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.)

As stated previously, when we came into Government in 1987 we inherited a very serious economic and financial crisis. The problems facing the Irish people were so severe that, unless they were tackled with courage and determination, this country would face disaster — there would be very unfavourable prospects for all our young children currently in the education system.

In the past Governments were remiss in not resolutely facing up to economic difficulties and in not identifying strategies and practical solutions. In 1986 this country was in dire economic straits with the current budget deficit standing at an all time high of 8.5 per cent and a national debt standing at over £24 billion. The public sector borrowing requirement was £2,506 million, a massive 15.2 per cent of GNP. The servicing of the national debt absorbs money which we can ill afford. We must ensure that we reduce our dependence as a nation on borrowing.

As a result of the policy adopted by this Government and the measures taken in the context of the 1987 budget, we have seen Exchequer borrowing significantly reduced, we have witnessed a reduction in interest rates and inflation has come down. The target for the current budget deficit in 1987 was 6.9 per cent of GNP and we bettered this target and lowered it to 6.8 per cent; likewise the target for public sector borrowing was set at £2,166 million or 12.5 per cent of GNP and in fact the actual borrowing requirement in 1987 was £2,056 million or 11.8 per cent of GNP.

It is now evident to everyone that the targets set by this Government have been very successfully attained and indeed surpassed in many instances. The targets set were realistic and consistent with sound economic and financial management.

A new sense of direction has been given to the economy. The sense of despair and the depression that were widespread among the Irish people during the Coalition years are giving way to a realism and a belief that this Government have the willpower and the determination to pursue their stated objectives of progressively reducing the cost of servicing the national debts and the level of borrowing while at the same time creating an environment suitable for investment geared to productive economic activities and enhance employment opportunities.

The fiscal and economic policies introduced by this Government have resulted in a restoration of confidence in the business world and a realisation at home and abroad that the foundations for national economic recovery have been laid. The Programme for National Recovery which has been welcomed by the principal social partners will I am sure result in continued economic and social progress.

In 1987 our competitiveness in the market place showed a marked improvement against the United Kingdom and our EC partners. Manufacturing output has increased significantly and there has been a very dramatic growth in exports — the volume in 1987 increased by some 16 per cent compared to 4 per cent in 1986.

In order to have continued improvement leading to a resolution of our serious economic difficulties, it is necessary to continue with the policies introduced in 1987. It is necessary to set realistic financial targets, thereby reducing our dependency on borrowing and lowering the large interest bill which must be paid on borrowings.

The 1988 budget has been designed to reduce the current budget deficit from 6.8 per cent of GNP in 1987 to 6.3 per cent of GNP in 1988 and a corresponding reduction in public sector borrowing from 11.8 per cent of GNP in 1987 to 9.4 per cent in 1988. These targets are realisable and must be attained to ensure our economic recovery. The size and nature of the financial adjustments necessary to achieve these budgetary targets will, however, create certain difficulties and will require some sacrifices to be made. However, I am convinced that the vast majority of Irish people are prepared to make these sacrifices in the short term and accept a level of services which we can afford rather than place intolerable debt burdens on future generations.

Nevertheless, despite reductions made in public expenditure, it is expected that there will be some growth in 1988 in the gross domestic product and that we will achieve further growth in the volume of our exports.

In order to resolve our economic difficulties, it is necesary to control the public finances, to provide financial stability and to limit our dependence on foreign borrowing. These can only be done by maintaining measures for a level of services which we can afford.

Virtually everyone accepts that something must be done to bring down public expenditure but some object to any of the savings being made in a particular area. However, since the social services in the areas of health, social welfare and education account for 67 per cent approximately of the gross expenditure by the Exchequer on non-capital supply services, it is inevitable that any worthwhile reduction in public expenditure would have to involve significant savings in these areas.

We must all accept that we have limited resources. The question of how efficiently our resources are allocated is closely linked with economic growth and development. This Government have fully recognised the vital contribution which an efficient, cost-effective education system can make to the economic and social development of our country. In 1988 it is estimated that over 18 per cent of net Exchequer expenditure on non-capital services will be spent on the education services, whereas in 1986 the corresponding figure was 16.5 per cent. It is a fact that we simply cannot afford to allocate a larger portion of our limited financial resources to education.

We must make strenuous efforts to ensure that our resources are used to maximum advantage to maintain and improve the quality of education at all levels. Equity, efficiency and effectiveness must, in future, be the main criteria used for resource allocations purposes. Greater attention must be placed on educational planning than was done in the past and more attention must be given to the development of systematic cost-effectiveness studies and the production of educational indicators.

Every level of the education services must be carefully analysed and provision made for the co-ordination of educational planning with planning for other sectors of the economy e.g. labour, health, agriculture, et cetera. I was listening on the monitor to the questions put to the Minister for Labour and some of them also touched on education. Of course, planning for education in order to be effective must not only be based on educational considerations but also on detailed and accurate economic and social data and demographic trends. It must also take into account existing financial constraints.

This Government will continue to provide the maximum financial support possible for education. I have already stated that in 1988 over 18 per cent of net Exchequer expenditure on non-capital services will be spent in the education area — it is simply not possible in present economic circumstances to provide a greater amount. We must ensure that this expenditure is spent in the most efficient and effective way in order to cater as fully as possible for the varying aptitudes and abilities of all pupils. In order to do so, we must avoid any unnecessary duplication of resources whether human or physical. We must foster and encourage various educational interests and groups in a community to pool their expertise and resources for the benefit of that community.

Demographic trends indicate that over the next decade and beyond there will be very significant changes in the structure of our population. These will have very significant implications, in particular for our education system, and we must plan now to ensure that the quality of education will be maintained. For example, the projection that births will fall from a current level of some 60,000 to between 46,000 to 52,000 by the end of the century will have major repercussions for the education sector and especially for primary schools.

To assist in the planning process, the Department of Education are finalising a strategic plan for the development of an information technology system which, when fully implemented, will enable a better analysis than heretofore to be made of the effectiveness of the education services and will be of help in developing arrangements for the deployment of resources and in considering the viability of alternative strategies. A number of projects involving new technologies have been initiated in the Department of Education and a reappraisal of the computing needs of the examinations branch in Athlone is currently being undertaken.

A number of potential benefits can be achieved by the increased use of information technology in my Department. Information technology could greatly facilitate the evaluation of options which require cross-analysis of all the elements involved in the provision of education — students, teachers, institutions et cetera. It could improve the information available to support long term planning and allow for more effective monitoring of performance and other educational indicators. It is my intention to proceed, as financial resources allow, with a phased implementation of an effective information technology plan.

In accordance with the Programme for National Recovery a review body has been established to undertake a complete in-depth review of the primary curriculum which has been implemented in primary schools since 1971. It is necessary to analyse its suitability nowadays for imparting basic competences to our young children.

In addition, it has recently been decided to carry out a major review of the primary education sector. It is important that everybody involved — parents, teachers, school managers — should be fully informed about the sector, including future trends. The outcome of the review will enable relevant plans to be made to resolve present difficulties and, allowing for demographic trends, to anticipate future needs. It is not generally realised that the primary school enrolments will fall from some 568,000 in 1987-88 by over 100,000 by the year 2,000. This rapid decrease will have serious implications and challenges for our education sector and it must be planned for in a systematic and structured way. We must ensure at all times that the quality of education is maintained and the opportunities offered to our young people maximised. We have educational problems now but we will have equally challenging problems — albeit in a political sense perhaps — when the rapid decrease in the population occurs.

The Government's commitment to curriculum reform resulted in the Interim Curriculum and Examinations Board being reconstituted by me as the National Council for Curriculum and Assessment. The composition and modus operandi of the council have been designed to ensure that it will be a dynamic agency which will advise me and my Department on all matters related to curriculum and assessment at primary and second level.

At post-primary level there is urgent need to review and reform the junior cycle curriculum. Specific immediate tasks assigned to the council include the development of a new unified junior cycle programme which will replace the existing intermediate and day vocational (group) certificates programmes for introduction into schools in September 1989 and to be known simply as the junior certificate; the development of an overall framework for senior cycle and the review of existing rules and programmes for secondary schools.

This planned approach to curriculum reform will result in realistic targets and deadlines being set to improve the quality of post-primary education, enhanced standards of pupil achievement and will allow for special initiatives to be undertaken in areas such as modern languages, science and technology. We have already made a start in regard to modern languages and, small though it is, it will be very significant and indeed vital.

In the medium term, there are likely to be significant changes in teaching methods and in curricula due to the impact of new technologies — in particular computing systems — in education. Research work being carried out on computer aided learning, expert systems and artificial intelligence is changing our perception of knowledge and increasing our knowledge about learning processes.

New technologies can in theory bring to every school and to every pupil the best in education. It is theoretically possible, with the aid of expert systems which utilise the best teaching skills, to improve learning environments and to enhance the teaching-learning process for disadvantaged pupils.

Developments in telecommunications and electronics in association with advances being made in computer technology open up great opportunities for the transmission of computerised data and texts in the education sector. Already major changes can be foreseen in assessment techniques. In addition, it is envisaged that computerised data and computer networks could have a significance for the teaching of languages by making it far more interactive and more effective than it was. Within existing financial constraints we must continue to be innovative and make progress in this area.

The school transport service since it was introduced in the late sixties has been very successful in achieving its purpose of bringing pupils safely to and from school who, without this service, could not get to school or would endure much hardship in doing so. The school transport system is a complex one — rural Deputies are particularly aware of this since they are dealing with it all the time — and since it necessitates a very large outlay each year by the State it has been necessary always to keep it under constant review. A study with a view to making the system more cost effective has recently been undertaken and it is planned that four pilot projects — one in each of the provinces will be introduced for the 1988-89 school year. These projects will be monitored and evaluated. The outcome from these projects will enable, we hope, a more cost effective system to be developed.

Arising out of our Government's programme to have more effective and streamlined administrative structures, it was decided to amalgamate a number of vocational education committees. This decision will result in a more efficient and cost effective system and will enable the new VECs to provide a better service to the public. Within the revised vocational education structure a greater degree of autonomy will be given to the nine regional technical colleges. These colleges will be encouraged to place greater emphasis on applied research and development activities and to strengthen their links with local industrial and commercial interests. Indeed this is something which the regional colleges have long sought and have gone down the path themselves without full permission but the Act did allow for flexibility. I hope this will allow regional colleges to fulfil more vigorously their correct industrial role.

Work has started on the preparation of the required legislation and it is planned to provide for the necessary amalgamations later this year.

We in Government have always considered that the education system can be a powerful tool for bringing about desirable social objectives. In the education area the necessary savings in expenditure have been, and will be, made in such a way as to shield to the greatest possible extent the disadvantaged. None of the measures planned will reduce educational provision for them. Resources will be allocated to endeavour to achieve educational equity and this Government will continue to foster and encourage greater participation by the disadvantaged in all levels and activities of the education system. In our Programme for National Recovery which we brought about through the co-operation of the social partners, the section on education dealt specifically with the needs of the disadvantaged and the commitment of the Government to serving those needs.

A special high level task force representative of the Departments of Education and Labour was established in 1987 to examine in particular the situation relating to those who leave school without any formal qualifications. The task force recommendations and strategies to attract these early school leavers to special vocational preparation and training programmes will be fully considered with a view to their early implementation. As I said, my colleague the Minister for Labour has already spoken on that matter here in Question Time today. It is a great sign of progress that the two Departments, Education and Labour, have liaised quite successfully on this issue. In addition, the Government are determined that adult literacy and community education programmes will be continued and developed as much as possible within the limits of existing resources.

In the third level education sector there have been substantial developments in recent years. Outputs have increased and there have been significant gains in productivity. However, like every other sector efforts will have to continue to be made to achieve greater economies while at the same time maintaining academic standards and preserving essential services. A study is being undertaken to determine savings that could be made or additional student numbers that could be accommodated at no extra cost by reducing the length of courses leading to qualifications awarded by the NCEA. The HEA are to carry out a similar study in their own sector by examining the feasibility of shortening the duration of degree programmes. In addition, a high level interdepartmental committee representative of the Departments of Education, Finance, Industry and Commerce, Labour, Health and Agriculture will be established shortly to examine — (a) the provision of third level places; (b) the rationalisation of third level departments and institutions; and (c) the funding of third level institutions.

A study by a task force established to examine admissions procedures and entry requirements to third level institutions is nearing completion. It is anticipated that measures will be identified which can be implemented to bring about a more co-ordinated and a more efficient admission system.

Another important development of significance for third level institutions and students was the adoption in 1987 by the Council of Europe Education Ministers of the Eramus project. This project, which will last initially for three years, and later for a further extension, is designed to increase the mobility of third level students throughout the EC through increased co-operation in a European wide network between universities and third level institutions. Students participating in the project may spend periods varying from one term to one year in another Community country and will be eligible for financial assistance to help meet travel and other costs involved.

In the past third level institutions have played a very important role in this country by producing well qualified and highly professional graduates. The quality of their programmes in recent years has been enhanced by the development of industrial-higher education links, through the establishment of industrial parks and innovation centres alongside higher education institutions and by the establishment of specialised research and development centres. The necessity for close co-operation between industry and higher education institutions has been recognised by the EC. Its COMETT programme is designed to ease the skills shortages in high technology fields and will provide grants to develop higher educational-industry training partnerships and to fund the exchange of students, academic staff and executives from business and industry. All will benefit through the COMETT programme. Ireland stands to benefit greatly from this programme and three university-enterprise training partnerships involving virtually all relevant third level institutions have been formed to ensure the effective operation of this very significant programme.

In 1987 the Government made a policy decision that in future the national lottery fund would provide all funding for youth and sport. Youth, sport and recreation are the main beneficiaries of the fund. The investment being made in these areas will have long term beneficial effects for the Irish people. It will enable our country to make rapid progress in the development of many sporting activities. In international competitive sports Irish women and men will not be at a disadvantage for want of adequate training facilities here in Ireland and all Irish people will have available to them great opportunities for participating in sporting and recreational facilities. Many local regional and national sports projects will be developed for 1988: We listed those when we announced the allocations of the national lottery sports money prior to Christmas in 1987.

Projects will also be initiated in the youth area. A sum of £4 million is set aside for major developments of community youth projects in disadvantaged areas. In the allocation of resources special attention will be given to the needs of groups particularly at risk such as young homeless, young travellers and abusers. A sum of £1 million will be provided for the expansion and development of voluntary youth organisations and voluntary youth councils will be established to provide an efficient and co-ordinated local youth service.

The total provision for youth and sport is £27.14 million in 1988.

The six outdoor education centres based in Cappanalea, Burren, Birr, Gartan and Shielbeggan have in the past not been used to the best advantage because of financial constraints. In 1987 this Government provided £50,000 towards the cost of these centres. In the current year £400,000 has been allocated out of the national lottery fund to enable these centres be fully utilised. This has been due to the take-up of the lottery.

It is important that the great potential of these centres for developing activities relating to outdoor education, the promotion of tourism, youth exchange programmes etc., be fully realised and I am confident that in 1988 we will see great progress in this area.

The allocation for primary and post-primary school building programmes originally provided in the 1988 Estimates for Public Services Abridged Version, has been increased by £6.5 million.

The provision in 1988 for the national schools building programme is £18.875. This is an increase of £3.875 on the originally published proposal to provide £15 million for this programme. The latter figure was based on the need to provide at least £9 million to meet contractual commitments arising from a number of major projects still under construction in 1988, together with approximately £6 million to service an extensive programme of improvements to existing national school buildings. The additional sum referred to will now enable my Department to give priority to schools where it is accepted that there are acute problems of accommodation.

I am sometimes surprised, in dealing with primary school representatives who approach me about the prospect of getting grants for the provision of new national school buildings, to find that a case is being argued largely on the basis that facilities in an existing school are in a bad condition and that the parties frequently admit that they have never given any consideration to improving existing conditions with the aid of the grants which my Department are prepared to make available towards the cost of essential improvements. The improvement of existing school facilities can often be undertaken in advance of schemes of extension or major refurbishing. I can assure schools that by availing of this aspect of the Department's grant scheme their subsequent building grant applications will not be prejudiced.

It is important to say that because very often if you say to a school who are at the start of the planning process and who have to go through several further stages that you will give them several thousand pounds towards essential refurbishment they will say that that will prejudice their eventual case for a new school. Therefore, I give the commitment that all things being equal their case for a new school would not be hindered by their taking up of essential grant allocations.

Already schools and public representatives are flooding my Department with correspondence and inquiries suggesting that the additional capital now being made available would enable me to authorise the invitation of tenders or the placing of contracts for national school building schemes on which for some time now progress has not been possible. Judging by the number of letters and inquiries I have received in regard to the additional capital which is now being made available to me one would think that I had received a pot of gold. I must say at once that this extra allocation will have to be very carefully husbanded or housewifed to provide the maximum yield in terms of accommodation.

The penny has dropped.

I would like to here go back to a statement, which I made on the occasion of the budget of 1987, which referred to my intention that capital allocations to individual national schools would be made with a view to achieving the maximum impact over the widest possible number of schools. I expect to be able to offer grants for additional building to a number of schools which have, as I said earlier, acute accommodation problems but only on the basis that their schemes will be confined to the provisions of classrooms with normal basic facilities. The less urgently required features of their scheme, such as general purposes areas, library and medical inspection rooms, should in the general interest be deferred to form a later instalment of building. I would also expect that schools which are offered grants would accept the necessity to provide permanent classrooms only for the staffing levels which may be expected in the school in the long term. As a corollary they should be willing to retain suitable temporary accommodation in use to serve short-term needs.

In accordance with the announcement of the Minister for Finance, the additional capital will be devoted mainly to school building in rural areas.

It is proposed to continue the policy of not providing new accommodation where it is evident that sufficient suitable accommodation is available in existing schools within a reasonable distance. This policy will have particular reference to schools in urban areas, where application for building grants continue to be carefully examined in duplicating facilities.

The 1988 allocation for secondary, vocational and community-comprehensive schools is £23.625 million and includes provision for expenditure on construction, furniture, equipment and professional fees, and for sites other than secondary school sites.

The investment in post-primary school building forms part of the ongoing programme designed to: (i) meet the changing patterns in enrolment, and (ii) replace unsatisfactory and uneconomic accommodation.

I have referred already to demographic trends and while such trends will initially have greatest impact on the primary sector, their effects will also be felt of course in the second level area. Between now and the end of the century second level enrolments are projected to drop by some 45,000 pupils from approximately 340,000 at present.

There is continued need in view of this to promote and encourage co-operation between educational interests at local, regional and national level to obtain the most effective and most cost efficient use of existing resources and facilities.

Where new schools are required or where replacement buildings are necessary every effort will be made to ensure that there will not be unnecessary duplication of expensive resources and physical facilities. With declining enrolments there are sound educational, social and economic arguments for the development of new initiatives in local communities in the area of educational co-operation and indeed amalgamation. It is by such initiatives that post-primary schools — communities will be able to offer a satisfactory range of subject options for their full time pupils and adult education programmes that meet the needs of the community.

It is my intention to ensure that my Department will place greater emphasis in future on the need to achieve greater co-operation between schools in a particular community. With a view to rationalising educational provision at second level, priority will be given to projects in areas where there is evidence of local initiatives representative of all educational interests relating to amalgamation or the shared use of resources.

I would like to inform the House that I have been greatly heartened since coming into office by the spirit of co-operation from both the vocational sector and the voluntary-religious lay sector in the sharing of ideas in regard to voluntary rationalisation. Experience in the past had led one to believe that rationalisation only came about as a result of enormous heat, pressure and stormy meetings. We all have experience of this, particularly those of us living in rural towns. A sense of pragamatism has set in and, as I have said, the vocational sector and the voluntary religious-lay sector realise that the fall in numbers will necessitate rationalisation. They see it as being in their own interests as well as that of their students to bring about and to co-operate fully in rationalisation. If a community — and I mean a community in the fullest sense — comes forward with ideas for rationalisation those ideas will be carefully listened to and I hope followed through by my Department.

The bulk of the allocation of £1.68 million for special schools is for the continuation of the reconstruction of residential and administrative accommodation at St. Joseph's Special School, Ferryhouse, Clonmel. The balance of the allocation will cover completion of security fencing and other minor works at Trinity House School, Lusk, County Dublin.

Following completion of the major extensions to the Kevin Street and Bolton Street Colleges of Technology, necessary consequential works to the existing buildings are being carried out this year as part of the overall development of the colleges. Furnishing and equipping of the two extensions and the new Tralee Regional Technical College is also being completed.

It is expected that the final accounts in respect of the new Tralee Regional Technical College and the extensions to Kevin Street and Bolton Street Colleges of Technology will fall due for payment this year.

Work on the Engineering Building for UCD is proceeding. Work is also under way on Phase II of the National MicroElectronics Research Centre, UCC, and on the extension to the Industrial Microbiology Building at UCD. Both the Microbiology building at UCG and the Grattan Extension at NIHE, Dublin have just been completed and we will have to pay the bill when agreed.

The total provision for capital projects in the higher education area is £16.795 million.

I touched on the national lottery earlier and in this regard I now want to talk about the provision of grants to local communities for recreational facilities. I am doing this because my colleague in the Department of Education, the Minister with responsibility for Sport, may not have an opportunity to contribute to the debate. A provision of £4 million has been made in 1988 from the proceeds of the national lottery for recreational facilities. That is to cover existing contractual commitments and any new commitments. Expenditure will be by way of grants to various local community groups towards the cost of providing community and recreational facilities in accordance with established grant-in-aid criteria. The £4 million provision represents the amount assigned for allocation by me from a total provision of £10 million from the national lottery surplus, for grants to assist local and community efforts in the provision of sporting and recreational facilities and community amenities. The balance of £6 million is for allocation by the Minister for the Environment.

A total allocation of £6.5 million from the proceeds of the national lottery has been made in 1988 for the provision of various sporting facilities to be expended as follows:

Preliminary planning work and site acquisition for a National Sports Centre in Dublin with a follow-on cost in subsequent years

£2.5 million

Provision of major sports centres at five locations throughout the country with a subsequent cost follow on

£1.5 million

Grants assistance for the provision of local sports centres at 14 other locations

£1.9 million

Improvements to the existing sporting facilities at Morton Stadium, Santry and the Badminton Centre, Baldoyle and the construction of a basketball arena in the Tallaght area

£0.6 million

Total

£6.5 million

The significant reform measures initiated in all sectors of the education system in 1987 will be continued in 1988. These measures have been taken not only for educational reasons but also in order to provide financial stability and to promote economic development. I can assure the House that none of the measures taken will restrict access to education or impair any essential component of the education system. Indeed, many of the measures will provide for a more equitable, more efficient and more effective system.

It has to be said that the whole question of a budget, and the hype that budget day is given, has declined, perhaps more so than ever since the Estimates were published late last year. Consequently, most of the harshness of the present regime was clouded by the fairly cleverly constructed Budget Statement read by the Minister on budget day. There was no reference in that speech to the fact that the Minister had already taken £400 million out of the economy by the severe cut in the Estimates for a whole range of our social services such as health, education, social welfare and a variety of other services. We have the extraordinary position in regard to social welfare in that we are told that increases are being given but when we read the small print we discover that those increases are gained by slicing money off other sectors in the social welfare net. In fact, those increases are not real in terms of the resources being allocated to the worst off in our society.

The budget cannot be viewed in isolation from the social and economic policies being pursued by the Government throughout the year. It is clear from what has been said in all speeches since budget day that there has been no change in direction from the line promoted by the Fianna Fáil Government who remain in power with the support of the Fine Gael Party. There has been no change in the attitude they adopted when they took office but that attitude is a total turn about from the manifesto they presented to the electorate this time last year. The significance of the budget is that it confirms the direction in which the Government are moving. It confirms that they have taken on lock, stock and barrel, the theory and the practice of Thatcherism. Some Deputies, particularly those on the Fianna Fáil side, object to the label of Thatcherism because they feel it associates them too much with the British Establishment and for obvious historical reasons they dislike being associated with the Establishment. When I refer to Thatcherism I am not talking about the aura of imperialism which Britain likes to surround herself with because she is no longer the imperial power she was in the past. It may be slightly unfair to unload all the blame on Margaret Thatcher because we also have Reaganism and, more specifically, monetarism.

That philosophy aims to remove, in so far as it can, assistance from the poorest in our society. It tries to hark back to the old days. In Britain they like to talk in terms of Victorian values: In Ireland we tend to talk about traditional values and all the implications they have in terms of social attitudes which preclude so many people in our society from having any kind of half decent lifestyle. Underlying the whole idea of Thatcherism, or monetarism, is the idea that the State has no role in society other than to regulate the social forces that operate in it. It keeps close to the theory of capital and capitalism and the making of profit as the basis of a well-ordered society and, therefore, under no circumstances must it move away from it. There is the belief that regulations or interference that inhibit the capacity of individuals or companies to make profit should be removed at all costs. The argument is that profit is the motivation which keeps society running.

That has all sorts of implications for society. In the ideological sense the PDs are the clearest exponents of that policy. I can see a tendency in Fine Gael to move slightly away from it, certainly in their speeches they are trying to capture the social democratic areas of society. Fianna Fáil present themselves as the pragmatists of Irish politics, the people who have no ideology, who do not believe in ideology and simply take decisions on the basis of what they consider best for the people. In the old days de Valera chose to do that by looking into his heart. It is difficult to know how the Taoiseach decides what is best for the people other than by listening to the various powerful interest groups who surround the Government.

I am referring to the monied interest groups — the builders, the bankers and the industrialists who are the real power in the land and can effectively ensure that there is no real change in the taxation system. They can ensure that the PAYE sector will continue to bear 90 per cent of the burden of income tax. They can also ensure that despite a decision by the Government prior to the budget that they would introduce a 6.6 per cent rate of PRSI for self-employed and farmers, the budget itself introduced a 3 per cent rate, with a promise that it will be increased by 1 per cent next year and a further 1 per cent the following year. It does not take much cop-on to recognise that the various interest groups, which we are constantly told by both Fianna Fáil and Fine Gael we should be resisting, have won their battle on the PRSI issue. The pensions which will now be the right of the self employed and farmers who pay the 3 per cent rate will be paid for out of general taxation and will once again be a burden on the PAYE sector, who pay 90 per cent of income tax. It is clear that there are powerful interests operating in our society but they are not those who are in trade unions and toil to earn a wage or a salary. I am referring to those who have power through their bank balances and can influence the Government at that level.

Most people fail to understand exactly the kind of confidence trick that has been played on them by the introduction of a 3 per cent rate for the self employed and the farmers. The National Pensions Board recommended that farmers and the self employed should start paying PRSI in order to qualify for contributory social welfare pensions and to reduce the cost to the taxpayer of non-contributory pensions, which in 1987 amounted to £329 million. The contribution rate recommended by the National Pensions Board was 6.6 per cent of reckonable income. Predictably, of course, the farmers and the self employed complained that this was unfair and too high. Specifically the IFA said that they wanted equity with employees, which would mean paying the same rate for pensions as workers, i.e. 2.4 per cent without any liability for the employer's contribution of 4.2 per cent. This argument ignores some very important points. When it suits them, in relation to tax, for instance, the self employed and farmers are content — indeed, they demand — to be viewed as employers, not employees. Of course in relation to PRSI they demand to be regarded as employees. The contribution rate of 6.6 per cent from the self employed would cover less than 40 per cent of the cost of providing contributory pensions for them. The contribution required from them to cover the cost would be 16.6 per cent, according to the National Pensions Board. The Exchequer, that is the PAYE workers who are the general taxpayers, would still be making the major contribution. Ideally the self employed should be required to bear a much higher proportion of the cost of their contributory pensions and to make a reasonable contribution towards the cost of non-contributory pensions, which go mainly to them.

It is misleading in this context to refer to the employee's contributions to social welfare pensions being 2.4 per cent and the employer's contribution being 4.2 per cent. In the private sector most workers pay 5.5 per cent for social insurance, plus the health contribution and employment levy, and most employers pay 12.33 per cent. The Exchequer also makes a contribution to social insurance and covers the full cost of social assistance. Employers' and employees' contributions go towards the cost of all insurance benefits and the amount deemed to go towards pensions is purely arbitrary. It alters from year to year depending on changes in, for example, the numbers employed and paying PRSI and the numbers unemployed and claiming unemployment benefit, as well as the numbers retiring and the numbers claiming pensions et cetera. In 1987 when contributory pensions cost 13 per cent it was dedided that this would be made up of 2.9 per cent from employees and 6.2 per cent from employers, with the Exchequer contributing 3.9 per cent. The figures have been different in other years. However, the Exchequer contribution to contributory pensions tends to stay roughly in line with the overall Exchequer contribution to social insurance. In 1987 the former was 30 per cent and the latter 31 per cent.

Given that the Exchequer share tends to remain fairly stable and that the employer-employee share is broken down in a fairly arbitrary manner, mainly for book-keeping purposes, the question should not be whether a self-employed person's contribution should equate to an employee's contribution; it should be whether the cost of providing an employee's benefit is shared in a reasonable way between the parties in the State and whether the cost of the proposed benefits for the self employed is similarly shared. If it is considered reasonable for the Exchequer to pay 30 per cent of the cost of employees' pensions, is it not also reasonable for it to pay 30 per cent of the cost of pensions for the self employed? If this is so, the latter should be asked to contribute 70 per cent of the cost, which would mean a contribution rate of around 11.6 per cent. The 6.6 per cent rate proposed before the budget represents just under 40 per cent of the cost and as such represents a major additional subsidy to the self employed in comparison with employees. With the introduction of the 3 per cent rate, only 20 per cent of the cost is covered by contributions, which means a further massive additional subsidy by the taxpayer to the pension fund of the farmers and the self employed.

Unless the self employed are treated as the equivalent of both an employer and an employee for purposes of PRSI contributions, the self employed will be at a competitive advantage in the labour market. As the National Pensions Board pointed out, there will often be a choice between employing an employee to carry out a particular duty or contracting with a self employed person to do the job. Clearly there is no good reason the choice should be other than neutral from the income tax and social insurance aspects, whch in turn implies that the self employed person should also assume responsibility for the employer's contribution that would otherwise be avoided. The 6.6 per cent which had been proposed represented less than 40 per cent of the cost of providing their contributory pensions and still asked them for nothing towards non-contributory pensions. Thus the Exchequer must pick up the tab for 60 per cent of the cost — twice what it costs for employees.

A contribution of 6.6 per cent is about the same as the pension contribution paid by most public servants. The fact that the latter are covered by occupational rather than social welfare pension schemes and are not covered for other social insurance benefits is relevant to any discussion of how much the self employed should pay towards their pensions.

I make those points because a lot of hype has been promoted about the fact that at last the self-employed and the farmers are paying PRSI. Apart altogether from the question of whether the money will ever be collected given the experience we have had in relation to collecting taxation from those sectors in the past, as I have pointed out already the whole question of the derisory rate of 3 per cent has to be taken into account. It is part and parcel of the attempt made by the Minister in his budget speech to present an appearance of it being a giveaway budget on the one hand and of tackling inequities in our social welfare and taxation systems. It is just that because when you examine the 3 per cent contribution from the farmers and the self-employed you will find that greater inequity has been created under the guise of bringing more people into the PRSI system. Most PAYE workers at this time do not realise the extent to which they have been conned by this fairly nifty footwork.

I want to refer to the 6 per cent levy on pension funds. Again, this aspect of the budget has received scant attention from virtually all quarters, whether it be from economists, trade unionists or otherwise. I think, like the 3 per cent PRSI contribution it is a fairly clever piece of work. In effect, it is taking a further £15 million out of the pockets of the PAYE sector who pay the bulk into the pension funds. In order that pension funds pay out this money they must either increase the contributions from those who pay into the funds at present or they must reduce the benefits which derive from those funds. The Minister has said in his speech that this is a once-off levy, a once-off tax, but our experience in the past with once-off levies and taxes would lead us to doubt whether the Minister will be happy to forego a further £15 million next year. Certainly the 1 per cent levy which was imposed in 1982 and which was not removed until last year indicates that there is always a reluctance to forego income from whatever source, once it has been established.

However, it has to be said that that is not always true in the case of levies and taxes on the self-employed and the farmers. There is a history of abolishing various taxes, whether they be the wealth tax, rates or resource taxes, particularly on the farming community. This would indicate that they have a special place in the hearts not just of the Fianna Fáil Government, who abolished most of the taxes on them, but indeed of the other conservative parties also. The levy on the pension funds needs particular examination. It has not got much attention in this House or in the media. I think that the many people who are contributing to pension funds should look at it more closely.

I think it has to be said that the budget is not a good budget. It is not a good budget from the point of view of the unemployed. There is nothing whatsoever in it for those who are unemployed and whose primary need and demand is for a job. There is a slight increase in the general rates of social welfare. There is a £4 increase for those on long-term unemployment assistance in certain categories. However, those increases do not come anywhere near the levels recommended by the Commission on Social Welfare. Let us remember that the levels recommended by that commission would not keep anybody in the lap of luxury. If my memory is correct, they recommended a payment of between £50 and £60 as the basic requirement for a person living alone. In present day terms that would be approximately £55 to £65 per week for a person living on social welfare. Even with the additional £4 on top of the 3 per cent, it brings them no further than two-thirds of the way towards the very basic income which was recommended by the Commission on Social Welfare.

It is significant that most of the organisations who are dealing with the poor, i.e. the various religious associations and orders, the Conference of Major Religious Superiors, another group whose name escapes me at present which is associated with the Roman Catholic Church, and other organisations such as the St. Vincent De Paul are not satisfied with the level of social welfare payments. They have indicated that much more could have been done in that regard. The budget is to be criticised not so much in relation to that although, that is a criticism, but it has to be criticised for the fact that it does nothing to create employment. On the contrary, it sets about creating unemployment in the public sector.

The cry has gone up from the Fianna Fáil, the Fine Gael and indeed from the PD benches over many years — it is their basic philosophy — that the Government cannot create jobs but can only create a climate for investment. Clearly, as a socialist I disagree fundamentally with that proposition. It is my contention that the democratically elected Parliament of the people not only has the capacity to ensure that jobs are created directly but has a responsibility and a duty to do it. One hundred and sixty six Deputies are elected effectively to run this country. It does not make sense to me as a democrat that 90 per cent of the Members of this House, the Fianna Fáil, Fine Gael and Progressive Democrat parties can turn around and say that they do not have the power and the right or the duty to ensure that the resources of this State are used for the benefit of the majority of the people.

It does not make sense that the financial institutions of this State are controlled by a very exclusive and small band of individuals who effectively control the lifeblood of the State through controlling these institutions. Effectively the banks, building societies and various other financial institutions can in many cases decide whether there will be development in a particular area or not. Effectively they can decide whether the money they control remains in or goes out of the country. They can decide whether there will be a boom or doom. Our Government, supported by all the other conservative parties in the House, blithely say that they can only create the climate for investment and provide incentives for these people to keep their money in the country to invest in enterprise and provide incentives in grants, tax rates, etc., in the hope at the end of the day of providing jobs.

The primary function of investors of capital is not to create jobs but to make more capital. In a capitalist society that is regarded as correct. My contention is that the primary function of the Dáil should be to ensure that the resources available are organised in such a way that work is provided for all citizens who are capable of work, that education is provided for all our citizens who are capable of benefiting from such education, that those who are handicapped mentally are cared for in a way that gives them dignity and that those who are handicapped physically have dignity and do not have to go scrounging to voluntary organisations for assistance with this, that and the other or worry that various benefits they have at this time will be taken away from them because the climate is not right for others who are better off to invest in the creation of jobs and development of resources. That is the fundamental difference between us. The people so far have not taken to the message which The Workers' Party and the Labour Party have been promoting for very many years. That does not mean that the message we are trying to promote is in any way less effective or less worthy than the message which Fianna Fáil and other conservative parties have kept to over the years. The stark evidence before our eyes indicates that the philosophy and approach various Governments ranging from Fianna Fáil to Coalitions have engaged in over the years in supporting private enterprise and the making of private profits as a way of developing the economy has failed. The evidence of that failure is all around us in the numbers on our unemployment registers and the numbers who have had to go increasingly to Britain and the US in recent years to find work. It is there, too, with regard to the huge waste of resources in this State.

I heard one of the PD Members here today referring to the huge acreage of land which is unused. The EC are at present moving towards paying farmers not to use their land, not to produce food. For many years now we have seen Irish farmers producing food which has gone into intervention, and in some cases food produced was destroyed so that it would not go on the market. At the same time, we have a world in which vast numbers die from hunger.

There is a fundamental flaw in the philosophy that says that private enterprise, private individuals with money, have a right to do what they wish with that money regardless of the consequences to society. The consequences we see around us every day of the week of unemployment and poverty are too high a price to pay for that kind of freedom granted to those who have private resources and want to hold on to them. The responsibility of this Government is to ensure that the very considerable resources they have at their disposal, which at present they give to private enterprise by way of grants and tax rates to create the right climate, should be used directly by Government in the promotion of State enterprise which has in the past proved effective and efficient where it has been given an opportunity to be so. The Government have responsibility to ensure that where companies are getting grants at this time those grants result in job creation and not just the creation of greater bank balances.

There should be an obligation on those multinational companies who come in here and who, on the face of it anyhow, are making considerable profits from the labours of the Irish working class, to reinvest a significant proportion of those profits back into the Irish economy. There is a suspicion in my mind that some of the profits being declared by the multinationals are inflated unrealistically by the kind of pricing they engage in in order to benefit from the tax break that exists as a result of operating here and exporting from this country. The profit rate reported by them seems unrealistically high compared with what might be possible in other countries and leads me to believe there is significant — I do not know whether one would call it fiddling of the books; possibly not — doctoring of the books to show that the profits are being taken here in Ireland, whereas if they were taken in America or elsewhere a higher tax rate would be applicable to them. In any event, whatever way the profits arise, an obligation should lie on them to invest more of that money here in the State.

It is often believed, for what reason I do not know, that in some way The Workers' Party are opposed to multinationals investing in Ireland. That is not and never has been the case. On the Left we have been criticised for our attitude to multinationals because we have always argued that for so long as Irish native capital has not the capacity — it has never had the capacity — to develop this country and its resources, if jobs could be created by foreign investment that should be done by all means. It is significant that something like 80,000 jobs are provided in Ireland through foreign investment in this State, and that is not an inconsiderable number given the very high figures for unemployment at present. My remarks are not intended to indicate that we have any problem with multinationals investing here. However, we have a problem with the fact that the money they gain from their operations here is largely exported back to their parent companies and in many cases the operations they establish here are fairly low level in terms of technology and very little research and development work is done here.

Therefore, there is a great deal to be done in that regard but it is a mistake to expect that foreign investment on its own will have any major role in or impact on the development of our resources or in the provision of the kind of employment needed for the solution of our unemployment problems. There is no reason to believe, given historical experience, that the encouragement and creation of the right climate for investment will provide the number of jobs that are required to tackle the issue of unemployment. There is no evidence to show that Irish capital has the expertise and ability to develop companies with the capacity to compete abroad with the major enterprises that exist in Europe and elsewhere.

Debate adjourned.