot of leisure time on their hands. The current VAT rate on snooker — and I know that a detailed submission was made to the Minister in that regard — should be reviewed. Similarly in the entertainment sector progress was made. As a former chairman of the Joint Committee on Small Businesses I met all the various interest groups and I am glad that progress has been made on cinemas, fairgrounds and so on where VAT was reduced to 10 per cent.

It seems that the Irish Ballroom Proprietors' Association have again been totally neglected. They had sought to have two occasional licences per week. There have been something of the order of 5,000 jobs lost in this sector and it is extraordinary that they should have been neglected in this way. It strikes me that it would have been very beneficial to the Exchequer in terms of extra revenue and the extra competition which it would create in the entertainment sector.

There is a particular matter, a Leas-Cheann Comhairle, which I wish to raise and to which I hope the Minister will reply on Second Stage and I hope his officials will take special note of it. It is an anomalous situation which has arisen concerning farm tax. The last Government, and the former Minister for Finance, Deputy Bruton, gave a commitment that anyone who paid land tax in 1986 could get a tax credit against any of the three tax years, 1985-86, 1986-87 and 1987-88. If he paid £3,000 in land tax and his income tax bill in the first year was £1,500, and £1,500 in the second year, he could write it off until it was exhausted. Letters were sent to farmers from local authorities and from the inspector of taxes granting people tax credits on income tax paid. It was subsequently decided by the chief inspector of taxes last December that this facility was being withdrawn. It strikes me as being very unfair that because of this change people are now being informed that they have huge income tax bills where they were previously given written documentation to show they had tax credits. I will be seeking to table an amendment to the Finance Bill if this matter is not satisfactorily dealt with. It is extremely unfair.

One of the areas mentioned before the budget was announced was property tax. I note that other political parties such as the Progressive Democrats have proposed a property tax. As Deputy Noonan said, the only proper way to look effectively at the property tax is to have a major tax reform package. It is undoubtedly true that local authorities are starved of finance at present. In their current state they are totally different from the local authorities of yesteryear. In my own local authority all hedge cutting services have been abandoned, all rural refuse collection has been abandoned, all house repairs have been abandoned because there is no income. Money which came in in lieu of domestic rates or grants has now been cut by £2 million this year. There is a need for a property tax but it must be based on the Exchequer giving money to local authorities by way of a property tax in lieu of income tax in so far as a full credit would be given for property tax payments to local authorities against ordinary income tax receipts. At the end of each year, once a system of property tax was established, we would not have an increase in our taxation burden — which as a percentage of GNP or as a percentage of total income is the highest in Europe — but we would look again at a proper system of financing local authorities.

One of the faults of the land tax was that, even though the money was payable to the local authorities, they were being directly deducted in their domestic rates of a support grant from the Department of the Environment — the money which was received in land tax payments. The Government missed an opportunity to get the balance right between a tax on property and a tax on labour. Unfortunately, not one sentence of the Minister's speech was devoted to this area.

Again we have seen the soft target hit with an increase of £5 million in the bank levy. It is an extremely soft target. It is unfortunate that this Government have seen fit not to extend the structure under section 84 loans. There is no doubt that the debt equity ratio of many small companies is such that they require soft loan finance at a reasonable rate over a reasonable period of repayment. Section 84 loans facilitated that. Further pressures on the bank by way of bank levies, per se, are not necessarily wrong but it would be better to get increased taxation from the bank if necessary but, at the same time, allow them the facility to come out from under that particular tax burden by meeting their obligation to growth and industrial development in the economy.

I welcome what has been done in relation to capital allowances for the motor industry but I regret there was not some change in relation to benefit-in-kind. It is only reasonable to state that all research into what can be done to stimulate the services sector such as the motor industry in terms of new car sales must be carried out by those sectors. At present there is no incentive for companies to give their executives new cars. While capital allowances will be of some relief I feel that benefits in kind would be another way of stopping the brain drain. These people are very mobile and one of the important studies which needs to be done in relation to emigration is to see how many people, who could get employment here and who are well educated, are leaving because of the tax code as opposed to those who are leaving because of economic necessity and unemployment.

Another major change which the Minister has made is in relation to the amnesty. This strikes me as being a very significant change. Many people call to see Deputies in regard to demands which they had received from the sheriff relating to tax affairs going back to 1979, 1984 and so on. Some of these sheriffs hounded people out of business, not unjustifiably in some respects where people totally disregarded the inspector of taxes' office and taunted the system. I am not saying any sympathy should be given to them but it is amazing, seeing that we were advising people of their legal obligation to discharge their debts with the sheriff and seeing that the sheriffs went around threatening seizure and blue murder, now at the stroke of a pen those who were unfortunate enough this time last week to have made a settlement with the sheriff would have been far better to have done nothing.

This morning I spoke to the sheriff in my own constituency and he informed me that if someone agrees the amount of tax owing by 1 May and discharges that tax debt by 31 September they can forget about the interest. It strikes me as appalling that the Minister, if he was going to introduce such a concession, did not do so last year.

I welcome the decision in so far as getting in money and getting things up-to-date are concerned and in that respect I have always advocated more computerisation for the office of the Collector General because that is where the problem started. It was a Tower of Babel for many years. We need greater consistency in regard to amnesties and arrears. These ad hoc decisions based on political or other considerations will lead to major inequities and anomalies.

In conclusion, I would like to repeat that this budget is worthy of support in so far as it goes. A number of aspects should certainly be opposed by my party. If PRSI is to be introduced for the self-employed, it should be optional. However, my major criticism of this budget is that it has missed the opportunity to create the 3 per cent or 4 per cent growth in the economy which is vital. It has missed the opportunity to get in money which is available, for example through Irish Life, and it has missed the opportunity to be creative by not setting up joint ventures in the public capital programme. It has missed the opportunity to create jobs in the developmental sectors of the economy and it has missed the opportunity to reform our tax code by striking a better balance between tax on capital and tax on labour and between tax on property and tax on incomes. In that respect I would like to see the phased abolition of employers' PRSI and a major change in the particular trap which both employers and employees find themselves in in the services sector whereby they compete with social welfare rates and which is driving people in to the black economy. I am very suspicious of the changes which are being introduced in relation to corporation tax and I hope on the Finance Bill some of my detailed objections will be teased out in greater detail.

I believe that this budget marks an important step in the Government's strategy for regenerating the economy. Its consolidates and builds on the Government's achievements in their first year of office and it lays the foundation for further progress in tackling the problems facing the country.

This budget provides for measures which constitute the most significant and far-reaching package of reform in the social welfare area for a very long time. These are: a 3 per cent overall increase in weekly rates of payment; major improvements of over 11 per cent in the personal rates for those getting the lowest payments; the streamlining of the rates of payments in respect of dependent children of social welfare recipients with extra increases for those at the lowest levels; the continuation of the equal treatment alleviating payments until the end of the year; and the inclusion of farmers and self-employed persons in social insurance for old age and widow's pension purposes.

Looking back on the period of less than 12 months since we took office it is evident that the country has seen a major change for the better. Through firm decisions and a strong commitment to the national interest we have stabilised the economy and brought a new sense of confidence to investors. Significant visible and quantifiable improvements have been achieved. The broad thrust of the Government's strategy has been accepted by the people and by the major political parties. Our Programme for National Recovery reflects the general consensus on the approach that is needed at this critical time. This programme is a blueprint for the regeneration of the economy and for greater social equity in our society over the next three years.

Any programme, however well intended, will only be as good as our subsequent actions make it. While there is still a long way to go, the initial economic indications are good. Inflation continued to fall last year, the average being just over 3 per cent for the year. This was the lowest annual increase since 1967. The inflationary pressures are expected to remain subdued this year with a rate of 2.5 per cent for the year as a whole now being estimated.

Interest rates and mortgage rates have continued to ease — mortgage rates have fallen by some 3 percentage points in the last 12 months. This represents a significant reduction in outgoings for many middle-income households thereby increasing disposable income. Many families have seen a reduction of some £12 per week in their mortgage payments. This continued downward trend in interest rates will also greatly assist investment this year, with consequent spin-off effects for employment.

The targets set in last year's budget have been achieved and the Government's overall policy has wide international support. The Exchequer returns for 1987 confirm completely the success of the Government's management of the public finances. They clearly indicate that our finances have been brought firmly under control and that we can now look forward with confidence to securing a further improvement in 1988. Real economic growth and sustainable employment can only be achieved on the basis of sound public finances.

Present trends are more than encouraging and we must take full advantage of them. I believe that there is enormous potential in the economy and we must ensure that it is being used to the full. We must encourage people with ideas and ambition to put then ideas into action and we must make our economic and social system as flexible as possible so that it stimulates rather than inhibits their efforts. This is brought home to me in my work with people, especially young people, who only require a little encouragement to put their ideas into action. People, in their early twenties today are extremely knowledgeable and enthusiastic and they have an enormous potential which has yet to be fully harnessed. Government policies will enable this to be achieved. In my own area I will also be providing more flexible opportunities for people on the live register and this is something I will return to later.

On the social welfare front my first priority is to maintain social welfare payments at least in line with inflation. This goes without saying and it represents a very significant financial commitment by the Government. This year the Government have provided an extra £44.8 million for increases in social welfare and health allowance payments from late July next. The overall increases are on the lines proposed in the Programme for National Recovery with much greater increases being provided for those on lower incomes.

This year's improvements in social welfare rates are in three main areas, namely:

(i) a general increase of 3 per cent in widow's and old age pensions, unemployment and disability benefit and other weekly payments;

(ii) much higher increases for those on unemployment assistance and supplementary welfare allowance as follows:

— 11 per cent increase in the personal rate of unemployment assistance and supplementary welfare allowance, and

— 6 per cent increase in the rates for their dependent children;

(iii) streamlining of rates for child dependants so that in future there will be only two different rates per scheme — in general there are four at present.

I would like to deal with each of these in turn.

The Programme for National Recovery spells out clearly that the Government are committed to maintaining the overall value of social welfare benefits, and, within the resources available, will consider special provision for greater increases for those receiving the lowest payments. The 3 per cent general increase in rates of social welfare payments from July will more than protect the real value of social welfare payments given that the rate of inflation this year is expected to be 2.5 per cent. By bringing forward last year's increases from November to July the Government made sure that the income of social welfare recipients were fully protected against inflation up until July this year.

The general increase means that a family with three children in receipt of unemployment benefit will receive an increase of £3.10 per week giving them a new rate of £102.30 per week. A couple on retirement or old age pension will receive an increase of £2.90 per week giving them a new rate of £99.10 per week. A widow with three children in receipt of a contributory pension will get an increase of £2.80 per week giving her a new rate of £93.30 per week. The cost of this 3 per cent across-the-board increase is some £67 million in a full year.

The second element in the improvements provided in the budget is the provision of special additional increases for people on the lowest social welfare payments, namely, unemployment assistance and supplementary welfare allowance. There has been much debate in recent years about the low level of these payments. There was no doubt in my mind that the lower payments should be increased, and the Government have decided to increase the long term personal rate of unemployment assistance in urban areas to £42 per week from July, that is an increase of £4.20 per week or 11 per cent. All other unemployment assistance and supplementary welfare allowance personal rates are also being increased by 11 per cent. Overall this means increases well above the current rate of inflation. It is the first time that the position of people on these low levels of payment has been directly tackled by a Government. This is a concrete example of the Government's concern for the less well off members of the community being translated into action.

As I have said, a single person on long term unemployment assistance gets an increase of over £4 per week. A married couple with three children will get £6.70 extra per week bringing their total to £98.80. These special increases are a major step in the Government's plan to provide additional assistance for those on the lowest social welfare payments.

The third area of improvement is the rates paid for dependent children of social welfare recipients. There are two aspects to this. In the first place, we are streamlining the different rates for children. It has long been accepted that something should be done to reduce the plethora of child dependant rates. There are 36 child rates at present comprising, for most schemes, a different rate for the first, second, third to fifth and sixth and subsequent child. In general, then there are, at present, four different rates for children for each scheme. The Government have decided to reduce these to two. The rate for the first and second child will be the same. This will result in an increase for one child families. The rate for the sixth and subsequent child will be increased to that for the third to fifth child. These changes taken together with the general increase in rates will improve the incomes of large families considerably.

In addition to this increase in child rates, it has been decided to further increase by 3 per cent, the child rates for those on the lowest weekly payments, that is people on unemployment assistance and supplementary welfare assistance giving an overall 6 per cent increase in these rates. This, together with the special increase of 11 per cent in personal rates that I already mentioned, will mean a significant improvement in the position of these families.

For example, a family with two children in receipt of unemployment assistance at the long-term urban rate will receive an increase of £6.20 per week. Their present rate of £84.20 per week will, therefore, rise to £90.40 from July next.

A family with six children in receipt of unemployment assistance at the long-term urban rate will receive an increase of £9.70 per week to a new rate of £124.00. A family with two children in receipt of disability benefit will receive an increase of £2.80 per week giving them a new total of £93.00.

These examples clearly illustrate that the increases in the budget are meaningful in money terms and, therefore, will ease the financial burden on the more hard-pressed sections of our community. Some economists would have us believe that such increases cannot be afforded but this is to ignore the social reality of the present situation as distinct from the purely economic. The Government know that people at the lower end of the income distribution cannot wait for better days, and the measures in this budget show our genuine concern for them.

The overall social welfare package of improvement in payments will cost an estimated £44.8 million including health allowances, this year and some £101 million in a full year.

I would now like to say a few words about the equal treatment alleviating payments. These payments were introduced on a temporary basis in November 1986 to lessen the effect of the implementation of the EC directive on equal treatment for men and women in social security matters. Payments of £20 per week are being made to recipients where, at November 1986, both spouses were in receipt of a social welfare payment. Payments of £10 per week are being made to people whose spouse was earning over £50 per week. Originally there were over 29,000 persons in receipt of these payments. However, there has been a gradual decline in numbers with the result that at present about 19,000 people are in receipt of these payments.

The previous Government had intended that these payments would cease last November but this Government decided to extend them to the end of March. In view of the hardship that would be caused to families by the abrupt ending of these payments, the Government have now decided that they should be continued until the end of this year.

However, as part of the process of phasing out these payments they will be adjusted to take account of the basic increase in rates in July 1988. I will also be reviewing the special additional temporary payments in respect of rent and mortgage which apply to a small number of these people.

I now want to turn to the other major new development in the social welfare system which has been provided for in the budget and which will come into operation this year. This is the extension of social insurance cover to the self employed.

The extension of social insurance to the self-employed is a major milestone in the development of the social welfare system. When the unified system of social insurance was introduced under the Social Welfare Act, 1952 it covered employed people only and this has been the situation since then. The abolition of the income limit for social insurance in 1974 brought all employees, including those with higher earnings who were previously excluded, into the system and gave them the basic cover for benefits and pensions which the system provides. The fact that self-employed persons have never been covered is a major gap in the present system.

We have been exceptional by European standards in having such a large proportion of the workforce outside the social insurance system. It is a generally accepted principle of social policy that social insurance cover should be available on as wide a basis as possible to those who are in a position to contribute to it. This not only ensures that the people concerned have the protection of the system but also that the overall financing of social welfare as a whole is put on a more equitable basis. We have a system under which employees and employers contribute on a substantial basis to the cost of social insurance cover for themselves and their dependents whereas the self-employed are totally excluded from the social insurance system. This means that self-employed people must rely on means-tested social welfare schemes, which, of course, are fully paid for by the Exchequer, or in practice by the general taxpayer. This is an unfair system, both for self-employed persons themselves and for the taxpayer.

When I previously served as Minister for Social Welfare in 1982 I had developed proposals on the extension of social insurance to the self-employed. We left office before these could be implemented. The outline of that scheme was available to the incoming Government. However, in the four years which followed no further progress was made. On becoming Minister again in 1987 I asked the National Pensions Board to prepare a detailed, carefully costed report for me and in July, on the basis of my proposals the Government took the decision in principle to extend social insurance to the self-employed from April 1988. This decision was later reaffirmed in the Programme for National Recovery. I then had a series of discussions on the issue with delegations from the various organisations representing the self-employed. In these discussions careful note was taken of the views and concerns expressed and these were taken into consideration in drawing up my proposals for Government. On 14 January I received the report from the National Pensions Board and final Gopvernment approval for the introduction of the scheme was given without delay.

Thus a process which began with the publication of a Green Paper on the issue nearly ten years ago has been brought to completion within a matter of a few months. The importance of this achievement must be acknowledged.

The main focus in the debate on this issue to date has been on what the proposed scheme will cost the self-employed and the general taxpayer. I believe, as Minister for Social Welfare, however, that it is far more important to focus on the benefits it will bring. Under the scheme social insurance cover will be extended to the self-employed for old age and widows and orphans pensions. After three years a self-employed man who is married will have provided for his family an entitlement to a State guaranteed non-means tested widow's and orphan's pension in the event of his death. In the course of my political life I have seen far too many cases of widows of self-employed people left left without any independent income as a result of the premature death of their husband and being forced to have recourse to a means tested pension. The experience of these cases over the years was a major influence on me in pushing for the extension of social insurance to the self-employed. Under the proposed scheme these situations will no longer arise as the widows of the self-employed will have the same rights to a basic pension without a means test as widows of employed persons. Thus, the rate of pension payable will not be affected by the value of whatever assets they have on their husband's death and their pension payments will not reduce if they wish to obtain extra income from employment or self-employment.

Under the old age pension scheme self-employed persons will obtain entitlement to a basic pension as of right when they reach age 66. In the case of those who have never been insured before, full entitlement to a pension will be obtained where a minimum period of ten years insurance has been completed before pension age. Those already within ten years of pension age but who have previous insurance as an employed person, may also acquire entitlement to a pension under the proposed scheme as it will be possible to combine all the periods of insurance completed for this purpose.

Under the scheme proposed the self-employed will for the first time be required to make a direct contribution to the cost of social welfare pensions. It is projected that this will significantly reduce the burden on the taxpayer, not just in the early years when income for contributions will greatly exceed the benefits being paid out under the scheme, but also over the long term.

Reference has been made by some commentators to the fact that in introducing this scheme the Government are placing an extra burden on the general taxpayer and that in time the proposed new arrangements will cost the Exchequer more than continuing the existing arrangements. The National Pensions Board in their report estimated that just continuing the existing arrangements for self-employed persons who could qualify for non-contributory pensions in the coming years would cost £45 million after five years, rising to over £200 million after 25 years. The additional cost of the proposed new arrangements, however, will in fact be £6 million after five years and will not exceed £100 million in real terms at any stage within the next 50 years. It has been a major objective of the Government that the income received from the contributions which the self-employed will be required to pay will, over time, exceed the additional cost of the new scheme. The Government are satisfied that the rate of contribution set is in line with this objective.

Since the scheme of social insurance for the self-employed was announced there have been suggestions that the scheme should be an optional one, that is that people who are better off should be allowed to opt out if they chose to do so. I had considered this possibility but I came to the conclusion that such an arrangement would be totally unworkable. The essence of a social insurance scheme is that it is comprehensive and all embracing. All must contribute — the good risks as well as the bad. If the choice of opting out were to be allowed the scheme would not be viable unless levels of contribution were to be raised to a totally unrealistic level for the reduced numbers participating. The only alternative would be a substantially increased net cost to the taxpayer. I am satisfied that a scheme containing a provision for opting out would be unrealistic.

I would now like to turn to the phasing in arrangements for contributions. At a time of severe economic difficulty, the Government felt they could not impose straightaway a high contribution on the self-employed. There are undoubtedly many self-employed persons who could pay the full contribution immediately but there are many more for whom the sudden introduction of the full level of contribution would have created hardship. The Government decided, therefore, that a phasing in arrangement was essential, given the position many self-employed persons find themselves in as a result of the current economic situation. Phasing in is also necessary to enable self-employed persons with private pension cover to adjust their level of cover and the contributions they are paying to take account of the PRSI pension cover they will now be acquiring. The rate of contribution will, as announced by the Minister for Finance, be 3 per cent for the 1988-89 income tax year, 4 per cent for 1989-90 and 5 per cent for 1990-91. The contribution will be levied on income assessable for tax and the percentage rate of contribution will be subject to minimum contribution of £4 per week.

The minimum contribution of £4 per week was recommended by the National Pensions Board. It is necessary in the case of the self-employed mainly because capital allowances are deductible for PRSI purposes and self-employed persons with high capital allowances who would otherwise have a reasonable or even high level of income could end up paying a very small PRSI contribution or none at all.

Furthermore the Government have accepted the view of the National Pensions Board that it is necessary to have a system of flat-rate contributions for those whose incomes are not being regularly assessed for income tax by the Revenue Commissioners. The Government concluded that a flat-rate contribution of £4 per week equivalent to the minimum contribution would not be justified for lower income people and have set the level of flat-rate contribution at £2 per week. Smallholders on unemployment assistance will not be required to contribute to the scheme.

This is the basic outline of the new system as it will apply to self-employed persons from April next. The necessary detailed measures to give effect to the new scheme will be included in legislation which I will be bringing before the Oireachtas in the coming weeks. I look forward to a detailed discussion of the proposals at that stage and I am confident that my proposals will receive support from all sides of the House.

There are a number of other issues in the social welfare area that I would like to mention. The first relates to the family income supplement scheme which is designed to help lower paid workers with families. In line with our commitment in the Programme for National Recovery, I am having a detailed examination of the family income supplement scheme carried out in order to identify any adjustments to the scheme that may be required. Deputies will recall that we made significant improvements to this scheme last year. The present family income supplement weekly payments are quite significant. For example, a family with five children on an income of less than £192 per week could be entitled to a weekly payment of £44 per week. The effectiveness of the scheme in meeting its objectives is being examined and I expect to receive a report shortly.

Another area of significance for my Department is the national Jobsearch programme. Deputies will recall that it was in last year's budget that the announcement was made to launch the national Jobsearch programme nationwide. Prior to that it had been piloted in three locations and the results of an independent evaluation convinced the Government that it should be extended throughout the whole country. Specific targets were set by the Government in relation to the number to be interviewed and the provision of placements on schemes and courses including the Jobsearch course itself. There was no doubt last April when the new scheme became operational that the task facing the State agencies involved was a massive one. Never before had those agencies been required to organise and co-ordinate their activities to such an extent in the interests of the long term unemployed. I am glad to have the opportunity with the end of year returns to hand to pay tribute to the staff of AnCO, the National Manpower Service and the employment exchanges of my Department for their respective contributions to the success achieved.

The national Jobsearch programme has been an innovative approach to the problem of assisting the long term unemployed. Its benefits, however, go far beyond those who are out of work. It has also had a major impact on those who are in employment in their capacity as taxpayers. There have been considerable savings in expenditure resulting from this programme. The impact of the Jobsearch course on the long term unemployed has also been very encouraging. In a survey carried out last September when the programme was in full swing 76 per cent of those surveyed said they found the Jobsearch course useful, that is three out of every four, while 72 per cent said that the course gave them more confidence in looking for a job. These findings confirm the value of the scheme in terms of overcoming the particular problems of motivation, confidence and isolation experienced by the long term unemployed.

In a number of ways, therefore, the national Jobsearch programme is a major success story for this Government's initiatives for the long term unemployed. It has been of direct assistance to many thousands in their search for work; it has ensured that the manpower resources of the State are deployed in a unified and co-ordinated manner towards the provision of services for the unemployed; and it has resulted in a considerable number of people leaving the live register when offered an interview for a job or place on a manpower scheme.

The success of Jobsearch in 1987 has convinced the Government that it should be continued in 1988 along broadly similar lines. Proposals for 1988 envisage that a further 50,000 people will undergo the Jobsearch interview and that a total of 42,000 places on mainline FÁS courses and schemes will be made available on a priority basis for these and those who did not secure a placement in 1987. In addition, a further 14,000 places will be provided on Jobsearch courses, thus making a total of 56,000 places in all.

I would like now to say a few words about another initiative in relation to the longterm unemployed, namely, the part-time job allowance scheme. This scheme, which up to now has only operated on a very limited basis, is an attempt to move away from some of the more restrictive rules of the unemployment payments system and introduce a degree of flexibility for unemployed persons. It provides those out of work with an opportunity to seek and take up part time employment as a realistic alternative to remaining unemployed. The objective of the scheme is to allow those who can obtain part time work the opportunity to do so while still retaining entitlement to a basic payment of income supplement from my Department. Participants in the scheme may work up to 24 hours a week and earnings are subject to tax and PRSI in the normal way. Details of the new expanded scheme are being finalised and it will be launched nationwide in April. I am arranging to have it promoted in conjunction with the National Jobsearch programme both in the context of it being an additional option for persons to consider at the counselling interview and as an additional feature of the Jobsearch course itself. Provision has already been made in the 1988 Estimates for the proposed extension.

The basic payment from my Department to participants in the scheme up to now was £25 in the case of single persons and £40 in the case of a married person with a dependant. The Government have decided that the basic payment be increased to £45 per week for a married couple, and £27 per week for a single person.

The last number of years has seen a change in the pattern of working in the labour force; one of the most notable features in this regard has been the increase in the extent of part-time working. I believe that we need to be able to respond to such changes and I am convinced that the part time job allowance scheme will go a long way to meeting that need.

Another aspect of the unemployment payment system, where I believe we also need flexibility, is in relation to the elderly unemployed on the live register. It is a fact of life that employment opportunities for the elderly unemployed are slight and on the other side of the coin that most of them are not interested in rejoining the workforce and would already regard themselves as semiretired. In order to receive their weekly unemployment payments, they also are required to sign on once a week at a local office of my Department. This undoubtedly causes expenses, inconvenience and often hardship. I believe that we can and should do better for our elderly unemployed.

I have been considering a scheme which would allow persons aged 60 years or over who have been in receipt of unemployment payments for a certain minimum period to receive a pre-retirement pension equivalent to their unemployment payment which would be paid at local post offices by means of a pension order book. This would give them the option to receive their payments in a different way without the obligations attached to their present payments. I hope to be in a position to announce details of a scheme on these lines in the near future.

Finally, I would like to refer to another initiative in my campaign to crack down on abuse of the social welfare system. Just before Christmas I introduced a range of measures aimed at eliminating abuses of the social welfare system by employers. These include measures which deal with attempts by employers to evade their responsibility to collect and remit PRSI contributions. Most employers are exemplary in these matters and they have nothing to fear from the new measures.

However, a small but increasingly significant number of unscrupulous employers are encouraging their employees to operate in what I would call the "twilight zone". Where an employer does not deduct PRSI it can amount to a passive encouragement or invitation to work and sign. And, of course, the employer then hopes he can avoid paying the proper rate for the job. In effect, he expects taxpayers to subsidise him against the vast body of law-abiding firms and to assist him in undercutting his competitors.

This problem tends to be concentrated in particular sectors of the economy and I am embarking, in co-operation with the Revenue Commissioners on a nationwide clampdown on firms that openly and persistently try to ignore their obligations. Two weeks ago for the first time two employer directors were successfully prosecuted under existing legislation for aiding and abetting their employees in working and claiming unemployment payments.

This investigation was carried out by a new joint investigation unit comprising officers of my Department and the Revenue Commissioners. The provisions introduced before Christmas will strengthen our hand in pursuing abuses of this kind and will provide for penalties of up to three years imprisonment or fines of £10,000 or both. This new unit has already cracked down on many of these "twilight" firms in Dublin. Some of those firms would like to present an image of honesty and integrity. Some are operating as security firms; others seem to believe that they can get public moneys for work, for example, in the forestry sector while they fail to pay proper wages and to insure their workers.

Using the joint forces of the Revenue and Social Welfare inspectorates, these firms are being forced to reveal the details of their activities including the use of subcontractors.

Since the Dublin unit was set up it has detected 155 cases of working and signing. As a result fraudulent claims with a total weekly cost of more than £8,000 were stopped in their tracks. In many cases these were employees of firms that had evaded detection until the joint unit caught up with them. Many of these firms are now registered with the Revenue Commissioners and this will help them stay on the straight and narrow in the future. The unit has unearthed arrears of unpaid tax and PRSI totalling £400,000 and well over half of this has already been collected.

Over the coming weeks, I will be arranging for the reassignment of 15 staff in my Department to work directly with tax inspectors in a nationwide campaign. By this action I hope to demonstrate the serious intent behind the new legislative measures and to remove from the system the abuses in which some unscrupulous employers are engaged. This unit has been particularly successful in its pilot phase and I have no doubt that it will result in the saving of several millions of pounds once it goes nationwide with a very small number of staff.

I have outlined the developments in social welfare which have been provided for in the budget. By any standard the measures being introduced represent a very major achievement. Looking at what has been achieved by reference in particular to the report of the Commission on Social Welfare Deputies will recall the four main areas for priority attention identified by the commission, namely:

—improving the basic payment for those in receipt of the lowest payment levels;

—improving the level of income support for families;

—broadening the social insurance base;

—improving the quality of the service.

Each of these four priority areas is being addressed in a major way by the Government. I have outlined the very significant increases in the lowest rates of payment, which were provided in the budget. The streamlining of child dependant increases together with the additional increases for child dependants in the case of persons on the lowest payments represent a major improvement in income support for families. The introduction of social insurance for the self-employed represents precisely the sort of broadening of the social insurance base which was recommended by the commission.

Indeed, when we look at the money allocated in the budget we find that if we were to give the 3 per cent only to the long term unemployed and those on supplementary welfare, it would have cost in a full year £23 million. Because we have given a greater emphasis to those people on account of their very low income position the cost in a full year would be £53 million. Therefore, in effect we are giving an extra £30 million per annum to those on the lowest payments. I believe this is a highly significant step on the part of the Government and, of course, I welcome it warmly.

Finally, as far as improving the quality of the services is concerned, I have referred on a number of occasions previously to the measures which have been and are being taken to streamline and improve in a major way over the coming years the administration of the social welfare system so as to make it fairer, more efficient and more effective for users. A major element of this is the proposals for a more localised system of delivering services and the greater development of computerisation within the Department.

We are currently engaged in computerising the employment exchanges for unemployment assistance and unemployment benefit. We have already completed unemployment assistance in all the Dublin branches and the unemployment benefit has been computerised in five of the 13 Dublin exchanges at this time. We have also begun this process in Cork and will shortly be going to other centres throughout the country. Once these payments have been computerised it will make the whole system much more flexible, reduce the pressure on the staff in the exchanges and make it possible to cater more effectively and efficiently in a way in which the staff will have more time to spare for the individual clients who come in to discuss their position with them.

Computerisation in that sense can have a major benefit and can be of great assistance. It also means that many of the claims can be sorted out right at the outset by reference to the information system in the computer which can give information on the various other schemes and programmes, for instance, the number of children involved, the status of the spouse in the case of a claim where these are involved, and thus avoid difficulties and problems arising and errors in claims at the outset.

A localised service will mean that over the coming years all social welfare clients will be able to claim or obtain information on their entitlements locally. This new style arrangement will be based on the one-stop shop concept and this will give the public access to a much more comprehensive and co-ordinated service. Closer working relationships will also be established at local level with FÁS, the health boards and other agencies. The process of review of the social welfare system is an ongoing one, and in formulating further proposals for reform and development of the system I will continue to take into account the recommendations of the commission on Social Welfare.

I am interested in particular, as I have already said, in introducing greater flexibility into the system of payments for the unemployed. The developments which I have announced in relation to the part-time job allowance scheme and the introduction of a pre-retirement scheme for older unemployed people are examples of the sort of thing I have in mind. I will also be looking at the further development of the educational opportunities scheme, the voluntary work scheme for the unemployed and other measures in the unemployment payments area in the months ahead.

I believe there is considerable scope in the educational opportunities scheme and I will be discussing some of this scope with my colleagues the Minister for Labour, Deputy Bertie Ahern, and the Minister for Education, Deputy Mary O'Rourke. The voluntary works scheme offers many opportunities which so far are not being taken up and I will be consulting with the voluntary groups and bodies in the social services and community area to ensure that they know the value of this scheme and its potential for them. In that way I hope to see an improvement in the take-up of this scheme. I will be devoting a good deal of attention to it in the months ahead.

In conclusion, I am very happy with the major improvements which have been provided in this budget. The implementation of these measures will bring about a social welfare system which is more comprehensive in terms of coverage and payment levels, more responsive to those in greatest need and more flexible in the way it responds to the real requirements of social welfare recipients. Notwithstanding the current economic difficulties, the Government are ensuring that the needs of the less well off in our society are being recognised and catered for in an imaginative and meaningful way.

In speaking in this budget debate I will concentrate mainly on the provisions, or lack of provisions, for education and on how the budget leaves the education sector now that the Estimates and budget can be examined together. Before doing that I would like to comment on one or two other areas, particularly some of those mentioned by the Minister for Social Welfare. I will start with some comments in the speech of the Minister for Finance introducing the budget on 27 January when he said:

At last, there are solid grounds for optimism. For several years there has been a prevailing lack of confidence which was essentially due to the belief that we did not have the capacity or the discipline to correct our public finances, and protect and develop the economy properly in the face of severe difficulties.

That passage from the last paragraph in the Minister's speech was delivered in a sort of Messianic tone which combined aggression and fervour in equal measure. I noticed as he came to the end of his speech that the decibels ascended in direct proportion to the flimsiness of the case he was making. The Minister for Finance, the Taoiseach and their Government are well aware that the lack of confidence which the Minister deplored on 27 January was due mainly to the blind refusal of Fianna Fáil to cooperate in undoing the crippling damage they had inflicted on the financial stability of this country between 1977 and 1981. The lack of confidence was engendered by their consistent votes against any proposals for saving between December 1982 and December 1986.

I want to make a further point which I will not labour too much. If Fianna Fáil had behaved since 1982 as Fine Gael are behaving now the country would be four years closer to full recovery and a great deal of the pain which the population have to endure now from Fianna Fáil would not have been necessary. However, the greed for power was too great. It transcended the national interest, so Fianna Fáil consigned more young people to the dole queues and single tickets to Boston and Sydney because they could not bear to agree that Fine Gael analyses, activities and actions to deal with the national financial crisis were right. I must mention that because I felt the last paragraph of the Minister's speech on 27 January was unacceptable.

Taking the budget provisions, Fine Gael have already, in the speech of our spokesperson Deputy Michael Noonan, cautioned the Government on the PRSI proposal which the Minister for Social Welfare has mentioned at some length. That proposal purports to save the taxpayer money by bringing a further 230,000 people into the social insurance system. We have pointed out something that the Minister for Finance did not really bother to refer to in any detail, the calculations by the National Pensions Board about rates, about the collection of the moneys and the efficiency of collection. I repeat the call made by Deputy Noonan that there must be proof given to the Irish taxpayer that this is not a trick-of-the-loop and that a short-term financial gain to the Exchequer does not carry within it the seeds of further financial drain along the road as claimants pile up and contributions do not match them. I am not at all assured by the rather convoluted statement of the Minister for Social Welfare on this issue today. Fine Gael take this issue most seriously and we require proof that the Government have not embarked on this process in order to pacify the Irish Congress of Trade Unions in terms of the Programme for National Recovery while selling the PAYE taxpayers a false notion of equity which will only rebound on them in the end.

In listening to the Minister for Social Welfare just now, I was very interested on how many different areas he touched on. He spoke about the Jobsearch scheme which he neglected to mention was designed and launched by me as Minister for Social Welfare. I am glad that the Government are continuing that scheme, although it would be nice if they mentioned the fact that they had nothing to do with its launching. However, I believe that a very serious follow up programme should be initiated for all those who joined training courses or schemes as a result of the Jobsearch initiative. The Minister for Labour who is sitting opposite knows that there is such a serious problem of long term unemployment in this country that the Government have to consistently research and develop new ways of helping those people not only to undertake some activity but to keep activity going.

Unfortunately, I see no evidence of originality of thinking by the Minister for Social Welfare or the Government. None of the schemes either in the Jobsearch area or in the combating of abuse area is original. They were set up and initiated by me as Minister in conjunction with my colleagues in Government and also the National Pensions Board and the joint Revenue-Social Welfare task force on abuse for which the Minister has claimed such credit even in his speech. The Government had nothing to do with such innovations as the new printing systems, the family income supplement scheme, the part-time job allowance scheme and the educational opportunities scheme so rather than claim credit for many schemes they had nothing to do with, they should take very seriously the need to keep updating and progressing our enormous, unwieldly and creaking social welfare system for the benefit of the consumer, the real poor and the really needy. I hope we will see some originality because we have not seen any yet.

I wish the Minister for Social Welfare joy with the pre-retirement scheme he says he hopes to introduce. I will confess to this House that I had hoped to introduce it, too, but I ran into great difficulties with the trade union movement who did not want a situation whereby these elderly people could go to post offices for their payments or have them sent out to them. We had great difficulty with that because the trade unions within the Department would not allow that to happen. I hope that the Minister will be able to solve that problem for the sake of those elderly people who should be able to be accommodated in this way. Having said all that, I am glad that the Government have taken up the schemes and ideas we initiated and are carrying them on.

An area which was mentioned also in the budget was the new 6 per cent tax on pension funds. I notice that this is referred to as a tax and not a levy and I am glad that it was referred to as a once-off tax on pension funds. There are a great many questions which arise from that provision, questions which must concern that PAYE worker, the person who hopes he is funding his pension out of taxed income and who hopes to be able to retire in some security.

Does the 6 per cent tax on investment income include realised capital gains? That is one question that should be answered. How are capital gains to be calculated — from the date of legislation or from 1 January 1988? These are questions which people are asking and a great many firms and pension fund managers started to ask them as soon as the budget speech was over. Will capital losses be allowed against this 6 per cent tax and, if so, from what date? Has this scheme been fully thought out or is it half thought out? Who will be responsible for paying the tax — will it be the trustees of the pension funds, the investment managers or insurance companies?

An interesting sidelight on the question of taxation of pension funds is that, of course, the Government do not fund their pension system. The Government behave as we do not expect pension fund managers to behave. The Government pay pensions out of current spending whereas the pension fund managers who have been so responsible as to fund their pension liabilities are going to suffer now because they are going to be taxed on having built up those funds while successive Governments have not made such provisions and have left themselves in great difficulties which are growing because they were not so provident. I am sure that when pension fund managers consider that irony they must consider it a bitter pill to swallow. Naturally the pension fund managers are asking if this is a once-off levy. If it is not, there will be considerable dangers, for example, it would increase the cost of funding the pensions. That would initially affect companies but, of course, it will all come back to the PAYE worker who will be affected — either his pension will be less or he will pay more for his pension. Those are more questions which have to be answered.

In the prospectus which sells Government stocks, the Minister for Finance states that any appreciation of stock will be free of capital gains tax. That is held out as an attractive carrot for people who are investing in Government stocks. Is the Minister, as a result of putting a 6 per cent tax on pension funds because many pension funds invest a gilt edge stocks, proposing to default on that undertaking which is stated in the prospectus for selling Government stocks? That is an extremely important question and will, of course, affect people's views on buying Government stocks. Those are a range of questions on the 6 per cent tax on pension funds which I hope a Government spokesperson will come into this House and answer very shortly during the course of this debate. I do not know why we have debates if Government spokespeople do not come in and answer the questions that are raised by other people. Those are very clear questions which are now on the record and I ask that they be answered very shortly by a Government spokesperson. I do not expect the Minister for Labour to answer them immediately because I have only just asked them but I would like to be answered very soon.

I would like to turn to education. It is an area which, with over £1 billion expenditure, is central to any budget discussion. I am afraid I have to say that a complete mess was made of it in 1987 and continues to be made of it in 1988. The record of the Government in the education area since the publication of the 1988 Estimates in October is one of blunder, confusion, and retreat. They have retreated already in three areas: primary school cuts, school transport cuts and school building cuts. It now looks as if another retreat on vocational cuts is underway and all of these retreats have already apparently cost us over £20 million. We are seeing now the bitter results of decisions which were made last summer and which have caused massive disruption and discontent. They have done so because they were fundamentally wrong decisions and the Government refused to listen to this when it was pointed out immediately the Estimates were published. They were identified clearly by Fine Gael and other parties as being wrong decisions. The cuts brought the parents of this country out into the streets in unprecedented displays of anger. When these cuts were brought to the Floor of the Dáil they resulted in the first defeat for the Government.

The budget has belatedly attempted to correct one or two of these mistakes while the Taoiseach continually steps in to persuade teacher unions to come to the discussion table and uses yet another review group as a carrot. Since the Government came to office we have seen the establishment of no less than four major bodies, committees, commissions or councils. They were the Curriculum Advisory Council, the Primary Curriculum Review Body, the Primary Quota Review Committee and the Review Body on Primary Education. Now there is talk of another new body on post-primary education. This is making a joke of education policy and planning. The decent, concerned people who have been invited to sit on these bodies are being asked to mop up after the unholy mess created by this Minister and this Government since they took office. It is time to take a hard look at what is going on in Marlborough Street. It is time to get a steady hand on the education tiller before more damage is done. It is time to see if the present political leadership in education is capable of putting right the damage already done and of bringing forward the kind of dynamic education policy which is so desperately needed. The signs in those areas are all negative.

In his budget speech the Minister for Finance was selective. He referred to £6.5 million being restored to school buildings. The Minister was told long before the budget that he could not strip all school building money out of the Estimates as it would not be possible to have people in rat infested buildings which needed emergency repairs. The Government would not listen and finally when many schools had despaired they restored the £6.5 million. The Minister was too shy to mention the £3.8 million restored to school transport. Presumably that was because he did not like to sully the record with a reminder of the incompetence of the Government in deciding to cut £6.5 million from school transport in the summer of 1987. That decision was taken without the faintest idea as to the policy decision needed to back it up.

I asked many Dáil questions about this since it was announced in October and I got total evasion. For example, I put down a question on 3 November, following the failure of the Minister to answer questions in my Estimate speech of 21 October, and the Minister told me on 3 November that she was finalising the proposals for using the £6.5 million and that they would be circulated very shortly. Of course, they were never circulted because there never were any proposals for saving £6.5 million. It was quite clear that even by 3 November the Government had not realised the implications for parents and children of the £6.5 million, even though the implications had been pointed out to them by me on several occasions and by others who understood the school transport system better than the Government.

Fianna Fáil did the same thing in November 1982. If the Minister opposite will cast his mind back to the Book of Estimates then published he will remember that it announced a cut of over £2 million for school transport and there was no policy decision then either. In their usual manner Fianna Fáil turned around and bluntly opposed the measures and policy decisions made by the incoming Government in order to reach their financial targets. That set the tone of Fianna Fáil Opposition for the following four years.

In his budget speech last week the Minister did not mention that more than £4 million has been taken from the teachers pay bill at post primary level for 1988 as a result of the unexpected savings in 1987, so the vocational, community and comprehensive schools are facing the threat of losing hundreds of teachers from September 1988, because the Government seem to be pursuing that cut — or are they? We do not know. Last Sunday's and Monday's newspapers make interesting reading. Side by side with the accounts of an angry and worried 12,000 vocational school parents descending en masse on Athlone, there were reports of the Taoiseach going to meet anxious union leaders in vital talks to discuss problems arising from the proposed changes in the pupil teacher ratio. No wonder the Minister for Finance did not mention teacher pay in his speech. He must be aware that another fudge is coming up as a result of Cabinet bungling in education. Should we add back another £3.8 million to the pay provision at post-primary level, or is this budget for real? It would be infinitely preferable if the Government would now announce that they could find £4 million in “a better way” before the country and their own backbenchers are once more thrown into chaos and confusion.

On the primary side, all the committees, commissions and councils in the world will not tell the ordinary parents and taxpayers one simple thing. Is the £6.3 million which is to be saved from the application of Circular 20/87 in or out of the budget? Is the primary sector to lose about 1,000 teachers from July 1988? Here we have the prime example of stupidity. The Taoiseach trumpets to the world on 22 December that there will be a total review of the primary sector. The INTO, happily for the Taoiseach, climb on board. The country assumes that Circular 20/87 is effectively buried. But, in another part of the forest the Minister for Finance is giving an interview to Business and Finance on 17 December where in his usual “not an inch” style he announces, referring to Circular 20/87:

We will see the whole thing through to June next, and it will take effect as from September.

We will hold the line...

——and much more in that vein. The Minister also said in relation to Circular 20/87:

... when we talk about deferral to June of its implementation, that is only deferral of putting people on panel. Nobody is going to be out of a job ... until September next, the beginning of the school year ... We have that much time to ensure we are getting the savings that we are looking for on this particular section of the Budget estimates.

And if we don't, we have said quite clearly that they will come from other areas.

The Minister for Finance said one thing, the Taoiseach, the INTO and the parents are saying another. Who is telling the truth?

Just before the budget the composition of the latest review group — the Taoiseach's brainchild — was announced on 22 January and it is to be chaired by the much respected Dr. Thomas Murphy, a man I have known for many years. I do not envy him the job he has undertaken. How can he read the mind of the Taoiseach or the Minister for Finance? It is clear that the Government or perhaps the Taoiseach are giving an impression to teachers and parents that Circular 20/87 has been safely seen off the premises, or will be so watered down as to have virtually no effect and, so, the 1,130 teachers who have applied for voluntary redundancy either will not get it or will be replaced. Are we to assume that somehow another £6.3 will be found and, if so, how? Does this budget stand up at all?

No time limit has been set for the primary review. The teachers journal Turascail tells us clearly that the review body will make a progress report before Easter 1988 and that it will report not to the Minister for Education but to the Government. However, yesterday's Irish Times said that the review could take up to two years and that it would allow the circular concerning the increase in class sizes to be suspended indefinitely.

In that same article we are told of yet another review to be launched, one on post-primary education. In another report on the same page of The Irish Times— somebody was very busy giving that paper much interesting information — we are told the Taoiseach is to meet the teachers' unions and what is he going to discuss? The pupil-teacher ratio. We have a type of dance of the seven veils — now you see a cut, now you do not. The Minister steps out, the Taoiseach steps in. Who is running Education? Is Education running at all? While all these groups and commissions fall over themselves clearing up the Government's embarrassment, while the Minister for Finance squares up to the Taoiseach, the desperately needed reforms and initiatives go by the board and nothing is happening in Marlborough Street.

In the crisis in third level, who is taking initiatives there, while the Minister tries to placate, justifiably I am afraid, the parents and teachers? With regard to the crisis in language learning, while Europe approaches full economic integration in 1992, four short years away, where is the new thinking, the new European dimension in mobility, the tools which will help us to take advantage of the market of 350 million people on our doorstep divided from us by language? It has been raised by more and more Irish educators, most recently by Mr. Pat Diggins in a very interesting paper which he gave in Cork. It was also raised by the President, Edward Walsh, of the NIHE, Limerick. It has also been raised in the British education system. We are not the only country deeply concerned about this issue. The British authorities are extremely concerned about the need there for an initiative in language learning.

What is happening in that area? The Minister, in a parliamentary answer to me recently, did not accept that there was a problem. When will she remove the barriers which stand in the way of economic and scientific research and development in the RTCs? When will the chaos surrounding third level entry requirements be resolved by introducing one CAO system so that all the leaving certificate students can apply on one form for any third level place? There was a committee working on that issue when we left office. What happened to it? Who will force the third level colleges into fuller utilisation of their buildings 12 months a year, in order to alleviate the numbers crisis? Are the Minister and the Government happy to see the initial flow of our brightest and best to English colleges grow to a flood? There is so much to be done. The record is disastrous this year and the budget does nothing to alleviate it. Targeting the weakest and the poorest has been shown to be not only grotesque, as I have said before in the context of a general wage increase given to public servants, but the Government have also shown themselves to be flat-footed in trying to undo the damage.

I had hoped the budget would provide the opportunity for the Government to restore the status quo in the PTR at both levels, so that all this confusion would be put aside and we could see a Minister for Education actually doing what a Minister is supposed to do — directing and developing a progressive education system. We have not had such a thing since March 1987. The education world has taken a broad range of major cuts. It has taken most of them on board and has not complained. It has accepted most of these very swingeing cuts which were dealt out to them in March and particularly in October. They have decided responsibly to put up with the worry and difficulties caused by most of these cuts in the national interest but there have been a few which were serious mistakes, were unacceptable and contradicted not only educational good sense but the Government's own aspirations as set out in the Programme for National Recovery which promised in the education sector that the disadvantaged would not bear the burden of financial adjustments. They proceeded, five days later, on 13 October, to contradict that and flout it in its very essence.

I hope the Government are most carefully examining other proposed cuts which may have carried great threats within them. I am very concerned, for example, about the effects on the small Church of Ireland schools which may lose so many teachers as a result of being reduced to five years that they may have to close. We all know that the Church of Ireland Bishop, Dr. Caird, is not a man given to hyperbole or exaggeration. He has made his position of extreme concern very clear. We must remember that in small rural Church of Ireland schools lie the only hope for very many people of very low income to have their children educated in their own religion. That is one area that is of extreme concern and it should be carefully looked at.

The year 1988 begins with education in turmoil, with no policy initiatives of any kind on the horizon. It is, unfortunately — and I am sorry to say this — one of the failure areas of this Government and it is too important to let that failure continue. I repeat my call for a steady hand and a clear head in education before it is too late to undo the damage which has been done. I wish I could have made a budget speech which would have been more positive and that I could have been able to look on the bright side of education but given the confusion which exists now, the duplication of effort, the crossing of lines, the Cabinet splits, there is nothing very much in a positive line that one can say. I hope this Government can clear up this mass of confusion very shortly so that education can be put back on a steady road to progress.

The budget prepared and implemented last year by this Government, immediately after they took office, represented the essential starting point for economic recovery. We not only ensured that we kept within the allocations laid down in that budget; we went further and published the Estimates for 1988 in October last — the first time ever that that was achieved — well in advance of the current financial year. The negotiation and ratification of the Programme for National Recovery represented a further step towards restoring the country to economic health. The budget we have now framed is consistent with both those steps and with the 1987 budget which first outlined this Government's strategy. It has involved tough decisions in the national interest. It is responsible and constructive and it faces squarely the challenges posed by continuing high unemployment.

Already, the commentators have been unanimous in recognising that the Government's strategy is firmly on course. Each careful step has taken us some distance away from the precipice we faced when this Government took office last March. The problems of the economy are being tackled. This has led to the restoration of confidence in our being able to work towards a better future, increased employment and improving living standards.

In response to the Government's determination to take the necessary action to restore order to the public finances, the social partners took an unprecedented step in shaping a consensus on the measures which have to be taken to tackle our current economic and social difficulties. This Government have held firm in their commitment to the resolution of these problems through partnership and co-operation.

Consensus is not an easy option. It is never on tap, to be turned on when it is needed. It has to be worked at. It calls for constantly renewed efforts on all sides in order to moderate sectional interests and to combine our energies effectively to surmount new difficulties. It is clear that at each critical stage so far the strategy has held firm. This budget has been seen as further confirmation of the Government's willingness to fulfil their commitment and to extend and strengthen that consensus.

An important part of building consensus is to ensure that a consistent strategy is being implemented in all areas. I would like to take this opportunity of considering this budget in the light of the implementation of the Government's strategy in relation to developments in the labour market; the special employment and training programmes to assist the unemployed; the promotion of necessary changes in industrial relations practice and procedures, and the kind of measures needed to encourage companies to realise the potential of their employees at management and shop floor levels. The Government are taking action in all of these areas which will help to create sustainable employment in the future.

The last year saw a levelling off and even a slight decline in unemployment after years of steady increases. The seasonally adjusted live register in December 1987 was some 5,000 lower than in the early part of the year. Youth unemployment fell from 76,600 in December 1986 to 71,100 in December 1987. We are not resting, as the previous Governments did for so long, on the weary recitation of quarterly changes. We have taken action which will go straight to the root of the problems of youth unemployment and of long term unemployment among adults.

One of the most disturbing features of unemployment in recent years has been the even more rapid rise in long term unemployment. For this reason, I am particularly pleased that the figures showed a fall in the second half of last year. Between April and October, the number of people who were registered as unemployed for over a year fell by some 2,400. This shows the effects of Government measures such as Jobsearch, which was introduced to increase the assistance given to the long term unemployed under employment and training programmes.

We have provided significant increases in social welfare payments for people who are long-term unemployed. The higher increases in long-term benefits are a direct response to the plight of people living on unemployment assistance, the majority of whom have been out of employment for more than 15 months. These elements of the budget have been readily acknowledged as a significant step towards the implementation of the social equity provisions of the Programme for National Recovery.

Programmes for the unemployed have been given a new impetus and a clear priority within FÁS. This is particularly the case as regards the long-term unemployed. Despite the tight financial strictures which have necessitated a reduction in the overall Exchequer allocation for the training and employment services compared with 1987, we will be able to increase the activity levels in respect of this group in the coming year.

Deputies will be aware that the Labour Services Act, 1987, replaced AnCO, the Youth Employment Agency and the National Manpower Service with a single organisation, FÁS, with effect from 1 January 1988. I have asked FÁS to develop their programmes in two broad directions and I have had a number of meetings with their executives on these matters.

FÁS will facilitate, to the greatest degree possible, access for unemployed people to the jobs that are available, and to the wide range of options involving training or places on employment and enterprise schemes. I have told FÁS that their priority task is to provide programmes for those people who by reason of their educational disadvantage or long duration of unemployment have particular difficulty in obtaining suitable work or training. The great bulk of their resources and their activities as a programme provider will be devoted to the needs of the long-term unemployed and of those young entrants who experience particular difficulties starting out in the labour market.

I have also told FÁS that they should encourage employers to adopt a more positive approach toward training and towards bringing about an increase in the amount of training carried out in industry and in the services sector. The budget strategy reflects the Government's view that economic activity must not be overreliant on the State.

There is always the danger that State aid can lead in the end to substituting for what employers would otherwise have done themselves. It has been suggested in some quarters that State support for apprenticeships has produced this effect. It is now widely accepted that a radical new approach to providing craft training is necessary to meet the demands of modern flexible career patterns as the pace of technological change increases. We all have a responsibility to ensure that the economic recovery which is within our grasp will not be held back by any problems in ensuring the availability of a skilled and adaptable labour force.

The main purpose behind the establishment of FÁS was to provide a more co-ordinated and integrated approach in our manpower services. I have, accordingly, asked the organisation to provide me with an early indication of their proposals in four main areas.

First, how they propose to improve the delivery, content and cost-effectiveness of training and job creation programmes. I want this examination to include an examination of whether or not each existing programme should continue, or be reduced, modified or abolished. Secondly, what needs to be done to rationalise existing programmes and to ensure no unnecessary overlap as regards target groups, objectives or design. Thirdly, whether we need to do more to ensure greater public awareness of programmes and, particularly in the case of young persons and the long-term unemployed, accessibility to programmes best suited to their needs. Finally, I have asked FÁS to develop an integrated set of services to encourage enterprise having regard to the progress being made in reorganising other State agencies and in rationalising aids to industry so as to maximise their effectiveness in terms of actual employment creation.

I have also set out to ensure that FÁS will proceed to develop their services with maximum responsiveness to the needs of different regions and localities. This will involve the full integration of all employment and training services at regional level. In Dublin city, for instance, where I recently opened the new FÁS public inquiry offices, a fully integrated programme of services is being assembled to help the programme of development for the new Custom House docks area and to ensure that local people get the maximum benefit from the job opportunities which will become available.

In their endorsement in principle of the NESC Report Strategy for Development 1986-1990 and again in more concrete terms in their agreement to the Programme for National Recovery all the social partners have recognised the particular need to consider the position of the disadvantaged. Our general economic strategy must be directed to the creation of an environment favourable to job creation and sustained economic growth. Policies and programmes for the long-term unemployed must be developed within this context.

The provision of funding for special employment and training programmes continues to place a heavy burden on the Exchequer, even with the assistance available from the European Social Fund. The Government have shown their commitment, however, to ensuring that scarce resources are directed to those most in need. For those without jobs, the priority is to provide assistance which will help them in securing a foothold in the labour market.

The establishment of FÁS marks a major step forward in our efforts to assist those who have been out of work for more than a year. They will undertake to provide a cost effective approach to meeting their needs. The objective of social equity which is central to the Programme for National Recovery clearly calls for the development of a broad policy framework within which to address the problems of long-term unemployment rather than continuing to modify or extend the present patchwork of schemes.

The scale of the problem calls for a careful assessment of the factors which contribute to long-term unemployment. The Jobsearch process has helped to sharpen our appreciation of these factors. It has proved a useful stage before proceeding to take radical steps in programme design.

Recent experience in this regard has also influenced our approach to the future of the European Social Fund, in the context of the reform of the Community Structural Funds. We have had to emphasise the importance of the social dimension in rehabilitating those who have been caught in the trap of long-term unemployment. Clearly, income maintenance is not a sufficient measure of social solidarity. We need to harness the commitment of employers, trade unions and local communities in order to increase the range of employment opportunities available to the unemployed. Above all, the sheer cost of pursuing these intervention measures to redress the problems of the long-term unemployed underlines the need for measures which actually prevent people from falling into that category altogether.

It is perhaps not sufficiently realised that about 6,000 young people — about 10 per cent of the school-leaving population — finish school each year without even the most basic qualifications. We have plenty of evidence to show that there is a relationship between educational qualifications at the time of leaving school and subsequent experience in the labour market.

Those with the lowest qualifications and with none at all are most likely to become or to remain unemployed. That lesson is highlighted each year in the annual surveys of school leavers. The problem categories continue to fare badly in later years. A number of surveys have found that early and unqualified school leavers are heavily represented among the unemployed and the long-term unemployed. I set out in recent months, together with my colleague Deputy Mary O'Rourke, Minister for Education, to examine this problem in depth, responding both to the spirit as well as the letter of the Programme for National Recovery.

There are many inter-related reasons for educational disadvantage. While there are limits to the extent to which the education, training and employment services can address all those causes, we need to do a great deal more and we need to do it better. The agenda for a better opportunity for early school leavers which we hope to announce in the near future will be based on four major themes—

— targeting our limited resources at the schools and pupils most in need (in primary and second level junior cycle);

— taking preventive action within the school system at the earliest stage;

— ensuring that programmes devised for those who have left and will continue to leave school early are sufficient to provide adequately for transition to adult and working life;

— achieving greater coherence between the programmes of the Departments of Education and Labour, which has been a problem for a number of years.

In the absence of systematic support along these lines up to now, too many vulnerable and disadvantaged youths found themselves unemployed at the end of six months training or, at best, moving in and out of a series of unstable jobs.

The allocation for DION — the Advisory Committee on Welfare Services Abroad — will be maintained this year at £250,000. The 1988 allocation has been maintained at the new level set by this Government last year when it increased the allocation significantly above the level of £155,000 set by the outgoing Administration. The action taken by the present Government has been acknowledged by the Federation of Irish Societies, whose representatives I have had the opportunity to meet with in Dublin and in London in recent months.

In addition to the DION grant, assistance is also being made available to the Irish Centre, Camden Town, London, through the community youth training programme to help renovate the premises to provide a drop-in centre for elderly disadvantaged Irish people and also to provide meeting rooms for young people. The completion of the project this year should result in a significant improvement in the facilities available at the centre.

Since I took office as Minister for Labour, I have made it clear that I am anxious to improve the flow of information to intending emigrants — particularly those young persons who have given the matter little thought and who may have an inflated idea of both the work and the support services available to them abroad. In the last year I launched a publicity campaign featuring a new leaflet and posters informing people of the information and counselling facilities provided by FÁS — done formerly through the network of National Manpower Service offices — and indicating the sources from which help is available for those who find themselves in areas like London and other British cities. I have asked the board of FÁS to examine the problems in this area and the scope which exists for taking effective preventive action directed to those young people who are likely to encounter harsh experiences abroad.

As many young people still seem to make very unrealistic assumptions about the living and working conditions facing them in Britain, I intend to bring to light the work of many of the voluntary bodies who deal with the welfare problems of Irish people by releasing an annual evaluation of their efforts prepared for me by DÍON.

I have already mentioned the positive effects of the Jobsearch programme in terms of reducing long term unemployment. As Deputies will be aware, my colleague the Minister for Social Welfare, who has contributed already to this debate, retains overall responsibility for this programme.

I wish to highlight aspects of the programme which affect the operations of FÁS and which have yielded interesting results in terms of how the effectiveness of employment programmes can be assessed. After candidates are identified initially by the employment exchanges, FÁS becomes involved in interviewing them and in providing them either with access to the jobs that are available or with a wide range of options, including training, a place on an employment scheme or the chance to start a business for themselves.

The savings which will arise from the Jobsearch programme in 1988 have already been documented. What has not been significantly emphasised — indeed it has been shouted down by the begrudgers — is the extent to which many of the participants have responded positively to the opportunities which have been provided. Let us look at the results.

Jobsearch is a mechanism which helps us to target our programmes on those most in need. A good illustration of that targeting is the fact that almost 50 per cent of participants in 10,000 Jobsearch courses were two or more years unemployed and 35 per cent, one of every three, were unemployed for three or more years. High levels of satisfaction have been expressed with the content of those courses.

The results we have got from our evaluation of the programme have clearly established its value for participants. Problems have been identified and, where aspects of the programme did not draw positive responses from some or all participants, they are being examined and, if necessary, will be redesigned.

The Jobsearch programme has achieved more than any previous initiative in breaking down the barriers between social welfare policy and labour market policy. It has succeeded in a way which will help us to plan a range of initiatives reflecting more effective policies and an improved capacity to assist the clients they serve.

I would like to refer at this stage to the important contribution which the European Community can make to our national recovery efforts, through the European Social Fund for which I have been entrusted with individual responsibility by the Government. The Social Fund, which provides assistance for programmes of vocational training and job creation, is of major significance in maintaining current activity levels on training and employment schemes.

In 1987 we received payments amounting to £193 million from the fund, our highest ever figure for one year. In the coming years we would hope to increase our receipts from the European Social Fund substantially. The Social Fund — as one of the structural funds of the EC — is about to undergo a major reform as part of the Delors plan for implementing the provisions of the Single European Act.

One of the proposals which will come before the European Council next month is for the doubling by 1992 of the resources from these funds to be committed to the poorer or less-developed regions of the Community, including Ireland.

It is also proposed that the rate of assistance paid by the funds to the less developed regions be greatly increased. This would enable us to expand our training and job creation programmes substantially, without putting additional strains on the Exchequer, a major consideration in our present difficult situation. The major elements of the Delors reform package should be the subject of agreement by the Heads of Government at the next Summit. At that stage, the Ministers for Labour will have the task of deciding how the European Social Fund will operate in detail.

In those discussions I shall be pressing the Council of Ministers for a special rate of assistance for employment schemes, such as the social employment scheme which, up till now, have received a much lower rate of assistance from the European Social Fund than vocational training schemes. This approach is justified, given the numbers of long term unemployed we have and the need to give them special assistance. Modern intensive approaches to vocational training are extremely costly and are unlikely to meet the immediate needs of those who have been out of work for an extended period of time. We need more flexibility in the range of measures we can use to assist this category.

New pay increases in 1988, in accordance with the private and public sector agreements associated with the Programme for National Recovery, should not exceed 2½ per cent. Even allowing for carry-over from existing agreements and the effects of movements in exchange rates, particularly the dollar, there should be a significant improvement in our competitive position vis-á-vis the UK and, at a minimum, broad stability in relation to other EMS countries. I believe it is essential that there is general adherence to the terms of the agreements. What is at stake is a significant gain in cost-competitiveness which can be translated into greater job security for those in employment and improved prospects for job creation.

The changes in personal taxation which this budget has provided, particularly the broadening of the 35 per cent tax band, have been widely acknowledged as a step in the right direction. They will significantly increase the real value of the pay increases provided for in the public and private sector agreements and improve work incentives. The prospects for the smooth operation of the programme itself have been enhanced by the combination of these tax reductions and an inflation rate of 2.5 per cent.

We need to ensure that our capital and our human resources in both the public and private sectors are managed well. An enormous responsibility for the future development of our State, therefore, rests on all who perform a managerial task, and the numbers here are sizeable.

We have never examined our approach to management development in any comprehensive and systematic way. This will be rectified during the course of the year when I receive the report of the Advisory Committee on Management Training, which I established last year. Management development is a continuous process and calls for major efforts by our businesses, our individual managers and the State education and training institutions.

Securing improvements in our approach to industrial relations is an important objective of the Programme for National Recovery— here I quote from Section VI, paragraph 5 which commits us to holding discussions about:

... changes in industrial relations which would provide a better framework for collective bargaining and dispute settlement and help to create conditions for employment generating investment.

There are three points I want to stress about these discussions. First, I want them to conclude reasonably quickly. I am talking of weeks and months rather than years. There is little point in conducting endless discussions — as did all of my prececessors since 1906 — in search of an elusive consensus.

Second, I am prepared to adopt a pragmatic approach and aim to secure a package with which both sides can live, and which is of practical benefit to the community generally, rather than pursue some unattainable ideal. Third, I intend to publish a Bill this autumn in the light of discussions which have already started. Hopefully, these discussions will conclude — in the spirit of the programme — with broad consensus on the action which needs to be taken. If this consensus does not emerge I will have to decide on the best package to put to the Government.

The industrial relations environment is changing. This is partly a reflection of the changing labour market. This pattern of change is apparent in the continuing reduction in the annual incidence of strikes and in the numbers of work days lost as a result of industrial disputes.

My Department counted a total of 76 strikes which commenced in 1987, of which 22 were the result of unofficial action. The number of work days lost in 1987 was 260,000, of which 25,000 or approximately 10 per cent — were through unofficial action. The 1987 figures reflect the steady decline in the incidence of industrial action. In 1984, for instance, there were 191 strikes, of which 75 were unofficial. The reduction in unofficial strikes is a very positive development.

It is a trend which I hope will be further strengthened in the lifetime of the Programme for National Recovery. The changing environment of industrial relations in Ireland behoves us all — Government, employers and trade unions — to ensure that our procedures and practices are attuned to the needs of a modern industrialised economy and to our common objectives of consolidating employment and boosting job creation.

With a view to ensuring that our employment laws are better explained and understood, I have recently had a new "Guide to Labour Law" prepared which provides in one booklet a description, in a straightforward and non-technical manner, of the main provisions and procedures of the various Acts.

I would also encourage employers to use the information service which has been established to assist employers and workers in understanding employment regulations. In 1987 about 40,000 inquiries were handled on subjects such as redundancy, holidays, dismissals, wages, minimum notice and maternity leave.

I believe that our experience of the administration of legislation has shown the need for changes to keep pace with developments elsewhere in the economy. I selected three areas of employment law for priority review — unfair dismissals, employment equality and payment of wages. These formed the subject matter of a discussion document which was published at the end of November. I am at present awaiting submissions from interested parties on the issues raised in the discussion document.

In this instance views are being sought from a wider audience to ensure the greatest consensus possible on how to proceed further. In examining submissions and in considering future changes I will be guided by the desire to strike a balance between the need to safeguard workers' basic entitlements in employment while, at the same time, recognising the need for flexibility to enable firms to improve their competitiveness and to keep pace with technological developments.

The legislative proposals on worker participation at sub-board levels contained in the Bill to be taken in Seanad Éireann this week complement the thrust of my Department's efforts to translate into new legislation the recommendations of the Barrington Commission on reforming our approach to safety and health at work.

Both of these areas feature on the agenda for legislative change outlined in the Programme for National Recovery. Initiatives in these areas will strengthen the response at enterprise level to the principles on which the programme is based — namely the recognition that greater employee involvement and an acceptance of responsibility by all concerned can contribute significantly to improving the efficiency and the competitive edge of our organisations.

The economic future of this country and the future of those in employment and of those unfortunate enough to be out of work at present, depend on this Government keeping their nerve and seeing their policies through to a successful conclusion, however unpopular this may be with some people.

The most difficult decisions have been taken and the major sacrifices already made by the people of this country. It has not been easy — the problems we faced ten months ago were too deep-seated to permit of easy solutions or soft options. We still have some way to go but I believe the worst is over. The signs are there in the 1988 budget that this is so — for those who want to see them in it!

The combination of unavoidable expenditure cuts, reduced borrowing and moderate pay increases under the pay agreements, augmented by moderately improved incentives through the income tax band changes, should restore confidence, improve competitiveness and encourage initiative. This is the only sure foundation for growth in sustainable employment. That is the objective of the whole painful exercise. The people of this country, generally, see this and, despite the discomforts, accept our policies.

They know that, in our circumstances, the tired old prescriptions about spending our way out of our difficulties are a recipe for disaster. If they worked, we would not be in the difficulty we are now in. It can only lead to more disastrous unemployment levels in the longer term. We are on course; this budget shows that the people realise this; so I am glad to say do the great majority of this House.

There are many other areas of the budget that we could usefully go through, but I am touching on those in regard to employment and the incentives that are there. We will see that with the economy being primed and some difficult decisions being taken, there will be growth in employment and less closures in 1988 than we have had in the past ten years. A major tackling of our huge unemployment problem will lead the way to a final recovery. That is the only solution and, hopefully, 1988 will see a change particularly in the fortunes of the unemployed.

I welcome the opportunity to say a few words about the budget. In the few days which have passed since the budget was introduced on 27 January one has had an opportunity to analyse more carefully the implications of the budget, the trickling down effects of its contents for the economy and perhaps, most important, the strategic omissions.

The aspect of the budget I am most concerned about is the omission of an industrial strategy in pursuit of jobs. The whole debate on public expenditure in recent years in the country and in this House has increasingly focused on the somewhat sterile activity of seeking to balance the national books. Important as that is, we should always bear in mind that that is not an end in itself but a means to an end, the end being some form of management of our resources and fulfilment of the aspirations and expectations of the people of Ireland. In other words, the budget is not simply a fiscal statement; it is not merely an accountancy exercise. Whereas I commend the Government on having achieved targets in the vital area of public expenditure and made progress more rapidly and more substantially than any previous Government or any previous Administration often in the face of hostile opposition, nevertheless, there are aspects of the presentation of the budget which leave one to wonder whether or not some of us missed the point a little.

I am concerned, for example, that all of us embarking on and engaged in the form of consensus which has developed in this House relating to managing the size of borrowing and the public debt generally might miss the point, particularly in relation to those who are less articulate and less organised than some of our peers. I would say to the Government that, provided they have analysed carefully the merits of cases being presented, they should stand firm against lobbies and groups who pursue merely a sectional interest. That is not to say they should say no to them all but that they should be evaluated on the merits of their requests and not on the strength or obstructive capacity of their numbers. It would be reasonable for the Government, in those circumstances, to expect support from every other right thinking person in this House who believes the national interest should come first.

However, the language contained in the budget was little short, on one or two occasions, of being slightly gloating, though I have to allow the Minister for Finance some degree of self-satisfaction in achieving, broadly speaking, targets which many political commentators derided him for aspiring to less than 12 months ago. I am mindful, representing as I do large numbers of people who believe that whatever way the books are balanced they will be at the end of the pile, that the fundamental challenges of creating work and creating an environment in which people can realise the aspirations to which they are entitled and tackling the fundamental problem of poverty in our society are not being dealt with.

Therefore, the budget, particularly in the context of representing broadly a shift from direct to indirect taxation, is, to a substantial extent, little more than moving one column of figures into another column in terms of the public accounts and Government expenditure generally. In other words, I am particularly mindful of the fact that it is not adequate for us in this House simply to deal with budgetary strategy as if it was mere accountancy. I do not want to be negative or less than generous in saying to the Government that there are many people who applaud what they are doing in broad terms and believe that the strategy they are pursuing, even if it represents a complete turnabout to what they said before the election — and leaving that aside because it is very much a side issue as far as public perception and public interest are concerned — is the right one.

I think the Government are making a number of mistakes. First, I believe they are not honestly dealing with the fundamental challenge of generating an industrial climate which will create work. Second, it seems that very much of what is in place is being allowed to continue in terms of industrial incentive and existing structures. Third, the Government are not tackling the problems of tax reform.

There is no point pretending that the optical illusion of a slight reduction in cash terms for the PAYE sector, which has the net result of increasing the income tax take by over 1 per cent, is some form of tax reform. It is not, and it is not right to pretend it is. Tax reform is making a fundamental change in the way tax is levied and in recognising the disincentive effect which brutal levels of taxation have particularly on those people who are generating employment, despite the most hostile tax environment in Europe. That area of tax reform has not been tackled and I have no doubt it would be relatively easy to develop a consensus in this House in that respect. Whether it is because the Government have not had a chance to look beyond the figures or that they are happy for the time being to do a different type of exercise, I am not clear, but those fundamental areas have not been tackled in the budget. To that extent, this is a matter of regret because one anticipates from a new Government a fresh and fundamental approach to reforming public expenditure.

Today we nodded through the 1986 report from the Comptroller and Auditor General which was virtually a reprint of the mistakes, duplication, waste, inefficiency and fraud that appeared in previous similar reports. The point is that the systems which are in place in terms of spending public money are similar to the systems that were in place last year and the year before. There are opportunities there of radically overhauling our systems of expenditure and taxation.

In terms of jobs, the budget hardly mentions the target. There is no more major challenge to the morale of our society at present than the need to give people hope that, in the near future, they will have an opportunity to fill their employment expectations. My party have done some work in this respect. When we spoke a year or two ago about aspects of economic management which are not standard parlance, for example, privatisation, we were derided by colleagues of the present Minister for Finance, but we endeavoured to put forward some constructive suggestions, and I want to do a little of that today.

In broad terms, the budget has to be welcomed, although it is still soft in many areas, ducks many targets and evades fundamental challenges in the areas I have mentioned, particularly in employment generation, tackling poverty and taxation reform. I am very sorry these areas have been missed because there is a capacity for all of us to respond to a serious onslaught on these fundamental problems. Mere tinkering with the personal allowance of the PAYE workers will not be a pallitive for radical reform of the tax system, particularly when what is being presented as tax reform is, for the single man at the bottom of the scale a decrease in his weekly tax of less than the price of a loaf of bread. In my view, that is an attempt at management by some form of illusion and that can hardly be presented as reformist in nature.

If we are to deal honestly with creating work, or more properly creating a climate in which work can be generated, the first thing we should do is to address the misconception that somehow it is possible to create jobs. Jobs are, essentially, the outcome of economic activity. They are not something one deliberately sets out to create. I have yet to meet an entrepreneur or business person whose target was to create jobs. Their target was to create economic activity, to create profit and thereby they created work. Facilitating that spirit of enterprise is ultimately the only answer to sustaining jobs in any economy. Any other form of temporary schemes, training schemes or public sector works is simply postponing the evil day and perhaps masking the depths and nature of the challenge which has never been more serious, because present statistics do not relate to the very sad and tragic emigration which continues unabated.

Any analysis of industrial strategy will have to deal with that fundamental issue. How can we so create a positive attitude to economic generation as to make it worthwhile and rewarding to work? Unless that is done, the sad statistics of company failures which we witnessed recently, despite the heroic work of many State bodies and their leadership, will simply come to nought. Essentially our economic and social prospects depend on the further development of our industrial base to produce quality internationally traded goods and services for the world markets which is no more complex than that. In broad terms, therefore, it is essential for us to provide a competitive environment for industry and business by implementing suitable macro-economic policy, by imposing the most rigorous standards of control and a reduction in scale and size of State activity and institutional involvement in industrial policy. It is vital to take a major leap forward in support of export marketing because a job in this area creates downstream seven other jobs.

We have to positively and dynamically encourage the innovation process. I am constantly staggered at the number of people, young and old, who have the innovative spirit and who look for some form of guidance or environment in which that spirit can be brought to fulfilment. We have to encourage the base of indigenous enterprises and continue to attract overseas investment in the traded goods and services sectors.

Successful enterprise will depend ultimately on how competitive the operating environment is. This has major implications for enterprises' need for competitive input costs and for realistic interest in exchange rates. There has been progress in those respects, yet cost penalties for indigenous industry, despite the marginal benefits that have been derived from the interest area for example, far exceed the total grants paid to the sector. The amounts by which Irish industrial costs exceed those of our EC partners is currently estimated at over £200 million. Despite the many natural advantages we enjoy as a trading nation, and the enormous investment which has gone into industrial development over many years, it is nevertheless very clear from any examination of objective criteria, including international and domestic publications in the area of industrial policy, that the two key targets of doubling output over a ten year period and increasing employment in manufacturing from £3,000 to £6,000 per annum, have not been achieved.

Furthermore, it is clear that growth in output has been concentrated essentially in three sectors, electronics, chemicals and food. Irish manufacturing output growth is now heavily dependent on international trends in the electronics and chemicals market and, therefore, subject to cyclical downturns. It is clear, for all these and many other reasons, that a more considered, more highly planned and more specialist-oriented approach may be desirable, and indeed is perhaps essential, if we are to get the kind of growth in employment targets which we are so obviously in need of. Yet, grant approvals to the IDA remain heavily concentrated in those three sectors, constituting some 70 per cent of approvals in 1985, for example. These are three sectors in respect of which there is no particular reason in many cases to believe that we can do better than others competing in the same marketplace.

Our industrial policy should be honed to play to our strengths, to become the best at what we are good at and not to seek to enter into artificial competition in relation to goods, services or manufacturing which can be provided better by others, either by virtue of the economies of scale or by the natural, indigenous nature of the manufacturing infrastructure of other countries, tradition or whatever. This country is good at some things, the food industry is one and it is in those areas we must invest and develop. Yet high productivity in the three sectors to which I referred has led to negligible growth in employment even when output increases.

Between 1983 and 1986, there were small increases in electronics employment, a decline in employment in the food industry and no change in the chemicals area. It is not an impressive return for the very substantial investment put into those sectors. If it is agreed — and this is open to debate — that a primary objective of industrial policy is the creation of employment and not merely the creation of successful companies, which is presumably what the entrepreneurs are primarily concerned about, we have a substantial length of road to go.

If the main aim of industrial policy is to target an improved annual growth of industrial output per annum, with an associated overall growth in employment within the economy over the next ten years, then the State's massive expenditure must be targeted towards meeting the defined aims of this industrial strategy. Perhaps that is a fundamental weakness in the Government's approach. There is a degree to which the Government go down a little of the road with everybody in the industrial spectrum because there is not a coherent or clear-sighted industrial strategy against which investment can be measured and against which criteria or commitment of resources can be applied. Therefore, it is impossible to measure success in terms of achieving targets.

The criteria involved for grant-aiding should include the need for commercial viability on the part of each project receiving State support, a clear development strategy from the applicant enterprise, an adequate rate of return on the State investment in excess of, for example, that on long terms gilts and an adequate equity base within the enterprise. For example, it is not unreasonable to ask in the light of some of the unfortunate, but inevitable, failures that we have had by some of the major companies — I am thinking of the micro-electronics area — whether there is a flexible grant-aid approach which allowed for reviewing the way we grant aided certain companies who, overnight, collapsed and took off owing substantial sums.

One of the proposals my party would make is that there is no longer any absolute need in all cases to assume that the only way to grant-aid an industry is to present them with a non-repayable grant based, presumably, on an assessment of the industry's business plan. It is not unreasonable to suggest, as an option at least, that one way of facilitating companies with far greater protection for the taxpayer, would be to make repayable loans or to make grants payable in respect of input costs directly related to those costs over a period of time, so that if the enterprise folds up or if head office in Detroit or New York decide to cash in their chips the taxpayer will not be left high and dry, as has happened time and again here. I am not blaming the IDA and, given our investment policy, it is reasonable to assume that now and again there will be failures. Naturally, we all wring our hands when these things happen although we are a little more reticent in applauding the firms which are successful.

The idea that grants on a non-repayable basis paid into the open maw of a company is the only way of assisting the creation of jobs is nonsense. Serious and genuine companies, looking at a long term commitment to Ireland, will be quite happy to sit down with the IDA or the Government to consider the possibility of repayable loans or getting their grants on a phased basis relating directly to their various costs, peculiar perhaps to this country. I am talking here about the input costs to industry and I suggest that with respect to the Minister, as a way of getting better value for money, which is not the case at present.

It is also clear, for some peculiar reason, that Irish industry has not shared in the general international recovery since 1984 and that native Irish firms have lost a large share of the home market, which is a very serious and worrying trend. Between 1980 and 1985, the share of domestic consumption won by competing imports grew from 34 per cent to 41 per cent. In other words, Irish firms are losing at home and abroad and growing exports to EC countries have not offset this decline in the home market. Unfortunately, this is lending to an international perception of Ireland which is far from flattering, perhaps unjustly so, but nevertheless that is the case.

The world competitiveness report published by the EMF foundation in Geneva in August 1986 used a combination of hard data indices and survey information collected from an international sample of business executives and economists. In that study 22 OECD countries were ranked on overall competitiveness. Ireland came 17th having been, incidentally, 16th the year before. Those at the top of the scale were Japan, the USA and Switzerland in that order. The detailed assessment of that study makes extremely interesting reading and builds up a picture of the profile which the world has of the Irish industrial scene. Candidly, it presents an enormous challenge to all of us.

Domestically, of course, the area in which we have some control — and in relation to which the budget had the opportunity to make strides and did not — is that of Irish industry and commerce which also suffers severe competitive handicaps. I appeal to the Government to review those peculiar and particular costs, levies and taxes with a view to refining and honing them with the strategic aim of reducing them where possible in line with the potential to create work. I am quite convinced that a review of competitive costs would lead us to an inescapable conclusion which could, if applied logically, in terms of industrial policy, be largely self-financing by taking people off the dole, putting them into employment and causing economic regeneration.

Even to apply a European average cost for fuel oil, gas, electricity, postal service, telecommunications and interest rates to Irish industry would almost double the profit rates. The application of European averages to Irish industry would double profitability and would obviously make a major contribution to employment. It gives some indication of the incredible handicap which people trying to run small and large businesses in this country have to endure. It is the essential reason it is simply not attractive to employ people unless there is no other opportunity. It also explains the reason for the incredible growth in the black economy which is nothing more than a symptom of revulsion at an extraordinary tax rate which continues to penalise those in the tax net but still continues to avoid many people outside it who should be within and which has at its root a regime in terms of tax evasion which simply rewards the evader. By and large, the worst that can happen in terms of evasion is that, once caught, the evader negotiates a deal to settle amicably, a deal more or less agreeable to both the Revenue Commissioners and the evader. That is the regime which punishes those who comply with paying their taxes and rewards those who do not.

Since 1980 only one third of the decline in output is attributed to fall in domestic demand. Some two thirds of the explanation can be found in a huge increase in competing imports. Consequently, at home or abroad Irish industry is paying the price of being uncompetitive and most of the lack of competitiveness is due to factors other than the cost of labour. It seems to me that firm action by the Government is essential. That is why I was particularly disappointed to find in the very comprehensive statement by the Minister on the budget virtually no reference to the challenge of employment. That is why I perceived the document presented as being very largely an exercise in accountancy. Nationally, it is very important and very important to the economy but it is without clear social targets in terms of employment or other objectives such as tax reform.

We have got to consider in addition the imposed cost disadvantages of lower standards of roads and public infrastructure, the extra costs involved in dealing with bureaucracy and legislation compared to the European average and the inherent logistical or scaled disadvantages, including the transport costs arising from our location vis-á-vis Europe. I suggest to the Minister that there should be a very thorough re-evaluation of every piece of form filling and bureaucracy which the ordinary business has to endure. When I use the word “business” I am not talking about the multinationals predominantly. Most businesses in this country are very small operations. Recently I asked one shopkeeper how many pieces of paper per year he had to complete. Part of his answer was not fit for family consumption but the other part told me that there were dozens — he did not say how many — and that he was, quite frankly, fed up with them and was thinking of packing it in. I wondered to what extent much of this was necessary.

I am convinced that the creation of a climate in which enterprise can flourish is not purely about the tax burden or about PRSI levels but about a positive attitude by the Government and by semi-State bodies to welcome in people with ideas on enterprise, making it as easy as possible for them to flourish, giving them the benefit of the doubt in terms of, for example, introducing a proper, genuine tax self assessment scheme and punishing those who abuse the scheme. I am convinced that we cannot expect any genuine revolution in that respect unless the State is willing to focus directly on the reasons enterprise, right now, is in the doldrums.

It would be extremely healthy for the Government formally to invite in representatives of enterprise, of industry and the various areas of economic development and seek to ascertain from them the precise reasons why, unfortunately, much of what they find repressive at present is causing this down-turn. You will find that it is not all about simply having the hand out all the time. There are very practical things the Government can do to deal with some of the difficulties imposed on enterprise now. All of those cost factors — and the Minister must know them as well as I do and, indeed, there are Ministers in the Cabinet who have direct experience of these cost factors — must be tackled within the framework of a comprehensive industrial policy. That is not to say, nor let anybody here pretend, that they can all be written off overnight or that there is an open cheque to build new roads tomorrow. Nobody is saying that. There is not even a beginning of the perception in the Budget Statement that these problems of industrial costs are germane to the question of our industrial strategy and employment strategy and will have to be tackled even on a systematic basis over, say, a ten year time scale. That is not even mentioned in the document and, to that extent, for the unemployed it is a failure. That is very sad and, perhaps, explains why there is a continuing drain out of the country.

In future, the impact of Government measures on industrial costs per activity should be addressed in advance. There should be an impact statement prior to measures which the Government often blithely introduce here, some of them being administratively cumbersome, or unnecessarily expensive, or perhaps duplicate of effort. That procedure applies at present to proposals coming before the EC Commission and it seems a perfectly reasonable proposal to make in order to guage the likely impact of various Government decisions on small and medium sized enterprises.

Obviously, the whole area of Government infrastructure, of the semi-State bodies and the State agencies described as supporting industrial development in Ireland is a key element in the support of infrastructure in terms of assisting the development and achievement of an industrial strategy. Across the 20 State agencies, so described as being broadly supporting industrial development in Ireland, the annual pay out to industry is put at £187.5 million, half of the total budget allocation of these agencies and the other half is absorbed by internal administration and increases in agencies' fixed assets. That in itself speaks volumes without having to spell it out in greater detail. If half of the total allocation goes on administering the grants, since the grant applications must be prepared by the clients and that in itself is a very expensive business, it might be reasonable to assume that a like figure could be put on the cost of securing the grants, or other supports and, of course, this cost is absorbed by industry. What this means is that, broadly speaking, both the Government, as a provider of incentives, and the firm, as the beneficiary, have found what is called their line of indifference in relation to the grant receipt at a cost of three times the net benefit. That, in itself speaks volumes and shows another ripe area for investigation, for analysis and for Government response.

There is also the serious question of the extra costs of Government imposed on industry. I am convinced that a major assault in that area would yield extraordinary results. I would like to make this suggestion to the Government. Would they consider some form of strategy or measure similar to the Grace Commission in the United States which would invite in the achievers in our society — the only people who will make this economy grow — to informal consultations and to an informal structure if they are so agreeable to assist in Government in targeting on areas inhibiting industrial growth and focusing on areas where industrial strategy and industrial potential could be fully realised? That commission consisted of a group of voluntary people from the private sector who sat down with the Government and tried to assist them in pinpointing clear targets in the areas I have mentioned. At all times the Government have to be the guarantor of last resort for the people. They must protect the interests of the public and the common good. The present structure which is to shut out vast areas of expertise and achievement totally, as if they had nothing to contribute, is totally unrealistic.

The knowledge or experience base in politics generally is relatively low. I honestly believe it could do with interfacing in some structured way with the real world of commerce, business, enterprise and achievement. I am not suggesting, at any stage, that there should be any form of abdication by the Government to such interests many of whose primary concerns will be sectional, will be selfish and will perhaps be self-centred. I simply believe that people who have to make it happen day in day out — some of the associate companies with a scale and size almost of our GNP — if approached properly and if asked, would respond and would assist the Government to target areas of industrial strategy and focus on areas of handling of public expenditure where some kind of modern management system would be useful. I ask this rhetorically and perhaps when the Minister is replying he might try to answer it specifically even though I do not assume he will.

Mention of modern management reminds me of an experience I had some years ago when I was an office holder. I would like to know, today, in 1988, how many Government Departments still use people resources, still utilise workers in the incredibly tedious job of writing their letters in longhand and handing them to typists who type each letter individually. I know there are many. That kind of outdated, Dickensian approach to managing both people and resources would not be tolerated in any ordinary private business. There is no justification whatever for its being tolerated in the public sector. It seems reasonable, therefore, that the wisdom and experience of those who are in the business of achievement day in and day out should be brought to bear in Government or at least interfacing with Government with the Government and the Cabinet always retaining the right to make the final decision. I would commend such a strategy.

The Government have made an attempt to embark on a programme of rationalisation in State agencies. I am equally concerned about the regionalisation of State agencies and, quite frankly, some of the approaches to rationalisation have been little more than cosmetic. A basic weakness is that they rely absolutely on voluntary redundancies, the result of which, hard as it is to say, will inevitably mean that the needs of the individual rather than the overall needs of the State will be met. Those who want to go are those who want to go because it suits them. I am pleased to see that some of them are setting up their own enterprises. What the State may need however is a different model. It may very well be that some of those who are going are precisely the people who should stay and it may very well be that some of the agencies presently existing should be rationalised out of existence or that in one or two cases a new structure may need to be created.

I believe, hard as the bullet might be to bite, that relying absolutely on a cosmetic approach to rationalisation in terms of the numbers involved in voluntary redundancy is inadequate in terms of honing a structure to deal adequately with the challenge of industrial policy. However, I accept that the Government have made a start in that respect and are to be applauded for it. I suggest that a substantial amount of inter agency rivalry and overmanning still exists and that this needs a very serious and tough look. It also seems that some of the suggestions made in this respect raise major questions. For example, the on-off abolition of the National Social Service Board is a case in point. One of the reasons given for its abolition was that the work would be done by the Department. If people have built up an expertise in an area it seems that the answer may well be to leave them where they are and perhaps depending on what is the rather nebulous and unclear future of that board, to ask those in the Department who may be handling the work of the board to leave. Why should it be that the Department are virtually sacrosanct and that the agencies, those in the field, get the chop? The Government in that respect should begin at the centre, deal at the core with the problem of numbers and deal much more dramatically with it than by way of the option of voluntary redundancy which may result in a quantative improvement but which may also result in qualitative disasters in certain areas. We cannot start from scratch but the Government will be extremely fortunate if, depending totally on voluntary redundancy, they achieve by chance a model which will assist in the development of an industrial strategy. I do not believe anybody expects that to happen.

In the area of industrial promotions there should also be a review of the socalled free services which the State offers and which are paid for by the taxpayers in general. It is reasonable that the Government might look at a fee for a service being provided to a beneficiary wherever this is reasonable or practicable and particularly where it would not inhibit new enterprises. Here, we are not talking about people at the start up stage being hammered by additional costs but rather at substantial industries which have established their market niche both here and abroad paying for the State services they use.

While we have been worst in the trends in the eighties our pattern of decline in industrial employment is consistent with international trends and it makes the case for combining a selective industrial development policy with a comprehensive service development policy. It is clear that there is a major future in internationally traded services. Again, there has been a blind spot in terms of giving grants and incentives. It is legitimate to do so if it is manufacturing, heavy product or engineering but if it is a service, perhaps because it is more difficult to quantify, it is less likely to attract grants. That is something we should seriously question and I do not think that that concept would last very long in certain other small countries which have been very successful in their economic management. Above all, there is an overriding requirement to focus Government action and funds on resolving the cost disadvantages which Irish industry presently suffers from.

Leaving aside the narrow economic issues, somewhere along the line we are going to have to address the question of the definition of work which we have inherited. We are now embarking on a totally new age which has a totally new attitude to work and personal fulfilment. There are areas of economic activity in which there will never again be the same kind of economic activity as there was in the past because technology, human expectations, educational qualifications and personal aspirations have all changed. The goal posts have shifted. Redefining what is useful socially and personally as being a legitimate definition of work will be a challenge, perhaps for the sociologists in the first instance and some of them have been attending to it but also for all of us who talk about creating jobs. Our definition of work is too narrow but we can debate that in greater detail on another occasion.

I also believe that another omission from the budget was the area of privatisation or what we sometimes call in the Progressive Democrats public ownership, that is allowing workers, members of the public, to part own their enterprises. I include in this public enterprises. It is fundamentally wrong for the State to preach to the private sector about the need for and the advantages of a wider share of equity in private enterprises if it is not prepared to make a start and show an example in the area that it itself controls. The Progressive Democrats completely support the concept and practice of public ownership or privatisation of public sector companies. It is our view that workers and others in relation to these enterprises are entitled to a stake.

Who are these anonymous owners who own these enterprises on our behalf? Some of them will not even reply to a letter. I would be far happier having a much wider ownership base, including ordinary people with small investments and not merely the substantial and wealthy people who obviously are entitled to a stake also but that is a question of degree and control. The principle is what we are after. I would like the Minister to tell us in his reply specifically what he proposes in relation to privatisation of both major State bodies and public sector agencies.

Would the Deputy please conclude as his time is up?

In conclusion, therefore, I just want to say that in general terms there is much about the budget we like and I do not believe it is unimaginative. There are a number of measures in the budget which have to be welcomed and the general thrust of it is broadly welcome but there are many omissions and they are at a fundamental level. It is regrettable that the budget focused not at all on the very basic issues and challenging areas of employment, tax reform and poverty. It did not concentrate on the basic inadequacy in the way our resources are distributed. Unless those areas are addressed all we are doing is moving the figures around. That fundamentalist approach is what we should look for and one I would like to have seen in the budget.

Before dealing with the budget I should like to state that it strikes me as extraordinary that we hear from time to time in the House remarkable raiméis about the budget. This is a creative budget, an extraordinarily well-crafted one, and it is not true to suggest, as has been suggested by several speakers, that it has a narrow focus. In fact, it has a very broad focus. The budget has to be put into a context and that is where most of its critics are missing the point. it has to be considered in the context of being part of a continuing brave effort by Government to put the nation's sick finances back onto a healthier plane. It is only by doing that that we can achieve what we want to achieve for our people.

The year that has just passed, even critics of the Government must admit, was one of considerable achievement on many fronts in the Irish economy. The year that is ahead of us will be equally important in terms of achievement and potential to put the nation back on its feet. It is no exaggeration to say that the 11 months since the Government took office have seen the whole thrust of economic and financial policy changing dramatically and for the better. A sense of purpose has been restored to the management of the public finances and solid progress has been made in both output and exports. Inflation is at its lowest level for two decades. Decisive Government action on the public finances has led to lower interest rates. These are real and substantial achievements and they bear reiteration from time to time.

Above all the public finances have been put back on the rails. Over the last few years our public finances began to look like what Sir Alex Cairncross once described as a hippopotamus that had gone amok and was running out of control. That hippopotamus, that huge bloated beast of public finances, has been brought to heel and is now being caged and penned down. We will all benefit from that. The Government inherited an extraordinarily difficult economic and financial position when they took office in March last. In the four to five years of Coalition Government the public debt doubled, from £12 billion to £24 billion. It is worth reminding ourselves of that fact from time to time.

Fine Gael in government had analysed the problem accurately and had reached the stage where they had established what precisely needed to be done but they failed to do it because they were vetoed by their partners, those ersatz socialists who can say not to everything and yes to very little. By the time we took office not only had the national debt doubled but it was increasing at the rate of £2 billion per year. That fact sometimes proves unpalatable to Opposition parties. The cost of funding the debt had doubled and virtually the entire yield of PAYE was being swallowed up by that debt. Obviously, there had to be a change of direction and when the Government took office they decided that they would take decisions. That is where they fundamentally differ from the Government who preceded them. The decisions were difficult and, in the short term, were not likely to be electorally popular but, nonetheless, in the greater interest of the nation, they were taken.

The aim of the Government since taking office has been to lay the basis for secure growth in the economy. If we are honest with ourselves we will recognise that laying those foundations is not something that can be done in two or three years; it is something that determines commitment over a considerable number of years. The profligacy of the past — many parties participated in that profligacy — had led the nation into a state where its economic existence was imperilled. In the budget the Government have continued to reduce the dependence on borrowing and improve the environment for more investment and in that way to create the conditions in which employment can be established. There is no point in Deputies wringing their hands and suggesting that the Government have a magic wand they can wave over a sick economy and create employment. If employment is to be created we must concentrate on creating real jobs. In the past, unfortunately, we created jobs that were propped up and carried on the backs of the taxpayers and taxpayers are not prepared to go that route any more, and rightly so.

Effectively, the objectives of Government must be long term. The first and most important objective is to restore confidence in the economy. I submit that confidence in the economy has effectively been re-established. Real economic growth depends on the clear demonstration of Government determination to manage the Government's and the nation's finances not just in 1988 but in future years. I submit that the budget shows such determination. The decisions taken last year, while essential for our future prosperity, were by no means sufficient in themselves to solve our budgetary and economic problem. Difficult decisions have also to be taken in 1988. The Estimates were published last autumn marking an historic breakthrough because it signalled a very real intention to retrench, to cut back severely on the excesses of public expenditure. It was important in that their early publication made one of the most significant breakthroughs in the public finances of the nation. Other parties had prattled about that. A fine document was produced in the early eighties by Deputy John Bruton suggesting that we should go that route but, significantly, when Deputy Bruton was in the most important position in regard to the nation's finances he failed to achieve that. To publish Estimates so that the House could engage in some logical discussion on them was a major and welcome breakthrough. Hopefully, it will be improved on in the years ahead.

There were real achievements in 1987. The Exchequer borrowing requirement was sharply reduced and that has been handsomely recognised by some Members. It is to our advantage that we should sharply reduce the Exchequer borrowing requirement. Despite the severity of the budget measures taken last year there was a degree of buoyancy in the economy by year's end which surprised some economic analysts. By year's end the prime overdraft rate had fallen by five percentage points. That was a significant achievement because not only does it impact itself on the cost of Government but it impacts itself on the cost of small businesses, on farmers, shopkeepers and industrialists planning long term projects and investments and, therefore, planning for employment. It also makes an impact on householders. If we take the case of a young couple buying a house and taking out an average mortgage of £25,000, the percentage cut in interest rates means a saving of £55 per month to that young couple. That is significant because it is taking a major step in the right direction and putting money back into the pockets of ordinary people where the money should have stayed in the first place.

The alarming drain of domestic capital out of the economy was dramatically slowed by the end of 1987, while in the first few weeks of 1988 we could begin to celebrate inflows of funds from abroad. These inflows had received a very real impetus by the clear determination of the Government to rectify the disastrous position of the national finances. Major development projects in a variety of sectors had already been announced. Last year this Government put the nation's finances on course, in remarkable contrast to the previous five or ten years, not just the years of the previous administration but the years before that when there were administrations from this side. This again demonstrates the determination by Government to follow through on their earlier decisions. Over the past 15 years the budget had become something of a farce because figures at the end of the year bore little relationship to what had been said with such solemnity in this House at the beginning of the financial year.

The actions taken in the 1987 budget were only the first step. The second step which is taken in this budget was signalled in the 1988 Estimates which involved savings of the order of £490 million. These were published well in advance to give Members of this House the opportunity to digest them and to respond. Most Members responded in a responsible way.

These were not the only achievements of 1987 and 1988. Another singular achievement for which the Government are responsible is the establishment of the three year Programme for National Recovery. Much scorn has been lavished on this programme but I see this as one of the most important achievements of 1987 because it brings rationality to the whole issue of pay and pay negotiations in the wider sector. Rationality is an essential ingredient if we are to have economic growth. We must not only control public finances but we must start saying to those who create real jobs that these are the parameters within which they will have to operate.

The Programme for National Recovery underlines the fact that development is central to this Government's outlook. It has been suggested by Deputy Noonan and others that this Government are following a one-item agenda. This is a catchy phrase intended to appeal to the gallery and the headline writers. That is what politics has become in this country. It is unjust, unfair and simply untruthful to suggest that this Government have set been following a one-item agenda. The agenda which the Government have set themselves is expansive and has within it many facets, all of which are important to the wealth and wellbeing of the nation. The Minister for Labour spoke earlier about changes in the labour and public service area. On the industry and employment side we have, for example, the contract for the financial services centre which has now been signed and work is in progress. It is interesting to consider the rumourmongers in this city who were gleefully operating in anticipation of some reversal.

A crash programme to boost tourism was introduced last year. The increase of 16 per cent in tourism is quite extraordinary by any standard. In the same sector, work has commenced on a new runway at Dublin Airport and on an extension to Cork Airport. The business employment scheme has been extended to tourism projects. In a county such as Wicklow where we have a great deal to offer the tourist, this is a major achievement. Air fares have been reduced and while we cannot claim full credit some credit at least is due.

There have been real achievements in the forestry sector, which is of particular importance in my constituency. New and bigger grants were introduced for tree planting and the planting programme exceeded all previous standards. Those growth targets were achieved in 1987 and we can be confident that they can be repeated in 1988. We will also see this year the establishment of a State forestry enterprise agency. I have said before in this House, and I repeat, that there is only one county for it, the county which has most forestry and which I have the privilege to represent, namely, Wicklow.

On agriculture and food a great deal has been achieved. At the beginning of the year the Goodman Group announced a £260 million investment programme. That shows real confidence.

As Deputy Keating said earlier, there is no point in talking about ersatz or shadow jobs created in the public sector. If we are to generate real wealth and make real progress we must look to the areas where we have special advantages such as food, mariculture, agriculture and forestry. We must build on and expand these areas.

We have appointed the first ever Minister for Science and Technology. It was announced at the end of the year that the Biotech programme would get a boost. This programme has languished on the files of the previous Government for some reason which cannot be rationally explained.

There was progress in energy, communications, environment and every other sector. It may be modest but it was progress and it is a damn sight better than anything achieved in the previous five years.

While progress was being achieved on these fronts, the weaker members of our community were not being forgotten. Last year we had an expansion of social welfare services through the extension of optical and dental benefits. Tragically there are difficulties on the dental side because members of the profession are interested in a narrow focus rather than in serving the community who put them into their professions in the first place. In this year's budget we have even bigger and better improvements. The increase of 11 per cent for the long term unemployed must be welcomed by all Members. A great step forward was the introduction of real measures to combat fraud. There had been a great deal of discussion in this House and elsewhere over the past four to five years about the extent and the level of fraud. To the degree that there is fraud in the social welfare system it is theft from the poorest and it is also theft from the taxpayer and it has to be redressed. I was appalled during the course of the Minister's budget speech when a member from the Fine Gael benches talked about Nazi tactics and draconian measures. If somebody is stealing from the poorest or if somebody is stealing from the taxpayer we should make no apologies for going after those people with vigour.

Very real progress has been made in the marine areas. For the first time in the history of the State we have created the Ministery for the Marine. We have put into place the Shipping Investment Grants Act. Only last week at Arklow port we saw the Arklow Manor sail into her mother port, which was the first fruits of the Shipping Investment Grants Act. As I have said there has been very real progress not just on a one-item agenda but on a multiple-item and varied agenda in 1987.

Much has been made about the areas where we need to make progress now that the nation's finances have at last started to be brought under control and very high on any agenda for progress in the future must be taxation reform. The Government have recognised in their activities this year, as they did last year, that high taxation was a disincentive and had a disincentive effect on economic recovery. At the beginning of last year the Government indicated that they intended to make significant progress towards fulfilling their promise that two-thirds of the taxpayers would be brought to the standard rate.

Debate adjourned.