In my contribution to this important debate yesterday I pointed out that the Government had faced an extraordinary situation at the start of their term of office. I pointed out that they had met it, and met it well. For the first time in a decade we can say that the beast of public finance has been penned and if it has not been finally tamed it is certainly on the way to being tamed. In the time available to me I should like to deal with four specific issues. The first, and the most important one dealt with in the budget, is the question of taxation reform. There has been a great deal of hot air in the House, expanded elsewhere, on the issue of tax reform.
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.)
The noise from the lobby is intruding into the Chamber and is source of disorder. The noise in the lobby must cease.
Taxation reform is one of the most important issues dealt with in the budget. Much of the hot air here, and elsewhere, on the issue of taxation reform emanated from the benches opposite. It is worth reminding those Members who are guilty of expounding so much hot air on behalf of the taxpayers that in the term of office of their Government very little was achieved other than analysis. As one commentator has suggested, we had a paralysis of analysis. We had continuous claims that taxation reform was imminent and that taxation reform would be achieved but the reality is, and statistics prove this, that the overall take on taxes during the period of Government of the last regime increased by some 5 per cent of GNP. In other words, there was a great deal of talk about reform but there was very little reform.
One of the problems here is that politicians by reiterating good intentions have begun to debase the currency of political rhetoric. The first major steps in taxation reform were taken in the budget and have to be put in the context of what was achieved last year. During last year the special task force set up to deal with the whole issue of tax arrears proved extremely effective, too effective for some Deputies. I can recall a Fine Gael Deputy referring in the House to Nazi tactics. The tax clearance arrangement for grant payments has been finalised and that is a major breakthrough. The Revenue Commissioners are completing a programme and timetable for the reduction and elimination of taxation arrears. Members on all sides are rightly affronted by the extent of taxation arrears, as is every taxpayer.
The Government have taken the first steps to fulfil the latter commitment through the introduction of self-assessment for corporation tax and for income tax in the self-employed area. Overall, the Government's aim is to reform the taxation system so that each group in Irish society pays its fair share of the tax burden, no more and no less. Most Members will accept that under the present arrangements the PAYE sector pay far too much, they bear an excessive degree of the burden. Major tax reforms are important in the context of social equity.
Another achievement last year was the introduction of the withholding tax. That tax was, in effect, the spread of the PAYE system to other persons in the public sector. The Government have taken an additional step in that regard in the budget. Overall the Government have put the country on course for a more rational taxation system. At the same time, they have achieved a considerable amount in returning the balance to equity with regard to the PAYE taxpayer. All Members will welcome the additional allowances and the increases in allowances. I am sure they welcome in particular the expansion of the 35 per cent band and, therefore, the effective reduction of the higher bands.
Deputies will be aware that taxation reform cannot be achieved overnight. There is a great impatience for taxation reform but it is important, as we move down the road of implementing and putting into effect a logical tax structure, to ensure that it is a tax structure that will endure. The steps taken by the Minister, particularly in regard to self-assessment, are important in that regard and should be welcomed by all.
The first specific of the taxation proposals in the budget is that the Government have given an additional £152 million in tax reductions, effectively putting money back into the pockets of taxpayers. That is where the money should stay. It is quite intolerable that very high levels of tax burdens have to be carried by members of society. Effectively, that soaks up the money of taxpayers.
Another important achievement in the budget was the fact that 93,000 taxpayers who would otherwise have been liable for a 48 per cent rate have been reduced to the 35 per cent rate. In addition, 55,000 taxpayers who would otherwise have been paying the top rate of 58 per cent are now at a marginal rate of 48 per cent. They represent major achievements. Another major achievement is that 16,000 taxpayers at the very lowest levels will, effectively, be out of the tax net. In all, the budget comes very close to fulfilling a promise the Government made at the outset, that two-thirds of all taxpayers will be on the standard rate. In the tax year 1988-89 some 63 per cent of taxpayers will be paying tax at the standard rate. That, by any standard, will be a major achievement. It is a timely one because what the Minister for Finance is doing is showing faith with the people who have accepted the burden of the necessary cuts in areas of public expenditure. The Minister is rewarding the people for their forbearance in that regard.
The second question I should like to deal with is that of jobs and the budget. I have mentioned the mythology that has been created about this, particularly by Deputy Michael Noonan of Fine Gael who spoke in cliché terms of a one-item agenda. Yesterday I went through the various sectors where the Government have adopted specific proposals to improve and create jobs. They have endeavoured to create real jobs in the private sector where wealth will be generated and where the national well-being will be better attended to. The Government's strategy on employment is twofold and Deputies, although they might preach otherwise, know that. First, the Government have to take firm action in relation to budgetary difficulties. They did that last year and again this year. Those firm actions will bring with them their own rewards. This is already being demonstrated in the new sense of confidence which is coming about because of falling interest rates. I would refer Members to the most recent CII report which pointed out that there is if not a bullish tendency with regard to private sector investment at least sufficient confidence for private sector investors to consider putting more job-creating proposals into place.
The first step must be the bringing into control of the beast of public expenditure. That is being done. A second Government objective is the active pursuit of development opportunities throughout the economy, with special emphasis on natural resources. In the past year we have seen the beginnings of these efforts and the first rewards. Yesterday I referred to forestry. The untruth that this is not a budget dedicated to jobs or to progress and development does not improve by reiteration. The opposite is precisely the case, as Deputies opposite are aware. They also know that during the term of office of the previous Government unemployment increased by a figure in excess of 100,000 and there were, in addition, 100,000 emigrants. It will take time for that unfortunate trend to be reversed but the slackening of the rate of increase in unemployment shows that a reversal is within sight.
In spite of all our economic and financial difficulties, a measure of a nation's civilisation is the degree to which it seeks to support those who are least well off. In this budget and in last year's budget this Government have dedicated their attention to these people. Last year the social welfare increases were brought forward from November, when it was proposed by the previous regime to introduce them, to July. We would all like to have done better but at least that was an improvement and a move in the right direction. This year there is an overall increase of 3 per cent in the level of social welfare payments, despite the fact that inflation will be of the order of 2.5 per cent. I would admit that there is only a marginal benefit to those who are dependent on social welfare but at least the balance is again in the right direction. Special help has been introduced for the long-term unemployed and a single person on urban unemployment assistance will receive an increase of 11 per cent. I am sure Deputies on all sides of the House would like to give more because those who are genuinely unemployed and dependent on long-term urban unemployment assistance deserve special consideration. We all accept that their plight is a very real one. There is also a special increase of 6 per cent for child dependants. Once again this increase if considerably higher than the rate of inflation.
There is to be a continuation of the special equality treatment payment which was due to end last November but is to be continued at least until the end of this year. The equality directive was, to say the least, anomalous in that it had the net effect of equalising people downwards. It is well to remind ourselves that this was during Deputy Hussey's period of office in the Department of Social Welfare.
The extension of PRSI to farmers and the self-employed on a phased basis seems to be a realistic way of extending the PRSI net. I accept that there is some criticism and some Members opposite have made the point that some of those affected may try to take the benefits without paying the imposition. That is their judgment on farmers and the self-employed; it is not my judgment. An effective collection system when it is introduced should prevent that anomaly from arising.
I particularly welcome the additional £11 million which the Government have put into the budget for the drug refund and long term illness scheme. The retention of that scheme in full is a very important decision which should be welcomed by all sides. As a member of the Eastern Health Board, I certainly welcome it. The additional £3 million which the Government have promised towards the cost of providing accommodation for the homeless is also very welcome. One would wish that the money could be higher because anybody who is a member of a local authority or a health board is aware of the extent of this problem. It is sad that because of the economic situation this problem may deepen in the years ahead. I look forward to the introduction of legislation later in this session to deal with the issue of homelessness.
I welcome the additional £6.5 million for the repair and replacement of dilapidated primary and secondary schools. Notwithstanding the fact that there was a great deal of hype during the previous Government's term of office about the repair and replacement of dilapidated schools in my constituency, we got a whole series of promises but at the end of the day when Deputy Hussey vacated her seat as Minister for Education we were left with nothing but paper. We had no bricks and we had no mortar.
In the general area of social equity, a final improvement is the reintroduction of the installation aid package. This is a very important scheme which costs only about £1.4 million. We have a very peculiar age structure in agriculture and it is important that the Government should provide installation aid to encourage that age structure to change. It is extraordinary that the age structure in agriculture is so out of kilter with the demographic structure in general. It is of critical importance that this scheme should be operated. It is a very low cost scheme so far as the Exchequer is concerned because much of the expenditure will be met from European funds. There should be a long-term commitment to that scheme because on-off policies in this area cannot but do damage.
I would ask the relevant Ministers when they come to work out the detail to look at those who are marginally disallowed under the installation aid package. In my constituency there is a young farmer who had four hours of instruction to complete on the day the aid package was discontinued. He should be allowed to fulfil that requirement and the cumulative amount should be taken into account so that the aid package can be made available. There are other young farmers who may have gone ahead since the discontinuation of the aid scheme was announced and have become installed as the primary operators of particular holdings. There should be a degree of retrospection to deal with such cases. As I have said, it is a very low cost scheme. It is a very important scheme. It retains a degree of equity for young farmers and would help to change the balance.
Again as with other myths that are being perpetrated, it is not true to say that this budget focuses excessively on one area. As I said yesterday at the outset the striking feature of this budget is that it is extremely well crafted and covers so many areas. On taxation reform we are moving in the right direction. Jobs are dealt with in the budget as are the less well off.
I would like to deal with a point which has been touched on by a number of Deputies. I think it is a valid point. It deals with the whole general area of what we could call administrative reform and decentralisation of the administration. The Government's announcement to extend the decentralisation programme and to increase the number of centres involved in decentralisation is very welcome, but I would submit that it does not go far enough. We need to think of real decentralisation and, in effect, for the past 15 or 20 years we have deluded ourselves that we are talking about decentralisation. I said on another occasion here that we have one of the most highly centralised Administrations. Our bureaucracy is not only highly centralised but, because it is highly centralised, it puts a particular burden on our citizens. For example, in the social welfare system the decisions still emanate from Dublin. To my mind this is wrong.
Real decentralisation would mean shoving decision making down to the provincial centres that are now getting staff units. At present effectively we are decentralising the Civil Service and the Administration and we are simply moving sections from Dublin to the provinces. That is very welcome in that it helps to spread the economic benefits of the Administration around the provinces, but we need to go a step further. We need to address the core issue in regard to decentralisation and that is the anomaly that exists in the Ministers and Secretaries Act, 1924. There is the extraordinary myth that all decisions emanate from a Minister and, because of this extraordinary mythology, the Civil Service and the Administration effectively have to be encrusted about the Minister's presence in Dublin.
We all know that Ministers, good as they are, do not make all the decisions. We all know that many of the decisions emanate from the day to day operations of the Administration. Those operational decisions which do not need to be taken at the centre must be taken in the provinces and towns and moved out of Dublin and down to where they are closer to the citizens. That is the next priority.
Mr. Tom Barrington said some 20 years ago that real decentralisation was the next necessary thing. If it was necessary then, it is urgent now and should be addressed. I accept that Ministers who are overburdened have a difficulty in this regard. As the old saying goes the screaming babies get the attention. Sometimes that which should be done is displaced by that which must be done. In a busy schedule I would ask Ministers to look at this issue. It is an important issue and the lives and wellbeing of the citizens of the nation could be improved.
I would also venture to suggest that the lives and wellbeing of the Members of this House would be improved because one of the things that flows from our anomalous level of centralisation, our abnormal level of centralisation, is a very high degree of what some people have called clientelism. I do not accept that there is anything wrong with TDs or public representatives representing and seeking to further the interest of their constituents. To my mind it is one of the highest and most important duties of public representatives. However, there is no doubt that the situation which pertains in Ireland is abnormal. There is equally no doubt that it is not some sort of peasant culture suggested by some academic observers that created this situation but an excessive degree of centralisation of administration. I ask Ministers to turn their attention to this issue.
A further point was raised by Deputy Keating in his contribution yesterday which I listened to attentively. Deputy Keating suggested there were other areas of administration which should be looked at, for example, forms. I should like to submit in this regard that it would be worth while for us to look at the French experience. Some ten or 15 years ago the French Administration put in place a form audit agency known as CERFA, the centre for form research. That agency examined every single form used in the public service and ensured that every single detail of information which is sought is necessary and they banned and outlawed a whole range of forms which sought to put an unfair imposition on those who have to fill in the forms, the public. Major economic benefits have accrued from that and I think we could achieve a great deal in that regard.
One final point was touched on by Deputy Keating and I am somewhat surprised that those who watch the affairs of this House in the press gallery missed it yesterday. I am mystified that they missed it because this was an issue in the general election. I will quote what Deputy Keating said and I will quote slowly so that they cannot miss it today. Deputy Keating said that a basic weakness in the Government's proposals with regard to administrative reform was that:
... they rely absolutely on voluntary redundancies.
He went on:
Thus the needs of the individual rather than that of the State will be met.
If that phrase had come from any other quarter in this House it would have made the headlines because, of course, the needs of the individual should always be above the needs of the State. We do not live in a situation where we should dictate the circumstances to individuals.
It is extraordinary because this issue became a debating point when the PDs were suggesting there should be major cuts in public services during the election. If I recall correctly Deputy Colley made great efforts to make sure the press took it that she did not mean there should be involuntary redundancies. Yet here we have on the record of this House a suggestion that there must be involuntary redundancies. The Government have depended rightly on voluntary redundancies and the wisdom of the Government's decision in this regard is obvious to anybody who knows anything about the public service. It is suggested that the Government should "bite the bullet" in this regard. We are always being advised by these people to bite the bullet but when the bullet has to be bitten they are in the wrong lobby. This is hypocrisy of a most extraordinary degree.
I would oppose any decision to have widescale sacking on an involuntary basis of people who have served this State well. I urge that the voluntary element which is in the restructuring package should be maintained and I certainly reject the PDs' suggestion that that package should go forward on the basis of turfing people out on a wholesale basis. No doubt the great prevaricators in that party will find some other ways of reinterpreting this as they did, for example, when Deputy Kennedy of that party at one stage last year said in Bray: "I support the £86 million cuts in education but I do not want them in primary education." One of her colleagues said the following week: "We do not want them in secondary education" and the next week they said: "We do not want them in third level education." The money was obviously to come out of the tea money in the Department of Education. As I said, there has been a great deal of hypocrisy about economic affairs in this nation over the past ten or 15 years. It does not exist on one side only but right across the board.
Last year's budget was a welcome injection of realism and this year's budget follows on it. The Minister is to be commended on a budget that is well crafted and deals with all the important issues. In particular, he is to be congratulated in that in his budget he has made a special effort to protect those who are less well off in society. He has made an important contribution to tax reform and by continuing with his logical policies he has made a very important contribution to the improvement of the long term economic prospects of this nation. Therefore he has made an important contribution to the wealth, well being and welfare of all the people of this nation.
The budget deserves support. It does not deserve some of the carping criticism it has received. It certainly does not deserve the nit-picking which typified Deputy Noonan's contribution on it. It deserves support. It is a fine budget and it has been put before this House by a fine Minister.
I listened with interest last evening and this morning to Deputy Roche's contribution and I congratulate him on a very articulate submission, though I am not so sure that the credit he now attempts to take along with his party for the current situation which he sees as developing favourably rings of consistency. Of all the political parties in this House I believe that the one which I have the privilege and pleasure to represent at present is probably the only party who have remained consistent to any policy at all in the last ten years. One of the major problems the country has had over that period is frequent changes in policy to meet the various problems that arise. For reasons of expediency, political parties seemingly willingly have changed their policies at any given time just to meet the opportunities and difficulties that arose. If more political parties had been more consistent and remained true to their objectives we would not have the kind of problems we have today.
I have to take Deputy Roche to task also for his seemingly scant respect for the efforts of the previous Government during the past four years, and I remind him of the attitude his party took to public spending, their repeated demands for increased public expenditure and increased borrowing throughout that period. I remind the House also, lest anybody forget, that when the Government came into office we had inflation rates in the 20s and interest rates somewhere in the same region and a large number of other problems with the economy which I am not going to go into at this juncture but which are well known to everybody in this House. Dramatic changes took place during four years in the face of the stiffest opposition, of repeated motions in this House in Private Members' time and of issues raised on the Adjournment, night after night, week after week. Therefore, if anybody wants to claim credit for what has happened in the past couple of years the people on the benches opposite should be the last to raise that issue.
Notwithstanding all that, on this side of the House and generally there has been a guarded welcome for the more positive aspects in the current budget right across the board, despite what the previous speaker might say. However, nobody should forget that every book has its good and bad pages, good and bad chapters, and that applies to this budget and I am sure it applied to previous budgets. We must all recognise that there is a job to be done and we must all decide on how it is going to be done, and whether we are in Opposition or in Government it behoves politicians to remain consistent to what they see as the resolution to the problem regardless of the position or location of their benches or portfolios. That is very important from the point of view of the country and confidence in general.
Taking the budget generally, social welfare increases, for instance, are welcome, though of course we note that the child benefit area received no great recognition — in fact, it received none. That being the case, in that area there are unresolved difficulties and anybody who has had a discussion with housewives who are attempting to meet the weekly budget at present knows that they will tell you exactly how hard it is to bridge the gap week in and week out. Perhaps it is unfortunate that a little more recognition was not given there.
I welcome the tax concessions given in the budget, but I point out that greater tax concessions were given in previous budgets and when they eventually filtered down to the taxpayer the benefits were not as they at first appeared. Therefore, before anybody goes into a state of euphoria about it we should recognise that these problems have been tackled previously. We all accept that there are problems and they must be accepted by Opposition as well as by Government parties.
I must refer to a point made by the Minister in his Budget Statement regarding the satisfactory outturn. The satisfactory outturn has been much vaunted in the last week or so and a great deal of attention has been paid to it, but I submit it is not as satisfactory as people might be given to believe. First, we have all received complaints about unpaid house improvement grants, unpaid new house grants, unpaid disadvantaged area grants, a whole series of payments that have been delayed for one reason or another. When anybody rings up a Department to find out what the problem is that person is told it will be some time in the next six weeks or two months, or it is in hand and will be paid as soon as possible, or it will be paid as soon as an inspection is carried out and the inspection will be carried out as soon as possible. All in all, it leads us to the one conclusion, that for some reason we have not been able to identify — or we have but it has not been accepted yet — payments have been slowed down from the month of August onwards in the last financial year and they are still being slowed down. Therefore, the great general acclaim we have had about the outturn in terms of spending results more from involuntary cutbacks, in failure to meet just payments on demand.
Reference has been made to the introduction of PRSI for the self-employed. As previous speakers have said, there are beneficial aspects and dubious aspects to that in the sense that on the one hand extra revenue will be brought into the coffers and extra liabilities will be imposed on the Exchequer as a result. Undoubtedly it is welcome that a pension scheme will be available for everybody in this country who after a life at work may find himself or herself unable to afford his or her own pension. One way or another it is desirable that consideration be given to the introduction of a national pension scheme. Of course, it could also cost the Exchequer more money. Certainly it will cost more in administration and in benefits to be paid later and these will increase as time goes on. That has been provided for — this point has been made by my colleague Deputy Noonan — but I am not so certain that at the end of the day there may not be a loss as a result of the change rather than a gain. That has been dealt with fairly adequately by various other speakers and I will not go into it again.
I welcome the section dealing with the reintroduction of the young farmer's installation grants. Serious problems were caused when they were ceased and it is to be hoped that those referred to by Deputy Roche who were on the wrong side of the expiry date when the hatchet dropped may be accommodated to some extent under the new scheme. I ask that that be done.
I mentioned the consistency of political parties and the possible effect consistency or lack of it can have on Government and public attitudes to Government. The party opposite will have to accept that in the last 18 months they have undergone a major change in attitudes and policy in so far as public spending is concerned. One had only to read the various posters that adorned the various highways a little over a year ago to get some impression of the thinking at that stage. The public do not necessarily feel too aggrieved at what is happening at present. What they feel most aggrieved about is the fact that what is happening at present is vastly different to what was indicated in most of those posters and no doubt this type of thing will happen again.
What posters?
I can well understand why Government speakers have chosen to forget about these posters but I can think of one famous one which read: "Health cuts hurt the old, the sick and the handicapped".
It was your party who put up that.
I am amazed that a Government Minister should make a suggestion like that because it is one thing to forget about what the posters contained but to try to disown them at this stage is stretching the imagination and the public's ability to cater for that a little too far.
The point I wish to make is that the regard the general public have for politicians and political institutions is undermined by political parties and politicians when they set out on one particular course and seemingly espouse one particular type of policy and then decide to turn their backs on it. There is nothing wrong with adopting a policy; it is when you go down a road a certain distance and then turn your back on it that public confidence in the political institutions is shaken. That is a dangerous thing to do.
I would like to refer to the other negative aspect of the budget which I think has been dealt with by other speakers, the question of employment or lack of it at present. There is only a passing reference to that in the budget. I cannot see anywhere in the budget a provision that is likely to create jobs. There is absolutely no recognition in it of the fact that more than 250,000 people are unemployed in this country at present; yet, when the Government were sitting over here in the Opposition benches hardly a day went by when we did not see a hoarding or billboard showing a passport or a long queue depicting what they saw as the failure of the then Government policy to provide jobs and the only alternative for young people was to emigrate. If that was their attitude then, I cannot understand why the Government are so silent about the unemployment issue at present. I cannot understand why no great attention was given to the unemployment issue in the budget. Is it that the Government have completely forgotten about the existence of the unemployment problem or is it that the only answer they have to the unemployment problem is that the young people be exported out of the country?
During the term of office of the previous Government there were difficulties in that area and unemployment figures increased. There is no doubt about that but at least some attempt was made at that time to tackle the problem and to try to continue to introduce incentives which would help to alleviate the problem, to try to give hope to young people and to try to give hope to the parents of young people who would be coming out of school, seeking employment and coming onto the job market. There was some attempt made right through the period of office of that Government to restore some semblance of hope to those people. There is absolutely no hope now. There was not even a mention of the issue in the single biggest item to come before this House during the past 12 months. The many thousands of young people who are seeking employment and who will come onto the job market during the summer months who listened to the Financial Statement of the Minister for Finance must have felt at the end of it that there was a page missing because they did not hear anything that would give them any encouragement or enthusiasm to remain on at school.
I emphasise that point simply because young people, as we all know, are easily elated and easily deflated or dejected. They lose confidence very quickly because they do not have the experience of older generations. They take as an indicator what they hear and see over a shorter period of time. What they have seen on this occasion is a total neglect of what they regard as their most serious problem, the very problem when they leave school of having to face into the world and get employment. There is no recognition of that problem in the Financial Statement. That is very sad. I hope as the year develops we will see some further movement by the Government which will give us some indication that at least they are aware that the problem exists and that something needs to be done about it. Most important of all, if all else fails there should always be some hope. If one takes away the hope, particularly when it relates to young people, one can do irreparable damage.
I want to refer to the policy of the Government and the budget and the effects on education. From listening to speakers on the Government side of the House during the past week or so, one could be forgiven for coming away with the belief that we are living in a different country. I am sure there is hardly a Deputy in this House who has not attended dozens of meetings throughout the various constituencies in regard to the cutbacks in education. The Fine Gael Party put before this House a motion which would have resolved many of these issues in the early stage which the Government, and various other parties for that matter, did not accept. This party anticipated the problems that were about to arise but obviously other parties did not because we were forced into a situation where public representatives had to go before the people in various towns to give an explanation to the parents as to what was going to happen, where cuts were going to take place, the effect they were going to have on the pupil-teacher ratio in schools and whether there would even be a proper education system for their children, let alone jobs, at the end of the day.
If the Government had carefully thought out their plans, surely they would have made provision for all this during their discussions with the social partners away back last summer and autumn. The week before Chrismas when the budget was framed was not the time to go hunting around the country looking for a few million pounds here and a few million pounds there and wondering if it would be possible to squeeze a few extra shillings one way or the other in order to provide the necessities for the educational system.
I have to say, having listened to a number of the Government speakers, I am not so sure they were aware that this was happening. Certainly, it smacks of a great lack that the Government speakers should now be so complacent in regard to those matters. Incidentally, those problems are not over. Despite the little recognition given to education in the budget, those problems still exist. We have not heard the end of Circular 20/87, though we hope we have. There is also the question of the cuts in vocational schools and their effect on pupil-teacher ratios, the possible loss of teachers and the loss of various disciplines as a result. All of those issues have yet to be addressed.
While speaking on the question of vocational education, I have to point out that that was the one system whereby every boy and girl in the country could aspire to a high standard of education. It was available and accessible to them and they readily availed of it. This is the first time during the past four or five years that an attack was made on that system. When we talk about progress or lack of it over the past four or five years let us remember that in those years there was recognition of the necessity to provide a proper education system for the children as well as to meet budgetary constraints.
The budget debate so far has made little reference to local government although previously we heard a lot about local government reform. I am glad that the Minister for the Environment is here now as I know he is personally committed to local government reform. I hope the Minister achieves his ambitions. The Minister will certainly receive the support of every politican in this House, certainly politicians who have experience as members of local authorities. A local authority gives good grounding to politicians as it is there that they learn the rudiments of administration and politics.
We all recognise the need for local government reform, but it will not come easily. Unless something is done soon in that area the whole system will crumble. When I joined a local authority there was something in the region of three times the number of outdoor workers as administrative workers. Now the position is completely reversed. A private company in any part of the world could not exist in that inverted economic situation. The decision not to fill posts that become vacant is exacerbating the problem because generally the outdoor workers are more established and are in their fifties or late fifties, whereas the younger workers are in administration. The Government's policy in relation to public service redundancies is exacerbating the problems and there is no possibility of achieving a balance in that area in the foreseeable future unless there is a change of policy with regard to replacing staff. That problem must be tackled because if it is not, in about five years time there will be no outdoor staff in the various local authorities and we will have the ridiculous situation in which there will be administrative staff who will have nobody to administer.
The previous Minister, Deputy Boland introduced a system whereby grants were allocated to local authorites to top up the funds they raised through local charges. That might have seemed like a gimmick at the time, but it had the effect of rewarding the local authorities who had the guts to raise finances. It gave them some recognition and topped up their funds. It also had the effect of levelling off the amount of local charge imposed by a local authority.
As the Minister knows, all local authority members love to have power but they do not necessarily always want responsibility. There must be a combination of power, authority and responsibility because without that we do not have local government. The money must come along with the responsibility. It is probable that local authorities themselves allowed the power to slip through their hands. When various rates, farm rates, commercial and domestic rates began to rise it became unpopular to be associated with the charges, particularly at estimates time. Local politicians, like all politicians want to be loved by the public at all times and do not want to be involved with the hassle that goes with raising money with the result that they handed the power over to central Government. Now local government is centrally controlled. There is no point in talking about autonomy because it does not exist. Virtually the filling of a pothole on the road is controlled by the Department of the Environment. Incidentially, while I am on that subject I invite the Minister to drive to my constituency along the scenic Grand Canal route towards Sallins to discover what must be the worst county road in Ireland. The Minister must find a way to do somthing about main and county roads especially in the counties adjacent to Dublin. The immediate neighbours to Dublin have a particular problem that has not been recognised and unless some recognition is given to it the roads system in those counties will disintegrate.
I trebled the 1986 allocation to do that job. Why do you not get on to the council and tell them to spend the money and fill in the potholes?
With all due respect, the Minister can treble it and it would have no more effect. The Minister must be aware, as the previous Minister was, that the problem is greater than an increase in the funding available. There has to be a specific carefully drawn up plan to deal with the roads in these counties immediately adjacent to Dublin because every motor car and truck that travels to or from the capital city uses the roads——
They do not use the county roads.
They do use the county roads, because of the traffic congestion on the national and primary routes. All one has to do is to drive around those roads to see that. I invite the Minister to have a look at them some time, just to see for himself exactly the effect this traffic is having. I have travelled throughout the country and there is not another place of which I am aware that has such atrocious road conditions as the conditions existing in the counties adjacent to Dublin. I refer to Counties Wicklow and Meath as well as to County Kildare. They are the only counties affected in that fashion and I implore the Minister to do something about it. Unless the Minister tackles that problem the whole roads structure in these counties will completely disintegrate. The Minister's colleagues in the counties referred to will verify exactly what I have said. I am not making a politicial point. I put this to the previous Minister as well. That is the issue that ranks highest in the minds of commuters in Counties Kildare, Wicklow and Meath at present.
One often gets the odd snippet from previous budget speeches. I am sure that that will happen also in the future. The building industry is one that would hardly be an inspiration for Government speakers. I was amazed that the Minister referred generally to the economy taking an upturn and said that there was greater investment in plant and machinery. I cannot understand where this is happening. It certainly is not happening in the building industry. By checking with any of the suppliers to that industry we would quickly find out what really is happening. In the Official Report, Volume 355, column 1300 on 31 January 1985 the present Minister, Deputy Reynolds, said as follows:
This morning I was stopped at the lights in Northumberland Road and a builder came over and knocked on the window. He said: "I am absolutely disgusted that nobody knows what the reality is of business here". I asked him what he had intended to do. He said he was taking the plane to Florida to enjoy the sun and that he would come back when there was a change of Government.
If I were the Minister now, I would be very worried if that builder came along and knocked on my car window again. Anybody who is familiar with the building industry and recognises the problems that that industry face——
I am glad to say that that builder is back and has got a huge job in the docks site scheme.
If he knocks at Deputy Flynn's car window that Minister should make sure it is with his hand and not with a hand weapon as well. I have spoken to a number of such builders recently. Their reaction to present Government policies with regard to the building industry is, to say the very least, not what the Minister seems to think. There is also the question of roads and communications. Whether we want to accept it or not, there is a crying need now for more investment in roads. I well recall when Members now on the Government benches used to tell us on a daily basis that there was need for an investment of £200 million extra on roads and that this was a capital investment which would not affect budgetary policy at all. At present, all capital investment seems to have disappeared. The school building programmes, the extension of facilities in various schools throughout the country, all seem to have disappeared. I once heard a Member of this House, now sitting on the opposite benches but not present at the moment, saying that a sign of the state of the economy was the number of cranes you could see on the horizon. You can see a few of them on the horizon, but there are fewer than there were. It is now reaching a stage where they are being dismantled. Certainly, the amount of movement is very little.
My colleague, Deputy Allen, is more than capable of dealing with the health situation, to which no doubt he will refer. As a member of a health board I have to say that, generally speaking, while everybody accepts that economies must be made it is unfortunate that the cuts bear most on those who bring the services to the ordinary people who are most affected — those in community care, for example. The nurses in hospitals are concerned at the closure of wards and the loss of beds. It is not in administration that the cuts are made but where they affect the people. That is what has happened, also, in relation to local authorities. The same general principle applies, of imposing the cuts on outdoor staff, those who carry the services to the people. It is they who have been curtailed in their activities and on whom the cuts are visited most.
The Minister referred to the improved situation in agriculture. We all know that that improved situation was almost directly attributable to a very dramatic change in climatic conditions. There had been two, almost three, successive seasons of extremely inclement weather conditions, creating particular difficulties in agriculture. Fortunately, last summer there was a slight change for the better. I know the Government and the Minister are inspired, but I am not sure he could claim responsibility also for the change in the weather.
No, Deputy.
That is about the only thing for which he has not claimed responsibility. There was reference to the food industry and expansion plans in that area, which I welcome. I also welcome the Government's general thrust of policy in that regard. It provides a great area for expansion in terms of job creation and so on. I must point out, however, that there are fewer people employed in that industry than there were a year ago. After all the smoke has died away and after all the hype which we have heard before, that is the position. If that were to continue, I would have to conclude that all that hype was merely window-dressing which was not going to produce anything. I would have to issue a warning that we have heard enough of the glory that goes along with expansion plans. We want to see the potential in that area realised. We do not want to hear about continued investment policies which it is hoped will achieve 4,000, 5,000 or 10,000 jobs and find at the year's end that there is a loss of 800 to 900 jobs. That simply is not on.
One point was mentioned by my colleague and myself in the debate on Second Stage of the Abattoirs Bill. It is that grant aid which is available to meat processing plants involved in exporting is not available to similar plants catering for the home market. This needs to be tackled. We should recognise that if we want the industry to grow it can start from small beginnings and grow greatly. We should be prepared to encourage a natural progression from a relatively small plant catering for the home market to a plant capable of dealing with export substitution and exports. I am sorry there was not some reference to that important matter in the statement of the Minister for Finance. It would certainly improve job prospects in the food and meat processing area. I hope that will be borne in mind in the not too distant future.
My colleague, Deputy Noonan, made reference to costs to industry generally, right across the board. Costs here are higher than elsewhere. Electricity and transport costs are examples. There is also the cost of bad road communications, all an added burden on industry. We should strive to get our Irish industrialists competing on a fair and equal basis. This matter is extremely important. If we are to expand as an industrial nation, our costs will be the determining factor in the sense that we will be able to compete with our neighbours only when our own costs are down to a level similar to theirs. If we do not achieve that, we shall lose out.
Another problem arises in regard to the ESB. The Government are becoming increasingly reliant on borrowing from the future. Advances were made to the ESB in previous years and those advances are now being hauled in. It seems that all that is happening is that payments that will be due next year and the year after are being brought forward. That is all very well but what will happen in 1989, 1990 and 1991 when the then Minister for Finance is framing his budget? Where will he claw the money from? Those moneys will already have been expended and they will no longer be available. It is a little like what used to be Fianna Fáil policy — borrowing from the future to pay for today. It is dangerous and should not go unnoticed.
My last point refers also to industry and was mentioned by other speakers, that is the rising problem of the black economy and the reasons for it. There would not be a black economy if it were not for the fact that taxation levels, contributions, liabilities and levies on business interests are of such a nature as to make it virtually impossible for them to exist. Any employer taking on an employee at present is immediately committing himself or herself to a liability of approximately £2,000 before paying the person any wage at all. We hear a lot of hype about the number of incentives that are available but there is very little talk about the number of disincentives, the built-in, continuing, on-going disincentives which are imposed on the business community, the people on whom we rely to provide jobs in order to alleviate our unemployment problem. I know budget targets have to be met and that will always be the case but greater recognition should be given in the future to labour intensive industries by way of tax concessions. If we want the private sector to carry the responsibility for providing jobs then we must also give recognition by way of tax concessions for the effort they are making and will have to make if they are going to carry that burden.
There seems to be a theory in this House at present that the private sector has failed and various instances are cited to illustrate this. It should be pointed out that the private sector has many things imposed upon it over which it has no control, such as the costs to which I have already referred. Those costs are imposed simply because the area from which they arise are areas which are controlled in many cases by monopolies. Those costs are passed on to industry which has to carry the burden, part of which is a lack of job opportunities, a lack of incentive to work and a lack of incentive on the part of employers to employ more people.
The Deputy might now bring his remarks to a close.
In future, it would be a useful progression if Governments and Ministers for Finance were to give greater recognition by way of tax concessions to industry in response to the number of people employed there. I accept there are concessions in respect of capital but we need to relate them more to people.
Ar dtús, caithfidh mé a rá gur cáinaisnéis éifeachtach agus feabhsaitheach í an cháinaisnéis seo.
Is cuid í de straitéis an Rialtais riocht daingean a chur ar an gcóras airgid poiblí agus iarracht spreagadh a thabhairt do gheilleager na tíre ag an am céanna, i dtreo is gur féidir laghdú a thabhairt ar líon na ndifhostaithe.
Cé nach bhfuil an Rialtas in oifig ach ar feadh naoi mhí, d'éirigh linn straitéis airgid na bliana 1987 a shroichint.
Is féidir le cách a fheiceáil an tslí deariartha atá beartaithe ag an Rialtas a dhul.
Against that background, the reaction of Opposition parties to this budget has been very interesting. It has said much more about them than it has said about the budget. It has underlined a reality of which the Irish public is already aware: that we have a minority Government here which just happens to be the strongest and most decisive Government this country has had in many years and that we do not have an Opposition but a scatter of ideological hitch-hikers on the lookout for a handy bandwagon.
The elegant subtlety of this budget was that it did not give any of that scatter a bandwagon worth climbing on to. They did their best. Deputy Durkan followed the same line this morning. I must tell him and this House that I do not believe we have ever before had so mediaaddicted a Dáil. Press releases and statements are fed out with marvellous fluency. Half the Opposition do not know what they think until they hear themselves quoted the following day. So, when the budget details were clear, one major Opposition figure in this House called them "dull".
We are a Government, not the allsinging, all-dancing budget show. We are not playing to a clapometer here, we are bringing realism into the Irish economy. We are implementing a balanced solution not influenced by sectional interests or diverted by sectional interest demands but recognising the needs and possibilities that are available now.
What another Opposition party seems to be implementing is some kind of second-rate Oliver Twist performance. We also had that last week. It was not "Please, Sir, can I have some more?" but "Please, Sir, couldn't that group over there have some less?".
Let us remember that the Leader of the main Opposition party suggested last week that, given the current consensus within the House, the Government should have taken more draconian measures. That could only result in reduced economic activity and reduced living standards. The Opposition should get their act together and decide what they really want in politics in 1988. It is a bit like a group of doctors hearing about a planned operation and agreeing before they were even consulted that it was very necessary, and suggesting that the surgeon, while he had the knife in his hand, should also cut off a few spare legs and arms and maybe a nose or two. That is the kind of Opposition performance we have had since the budget was announced.
At least let us have no self-serving waffle about consensus. Let me define for the House precisely where there is a consensus and where that consensus stops. There is consensus that we have a problem. Action must be taken and we have consensus on that also. We have also got consensus on the tragedy of unemployment and emigration. After that, obviously, there is a parting of the ways.
The Government have taken a simple decision in regard to these matters, simple but courageous. They have decided to be part of the solution to those problems. They have taken radical action. They have also recognised the plight of the PAYE taxpayer. This budget underlines our intention to honour our manifesto commitment to them. The Government have done a lot more, for example, the self-assessment measures for the self-employed and others constitutes a major step forward in taxation thinking which should be recognised by the Opposition parties as such. Therefore, in the face of our problems, the Government have decided to be part of the solution to them.
On the other hand, all of the Opposition parties in this House clearly have decided to be part of the problem. The parties on the Left clearly need the problem to continue — that is what they have been seeking to achieve — because, if it does, then they can recruit from the growing misery base. That is why, for example, they can trivialise as dull a budget which has made major, unprecedented funding available toward the solution of homelessness. The parties on the Right need the problem to continue also because, if the Government build on reality and break the mould, how can those parties face the next day without a nice warm slogan to wrap around their hollowness? Has that not been the problem as represented from the far right in this House?
One commentator said that a particular Opposition spokesman talked as if he had written his speech before he had even heard the contents of the budget. I would go one step further. I would suggest that all the spokespeople talked in reaction to what they expected from the stereotype they had built up of what constitutes a Fianna Fáil Government. Of course the reality is quite different. So it was particularly in this budget, which was demanding but was also human in content, caring for the economy but also for people and their environment. In a nutshell, our budget was street wise and idealistic. Of course the Opposition could not cope with that other than whinge, which now appears to be the usual response to Government measures. They like to tinker also at the edges of the problem. So far as I am concerned Opposition should be a seed bed of alternatives. The Opposition, made up as it is now of right, left, middle left and middle right, is barren of ideas. We heard no ideas from any of the speakers this morning. Of course Fine Gael have always been strong on posturing, as is the case with some of the other Opposition parties, strong on rhetoric also but barren of ideas. Fortunately for the country this minority Government have ideas, the courage to implement them and most important of all the competence to make them work. That is a new dimension to Government in this country. When one considers that the Opposition parties who were in Government for ten of the past 14 years left behind them a trail of destruction and failure to implement any suggestions they had made over that period, one gets some idea of just how barren those parties were in Government. They have continued their sterility and barrenness in Opposition.
Our success in handling the national finances since assuming office has led to a growth in business confidence. This is reflected in the large decrease in commercial lending interest rates, including the mortgage interest rate. Bank interest rates have fallen six times since this Government took office. At a recent meeting of the CII, when in excess of 40 of the major executives of some of the bigger companies here were in attendance, it was stated that, for the first time in four years, the meeting was actually bullish, the new buzz word when investment is about to take place, when people feel there is a lift in the economy. That happened for the first time in four years just a few weeks ago. It is a strong indication that Government policies are working. It is not just a matter of our stating it here. It has been recognised in an independent way by the captains of industry outside. The Opposition should take note.
The fall in interest rates has had a beneficial effect on costs for the public and private sectors. It helps reduce the cost of servicing the public debt. It helps reduce the borrowing costs of private sector firms, especially those in the building and manufacturing industries. In my area of responsibility local authority have benefited from lower interest rates in servicing their short term borrowings, all because of reduced interest rates and good Government policies in order to achieve them.
Of course individuals are most affected by mortgage rates. There, the annual rate has fallen four times, from 12.5 per cent to 9.25 per cent, since this Government took office. That adds up to a monthly saving of £55 for somebody with a typical £25,000, 20-year mortgage, a real saving and easement for those who have to meet a tight budget. It would be much more beneficial to the Opposition were they generous in recognising the fall in interest rates in so far as it affects mortgage holders, falling from that 12.5 per cent to 9.25 per cent, an extraordinary achievement within a matter of nine or ten months.
There are other favourable economic trends such as the very low rate of inflation, surplus balance of payments due to the spectacular performance of our exports and stability in foreign rates. Government policy has underpinned all these trends. This budget sustains them further. Positive economic trends will tend to improve employment levels, particularly within the building industry where there have been some recent encouraging developments.
Obviously greater equity and fairness within the tax system is a Government priority. This budget demonstrates that we are serious about this. The new measures will ensure that nearly 63 per cent of taxpayers will be paying tax at the standard rate in the income tax year 1988-89. Who would have thought that a Fianna Fáil Government could have come so close to achieving their three-year target in nine months, of having almost two-thirds of the PAYE sector paying the standard rate of income tax — 35 per cent?
Self-assessment for the self-employed and corporate taxpayers will help to release staff to monitor and follow-up those in arrears. The measures proposed for dealing with non-complying taxpayers show Government determination to improve collection of taxes and reduce public unease about its effectiveness. For the past couple of years we have heard nothing but bleating from the Opposition parties about what they would do about collecting the moneys due to the State. There has been a major advance made in that respect this year, in so far as the incentive now being provided for a short time to those who are in arrears means that they can finally settle their affairs. It constitutes a major step forward and we deserve to be complimented in that regard. Following on the number of representations received from all sides of the House, from Deputies on behalf of their constituents who were advocating such measures, the Opposition should, in all generosity, accept that that constitutes a step in the right direction.
Fianna Fáil have always provided for the most vulnerable and deprived sectors of our community. The Government, in providing for an increase of 3 per cent in the value of social welfare benefits and health allowances, are continuing that commitment. The increase will be effective from July next as compared with the Coalition proposal last year to pay increases from November. Mind you, that Coalition had a party of so-called Left involved in its make up. When one considers that they thought that the way to deal with the people they profess to support was to leave until November the little they would receive at that time, then one sees something of how far away from the thinking of the Left that party have gone. The increase of 3 per cent may be slightly ahead of the expected rise in the cost of living, as some experts predict that the consumer price index this year could be as low as 2 per cent. Of course, there will be increases of up to 11 per cent in selected categories of long term unemployment assistance.
The least well off have received special treatment. We should all be generous enough to reflect in the House on what is regarded outside the House as a genuine recognition by Government of the least well off in society. We have discriminated positively in their favour and that must be seen as a positive step forward in reducing the existing level of poverty.
I was saddened to note, in the Opposition response to the budget, a suggestion that it has ignored the unemployed. The budget has no gimmicks, no fast fixes, no sops, no created agencies mandated to solve some aspect of unemployment overnight. What the Budget does is to boost areas which provide a reasonable expectation of generating new jobs in worthwhile numbers. The building industry, tourism, fishing and aquaculture all stand to benefit. These industries are labour intensive. They benefit the country as a whole as expenditure is spread throughout the country.
The Government are not into flag waving or speculation on unemployment figures. We set our targets in the Estimates as published and we reached them. That is some change from the practice that has been there over the past 14 years, most of which time the Government benches were occupied by the Coalition. We reached our targets, a difficult reality for the Opposition to swallow, whose preoccupation in Government was preaching figures and then failing miserably to attain any of them. That, of course, is what put them out of office and where they will stay while they continue to practise the same kind of foolishness.
Before getting down to areas of expenditure for which I am responsible I would like to say a few words about the large reduction shown in the Environment 1988 Estimate over the 1987 outturn, as set out in table 2 on page 2 of the Principal Features of the Budget
Deputies will recall the Local Loans Fund (Amendment) Act, 1987, which allows the Minister for Finance to write off amounts outstanding on certain loans from the local loans fund. The main purpose of that legislation is to simplify the system of financing capital programmes operated by local authorities which had developed into an expensive and time consuming circle of payments. The changes will not have an adverse effect on the finances either of the Exchequer or local authorities. They will reduce administrative work and improve efficiency.
The total amount of loan charges subsidy varies with capital expenditure and the level of the local loans fund interest rate. In 1987 the Environment vote included £266 million for such subsidies, while the 1988 Abridged Estimates includes about £270 million. This money is issued by the Exchequer to local authorities via my Department and then it is returned by the local authorities to the Office of Public Works as part of their loan charges repayments. I am glad these wasteful procedures are now terminated. The revised Estimate volume will provide a much clearer picture of my Department's expenditure.
This Government are setting out to create economic conditions conducive to investment, employment and growth. They are setting out to improve derelict and rundown inner city areas. The largest urban renewal project underway is, of course, the Custom House docks development. The master project agreement between the Authority and the development consortium was recently signed and construction work on the site has already begun. It is estimated that the project will cost £250 million and employ about 2,500 to 3,000 people during construction. Hopefully, it will be in excess of 7,000 on completion.
Will the Government publish the document?
Does the Deputy mean the master project agreement?
Yes.
I think not.
It would make very interesting reading.
I would regard it as a matter——
Why not? Is it not in the public interest to publish it?
I imagine it would be a matter between the authority and the consortium.
Because the tax incentives are unique.
If the Deputy wishes to put down a question I will be glad——
I will not. I will raise it at the Committee of Public Accounts and we will call the Accounting Officer before the committee. The Report will make interesting reading.
I take it the Deputy is not opposed to the development?
I could raise it at the Committee of Public Accounts and call the Minister's Accounting Officer in and we will find out what happened.
Whatever about the Deputy's intention to raise it, I take it the Deputy is supportive of the development that is taking place in the inner city and the possibilities it has for creating employment and removing the dereliction that has existed in the inner city.
What about the interbank agreement?
I cannot imagine why the Deputy insists on pursuing these matters if he is going to raise it in another forum when he will be adequately answered.
Now the Minister is getting worried.
Not in the slightest. The level of national and international interest that has been generated by the success rate to date in furthering this project is most encouraging and the speed and efficiency with which the authority and the Government have brought this project to commencement date has impressed those looking at Ireland as an investment opportunity. I have to take a bow, whether for the Department or the Authority, for the completion of the master project agreement which was done in record time has resulted in the Government receiving very favourable notice as a Government who know what they are doing and where they are going and get on with the job——
There is not one new foreign company——
That is a change that might at least concern the Deputy who continues to interject because he was a member of a Government that continued to procrastinate and delay everything while he was there.
Additionally, the urban renewal financial incentive scheme has been in operation in designated areas of Dublin, Cork, Limerick, Waterford and Galway since mid-1986 and redevelopment projects amounting to almost 400,000 square feet are being pursued in these areas. In view of the progress being achieved in these centres, it was decided last year to extend the incentives to nine new provincial centres, namely Athlone, Castlebar, Dundalk, Kilkenny, Letterkenny, Sligo, Tralee, Tullamore and Wexford. Areas have been designated in these centres and the incentives will be available until mid-1991. Let me remind the House of some amendments which were announced in the budget.
The first is extending the deadline for availing of the incentives in the five county boroughs from 31 May 1989 to 31 May 1991, the time limit set in the new areas. I was anxious that whatever incentive package is available in a designated area, whether it is a borough council or a provincial centre, that they would all apply in the same way over the same period of time. That has been welcomed by many of the authorities involved in those areas.
We are also altering slightly the boundaries of two of the designated areas in Limerick and Dublin where development was being hindered by their original boundaries. Because of new investment opportunities becoming available in those areas there is need to extend these areas slightly and that will be done in the immediate future. We are also designating an area in or around Tallaght town centre. This is a response to representations that have been received, pressed and promoted on all sides of the House and I hope we can get around to finalising that matter and doing something really positive to bring investment and improvement to an area that is long waiting for it. This will bring much investment and prosperity to all the centres involved. My Department will be finalising details of these three amendments which I will be announcing shortly.
The good news on the designated areas front is that private investment is available and willing to get involved in urban renewal. It must be an indication of confidence returning in the private sector so far as development and putting up money in the area of construction are concerned. This will provide facilities that are badly needed in many of those derelict areas in the designated areas and also in the new town centre in Tallaght.
The Government are also providing a special £1 million revolving fund to the National Building Agency to enable them to invest in certain developments which will bring together local authority, private and voluntary interests in provincial centres to promote urban renewal. The fund aims to further stimulate and encourage private investment in this type of activity.
Two crucially important environmental measures were included in this budget: the concession in the excise duty on unleaded petrol so that it can retail at the same price as premium leaded petrol, and the new scheme of financial assistance for smokeless zones which I have been authorised to prepare. I make no apology to anybody. I have been seeking these two measures for a considerable time and they are a great response to what has become a major problem particularly for Dublin city.
Lead pollution from petrol is a serious environmental problem. It is a threat to the health of young children. Already we have reduced the lead content of leaded petrol in this country to a low level of 0.15 grammes per litre. Bluntly, that is not enough. Longer term, we have to phase in unleaded petrol. We have to reduce the use of leaded petrol and, ultimately, we should replace leaded petrol with unleaded petrol. We have some forecourts already in place with unleaded petrol available for sale and I expect there will be a huge expansion in the sale of unleaded petrol in the very near future.
The main obstacle to achieving this objective has been the higher price of unleaded relative to leaded petrol. This is due to the higher refining and transport costs associated with unleaded petrol. So, even though unleaded petrol was introduced in Ireland nearly a year and a half ago, it has not made much headway because it has been retailing at nearly 5p per gallon more than premium leaded petrol.
The budget excise duty concession will end this disincentive by allowing unleaded and premium leaded petrol to retail at the same price. It is now a matter of choice. I intend to exploit this initiative fully in promoting the use of unleaded petrol in this country. We are extremely well placed in that as much as one-third of the Irish car fleet can use unleaded petrol either straightaway or with minor timing adjustments.
Availability of unleaded petrol is now a key issue in tourism. Large numbers of mainland European motorists, particularly German, Dutch, Danish, Scandinavian and Swiss, use unleaded at home. When they come to Ireland, they want to do the same.
Many of our motoring tourists from mainland Europe know their cars cannot work properly on leaded petrol and the first thing they look for is the forecourt selling unleaded petrol. Now we will be in a position to impress upon the companies the necessity to provide the alternative. It will be no loss to them but it will be a major boost so far as tourist promotion is concerned, and I believe it is being welcomed by all in the industry. This point is well appreciated by the Minister for Tourism and Transport and by Bord Fáilte. It takes on added significance given the Taoiseach's recent remarks about the proper promotion abroad of Ireland's tourism image.
This budgetary concession, along with the £4 million announced in the budget for a package of tourism measures, will enhance tourist access to Ireland by facilitating continental motorists whose Governments and motoring organisations have already been complaining about the non-availability of unleaded petrol in the countries they visit. I would like to thank the oil companies who, on my recommendation last year, increased the number of outlets for unleaded petrol even with the differential in the price, but the take up was, to say the least of it, negligible. I will now have further discussions with the companies and I am satisfied they will take on board what I regard as a major advance so far as emission control, pollution control and tourism development are concerned, by providing the facility of making unleaded petrol available throughout the country.
State assistance for smoke control measures, as announced in the budget, will be of particular interest to Dubliners in this Millennium Year. The Government have agreed to allow up to £250,000 to be spent in 1988 to begin a scheme of financial assistance towards the cost of smoke control measures.
The Dublin smoke situation is by far the country's most serious air pollution problem. The need to remedy it was the main reason behind the enactment of the air Pollution Act, 1987, which this Government actively promoted through the Dáil upon assuming office. Smoke emissions in Dublin are actually greater than for the whole London area and, relatively speaking, smoke pollution in Dublin is six times more intense. Dublin inner city and areas such as Ballyfermot, Crumlin, Cabra and Rathmines regularly exceed EC limit values. Medical commentators, the media and increasingly the ordinary Dublin public have been voicing concern about this.
Some 80 per cent of smoke pollution in Dublin arises from domestic sources. The remedy envisaged in the new Act for local authorities, subject to ministerial approval, is to declare "special control areas" or smokeless zones. In line with their statutory obligations, Dublin Corporation have just completed a survey of nearly 900 houses in Ballyfermot with a view to this zoning.
Smokeless zones will require householders to find an alternative to burning ordinary coal in an open fireplace, either by changing their heating system to, for example, a gas burner, or by using smokeless solid fuels which will also require adaptations in terms of an enclosed stove or an upgraded open fireplace. Financial assistance towards the cost of these adaptations will be available under the scheme now approved in principle. The practical preparation of the scheme will now go ahead as a matter of urgency and I will announce the details later.
Some commentators have speculated that the new grants scheme will be linked to a particular type of heating appliance. This is not going to be the case. In principle, I would like the scheme to encompass all suitable appliances, whether for gas or solid fuels.
The relatively modest sum of £250,000 has been earmarked for this rather than a larger sum because the procedures for establishing smoke control areas recently enacted by the Oireachtas in the Air Pollution Act, 1987, necessarily involve some time. On top of that, a minimum period of six months must be allowed under the Act between the confirmation of an order and its coming into force. While I am anxious for remedial action on Dublin smoke pollution to be developed quickly, £250,000 is sufficient provision for the grant liabilities likely in reality to mature in 1988.
Having provided the legislative framework to tackle the whole problem of air pollution, I am satisfied that we can now undertake practical steps to apply smoke control measures to areas of greatest need. It comes down to a simple, basic fact of political life. Passing legislation without giving it the financial muscle to implement it is a waste of time. What we did last year was to get the legislation through and what we have done in this budget is to provide the money to make it work.
Not enough.
As much as is necessary and, if more is needed, it will be there. With the time scale the procedure and formula which have to be adopted by the local authority, the amount I have provided cannot physically be paid out in any greater amount in 1988.
I have decided not to proceed with the development of the site at Baldonnel which it was intended to develop for the storage, prior to export, of hazardous waste. The site is not suitable as far as I am concerned. Capital grants up to 50 per cent will be made available by my Department to private sector operators to encourage them to improve and extend the range of treatment, recovery and disposal facilities for hazardous waste. In addition, to make sure that planning in this area is based on current and comprehensive information, my Department are commissioning a feasibility study of the technical and economic aspects of the possibility of the provision of a national hazardous waste incinerator. Progress in the safe disposal of hazardous waste is urgent to ensure that existing and potential employment is not endangered by the lack of suitable disposal arrangements for the inevitable waste. We might as well realise that it will not always be possible to export our waste and gear ourselves to deal with the matter.
One of the positive happenings in 1988 is, of course, Dublin's Millennium. The Government are contributing to it by providing £700,000 from the surplus generated by the national lottery for a wide variety of projects and events including community involvement, youth, sport, arts and culture.
We are anxious that permanent improvements are also undertaken for the Millennium and my Department have already given £250,000 to Dublin Corporation for the repaving of Grafton Street. We have been assured that work on this project will be finished in time for St. Patrick's Day.
It is important, too, that improvements should be carried out to O'Connell Street and the corporation have at my request, drawn up plans for the widening of the central mall and, in the longer term, widening the footpaths and reducing the traffic flow. The Department of the Environment will be providing a further grant of £250,000 towards the improvement of the mall this year and this will be matched by a similar amount from the corporation.
We must encourage private investment in specific sectors of the construction industry.
One of the best ways is by the restoration of the so-called section 23 incentive for investment in private rented accommodation, under which a 100 per cent allowance will be available in respect of reasonable expenditure incurred on the construction and refurbishment of private rented residential accommodation.
The allowance will be set against rental income from all property in the State. This fulfils a specific commitment in the Govenment's pre-election programme and is one of the principal recommendations of the Construction Industry Development Board.
When this incentive existed previously from 1981 to 1984 it proved to be singularly successful in boosting building activity in the private rented sector and in increasing the supply of rented accommodation.
The restored section 23 incentive should result in an increase in the supply of accommodation which should ensure that rent levels remain reasonable. Another benefit will be a raising of general standards in the private rented sector as older substandard accommodation is replaced by modern units.
There is another important point here. The original section 23 had relatively little impact outside Dublin and, perhaps to a lesser extent, Cork. I know that other cities and towns regarded the demise of section 23 as a lost opportunity and I would hope now that developers and investors throughout the country will avail of this important incentive to an extent that did not occur previously. The incentive only applies for three years.
It is worth noting that when previously in operation, section 23 had an unexpected effect on certain types of residential building which was not confined to the private rented sector only. Because of the incentives, many builders undertook high quality developments of town houses and apartments and found that in many cases the bulk of the development was sold to owner occupiers.
So, quite apart from its direct impact in providing rented accommodation, section 23 encouraged house builders to discover an important element of the market which had been largely neglected. The mortgage rate is now at its lowest level for 15 years.
The prospects are good for private investment in the commercial sector of the construction industry. Out in front, of course, is the Custom House Docks site, with investment in the region of £250 million. That means an immediate impact on construction output and employment in the Dublin area. It should also become a catalyst for further growth in private investment in construction, creating a knock-on momentum for development and recovery.
Other areas of private sector involvement are the provision of office accommodation in provincial areas as part of the Government's decentralisation programme, the construction of the Galway Road/Navan Road section of the Dublin Western Ring Road and some major industrial projects such as the Saehan project in Sligo. In the public area, the public capital programme affecting the building industry is set at nearly £900 million. This is a very substantial sum in times of severely restricted funds.
My colleague, the Minister for Energy, recently announced that work would commence immediately on the extension of the natural gas grid northwards. The total cost of the project will be approximately £30 million and during the construction stage it will provide 200 jobs in the construction industry.
In regard to stamp duty, this budget has removed perhaps the worst trap or distortion from the present system with the introduction of a new reduced 5 per cent rate for properties in the £50,000 to £60,000 price band.
Up to now, stamp duty on houses up to £50,000 was levied at 4 per cent while houses over this limit were rated at 6 per cent. This resulted in a 50 per cent increase in the rate of stamp duty payable. The change will represent a saving of £600 on the purchase of a £60,000 second hand house.
The Government have approved my proposals for a special allocation of £3 million over three years to finance the provision of accommodation for homeless people by voluntary organisations. Voluntary Housing Organisations are now playing an increasingly important role in this area. Expenditure under the voluntary housing scheme is increasing year by year, but it has not achieved much in the way of additional accommodation for the homeless.
The additional £1 million provided in the budget will bring to £4 million my Department's allocation to local authorities for fully subsidised loans to voluntary housing organisations in 1988. In addition to increasing funding, I wish to inform the House that I am also amending the terms of the scheme to make it easier for voluntary organisations to provide accommodation for homeless people which, being not necessarily self-contained, is at present outside the scope of the scheme except in exceptional circumstances.
In recognition of the fact that the existing requirement to meet 20 per cent of the cost of providing accommodation is particularly onerous on voluntary bodies assisting the homeless, I have also decided to increase from 80 per cent to 95 per cent the level of assistance available in any case of accommodation for homeless persons.
The increased provision, together with the change in the level of assistance which may be advanced, will let voluntary organisations expand and develop their role in housing the homeless. There is no point in having legislation without the money to implement it and, since I became Minister for the Environment, I have provided the money and I will introduce the legislation later.
The Focus Point organisation have been developing an integrated range of services for homeless people. Very important within that range is help for homeless people to resettle whether in local authority or private rented accommodation.
Last year, following a request by my Department, a building in Arran Quay was made available by Dublin Corporation to Focus Point. They undertook extensive rehabilitation work so that it might provide accommodation for homeless young persons. I am pleased that it has been possible to make a specific grant of £50,000 towards the substantial costs incurred.
All that I have outlined should make a significant improvement when it comes to accommodation for homeless men and women.
I am also reviewing the tenant purchase scheme introduced in August 1986 to see if tenant purchase can be made more attractive. House tenant purchase should be encouraged as I should like to see greater home ownership. There are 120,000 local authority houses involved and the cost of management and administration of those houses in 1986 was £65 million, exceeding the rental income of £41 million by £24 million. The decline in sales of local authority houses has taken place since the seventies and I am now interested in bringing in a new tenant purchase scheme so that more people can own their own houses and reduce that imbalance in rental income, administration and management costs.
The 1988 provision for the local authority rate support grant stands now at £186 million, a reduction of £39 million on the amount included in abridged Estimates volume published last October. This reduction arises from the changeover to the new capital grants system which I referred to earlier and represents the amount of Local Loans Fund repayments which local authorities will not have to meet in 1988 from their own resources (including rate support grants) following the write-off of loans by the Minister for Finance on 1 May 1988.
I should also point out that the 1988 rates support grant provision which will appear in the Revised Estimates volume will incorporate the £13.08 million in Vote No. 18, Rates on Government property — which will in future be paid by my Department to local authorities as part of the rates support grant, much to their advantage. Notwithstanding the reduction in the rates support grant provision, the Government will still be providing about £450 million to fund local authority current expenditure in 1988.
Local authorities will also benefit financially from other developments, including the early estimate periods I introduced to help them manage their cash flow better, lower interest rates and cheaper energy.
All this does not take from my clear understanding that 1988 will not be an easy year for local authorities. I commend them for the responsible way they managed to strike a balance between necessary economics and the maintenance of local services. It has been a workmanlike approach and it augurs well for the future.
The workmanlike approach of this budget also augurs well for the future. It is a budget which is resolute in its adherence to the direction this Government have established — but it is also a step away from the politics of misery.
That has been recognised by the public. The reaction to this budget has been positive. There has been no euphoria by one favoured section — it was too fair for that. But the general public have seen a continuation of the commitment to getting the national books right, while at the same time showing concern, showing innovation, showing imagination.
Finally, I must reiterate that this is the first budget — the first budget ever — to make real provisions for the solving of environmental problems. I suppose that sums it up. This Government sees growth, development and a positive future for Ireland — and we are also going to make sure it is a country beautiful to live in, with air that is fit to breathe.
May I remind the House of the following statement which I will quote from the budget speech of Deputy Haughey on 6 February 1985? He said:
Practically everybody outside that small cabal of right-wing Ministers and monetarist economists who are slowly destroying our country clearly see what is needed and what should be done.
He went on to say:
Indeed, at times it seems that somewhere in the Government establishment there is an inexplicable malevolence towards building and construction as an industry.
This budget has failed to confront the three main problems now facing our country. We have unemployment where one in every five of our labour force has no work. As Deputies we know the poverty and the degradation that means for tens of thousands of individuals and families.
Secondly, we have still, after the budget, a taxation system which has done nothing to redistribute resources, in fact it has gone in the other direction. Our taxation system is still narrowly based and open to substantial evasion. It still does not control the black economy. This is because there is one single thing missing from the budget and that is the question of total disclosure. That is totally glossed over. In terms of bank accounts, building societies, commercial and financial institutions there is no provision for total disclosure. Even in the power of attachment, there is no provision.
Thirdly, this budget fails because the burden of lowering the current budget deficit and our foreign debt must be reduced. There is no dispute in this House in that regard. There is still that burden on the backs of those with low incomes and who are dependent on essential social services. I will give one example. Last year, from those on relatively low incomes £7.5 million was taken in out-patient and in-patient charges. That amount was taken from people who were sick and either in hospitals or needed to use out-patient facilities. They had to pay.
We have a Fianna Fáil Party who, in my opinion, have betrayed their historic concern for the poor and who, uniquely in this country, are enshrining a two-tier health system, a two-tier hospital system in a society which is becoming two-tiered in itself.
In the past 12 months there has been a doubling of the number of deaths from AIDS. What was the response of a former Minister for Health, now Taoiseach to all of this? He abolished the Health Education Bureau. We now have a staff of six in an office in Mount Street called the Education Health Bureau but with no director, a fictitious budget, no output and no work. We saw the Galway report on juvenile alcoholism. We saw the ESRI report on rampant adolescent alcoholism in Dublin. Yet there is nobody to talk about lifestyles or to produce basic public health education programmes. I say shame on the Taoiseach for allowing that to happen.
I recognise, a Cheann Comhairle, that given the budget requirements for social services and for unemployment related expenditure there is a very restricted scope for major reductions in total taxation at present. However, the budget should have provided some stimulus for employment. It could have introduced real measures of tax reform. It could have gone much further in reforming our social welfare system and it could have provided a much greater equity in the taxation system. It could have done those things and above all we could have had a budget which would have protected essential social and public services. That did not happen because, regrettably, there is a political consensus in this House — it is a very perverse consensus based on imported monetarism of the worst kind and dominating now the main parties in the House — that the only way to restore order in the public finances is to cut public expenditure left, right and centre.
This deflationary policy, this status quo policy — because there is nothing new in this budget — must be opposed. Otherwise our country will continue in a major crisis of growing emigration, an ongoing inequity built into our tax system and more and more people on long-term unemployment assistance.
There are now, as we speak this morning, 112,000 people on long-term unemployment assistance and by the end of this year the number will be 120,000. We could add to that 15,500 smallholders who are effectively long-term unemployed who are not on the live register. The long-term unemployment figure is frightening within our country. What is the policy? Another £300 million is to be cut in public expenditure in 1988 as we will find when the Estimates are published at the end of this year. On and on it goes. At least 30,000 people — 35,000 most likely — will emigrate, our youngest and best educated in many respects as will also families whose members may have jobs but who are suffering from a sense of despair and a depleted morale. One can look at electoral register just published to find that that is the case. This deflationary policy is the most severe in the history of our country and it is based on the Programme for National Recovery.
I endorse the statement made by the Combat Poverty Agency in their pre-budget submission. I thought it was a most pertinent statement in that it referred to the programme as follows:
The strategy contained in the Programme for National Recovery will not significantly alter the position of that third of the population on the lowest levels of income.
Equally, we must take account of reputable economic commentators in relation to both the budget and the pre-budget position. It is frightening that the Central Bank in its latest quarterly bulletin forecasts that the rate of unemployment will increase further in 1988 and that the deflationary policies of the Government will reduce real GNP in 1988 by at least a half of 1 per cent. Independent economists from the ERSI — and I regard Mr. John Fitzgerald and Mr. Bradley as independent economists — in a very pertinent post-budget analysis stated that the overall effect of the budget would be more unemployment, more deflation and a further drop in GNP.
Last week when the budget was introduced and when I got sight of what can only be described as a pallid Finance script, with due respect to the Department of Finance, my hopes faded. I had hoped we might have seen a Minister, even a Minister for the Environment, talk about the need for a new comprehensive income-related property tax but there was not even a smell of it. I thought we might have seen a real effort being made to integrate RSI records of social welfare and income tax payments but there was not much evidence of that. I thought we might have seen a new statutory sick pay scheme which the Minister for Social Welfare has been talking about for the past 12 months. The prospect of that has disappeared. I thought we might have seen a real system of pay-related social insurance for the self-employed being introduced but what did we get? We did not even get a half measure. I thought we might have seen the introduction of the second phase of a child benefit scheme which I brought in in 1985-86 but what did we get? It has been frozen and for the second year running there will be no increase in child benefit. No effort has been made at reform. They have all gone back to that Finance burial chamber of interdepartmental committees and what has been brought in has been emasculated beyond recognition.
One of the more tawdry episodes in the history of Fianna Fáil has been its shifting policy on employment in the public service. In 1977-78 a Fianna Fáil Minister for Finance issued letters of congratulation to Government Departments — I have seen some of those letters — and other State agencies on their reaching the Government target on new recruitment in the public service. Ten years later a Fianna Fáil Minister for Finance and the public service is now congratulating State agencies on their achieving the exact opposite, a target of so-called voluntary redundancies. This new policy in the classical Fianna Fáil response oscillates from one extreme to the other. Both are unacceptable. Effectively, almost anybody in the public service may now opt for redundancy. For all practicable purposes any public servant aged 50 or over may opt out. There is no selectivity. That he or she may be a key worker of outstanding personal worth in the public service is of no relevance. The attitude of the Government and the Minister for Finance is: "Let them go if they want to". Key Departments who are expected to spearhead the control of public expenditure or the introduction of new taxation measures are not even exempt.
Consider, for example, two situations. Six assistant principal officers in the Department of Health have left, and that in a Department which has very few assistant principals. I do not blame them for going; I would be tempted to go myself such is the chaos in that Department. In Dublin County Council, 587 staff will have left between January 1987 and the end of this year. The effect of these redundancies on the quality of administration in, first of all, the health services and secondly in the most densely populated county, County Dublin, will be devastating both in the short and long term. All this is being done so that the Taoiseach can prove to his new-found stock exchange friends that he is a reformed macho expenditure cutter. Even Dublin Fire Brigade is not secure from the zeal of the redundancy policy.
It is said that we, the Irish people, are a people of extremes. All that I can say is that it seems that the Taoiseach is determined in his endorsement of this public service redundancy policy to give this reputation an entirely new dimension. How do we meet the cost of this policy? It is in a mess at this stage. Here again, we go from one extreme to the other. We can all recall in the halcyon days of Fianna Fáil expenditure the famous phrase "self-financing subsidies" as the vehicle of economic growth. Now to meet the cost of those redundancies a new economic phrase has been coined —"advance surplus payments from the Central Bank". Money which they would have earned, £80 million has been brought forward but of course we will have to pay it back between 1990 and 1993. The only complication is that the money must be paid back by a future administration between 1990 and 1993. Meanwhile the public servant retiring at age 50 with a lump sum and other payments will be drawing on an actuarial basis some 24 years pension — average life 74. Seven and a half years have been added on to get him out.
Is it any wonder that there is a rumour now that a new association is going to be formed, the association of redundant but not retired public servants or civil servants. There will be room for one as we get rid of 10,000 public servants in 1988 at a cost which no other European country would contemplate and on the basis of a policy which has been ill-conceived and ill-costed and which is being ill-implemented. That policy should be declared redundant forthwith and the £80 million should be spent more profitably and more productively. In my opinion if you want to borrow £80 million from the Central Bank it should be spent on the public capital programme. Indeed, I would have expected that the public service trade unions in the congress would have shared my views on this matter. It is a matter of profound concern to me that in their comprehensive discussions with the Government they seemed more preoccupied with the so-called voluntary options of redundancy and the levels of payment than with the far more critical matter of the great impact of that policy decision on our public services and, secondly, that the money should be used for more productive job creating purposes. I regret that unfortunate response to the Government and it will be very much regretted in the months ahead.
We have had no fundamental reform in the taxation system in the budget. There has been one major change in taxation in the past three or four years, the introduction of the deposit interest retention tax. That was spearheaded largely by my party despite intensive opposition from multiple sources, including Fianna Fáil. The House will remember the way Fine Fáil Members spoke of the impact of DIRT on children's savings. Nevertheless, that tax has proved to be a major revenue earner bringing in last year no less than £298 million. More revenue accrued from DIRT than from corporation profits tax in 1987. That was a very substantial tax reform by the last Government. In fact, the amount of money collected from DIRT is almost the equivalent of all of the public expenditure reductions in 1987, £300 million. That is sobering thought in terms of a new taxation measure. In the long run there was not a great outcry about it and, relative to the cuts in expenditure, it was much more equitable in our society.
The Minister for the Environment in the course of his speech did not refer to the unprecedented slump in activity in the construction industry. I do not think we fully appreciate that the public capital programme has been cut by 23 per cent, or £228 million. That is the single largest reduction in the public capital programme in the past 30 years. About 10,000 construction jobs will be lost as a result of that reduction and the prospect for 1988 looks grim indeed. We have had a lot of hype about the Customs House docks site development which depends on very shakey private investment but that cannot mask the massive reduction in State led activity at all levels of the construction industry. I can recall the assurances given by the Taoiseach, and other members of Fianna Fáil, to the construction industry and the building trade unions in the course of the general election campaign but those promises have been turned on their heads in the past 12 months.
We have had the unique decision by the Government to extend the urban renewal scheme to the Tallaght Town Centre and I should like to know why that decision was taken. A political correspondent in the Sunday Tribune last Sunday said I had made some innuendoes about it. I did not make any innuendoes about it; I stated the facts. I said there were private developers involved who put the gun to the head of Dublin Corporation. Monarch Properties Limited are the developers and that is well known. They said they would not go ahead and we have revised and revised the Tallaght Town Centre project. That company sat on the project until they got tax benefits applied to them. Fianna Fáil caved in. I should like to ask the Minister why those incentives are not extended to Blanchardstown.
It appears that urban renewal is being applied to green field developments. What a policy mess we have. In Government we decided to have this incentive applied to certain designated areas of Dublin, Cork, Limerick, Galway and Waterford but what has happened since? In a classical Irish move those incentives have been extended all over the place, to Tallaght, Castlebar, Athlone, Dundalk, Kilkenny, Letterkenny, Sligo, Tralee, Tullamore and Waterford. When are we going to extend the incentives to Clonmel, Blanchardstown, Dún Laoghaire, Bray, Wicklow, Mullingar, Ennis, Navan, Monaghan and Mitchelstown? The scheme is now a mess. An entirely laudable programme of urban renewal and re-instatement has been messed up for purely political reasons. The Minister for Finance must disclose to the House the cost of the tax concession in relation to Tallaght. He should give the House details of the concession given to the company concerned and if he does not do so, as a member of the Committee of Public Accounts, I will call in the Accounting Officers of the Departments of Finance and the Environment and put the question directly to them.
In the course of his budget speech the Minister for the Environment disclosed that the master project agreement between the Custom House Docks authority and the development consortium was signed recently but when I asked him to put a copy of the project before the House he refused, despite the fact that it involves £250 million of an investment, including State money. We are all aware that that agreement was not signed until the gun was held to the head of the Minister for Finance whose Department completely opposed giving a concession. The gun was held to the head of the Minister for Finance to have special tax concessions applied to an inter-bank deal in relation to that master project. There is no reason why details of that project should not be published but, once again, they are at it in terms of tax concessions and tax evasion. The House is entitled to know what is going on and I intend to pursue the matter until I have unravelled it.
With regard to the construction industry, the Central Bank estimated that there was a decline of 6 per cent in building and construction industry employment in 1987. During 1988, it is forecast that there will be a further decline in manufacturing employment and that output in the building industry will decline. In 1987 output was down by 10 per cent and employment was down by 6 per cent. Yet, we had a stupid decision by the Government to mutilate the public capital programme for 1988. That will cause a further dramatic decline in activity in the construction industry. On budget day the provision for infrastructure, which was savagely cut in 1987 to £116 million, was further reduced to £64 million for 1988. The impact on employment will be of major consequence in 1988.
The alternative was quite clear-cut. The public capital programme should not have been cut in such a deflationary manner because there are very many viable projects in the pipeline. For example, many major roads within and between large centres of population are in a deplorable state and are a serious impediment to industrial and economic development. Secondly, the voluntary redundancy scheme should have been abandoned and I call upon the Government to abandon it now. We need our nurses, our teachers and our public servants. We already have ample provision for people to retire. Under the current schemes anybody over the age of 50 can go. There is no need for a special incentive to persuade people to leave. The public services redundancy scheme should be abandoned forthwith.
I would also ask that the public capital programme allocation to the National Development Corporation should be increased. The amount provided is very small. If we are to contain during 1988 the situation where we have 120,000 long term unemployed, we need to put money into social employment programmes. There is no reason why £25 million could not have been allocated from ESF moneys for such schemes in 1988.
Despite multiple Government schemes to bring the farming sector into the tax net, farmers now pay less than half the tax in real terms that they paid a decade ago. By means of blatant political blackmail the IFA have successfully frustrated every reform of farm taxation, from the wealth tax in the mid-seventies to the land tax of the mid-eighties. In addition, this sector has been in receipt of massive Government and EC subsidies. It should also be borne in mind that since 1986 many thousands of farming families with children have been paid the enhanced rates of child benefit with no loss of the child tax allowance as in the case of PAYE workers. In effect, there has been a net additional transfer of child benefit of about £4 million a year direct to the farming community. The non-taxing of farmers has impeded the full introduction of a taxable child benefit scheme. In addition, farmers still owe £20 million in unpaid agricultural rates and they owe at least £15 million or £16 million in unpaid health contributions and levies.
I opposed the Fianna Fáil decision to abolish the land tax and I was horrified at the decision to close down the farm classification office. We have the scandal of public servants staying at home and being paid not to come to work because they are redundant in the farm classification office. That has been going on for the past six months. They do not know what to do with them. It is incredible but it is a reality. We are adamant that an effective system of farm taxation must be introduced. I would have preferred the total abolition of the VAT refund scheme rather than tinkering around with it last year and this year. It would have brought in additional revenue of £15 million or £16 million if it had been abolished altogether. In 1986-87 the average farmer paid £600 in income tax, while the average PAYE worker paid five times that sum. Because of Fianna Fáil promises in relation to the land tax, the farming community paid only £34 million income tax in 1987. This contrasted with £37 million in 1986.
I now turn to the appalling decisions relating to PRSI for the self-employed and farmers. I feel very strongly about this issue because for the past decade I have campaigned in Opposition and in Government to bring about this basic reform. In Government I was responsible for the setting up of the National Pensions Board and for the terms of reference which enabled the board to report on this issue. I warmly commend the board and in particular their secretary for a most comprehensive and authoritative report.
The decision of the Taoiseach, against the clear-cut advice of the Minister for Social Welfare, to introduce a rate of 3 per cent of PRSI for the self-employed, less than half the proposed 6.6 per cent, has been rightly described by responsible pension actuaries as an abject capitulation to the IFA. This Government's decision is a repudiation of the report of the National Pensions Board. Indeed, I find most disturbing the major lack of any real influence by the ICTU when this decision was being taken. I know this was done for pure political expediency. The net effect of this decision is that in ten years time the Exchequer will, in effect, be paying at least 85 per cent of the self-cost of providing pension for the self-employed.
Our PRSI system is a "pay as you go" system. At least the 40:60 ratio of personal contribution and Exchequer subsidy should have been maintained at all costs. Unless the Social Welfare Bill for 1988 provides for the 5 per cent rate by 1990, we will vote against that Bill. It would be a tragedy to lose the principle of introducing PRSI but I cannot accept that just 3 per cent will appear for 1988 and nothing else for 1989 and 1990. I further submit that the proposed PRSI rate is unconstitutional. It is self-evident that it is contrary to natural justice to charge a voluntary contributor 6.6 per cent and a self-employed person 3 per cent for the same social insurance benefits. In short, the Government have sold out on this fundamental issue and have almost destroyed the prospect of a fundamental reform in this area. However, there is time to change the decision. Many members of the National Pensions Board have greeted this Government decision with dismay.
This Fianna Fáil Government, uniquely in the history of the State, have extended and reinforced our two-tier system of health care. In 1987 the Minister for Health closed down 2,325 consultant staffed acute beds in health board and public voluntary hospitals, 334 non-consultant staffed acute beds, 349 geriatric beds and 609 psychiatric beds, a total of 3,617. In 1988 some 1,500 further beds will close at all levels. Meanwhile new private and semi-private beds are being installed. For example in the Blackrock Clinic in Dublin new beds are being installed and they have received planning permission for a new floor. In St. Vincent's Hospital, Dublin, the fourth floor is being converted into private and semi-private accommodation. There is nearly a £4 million new development at the Bons Secours, Cork, all for private facilities. The Brookfield Clinic, Cork, is due to come on stream at a cost of £12 million. We will probably have the privatisation of the Waterford City and County Infirmary and a number of other now closed public hospitals will be converted into private hospitals.
BUPA, the British United Provident Association, are deeply involved in the Blackrock development and we have another company, Community Hospitals (Irl.) Ltd, actively involved in Galway and now in Waterford. It is a matter of grave concern that this situation has arisen because there is now an acute shortage of public beds in our public hospital system, The future of the VHI in trying to cope with the great development of private companies in private hospitals is a matter of great concern. For example, even in major hospitals such as hospital 1 and hospital 7, of St. James' Hospital in Dublin which is a public voluntary federated hospital, they are converting two full public wards into private and semi-private accommodation to try to keep the hospital going. The reconstruction of that hospital has been almost completed at a cost of anything up to £90 million in public capital moneys and public beds are being snatched out of it at an enormous rate. The same is happening in relation to the new theatres in the hospital and more and more consultant staff are using these hospitals for private patients.
The Department of Health are so desperate that they are encouraging the use of private beds in order to get some VHI money into the hospitals, whether it be the Cork Regional Hospital or any other flagship hospital throughout the country. This simply means that medical cardholders and the 40 per cent of the population who are not in the VHI cannot get into hospital for acute emergency treatment and certainly elective work is out of the question because the hospitals are not open for that development.
Therefore, I am greatly concerned about this and I am greatly concerned that within the House there is still a consensus that health care should be allowed to develop into a two-tier system. Indeed, all I can say is that there are very few Members of the Houses of the Oireachtas or senior public servants queueing for public beds. It is ironic that the VHI which had an increase in charges of 8.2 per cent in 1987 are likely to face another major increase as more and more pressure comes on them within this two-tier health system, which is being introduced. In fact, we have a total absence of, and complete opposition by vested interests to the regulation of hospital development in this country. It is commonplace in America, Canada and throughout Europe that you cannot open one new bed without statutory approval. Yet in Ireland we have a two-tier system standing on its head. People are being abused and have no prospect of ordinary effective acute medical care.
That is why we have demanded that moneys should be reinstated into the public health hospital system because. I know patients who had to go into a private hospital to have a cardiac by-pass done who got a bill for £11,500 for a three week stay in hospital. They got £3,000 or £4,000 from the VHI and they had to mortgage their houses for £6,000 or £7,000 to pay off that bill. That is the kind of health care system which this Government are implementing in our society. I reject that and I believe we can bring about a far better system.
Finally, I am pleased that the refund of drugs scheme and the drugs scheme for long term illness have been continued. That is a tribute to the Opposition in this House and the way the labour Party opposed the earlier decision. I am pleased that the National Social Service Board and the National Rehabilitation Board have not been abolished. We exposed that issue in this House and we campaigned for it in no uncertain terms. The Opposition parties, and in particular the Labour Party campaigned to have those regressive decisions not implemented by the Government. With regard to Barrington's Hospital I hope we will see a change in policy here today. Although I am all in favour of rationalising acute hospital beds in many areas, the manner in which this particular episode has been handled is pitiful. I want to assure the House that the Labour Party opposition to this budget will be spelled out in further detail by our spokespersons in the many other areas, including the decision in relation to social welfare yesterday where 20,000 people suddenly discovered from the Minister's speech that they will not get any increase in social welfare in 1988.
Before I begin to make my speech it is necessary to reply to a number of points that Deputy Desmond raised. I have been sitting here and have listened to the entirety of his speech but I feel obliged to answer a number of points in relation to it. A theme running through Deputy Desmond's speech is that he is against private investment and perhaps that is the reason he is sitting with the Labour Party and I am sitting in the Fianna Fáil benches. I do not agree with him on this point at all. I have no problem with private investment and I think it is one of the means by which this country will get back on its feet. It surprises me to hear the Deputy say that. The Deputy also mentioned that the public capital programme had been cut. Is the Deputy saying that it should not be cut and that we should keep building with State money when in fact there may not be a need to continue with the building programme because, as is quite obvious from our census reports, our population is declining and it may not be necessary in the future to have so many schools, hospitals or whatever.
Deputy Desmond also referred to PRSI and the fact that this Government in the budget did not see fit to do away with PRSI altogether. The Deputy felt it was unconstitutional. However, he was a member of Government for four and a half years, and indeed over the past number of years the Coalition were in power more times than Fianna Fáil they did nothing to abolish the PRSI system. I feel the PRSI system is working well, there may be areas where it needs to be tidied up, but by and large it is working well.
With regard to voluntary redundancies Deputy Desmond made the point that anyone can take voluntary redundancy. That is not my understanding of it. I understand that the person would have to get the approval of the relevant Minister and would then have to go for the approval of the Minister for Finance. For instance, in local authorities when somebody applies for the voluntary redundancy package such as a worker on the road, he has to get the approval of the county manager first. The county manager may feel that he cannot let him go and so he will not be put forward for the redundancy scheme. Therefore to say that anyone can take the redundancy package is not entirely correct.
The Deputy also referred to hospital charges and various other items that were brought in by Fianna Fáil which he said were to the detriment of the lower paid workers. He was a member of a Government which did away entirely with food subsidies. Can he justify that? The Deputy also mentioned the recent good report on the budget, in The Irish Times on the following day and the report by the two gentlemen on unemployment and growth in the economy. Although they did say that there would be no growth in the economy this year, they said that if the Government kept on the path they were taking there would definitely be growth in the coming years. That is the only way that we as a nation will be able to provide work for our people. By getting this economy down lean, with no fat, we will get jobs for our people and hopefully stop the emigration trail.
Debate adjourned.
Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.