Deputy Cullen is in possession and he has 32 minutes left.
Financial Resolutions, 1988. - Financial Resolution No. 4: General (Resumed).
Before I moved the Adjournment last night I was speaking about the taxation system and the need to totally overhaul it. At present the Government are making some moves in the right direction, particularly in regard to corporation tax and that is essential in order to get us down to the levels applying in other countries within the EC. As I said last night, it is not enough just to tinker with the system, a total overhaul of the system is necessary. In the area of self assessment I am concerned that some of the moves being made at this stage are only cosmetic as most of what is being proposed now has in fact been happening for the past 18 months or so.
I would now like to refer to the trading houses which the Minister of State, Deputy Brennan, announced in the last day or so. This is another move in the right direction. Over the years we have identified that one of the areas where we are lacking is in the area of marketing so the setting up of trading houses can only be for the good. It has been pointed out that this should not be an area for smart accountants to operate in. While I do not think that we will just see smart accountants operating in it I suggest that the key to success in this area is that those who are going to get licences to operate in this area should have a background in marketing. I am the only Member of this House who is a full member of the Marketing Institute of Ireland and an understanding of where we should be going in this area is essential. If we are to make an impact in foreign markets it is not enough for us to look at the prospects on a purely financial basis. All of the financial resources and back up are already in existence and much of this will feed into the trading houses. One of the essential components of these trading houses should be the concept of marketing itself.
When licences are being granted the main criteria used should be the efficiency, the knowledge and background of the applicants. They are the criteria that should be looked at before a licence is granted. Their track record and the knowledge they possess should be looked at so that a real break through can be made in foreign markets. It is also interesting to note that the Minister of State speaks about exports which do not exist. The corporation tax rate of 10 per cent which is going to apply to these trading houses is a very encouraging move particularly as the Minister of State himself pointed out that we are talking about exports which do not exist. What we are looking for are new exports. This is a very positive move in the right direction and I hope it will be successful. It has all the ingredients to be successful if the approach adopted by the Department is the correct one and if the vetting procedures are properly adhered to.
I will now move on to different areas of departmental spending. The Minister said that each programme being developed will now have to be justified. That is certainly a step in the right direction but it is not enough to have a programme justified on its individual merits, it has to be related to the overall sense of direction. Any of us could draw up a programme and justify it on its own merits but to me that is not enough. All programmes should be looked at on an annual basis. The Ministers responsible should look at these programmes on an annual basis from the point of view of their merits and on a financial basis. Over the years the system which has operated is that when you were given a budget for a year you automatically put in for the same budget for the following year with the usual percentage increase irrespective of whether that programme could be justified.
The Deputy would introduce a Private Members' motion if there was a change in a programme.
The Minister should allow me to continue. I was about to say that the direction the Government are going, and the fact that they have referred to this area and to the need for real justification is correct. Ministers who spoke on the budget have made that clear. I can only encourage such action and accept that it is a step in the right direction. It is important that there should be coordination between all Departments. That is lacking at the moment, as mentioned by the Minister for Tourism and Transport yesterday. His brief touches on the environment, fishing and our inland waterways. If a Department decide on a course of action it should be referred to a co-ordinating committee to ensure that the proposal is appropriate to the work of other Departments involved. That may sound simplistic but if it does not happen our approach will be misdirected.
I was interested to hear the comments of the Minister for Tourism and Transport yesterday. It surprised me that the views I have been expressing in the last six months were contained in his speech. I welcome that. The Minister admitted that in recent years we have failed to reach our potential in tourism and there is little need to elaborate on that. However, we must consider how we can reverse that trend. Tourism has been identified as the greatest area for job creation but a lot will depend on the direction we take. Over the years Ireland has been promoted as a nice island and a misty land, as the Minister said, but that is not sufficient in the eighties. People have become far more discerning. We have an enormous number of facilities to sell to tourists. We have a natural coastline, superb inland waterways and golf courses, to mention but a few. We must promote those facilities in countries that do not have them. It is not every country that has golfing or fishing facilities that can compare with ours and we must promote them where they are in demand. We must identify the type of holiday that appeals to continentals and, having done that, promote them to the greatest possible extent. The Minister appears to hold the view that it is necessary to prove, over and above everything else, that we are going in the right direction. Statistics can be used to prove anything but it would be wrong to be led by them. They can be used as a guideline and to identify trends in various areas but on their own they are not enough. Indeed, they can cloud many of the weaknesses, and some of the strengths, of our tourism industry.
We have been told that 1987 was a boom year for tourism. I agree that the number of people who visited Ireland last year increased substantially. One of the biggest areas of increase was in the number of flights between the UK and Ireland. We have had a big increase in the number of people stopping over for a weekend, Irish people returning home for a weekend break, and I accept that there was an increase in the number of business people travelling to Ireland. I welcome those improvements but I wonder if there has been a real increase in tourism. Our future lies in an improvement in the number of people who come to Ireland for holidays, not only in the number who travel here for a weekend break or in the Irish person who returns home to stay with his relations for a few days. Many of our hotels are on the breadline and they say they have not seen any boom in tourism. I agree with them because the real growth in tourism will come if we can attract people here for a long stay. We have a potential to earn a lot of foreign currency from such holidaymakers. We have the potential to earn a lot of money from visitors who hire cars, stay in hotels and guesthouses and use all the facilities available here. We do not want those people to stay in one base. We want them to spread the money they have to spend throughout the country.
If we get caught up in statistics we will lose sight of the real development that is necessary. We must keep this area under review. I welcome the decision to establish a task force on tourism and I hope they will look at all aspects of the industry. I hope they will concentrate on trying to get visitors to visit as many parts of the country as possible rather than encouraging people to take short breaks here. We do not have a very warm climate and as a result we are not confined to a short tourist season like other countries. It is because of our climate that we can encourage visitors for almost ten months of the year. There are many seasonal activities such as fishing, shooting and golfing that would prove attractive to visitors. We need not concentrate on the summer months. I agree with the Minister that we should spread the tourist season throughout the year.
There has been reference to the income that can be derived from business people holding their conferences in Ireland. That business is expanding throughout Europe and we are managing to get a share of the market but we should concentrate more on it. That is an essential component of the tourist industry. I was interested to hear the Minister say that Germans are the biggest tourist spenders. I was not aware of that. Bearing that in mind it is disappointing to note that we attract but 1 per cent of the German market. We need to attract Germans here and the key to that is access fares. It is pleasing to note that we are moving in the right direction in that regard in that the air fares between Germany and Ireland for the new season will be substantially lower than last year. We must decide on the type of product the Germans demand and, having identified it, we must sell it.
I would be interested to know the number of applications that have been received under the business expansion scheme. It is a good incentive but I am anxious to know the type of projects that are being funded and if this scheme is part of an overall co-ordinated approach.
The national lottery has raised enormous amounts of money, far beyond expectations, much of which will be spent on the development of sports facilities. This is to be welcomed because Ireland badly needs new and far more sophisticated facilities. Sport gets massive television coverage worldwide. If we had the facilities for international events which would be covered in the European and American markets it would be of enormous benefit to tourism. One of the facilities badly needed is a 50-metre pool and I know that many proposals for such a project have been made to the Minister responsible. Having spoken to the Irish Amateur Swimming Association, I understand that if we had a 50-metre pool Ireland would be considered for the European Championships in the short-term and eventually for the World Championships. The cost of promoting Ireland worldwide would be phenomenal but if we had these facilities we could put Ireland on the world market for very little expenditure. The utilisation of lottery funds for the development of sports facilities can develop our tourism potential as well.
The recent CII report backs up the support given to tourism and particularly identifies business tourism, language, culture and agri-tourism as areas with potential for development. Agri-tourism seems to be low on the list. We have a lot of farming land which is underutilised and which may not be suitable for particular aspects of farming. Certain parts of the land bank could be used to develop agri-tourism, which is a major source of income in other countries.
The Minister referred to fifth freedom rights for Aer Lingus. It is essential that Aer Lingus as our national carrier and as one of the major world airlines should get fifth freedom rights out of other countries. Pick-up points in foreign markets would also develop tourism to this country.
I now refer to B & I which is now operating again, although on a scaled down basis. I commend the management and workforce for their effort in the past few months and I sincerely hope it has not come too late. I should like to be optimistic that they will put their act together over the next six months and that B & I will be a strong shipping line which Ireland badly needs. The current strike in Sealink brings home to us the volume of traffic out of this country.
The meat industry is experiencing grave problems because they are unable to get fresh meat out of the country due to this strike. B & I are coping with as big a volume as they can. This brings home the essential point that it is imperative we should have our own shipping line. It would be appalling if we as an island nation did not have a shipping line. I can only hope that B & I and the workforce will put every effort into making this company a success once and for all.
I was surprised the Minister had so little to say about road transport. The CII have pointed out that agreement has not been reached in the EC for the removal of restrictions on the carriage of goods within the Community. The blocking by Governments of some of the larger member states of proposals to increase international haulage permits by 40 per cent per annum over the next five years will hinder the expansion of Irish hauliers in Europe. It also puts in doubt the political will of some Governments to allow free movement of goods and services which the Single European Act provides for. The Minister for Tourism and Transport might tell us what the position is with regard to the removal of tariffs and the opening of free movement of freight within the EC. This is very important for Ireland because approximately 80 per cent of our exports go by road and sea. These policies which are being blocked within the EC must be implemented immediately.
We have an extensive budget available in the area of social welfare but I believe that in times of financial strain the Government should look at areas where people are receiving social welfare payments who should not be doing so. Resources in the social welfare budget are spread too far. It is fundamentally wrong that everybody who has children is entitled to children's allowance. People like myself should not be entitled to children's allowance because on a certain level of income there is no need for it. If funds were targeted at those who were really in need there would be far more realistic funds available to assist them. Those who genuinely do not need these payments should not be a burden on the State. There is nothing illogical about that, even from the point of view of the Left, those who claim to have the only answer to poverty. People like that should realise that targeting of resources on those most in need must be a sensible approach, particularly in a climate of financial restraint.
Within the Department of Social Welfare there is an urgent need for a thorough re-examination of the whole system. Payments are spread too far and we have a myriad of payments which nobody can keep up with. Different categories of people such as the single or the widowed seem in monetary terms to have different values. That is not the way a society like ours should be heading. We should have a simplified code with a minimum number of rates applying. This would be far more simple and fair and would remove those who have learnt how to defraud the system. One of the reasons such people are capable of defrauding the system is the entanglement of rates which enables them to work the system to their advantage.
Rather than talk about those who are defrauding the system, we should talk about the system itself which in many ways has encouraged people to defraud it. This is essentially wrong. We make a mistake when we talk about poverty, unemployment and taxation as if they were all distinct and separate areas from each other which are not interlinked in some way. I believe that the three of them are linked, particularly in the Ireland of today. The poverty of unemployment is not being properly addressed at all. In many of the speeches I have heard in this House it would seem that poverty was in some way separate from unemployment. I believe that is not the case. The new poor in Ireland are those who are unemployed. It is no good simply to find more money to throw at people who are in these appalling and unfortunate circumstances. That does not solve or in any way attempt to deal with the problem. If you are going to seriously deal with the problems of social justice, unemployment and taxation you must fundamentally look at what is causing them.
One of the major things that is causing the problem, and it has been identified by everybody, is the huge levels of taxation today. Taxation in Ireland is fundamentally a taxation on jobs and on work. The system should be geared towards a productive incentive taxation. If you move in that direction you will get more productivity because the incentive will be there for it. The eventual long term spinoff will be more jobs and in that way you will move people from the unemployment sphere and out of the poverty trap, which unfortunately many people find themselves in.
I will turn to the area of the environment which touches on many different aspects of life today. We have environmenal problems. The problems which most affects tourism in Ireland is litter and public services such as public toilets. In many hotels and restaurants the standard of hygiene is extremely poor. I believe education is the key to improvement in the area of the environment. People have to understand the impact that their attitudes and total disregard for the environment has eventually on their own lives and their own ability to earn a decent living in this country. Over the past six months we have seen the horrendous pollution of our rivers. A lot of this was caused by silage spills from a number of farms, but I hasten to add that it is not every single farmer who is polluting our rivers. However, there are a few obvious culprits and it appears they are not taken to task over this. The deterrents for such actions are not sufficient and they should be made to pay dearly for the total disregard for the law in regard to pollution. It has a horrendous impact on many aspects of life in Ireland today and, in my opinion, it is a criminal act.
In terms of local government in Ireland today, I do not know whether it really exists. Local government has to operate under the cap-in-hand mentality of central Government which is a complete waste of time. Local government is unable to function without finance and without control of its own finances it is even worse. We have spoken about a local property tax. I believe that if local government is to function properly, to be autonomous and to control and develop community life in its own area then it must have control of its own finances. That is the key component to successful local government. I believe in the long term there must be a local property tax.
I cannot accept that central Government, which is crumbling under the weight of demands from local government and is unable to cope because the finances are not there, can succeed in that area. However, unfortunately at present with the huge levels of direct taxation, particularly on the PAYE sector, one could not conceive of putting another tax on top of what they are already trying to pay. In a restructured taxation system with a substantially lower base rate than at present, I believe that at that juncture a move towards some form of local property tax would certainly be a move in the right direction. It would benefit those in the local communities who can now see the lack of many of the facilites which were available ten years ago before rates were removed. Funding was available locally for the infrastructural needs of those areas which is not there at present because the funds have disappeared. Central Government does not have the funds to properly fund local government. Communities who otherwise would be progressive and forward-looking are stymied because they are unable to operate in their own area.
I welcome the decentralisation programme which the Minister for Finance mentioned in his budget speech. This has been talked about for many years and is a major step in the right direction. The Minister announced that phase two of the programme is to begin shortly. My own constituency of Waterford was mentioned and I am very pleased about that. I would like to know what plans the Minister has for that particular area and whether it has been decided which Department is going to the constituency. I would like to know if the inspectors who were investigating the area have found suitable premises or has it been decided to build new premises. I would like to know the results of their investigations. It is a very important matter for us in that area as it is in the Minister's own constituency of Sligo where the programme is underway at present. Obviously we are anxious to get the programme underway in Waterford.
Whereas the budget has set out certain parameters, I think it remains to be seen over the next 12 months and in the years ahead if they will grasp the real need for changing the structures themselves. The Government are doing well in certain areas with the restraint in the public finances, but if they can get real value for money out of the systems that are in operation I think that will be the key to totally turning the economy around.
Before addressing my remarks to the merits of the budget I would like to comment on Deputy Cullen's contribution. I thank him for his praise and acknowledgment of the Government's efforts. The Deputy spoke about the review of programmes and structures but may I remind him that every time there is a review of a structure or a programme or any change in expenditure he and his party come into this House religiously on a Wednesday night and vote against every change in structure and programmes. They like to talk about it but as soon as a programme is put up for change or an amalgamation of any organisation is suggested they are the first party to come in here screaming about it.
We were the only party who voted with your Estimates. We supported and financial Estimates.
Every Wednesday night at Private Members' time you traipse up there in strange company for a right-wing organisation like yourselves and then you come in here bleating about changes in structures.
It is my right to argue and discuss what I feel needs to be done. I will continue to exercise that democratic right.
When the budget was presented to this House last week you had your opportunity and you will have your opportunity on many another occasion to put your feet in a voting lobby in line with the sentiments you have expressed here.
I will not be put into it by you or by anybody else.
Deputy Cullen spoke without interruption and the same courtesy must be accorded to the Member in possession.
The budget presented to the House last week is perhaps the clearest evidence to date of this Government's determination to continue pursuing the objectives which we set ourselves when we took office less than 12 months ago.
As you know, those objectives incorporate an integrated strategy for dealing with the problem of the public finances by stabilising and then reducing the national debt-GNP ratio and at the same time creating the environment for sustained, longterm economic growth. These strategies are mutually consistent. It is now abundantly clear that high levels of borrowing have an adverse effect on interest rates and contribute to a reduction in new investment and economic growth. Loss of confidence in the economy and reduced employment prospects for our people are inevitable consequences. The Government have now broken that particular vicious circle and are determined to ensure that it does not close again.
I am pleased this morning to acknowledge the recognition which has been given to the Government's efforts by the leaders of the business community as reflected in the poll in Business and Finance. This indicated that 90 per cent of the chief executives of organisations in this country recognise the great work being done by the Government.
I am satisfied that economic performance over the past year proves our twin strategies to be correct. We have now demonstrated clearly that tackling the imbalance in the public finances and the promotion of economic growth can be achieved simultaneously. Last year we set ourselves specific budgetary targets for 1987: the current budget deficit was to be reduced from 8.5 per cent to 6.9 per cent of GNP; total Exchequer borrowing was to be reduced from 13 per cent to 10.7 per cent while public sector borrowing was to be reduced from the untenable level of 15.2 per cent of GNP, the rate during the term of the last Coalition, to 12.5 per cent. This Government's painstaking review and monitoring of all aspects of public expenditure have ensured the achievement of our targets. We have re-established credibility by meeting budget targets. We have demonstrated the determination of the Government to follow through on their decisions. We have generated respect and confidence which will be reflected in higher capital inflows, higher investment, renewed confidence and new employment.
A large degree of confidence has already been restored as evidenced in particualar by the acceptance of the financial markets of our policies. Interest rates have fallen continuously since this Government took office and are now at their lowest levels for 15 years and confidence in our economic future is such that the trend is still downwards. The benefits for all sectors of the economy, particularly industry and mortgage holders, are obvious.
Overall, economic performance last year was very encouraging. A significant first step was taken towards achieving budgetary adjustment and, in addition, a considerable pick-up in the level of economic growth was achieved despite the direct short-term impact on domestic demand of Government actions in the area of public expenditure. Manufacturing output increased by about 10 per cent compared with 2.75 per cent in each of the previous two years. Inflation for the year at little more than 3 per cent was the lowest for 20 years and is set to decline further in 1988. The external position improved considerably. The trade surplus for 1987 was over £1.5 billion — an all-time record and more than double the 1986 surplus. Tourism earnings also improved on last year. Overall, the balance of payments on current account moved into modest surplus for the first time since 1967. There was a good recovery in machinery and equipment investment last year which rose by over 4 per cent. Agricultural output and incomes showed a considerable rebound from the poor outturns in 1985 and 1986. Overall, despite the impact of continuing fiscal adjustment, GDP growth may have exceeded 3.5 per cent in 1987.
These encouraging results give us grounds for renewed confidence and optimism and demonstrate that the process of adjustment which we have embarked upon must be and will be continued. The record trade surplus last year, for example, represent a vote of confidence by buyers in the countries with whom we trade and demonstrate their willingness to buy more and more of our products. The vicious circle which I spoke about earlier is steadily being replaced by this Government with a set of policies which will ensure our economic recovery and that our financial and economic sovereignty is preserved.
The placing of the public finances on a sound footing is now accepted by almost all shades of political opinion and economic commentators and there is now a high degree of consensus that our policies are the correct ones and should be pursued. The position with respect to public borrowing and taxation which prevailed before this Government took office could not be sustained. In this context the Government recognised at the outset that it was not feasible to effect the necessary reduction in borrowings through further general increases in taxation. The adjustment had to come, therefore, primarily through savings in public expenditure. To this end the Government have taken steps to rationalise essential State services in order to ensure that duplication and overlapping are eliminated, that resources are not absorbed in unnecessary administration and that financial resources are allocated so as to provide cost-effective services which will maximise returns to the economy and give taxpayers the best value for their money. It is a priority of this Government, however, that sacrifices to be made are broadly and fairly spread across all sections of society while protecting the position of the underprivileged.
The abridged Estimates for 1988 published last year underline our commitment to reducing Exchequer expenditure. Savings are being made right across the board because there is no alternative, but I must emphasise that these savings are distributed fairly with special attention to the needs of the poorer sections of our community. Overall, the target for 1988 for the Exchequer borrowing requirement is £1,457 million or 8.2 per cent of GNP, a reduction of 2.1 percentage points on the 1987 outturn and is the lowest since 1973-74. The comparable percentage in 1986 was 13.2. The current budget deficit for this year is estimted at £1,125 million or 6.3 per cent of GNP and represents a reduction of 2.3 percentage points on the 1986 outturn, the lowest percentage figure since 1980. Public sector borrowing will be further reduced from last year's outturn of 11.8 per cent of GNP to 9.4 per cent.
A major achievement in 1987 was the conclusion by this Government of an agreement with the social partners on a Programme for National Recovery embracing goals for fiscal adjustment, a plan for the evolution of pay, sectoral development policies, taxation policy and the pursuit of social equity. The programme recognised that a fiscal policy which faces up to the financial realities is the key to putting the economy back on the path to long term sustainable economic growth. Simultaneously, however, the programme provides an opportunity that must not be missed for dealing with the enormous related problems of unemployment, excessive taxation and social equity. It provides a basis for industrial peace and the climate and stability for enterprise to flourish. Key areas of the economy which have undoubted potential for growth have been identified in the programme and these together with other realistic opportunities will be vigorously pursued.
The budget takes an important and significant step in implementing several of the specific initiatives included in the programme. On taxaton, for example, this Government are determined to achieve much more effective collection and enforcement mechanisms and are moving towards a broader base for tax liability. Substantial progress has been made towards the Government's objective of having two thirds of taxpayers on the standard tax rate; in fact, the provisions in this budget will mean that almost 63 per cent of taxpayers will already be paying tax at the standard rate in the coming tax year. As well as the extension of the 35 per cent tax band by £1,000 and £2,000 for single and married persons respectively, this budget provides for increases in the personal and PAYE allowances and for increases in the general and age exemption limits. This package of income tax relief costing £91 million in 1988 and £152 million in a full year represents a substantial measure of relief for the hardpressed income tax payer.
Measures are being introduced to improve tax administration, simplify tax assessment and collection, eliminate arrears and make life more difficult for the tax evader. The self-employed, including farmers, will be subject to PRSI payments, initially at a rate of 3 per cent rising to 5 per cent in 1990-91. Our policy to protect the underprivileged in our society and those on low incomes is evidenced by the decision to continue the community drug refund scheme and the long term illness scheme and by the provision to increase by 11 per cent the personal rate of long term urban unemployment assistance with pro rata increases in other personal rates of unemployment assistance and supplementary welfare allowance.
I do not intend in my intervention today to go through all the budgetary provisions announced last week by the Minister for Finance. However, I think it must be crystal clear now to everybody in this House and to each and every citizen in this country that this Government are determined to maintain the necessary strategies commenced last year for the national benefit. The ultimate rewards are indeed attractive: growth of our industry, prosperity of our commerce, more employment and better living standards for all our people.
I now turn to the areas of my own responsibilities. With regard to major future developments in the energy area, I intend to continue pursuing a programme as quickly as possible: first to reestablish Ireland as a prospective territory for further oil and gas exploration following on the amendments to the licensing terms which I announced last year; secondly, to press ahead with the extension of the natural gas grid northwards to Drogheda and Dundalk so as to extend the benefits of natural gas supply to industry, commerce and domestic consumers; thirdly, to maximise the efficiency and effectiveness of the energy State companies with a view to ensuring the best possible deal for all kinds of consumers.
Because of the tremendous potential which it holds for our economy, the area of oil and gas exploration is, I can assure the House, an area to which top priority is being given. While the potential of our offshore sedimentary basins for oil and gas reserves is great, unless exploration drilling is carried out and reserves defined, we cannot hope to realise that potential. One of my principal priorities, therefore, on coming into office in March 1987 was to create the conditions and climate which would encourage the exploration companies to take a renewed interest in our offshore and to invest in meaningful exploration programmes. This Government want further commercial reserves of hydrocarbons in our offshore found and those reserves developed in a manner which recognises the realities of current and perspective oil market conditions, oil industry needs and the adequate protection of the interests of the Irish people.
With this in mind, I announced in September 1987 radical changes to our oil and gas licensing terms designed to provide a much needed impetus to exploration in the Irish offshore by making the Irish terms very competitive with other European areas. I will not reiterate the new terms which are well known by now.
As a follow-up to my announcement of the new licensing terms I have met with representatives of exploration companies in order to further promote exploration offshore Ireland. I am meeting a favourable response to the new terms.
The next few years will be very important for exploration in Ireland. This year's drilling programme will commence shortly and I wish the companies concerned every success with these wells.
In the context of exploring for oil I have been reminding the industry that very sizeable reserves of oil have already been found in the deeper waters off the west coast and that considerable scope exists for a great deal more exploration work in that area. Our Porcupine Basin has hitherto been under explored but I believe that the availability of the Porcupine report published last July should help greatly to rekindle interest. The first 1988 well is scheduled to be drilled in the Porcupine and negotiations are at an advanced stage to licence other blocks in the Porcupine Basin.
I can assure the House that I will continue to take every step possible to promote interest in and exploration of our offshore areas and to ensure that, in the event of commercial discoveries of hydrocarbons, such indigenous reserves are developed with the utmost speed in the national interest.
While I am on the subject of exploration I would like to briefly mention hard minerals. There was a substantial increase in the number of applications for minerals prospecting licences in the latter half of 1987. Zinc and lead remain a major target but, as the House will be aware, there is also significant activity in investigating the country's gold potential. One hundred and eleven new licences were issued in 1987 and I have approved the grant of a further 205 licences which are in the pipe-line towards issue. This step up in exploration activity increases the prospects of new mine developments with the resultant increase in employment opportunities.
Despite lower oil prices and a more relaxed energy environment generally, I will continue to press ahead with our energy conservation programme. This programme is designed to improve the awareness of energy efficiency and to reduce our dependence on imported fuels. It also aims to keep the message of energy conservation alive because I am well aware that in times of low oil prices the notion of energy efficiency may be forgotten.
The programme consists of a range of advisory and information services for industry and for the public, as well as the provision of electricity audits and grants for fuel efficiency surveys. The range of services which comprise the programme will continue to result in energy savings and, hence, cash savings. There can be no doubt but that energy consciousness and conservation contributes in no small way to the overall competitiveness of the Irish economy.
In relation to electricity, as announced in the budget by the Minister for Finance, we have arranged with the ESB to lower their prices by 5 per cent across the board. This reduction will offset the effect on domestic customers of the 5 per cent VAT on electricity and will result in a real reduction of 5 per cent to industrial customers. Coupled with three decreases in electricity prices over the past two years, this latest decrease brings Irish electricity prices further in line with those in other EC countries and will help to increase the competitiveness of Irish industry. The fact that Irish electricity prices are now close to the EC average is a remarkable achievement by the ESB when one considers that many European countries draw their energy supplies from cheap sources such as nuclear and hydro. ESB costs will be kept under continuous review and I can again assure the House that any opportunity for continuing the downward trend in electricity prices will be availed of.
The major development side of the ESB has now been completed and while there is a continuing improvement on the distribution system to be effected, additional generating capacity is unlikely to be required before the end of the century.
As Deputies will be aware I recently introduced the Electricity (Supply) (Amendment) Bill, 1987, and they will shortly have an opportunity of debating it. The main purpose of this Bill is to enable the ESB to set up subsidiary companies and to engage in the wholesale coal trade from Moneypoint.
The board continue, with the assistance of the FEOGA grant scheme to improve the system's supply to farmers and further work on this EC assisted scheme will be continued. It has been of significant benefit to thousands of farmers and considerable further work will be done.
Natural Gas now supplies nearly 14 per cent of Ireland's primary energy needs. During 1987 BGE delivered approximately 59,000 million standard cubic feet to their customers. The amount of gas which BGE may obtain annually from Marathon, 60,000 million standard cubic feet, is governed by a decision of the Supreme Court in 1986. During 1987 the price of natural gas to industry and the utilities fell in line with the continuing fall in world oil prices. Sales of natural gas to the utilities and industry now represents 27 per cent of total sales.
The legislation which I brought through the Houses of the Oireachtas in June of last year gives BGE the freedom to engage in the gas distribution business which they did not previously have. The acquisition by BGE of Dublin Gas has been completed and I look forward to a prosperous future for natural gas in Dublin.
The order which enables BGE to operate as a gas distributor can be amended from time to time to allow them to participate in gas distribution in other parts of the country. In this way I am confident we will see the development of an integrated national gas industry run to the highest standards of safety and efficiency.
In relation to the other gas utilities, the Limerick and Clonmel link-ups and conversion programmes have now been completed. Kilkenny gas has been integrated into BGE and satisfactory interim arrangements have been made pending the upgrading of the network. BGE are now also owners of Waterford Gas— they formerly being a subsidiary company of Dublin Gas. BGE are at present examining the feasibility and economics of using natural gas in Waterford.
Last April the Government approved the construction of a north-eastern pipe-line project subject to receiving EC regional funding. The EC approval has recently been obtained.
The line which will extend to Drogheda and Dundalk will also have spur lines to population centres and to the horticultural industry in north County Dublin and other large industry.
I wonder why north County Dublin?
It is an enlightened approach. Work on this project is already underway and it is expected that construction of the pipeline will be completed before the end of the year.
During the construction phase of the project which will last about five to six months, an average of 200 jobs will be created, giving a significant boost to the construction industry. Board Gáis Éireann have always made a considerable effort to maximise the contribution of Irish goods and services to their pipeline projects and I anticipate that a similar contribution to the economy will be made by this project. The estimated total cost of the entire project is of the order of £30 million approximately. I expect that the availability of natural gas in the region will prove an asset in attracting new industrial and commercial opportunities.
In my portfolio I have the utmost concern for safety issues. Foremost among these is the matter of nuclear safety and the transboundary effects of the operation of nuclear plants which I have dealt with at length in reply to various parliamentary questions tabled in this House.
Provision for £250,000 to enable the commencement of the phasing in of an emergency plan to deal with the effects of a nuclear accident, has been included in my Department's Estimate for 1988. This is an indication that despite the serious financial situation the Government are determined to do as much as possible to protect the Irish population from the effects of any nuclear accident. As I said in this House last week, I will be publishing details of the plan shortly.
I have allocated £895,000 to expenditure by the Nuclear Energy Board in 1988. This grant-in-aid will be reallocated to the new Radiological Protection Institute when they are established. I intend to bring the necessary legislation before the Dáil as soon as possible.
In relation to gas, in the year since the tragic events at Raglan House we have seen the publication of various reports related to safety in the gas industry. I am pleased to say that by the end of February all of the recommendations of the Cremer and Warner report relating to Dublin Gas, will be implemented. The gas related recommendations of the other reports will all be implemented within the required timescales. The monitoring of the implementation of the recommendations in the various reports is continuing in my Department.
In addition, I was pleased to announce in October last the completion of a portfolio of 34 gas standards produced by the National Standards Authority of Ireland. The standards cover all aspects of the supply and usage of both natural gas and LPG. The 1987 target of 25 kilometres of mains and service renewal in Dublin has been achieved. The target for 1988 is 100 kilometres.
Bord na Móna have made a very useful contribution to the economic and development life of this State since the late forties and never more so than in recent years when the cost of imported energy soared for a time to a multiple of four times what it was. After a few good years of profit, and an acceptable arrangement with the ESB, the board fell victim to the very adverse weather conditions of the years 1985 and 1986. In consequence the board's finances were badly hit and their reserves of harvested turf heavily depleted, except for briquettes which were conserved for the domestic market. Attention is now focussed on the tasks of replacing these reserves and of endeavouring to rehabilitate the board's financial position. The loss of revenue as a result of the two bad production seasons was £33 million.
In 1987 the board achieved over 102 per cent in their target for milled peat and 105 per cent in their sod peat production.
I will shortly be engaging consultants to examine the board's financial situation and their operations with a view to maximising their overall efficiency and identifying new products and services which can be delivered on a profitable basis.
Under the EC Valoren programme an amount in the region of £19 million will be used to fund a package of measures compiled by the Department of Energy which includes the development by Bord na Móna of additional bogland, principally in the west and west Midlands; the development by the ESB of smallscale hydro-electric facilities at 10 locations in Cork, Kerry, Leitrim and Donegal; the promotion of energy conservation and the more efficient use of energy, particularly our indigenous energy; further evaluation of the potential for wind energy applications at suitable sites in Ireland.
The work involved in this programme of measures will span the five years of the Valoren programme itself and it is estimated that 600 jobs will be created under the scheme. The total cost of the programme is almost £35 million inclusive of EC funding.
The Irish National Petroleum Corporation continues to operate the Whitegate refinery and to make a valuable contribution to the economy of the country in the purchase and refining of crude oil. It also plays a valuable role by maintaining stocks which contribute to the oil stock holding obligations placed upon Ireland by the EC and the IEA for security of supply purposes. The INPC also maintains the Whiddy Oil Terminal where there is provision for the storage of 1 million tonnes of oil.
As I said recently at Question Time, I will make a detailed statement about the Nigerian negotiations, if and when the business is satisfactorily concluded, at the appropriate time.
This Government have a progressive policy and programme for development of forestry which we are now implementing. We are convinced that this is an area which will contribute significantly to overall national development. There is a compelling case for this development. A dynamic forestry policy will generate further employment, improve the balance of payments, and redistribute incomes into regional areas as well as having a tourism related aspect through wildlife conservation and amenity development. Forestry is also one of the key areas identified in the Programme for National Recovery as having real potential for growth and increased employment.
The policy of developing, expanding and restructuring the country's forest resource — in order to maximise its benefits — is continuing. This has resulted in the development of broad strategies geared to achieving this policy and include such measures as: development of a semi-State company to operate the commercial activities of State forestry; expanding the level of forest planting in both the State and private sector; increasing domestic and export market shares for Irish timber; encouraging the establishment of new industries to use forest products.
Preparation of the necessary legislation to give effect to the establishment of the new forestry State company is well advanced and it is intended to introduce it at a very early date. This will be a commercial operation. I am happy to acknowledge that our activities in this connection have a wide degree of consensus.
It is my aim to increase even further the record national level of planting achieved in 1987. Last year some 8,000 hectares were planted by the Forest Service and 3,000 hectares by the private sector — a national total of 11,000 hectares. This year the State will increase its planting to 10,000 hectares. This dramatic improvement, which reverses the declining planting patterns of recent years, has been made feasible by the Government's decision to plant areas of Bord na Móna cutaway bog.
In addition, an active programme of encouraging further private sector forest development is being pursued. Domestic grants for conifer and broadleaf planting have been increased to £500 and £800 per hectare respectively. The Forest Service will continue to encourage forest development under the EC assisted Western Package. Proposals for more EC aid which are now before the Commission will, if successful, further increase the level of incentives for private forestry development.
The rapid production of timber from our State forests has begun. This year the Forest Service will produce a total of 1.4 million cubic metres — this will rise to 2 million cubic metres by 1992 and 3 million cubic metres by the year 2000. Considering that with current output of 1.3 million cubic metres Irish timber holds a 50 per cent share of the domestic construction market and is also impacting considerably on the export market, the prospects for forestry contributing further to an expanded wood-using industrial base, job creation, import substitution and foreign currency earning within a few years are now very real indeed.
The Forest Service is determined, together with the wood industries, that through adequate research Irish timber is used for the highest value end uses and that by good marketing it maximises its market share of both the domestic and export markets.
I am confident, judging by the Forest Service's successes last year, that under a commercial company structure this service has the necessary competitive drive to enable it to fulfil the Government's faith in its ability to manage and expand this resource for the good of this country. Such successes include increased planting of 1,000 hectares; increase in production to 1.3 million cubic metres and improved revenue earnings of £20 million. The dramatic improvement in performance which these figures reveal can be judged by a comparison with output and revenue performance in 1975 and 1980 when total production and revenue stood at 288,000 cubic metres — £2.3 million and 530,000 cubic metres — £6.6 million respectively.
Telecom Éireann's accounts for 1986-87 showed a loss of £8 million and the company expects that the current year's accounts, when published, will for the first time show a profit. The impact which the company has made on the State's telecommunications system is noticeable in the increased level of connections made each year since vesting day, fewer faults and lower call failure rates, not to mention the advanced technology represented by the company's mobile radio telephone system, its packet switched data network and its electronic mail box service. Further new services are in the pipeline and the current outlook for BTÉ is distinctly bright.
The capital allocation for BTÉ in this year's budget is £135 million. This causes no drain on the Exchequer as the money will be found partly from BTÉ's own resources and partly by borrowing through the company's financial subsidiary Irish Telecommunications Investments Ltd. The Telecommunications Capital Programme will be used mainly to improve the quality of service, to provide for business growth and to exploit new business opportunities. New business development depends on sustaining the technological advantage achieved through the introduction of digital systems under the Accelerated Development Programme. Investment in technology will continue to be necessary to maintain Ireland's competitive position in the growing market for information based services.
The Government attach considerable importance to the development of an international financial services sector in Ireland and intend to pursue this matter vigorously. This is made possible by the substantial investment and major technological advances in telecommunications. Ireland has a number of strengths which make it an ideal location for this type of development. I would mention among these our time zone location, the English language which is the language of international finance, our sophisticated professional infrastructure particularly in accounting, banking and law, our highly educated and "high-tech" workforce, the existing hardware and software industries and our digital telecommunications network.
The disparity in rates for international calls from this country compared to charges for calls to Ireland originating abroad has been well documented and widely commented upon and it is central to Telecom Éireann's strategy to bring these charges closer into balance. Telecom Éireann will shortly be making an announcement about substantial reductions in charges for international calls, an announcement which will be widely welcomed by the business community.
An Post's allocation for 1988 under the Public Capital Programme is £8 million. There will be no draw on the Exchequer as An Post will provide all the necessary funds from its own resources and borrowing. The funds will be spent on the further improvement and extension of post office accommodation, vehicle replacement, security facilities and the provision of equipment.
An Post is now in its fifth year of operation. Since it commenced operations in 1984 the company has achieved improving financial results each year. Losses in 1984 and 1985 were replaced by a profit of £700,000 in 1986. Preliminary results indicate that there was a further significant improvement in the financial performance of the company in 1987.
Basic postal rates have been increased only once, in March, 1986, since An Post commenced operations. There was no rate increase in 1987, nor will there be any in 1988.
The competence and capacity of An Post to carry out effectively not only traditional functions but also new ones has been well demonstrated by the highly successful operation of the national Lottery. The national lottery's new game "Lotto", which is still at the development stage, is likely to create up to 40 additional jobs.
There are a number of important developments taking place in the broadcasting sector which will also make their modest contribution to the generation of economic activity and employment.
In relation to RTE, the establishment of a new long-wave radio service is specifically adverted to in the Programme for National Recovery as one of the measures to be undertaken by the State-sponsored sector and arrangements are proceeding apace on this project. While the direct employment content of this project is relatively small — the station will have a staff of about 25 or so — the real benefit from this project will accrue through what, in effect, will be its export earnings. The station will have extensive coverage of the UK mainland and one of its major objectives is the generation of revenue through the sale of advertising air time in the UK. Likewise, the service will be a useful medium for Irish firms seeking to promote sales in the UK.
There are proposals currently before this House embodied in the Sound Broadcasting Bill, 1987 to establish a new independent national radio service as well as local and neighbourhood radio services. The provision and operation of the radio services which we envisage will, I believe, create considerable employment opportunities — as much as 500 to 600 jobs in the medium term — and this is one of the reasons I am most anxious to have the Bill enacted and have the work get underway.
As I said at the outset, our priorities in Government continue to be: to reduce dependence on borrowing which has been crippling our efforts to get adequate growth in the economy; to improve the environment for more investment and higher employment; to reform the taxation system and protect the living standards of those on low incomes and to develop our natural resources properly.
The budget measures, together with all the other strands of this Government's policies, will build upon the restoration of confidence which has already manifested itself in our country, hasten us on the road to full economic recovery and stability, provide employment for our people and hope for the future.
I do not think that any of us would deny that this budget has gone a long way to achieving its primary objective and I do not believe and never have believed in the politics of confrontation that will attempt to decry all the efforts that have been made by any particular Government. The Minister who is now departing would perhaps have recognised that in the past.
However, I want to draw attention to the crisis within our society that is shared by the three parties that now make up the majority political consensus in Dáil Éireann. This budget is not about creating employment; it is about solving the fiscal problems of debt in our society. In choosing to go down one particular road for which there is clearly a majority consensus, the Government have effectively abandoned the prospect of increasing employment in our society for at least the next two to three years.
According to international statistics, Ireland is the 27th richest country in a world of 160 nations. In this rich country, one in three of our population is dependent on social welfare and the great majority of those who are so dependent live below the poverty line. Poverty is now a major and growing part of Irish social reality. So, tragically, is ostentatious wealth. We are well on the way to becoming what an English commentator has recently described as "a society of the haves, the have nots and the have lots". In a major pre-budget submission, the Conference of Major Religious Superiors and the Catholic Justice Commission asked each Member of this House to accept as a fundamental principle that there should be no poor in Irish society. That is a principle to which every Member in this House is willing to pay lip service but, tragically, as the budget that we are discussing unfolds, it is becoming clearer by the day that the submission of the conference has fallen on deaf ears.
The Irish Labour Party have argued for years that the gap between rich and poor is not necessary. It is that gap which has left so many of our people without a home, without health, without education and without jobs — the famous phrase of Jim Larkin, "It is the gap between what ought to be and what is". The principal mechanism available to us for closing that gap is public expenditure. The approach to public expenditure as it has been followed by Fianna Fáil however laudable it might be in banking circles, means that that gap is actually being widened day by day. If we are serious about poverty, now is the time, even in our present circumstances, to consider a radically different approach to this problem. There is considerable evidence that the payment of low levels of social welfare to people who must remain in enforced idleness if they are to receive it is dehumanising. There is increasing evidence also that the very lack of work itself is damaging to health and welfare. Our society, with all the wealth at our disposal, is capable of overcoming this problem.
In many other societies in Europe, radical ideas are now being considered. I should like to put on the record of this House one which we now need to consider if we are to pay more than lip service to solving the problem of unemployment. One of these ideas worthy of very serious consideration — and I believe a budget debate is where such thoughts should be aired — is the idea of a basic social income payable, as of right, to every citizen of the State who is not currently employed and who is between the ages of 18 and 66 years. It would replace the present social welfare benefit system and would act as a guarantee, irrespective of circumstances, to anyone caught in the trap of poverty. It would give a real meaning to the term "poverty trap", which is too often used by those on the right in Irish politics to suggest that we should reduce levels of welfare to make badly paid work attractive to those who are forced to stay idle.
In return for a basic social income there is a wide range of activities available and now ignored which can involve thousands of unemployed people in useful and fulfilling activities, doing, in effect, work worth doing, to borrow a phrase from a previous time. Some examples of this would include a programme of rural tree planting to maintain the wild life habitat and so develop and conserve our tourism industry; a programme of planting in urban areas, not just in Dublin city under Crann sa Chathair but right across the urban landscape of this island; the systematic restoration of our canal system to provide for tourism and recreation, as well as a cheap system of bulk transport if that were required, and a major insulation of all public buildings; a major assault on all urban dereliction and finally — the Minister for Energy and Communications has just referred to this — a massive increase in the programme of afforestation to bring Ireland up to European levels. I calculated that approximately 10,000 hectares a year would achieve this and would provide a basis for an enlarged and substantial timber and paper industry.
My basic point is this — and I welcome very much the increase of 11 per cent in the moneys for the long term unemployed but we are forcing people to stay out of work in order to benefit from such an increase — no matter how dramatic the percentage increase may appear relative to the rate of inflation, in absolute terms the amounts of money about which we are talking are ludicrously small. Our society under various Governments has simply failed to tackle the problem of unemployment. This budget will actually increase that problem. This Government, perhaps the first in the history of the State, are borrowing taxpayers' money to create unemployment in the area of the public service. This Government readily recognise that they are not in a position in 1988 to do anything other than suggest that unemployment is likely to increase. I am not in the business of bashing our Government and I do not believe that this Government, it they use the available instrument open to them, are capable of doing anything other than introduce a budget similar to the one before us.
The problem is not unique to Ireland. Right through the whole of the EC despite the fact that we are getting richer by the year as a Community, levels of unemployment are increasing and they are dramatically increasing in those member states within the Community that have a growing labour force population. No matter what kind of political attacks we may make upon each other, it is quite clear that we have entered into a new phase of economic development within our society where, as we have seen in the private sector, including large open, competitive companies, in order for them to remain competitive and in order for them to increase production, they have had to reduce their labour force. In any sector of industry that one wants to talk about the paradox of modern society is evident. We can produce more with fewer people and, indeed, in order to produce more at competitive rates, we have to get rid of large sections of the people currently employed in those industries. This is not peculiar to our society. It is not peculiar to our economy. It is commonplace in all the economies of the OECD.
If we are to respond to the considered submission of the Irish Justice Commission and the Conference of Major Religious Superiors called, Widening the Poverty Gap, we have to tear up the Victorian rules that underpin the social welfare system and replace them with an enlargement of a concept of a basic social income which already has a model in place in the form of the social employment scheme introduced by the previous Government and which has continued to win support from the present Government.
If the work I am talking about were to be undertaken under the framework of local authorities, Government Departments or voluntary organisations, up to 80,000 people could be taken off the live register and given meaningful activity as well as the 11 per cent increase in the unemployment benefit which they will receive sometime in July.
Budget debates are occasions when we talk at each other but I invite the Minister and this House to begin to look coldly at the reality. Our society will never solve the problem of unemployment within our current frame of reference. We would need to acquire levels of economic growth of the order of 8 per cent to 9 per cent for a period of five to ten years in order to generate the level of activity that would possibly increase jobs, but there is no guarantee. Unless we come up with a radically new approach which tells everybody they have a place in society and that that place will be guaranteed a meaningful activity related to a basic social income if they are unable to find economic employment, then our society will fall apart and fail. That is the basic challenge which confronts us.
I would like to read into the Official Report the substantive article written in The Irish Times, 28 January 1988, by the economics editor, Maev-Ann Wren, when she summarised very fairly what this budget was. She said:
This budget takes over £300 million out of the economy, which represents both its strength and its weakness.
It would be churlish of me not to recognise those strengths because this Government are attempting to deal with the problem of our debt. The Labour Party have never denied that there was a debt problem. The strength of the Government's resolve, is represented by the Minister for Health who is here this morning. He is undertaking a difficult task in relation to health expenditure — more difficult than when he was in Opposition and thought that the then Minister would be able to tackle this problem painlessly — and the £300 million he has taken out of his budget, plus the Estimates, represents the strength of the budget at one level but paradoxically it represents the weakness of the budget as it represents employment.
The Minister for Energy said in his opening paragraph that the budget presented to the House last week was perhaps the clearest evidence to date of this Government's determination to continue pursuing the objectives which they set themselves when they took office less than 12 months ago. Those objectives were not set during the election campaign, and they bear no resemblance to any of the promises made or hinted at to the electorate. Until such time as we, collectively, have the honesty to recognise that we have to do something radical about unemployment, we will continue to have this problem as well as the associated problems of poverty, alienation, crime and dereliction with which we are all too familiar.
I want to turn to a serious and substantial article written in the same issue of The Irish Times by two senior economists of the ESRI. I do this because this Government, and particularly the Taoiseach, have frequently referred to the ESRI and the ESRI model of the Irish economy as the basis of reference for Government policy. I want to put on the record some of the comments these two economists, who are responsible in part for that model, have made in their assessment of the impact this budget will have on the economy for 1988:
This Budget and the Estimates of last November are primarily aimed at achieving stability in the public finances. The Exchequer borrowing requirement should be 8.2 per cent of GNP at the end of this year and by 1990, at 6 per cent of GNP, will be within the target zone of the Programme for National Recovery. The debt/GNP ratio will rise slightly during 1988 but will stabilise next year and fall thereafter.
There will be no growth in real GNP during 1988 due primarily to the deflationary effects of public spending cuts. This Budget does not change the picture. In the absence of further major deflationary action in 1989, we can anticipate resumed growth in the economy next year, leading to greater revenue buoyancy and further stabilisation of the public finances. However, the prospects for any major reduction in the numbers unemployed are poor, and some 7,000 more people will be without jobs partially due to this Budget and its associated expenditure cuts. Emigration will further increase.
This Budget is somewhat unusual in that the policy stance for 1988 was announced last Autumn in the Estimates and in the Programme for National Recovery. We turn to yesterday's speech more in the spirit of hearing again a favourite opera: the music and plot are familiar to us by now but the maestro's interpretation yields additional insight and pleasure. What yesterday's Budget did was to confirm previous decisions of the Government on expenditure and make marginal adjustments to the tax system. Both the increased provision for social welfare and the income tax concessions were more generous than had been expected, providing for increases above the inflation rate. However, the cost of these measures was more than offset by increases in other taxes, such as the levy on pension funds, and more rapid collection of income and corporation taxes outstanding.
While attention naturally focuses on its immediate effects, we must look to the medium-term for the rationale of this Budget. Three aspects are of particular importance; the deflationary effects of the expenditure cuts, the possibility of renewed growth in the private sector, and the likely developments in interest rates, savings and the balance of payments.
Firstly, where cuts in numbers employed in the public sector result in a reduction in the level of quality of services, the community as a whole is worse off. Some of those quitting the public sector may leave the active labour force (i.e., retire or emigrate). However, others will either add directly to the numbers unemployed or indirectly by taking jobs which might have gone to other workers. The net effect will be a significant increase in unemployment this year.
The cuts also have adverse indirect effects. Fewer people employed in 1988 means a lower wage bill and reduced consumer expenditure. Analysis using the ESRI's macro-economic model indicates that the cutbacks will reduce the 1988 growth rate of GNP to zero.
Secondly, the reduction in public sector activity will be compensated to some extent by an increase in private sector profitability and activity. A general rise in unemployment, accompanied by decreased job security for those in work, will tend to moderate wage demands throughout the economy. This will help improve the competitive position of manufacturing industry and traded services (such as tourism) and lead to increased growth. Such growth will be slow to materialise since investment decisions take time to plan and implement, particularly while the investors are themselves affected by the adverse short term economic climate. The changes in the corporation tax provisions may result in a temporary spurt in investment in early 1989, but should have no lasting effect. All indications are that private sector growth rates from 1989 onwards will be well above the dismal experience of the first half of the 1980s.
Thirdly, the Budget will have a major effect on the financial sector and on interest rates in particular. We are already benefiting from the downward pressure on interest rates arising from the expected reduction in Government borrowing and the growing balance of payments surplus. The fact that the cut in borrowing is, if anything, greater than expected will reinforce this tendency. Barring major disruption in world financial markets, we should see further interest rate reductions in the medium term which will give an additional boost to Irish competitiveness. However, it will take some considerable time to repair the ravages of the exceptionally high real interest rates of recent years and we will not see investment and employment picking up until 1989 or 1990.
Mr. MacSharry's task was not to be envied. He clearly faced painful tradeoffs in his efforts to restore stability to the State's finances. His overriding objective was to stabilise the debt-GNP ratio so as to break out of a vicious circle of ever-rising debt, an increasing tax burden, loss of competitiveness and spiralling un-employment. The price of achieving debt stability is higher unemployment in the short term.
In bringing in his budget, Mr. MacSharry has opted clearly for fiscal adjustment by expenditure cuts. Such cuts take longer to reduce borrowing than do increases in taxation. Furthermore, the cost of the public sector redundancy package is high. Nevertheless, by 1989 and subsequently, when the up-front costs of the cuts are paid, the economy should bounce back and the Exchequer borrowing requirement will fall continuously in future years if public expenditure can be held constant in real terms.
If Mr. MacSharry had opted for a policy of large tax increases there would have been a bigger initial reduction of borrowing but repeated doses of the same medicine might well have been needed. A tax induced wage spiral could have further eroded Ireland's precarious competitiveness position.
Finally while making ritual and well meaning noises, Mr. MacSharry has failed to tackle tax reform. The limited reduction in depreciation allowances is to be welcomed. However, this does not change the situation, high-lighted by the OECD, that the tax system is severely biased against employment.
The reintroduction of Section 23 relief for building and the extension of corporate tax allowances for commercial development in suburban areas (a piece of creative fiscal gerrymandering) means that the tax base has been further diluted. In introducing a special levy on pension funds, the Minister has recognised that there is a problem in the taxation of financial institutions. However, the introduction of temporary levies is not the way to deal with the problem. The answer lies in treating all forms of income on a consistent basis for tax purposes.
I am sorry to interrupt the Deputy, normally there is a tradition that Deputies may refer to a nugget in quoting but this is certainly more than a nugget.
I am nearly finished.
The quotation has lasted for about five minutes.
The last few lines of the quotation are as follows:
Continuing distortions of the tax system have very real costs since the increased tax burden falls elsewhere. The loss of efficiency and output from the highly taxed areas of economic activity may greatly outweigh the gains from these exemptions.
Thank you for allowing me to read that into the record. It is a succinct article by John Bradley and John FitzGerald from the very source to which the Government frequently refer as the Authority which has underpinned their economic strategy. In essence, it says that the Government, with all the strength they have commanded with the support of Fine Gael and the Progressive Democrats, may put through an enormously expensive and difficult to accept public package of massive expenditure cuts and they may succeed in 1991 and 1992 in sorting out our fiscal problems and rebalancing the books but that it will be at the cost of employment. At the end of the day, with a balanced set of books, there will be an increased problem of unemployment. We cannot allow one to be postponed at the expense of the other. There is no necessity to say to the unemployed and the poor that until such time as our books are balanced they must wait.
As the Irish Congress of Trade Unions, the Irish Commission for Justice and Peace and the Conference of Major Religious Superiors said, the two must go hand in hand and if this country, which is the 27th richest nation in the community of 160 nations cannot do that simultaneously, then we should look at the entire economic system to which we cling and ask oursleves if there is not a better way to give effect to the principle that there should be no poverty in our rich society.
Over the past ten months, the measures introduced by the Government to correct the countries serious financial problems have shown tangible results. Exchequer borrowing has been greatly reduced, interest rates have fallen, as has inflation, and there is renewed confidence in the Irish economy both at home and abroad. We have demonstrated our ability and commitment, to break out of the cycle of deficit financing that has had a crippling effect on our economy in recent years.
The full details in relation to the Government's fiscal policy were outlined in the Minister for Finance's Budget Statement. Nevertheless, it is important to reflect on the real financial and economic improvements which have taken place under this Government in such a short timespan. The current budget deficit in 1987 at £1,180 million was £20 million less than originally planned. Exchequer borrowing, a reduction of which is a key element of Government strategy, was also inside target by £72 million. The current deficit of 6.8 per cent of GNP was the lowest in eight years and Exchequer borrowing was the lowest in 11 years. In addition, economic growth in 1987 was in excess of 3.5 per cent and was considerably better than forecasted earlier in the year.
The budget reiterates the Government's intention to continue with their objective of improving the public finances while at the same time developing the economy. It also very clearly shows the Government's commitment to protect the less well off in our community.
This latter commitment is reflected by the fact that additional resources for the health services, over and above the October Book of Estimates provision are now being provided for. Provision has been made for a 3 per cent increase in allowances to disabled persons, the blind, and in respect of handicapped children living at home while £11 million extra is being provided to ensure continuation of the community drug refund scheme and the long term illness scheme.
Later in my speech I will be referring in greater detail to these schemes and to changes in the disabled drivers' schemes announced by the Minister for Finance.
As a result of the budget, total health spending in 1988 will amount to just below £1,300 million. While this is slightly less than the provision for 1987, I am satisfied that in all the circumstances, it is a generous provision when account is taken of the full year effect of measures adopted in 1987. These measures will contribute in no small way, to the health agencies' ability to contain expenditure within the approved limits in the current year.
Last year was a difficult year for health boards and voluntary hospitals partly because of the unavoidably late notification of their allocations. Indeed, health agencies responded well to the challenge in 1987 which was presented to them in managing and ensuring that services would be available generally to meet genuine need. It is important that such a contribution be acknowledged and placed on record. The early notification last October of the 1988 allocations to agencies was clearly an assistance to health boards and voluntary hospitals to adopt a strategy of service delivery consistent with the financial reality we must operate in.
I have advised the agencies to secure the necessary reductions in expenditure in areas which do not directly affect patient care in as far as possible. I have requested that key services for the old and housebound are protected and that services such as community nursing, home help and meals on wheels, as well as services for the handicapped, children and disadvantaged communities, be maintained at 1986 levels in real terms. I am glad to say that the response of the agencies to these requests has been very positive.
It is important to record that this House has approved the overall allocation to the Health sector in 1988. In other words it is accepted by this House that a figure of almost £1,300 million is sufficient to meet the health service needs of the country in 1988 given the existing budgetary reality. While Members of the House might differ over some of the spending details, nevertheless the bottom line is that the overall level of funding of the health services will remain as approved.
Rationalisation measures, initiatives and proposals which effect a saving when implemented mean that services elsewhere within the health sector will benefit given that an overall fixed sum has been approved. This reality tends to be overlooked at times when particular measures are being implemented. As Minister for Health I must have a national perspective on the entire health sector rather than a narrow, localised one. Of overriding concern must be a general improvement in the health sector as a whole.
The much needed rationalisation programme which is currently underway, when completed, will provide a health service nationally which can respond effectively, timely and effectively to genuine demands, be responsive to changes in service requirements and facilitate future developments in order to provide improved as well as a greater range of services for all.
I believe that the co-operation between my Department and its agencies, as demonstrated last year, will continue to show itself during 1988 and that the practical advantages of that co-operation will be of immense benefit to all of us who are involved in the health services.
In present circumstances no service or institution can be regarded as immune from critical analysis and discussions. General hospitals as consumers of over 50 per cent of current spending are the prime candidates for an examination of their effectiveness. Where other opportunities exist for either tighter control or the most appropriate location of responsibility for particular services those opportunities will be taken. In general, it means that we will, as a Government, spare no efforts to ensure that we get the most out of the State's and taxpayers' investment.
A major rationalisation of the general hospital area is underway. This is to ensure that our acute hospitals can respond, in the appropriate way, to the need for hospital care. The rationalisation of course involves taking out of the system beds which are no longer required, but it also involves: encouraging co-operation between hospitals; development of services with long waiting lists; putting in place and maintaining well equipped hospitals better able to respond to the needs of the population; responding to changes in medical practice; development of five day wards and day surgery; and planning for self-sufficiency at regional level in regard to certain specialties.
The year 1987 has seen the first important changes in the hospital system for some time. The financial restrictions have, perhaps, concentrated people's minds on the need to eliminate duplication and waste.
There has been a media concentration upon closures of hospitals but very little upon the provision of new facilities at Beaumont for example or at Ardkeen, Sligo, Cavan, Mullingar, Castlebar and Wexford.
The Government have, to date, allocated £10.1 million from national lottery proceeds to the health-welfare areas and it is a very welcome addition to these funds. Of this allocation, £2 million was allocated to the Health Education Bureau in 1987 and a further £2 million has been earmarked for the 1988 Health Capital Programme. Of the balance of £6.1 million, I have, to date, allocated £1.5 million to individual projects and I will be allocating the balance during 1988.
Broadly speaking, the £6.1 million will be used by me to fund the following services: about £2.25 million will be allocated for services for the physically and mentally handicapped, this being allocated for the implementation of resocialisation programmes designed to assist in the transfer of patients from institutional to community-based services. The object is to ensure that such persons will, through a programme of resocialisation, be able to meet the challenge to live independently in their own community. The programme will necessitate the purchase of houses, the provision of day nursing facilities, day care centres, and the employment of house parents to encourage independent attitudes and behaviour.
Nearly £1 million will be allocated for the provision of services for the elderly and this will be spent on the development of community-based services. The provision of these services will reduce the level of admission of the elderly to institutional care and, at the same time, greatly enhance the lifestyle of our senior citizens.
About £700,000 will go to the psychiatric services and will be used to accelerate the continuing programme of transferring long stay psychiatric patients when appropriate to live in the community. The programme will involve the provision of a range of modern community-based facilities.
A sum of £1 million is being provided for the development of community information and development services. Particular attention will be given to the service provided by voluntary agencies but it is intended that they will operate within a broader framework than heretofore provided under the aegis of the National Social Service Board.
A sum of £450,000 will be spent in 1987 and 1988 on the provision of AIDS prevention programmes. Special emphasis will be placed on the need to minimise the spread of HIV infection amongst intravenous drug abusers.
A sum of £700,000 is to be provided for the development of a range of services to facilitate investigation and management of cases of child abuse. Innovative prevention programmes for the support of families and young children will be developed together with new projects to assist the young homeless and movement of children from residential to community-based services.
I hope the Minister has something for women's organisation's as well.
It would be understandable if some people have the impression that there is little forward movement in the health services at the moment. The problems which have been created by our difficult economic situation could lead to the belief that new thinking and development in relation to health issues have been submerged in all the ruaille buaille of trying to live within our limited resources.
That is not the case. On various occasions in recent months I have referred to the various initiatives which are underway in regard to the creation of a positive health promotion policy. I would like to return to the subject again because I think it is a very important one. A consciousness of the influences which determine the quality of our health has become a distinguishing feature of all developed countries. Such countries have reached the stage where they are adequately equipped to cope with sickness and are now in a position to contemplate the social and economic changes required to advance the quality of the citizen's health. We have reached that stage. As Minister for Health I feel that the time has come when I should interpret the description of my post in a more literal sense and get away from the traditional notion that my main role is to preside nationally over a range of services for sick and infirm people.
I have integrated into my Department the functions of the former Health Education Bureau and created a new Health Promotion Unit. The unit will continue to carry on the type of health educational campaigns directed at the individual for which the bureau was responsible.
In addition, the unit will take on the responsibility for developing a broad health promotion policy with, I would hope, the support and participation of the many other agencies which influence the quality of our health. The unit will have the expert advice of the Advisory Council on Health Promotion which I established last month under the chairmanship of Professor Ivor Drury who is President of the Royal College of Physicians in Ireland. The council's members are drawn from a range of interests. They include not only persons of standing from within the health services but also influential persons from the farming, commercial, educational, local government, food, sporting and communication sectors.
How many women?
Their combined knowledge and commitment to the creation of a healthier society is formidable and I look forward to the type of progress which is likely to emerge from their advice. We have a few women, Deputy Barnes.
I am delighted to hear that.
The Government as a whole have committed themselves to supporting my efforts to create a comprehensive health promotion policy. I have been given the support of a committee of Ministers drawn from the Departments which impact to an important degree on the influences which determine how healthy we are as a nation. I shall act as its chairman, and it will be a very powerful vehicle for securing the participation and co-ordination of the various sectors.
Of course I shall not have to await the guidance of this new council in order to push ahead with preventive and promotional activities which have already been clearly identified. Cancer and heart disease are the two greatest killers of our times. While a great deal has yet to be learnt about their causative factors some of their origins have been identified beyond any reasonable doubt. The main one is tobacco smoking. I have an obligation as Minister for Health to continue the efforts of my predecessors and to work towards the complete eradication of smoking. It is not an unrealistic goal but its achievement will, of course, require a joint international approach. I think we are fast approaching the situation where people will demand such an approach in order that they and their families can be protected from the destructive consequences of tobacco. I have asked the new Health Promotion Unit to continue the anti-tobacco campaigns conducted with considerable effect by its predecessor, the Health Education Bureau. I will refer to legislative support measures at a later stage.
I would like to refer in particular to the need to face up to the hazard of cancer. As a result of initiatives taken by the Heads of State and of Government at the summit meetings in Milan and Luxembourg in 1985 a European programme in the fight against cancer was launched. I confirmed this Government's commitment to this programme at a meeting of Health Ministers of the Community in May 1987. The aim of the Europe Against Cancer campaign is to reduce significantly the number of cancer related deaths, perhaps by as much as 15 per cent by the year 2000, by a programme of prevention, early detection and cure. Many cancers are curable, particularly if they are detected in the early stages.
We propose to participate in a "European Week Against Cancer" from 1-8 May this year and the "European Cancer Information Year" in 1989. The committee of cancer experts which the Community has appointed, and on which this country is represented, has identified the fight against tobacco as a priority area. I have established a National Committee on Cancer to co-ordinate the Irish activities associated with this campaign. This committee will be chaired by the chief medical officer of my Department and will include representatives from the Health Promotion Unit, the Irish Cancer Society, the Irish College of General Practitioners and the Irish representative on the European committee of cancer experts.
Of course, in directing the fight against cancer, one of the most important requirements is the possession of accurate information on the incidence of cancer in the community. With this in mind, I have been actively considering how best to establish a national tumour registry. Such a registry would provide invaluable and detailed information on the prevalence of cancer and would facilitate the investigation of possible environmental factors related to cancer incidence. In addition, it would greatly assist in evaluating our success in bringing this disease under control. I will shortly be establishing a representative group to consider all practical aspects of the setting up of such a registry.
I have also established a working group to examine arrangements for cervical screening. This group will initially examine the current arrangements for the taking and analysis of cervical smears and recommend how these arrangements can be improved to deal with the present work load. They will then identify the population requiring screening and optimum frequency of screening for an efficient and cost effective cervical screening programme for this country and recommend how such a programme could be developed.
I have just returned from the London AIDS Conference which was organised by the UK authorities and World Health Organisation. Every country affected by AIDS was represented and the disccussion was very frank and open. What emerged was that our own strategy was very much in line with that of the other countries present. All countries have recognised that education both of the general public and of at risk groups is the most effective measure against AIDS. I have come away from London convinced that we must continue to pursue our current policies.
Following our mass media public information programme which was launched in May 1987 a survey had been carried out at the end of 1987 to assess its effectiveness. A clear majority considered the programme to be very good in helping them to understand AIDS and people's knowledge was improved as we had planned. We will continue to provide information to the general public particularly through poster advertising, our telephone services and through our booklet. I have decided to address specific groups in 1988 for intensive and direct action. A sum of £430,000 has been provided by the Government for this work from lottery funds. Sixty per cent of HIV positive individuals here are IV drug abusers. This is the group in which the infection appears to be spreading most quickly. It is also the category from which the majority of new cases are coming.
One to one contact with addicts will, I feel, prove the most effective way of motivating the necessary personal behavioural changes. I have already provided the drug agencies with £70,000 to enable them to expand their outreach programmes and further substantial funding is being provided this year for further expansion which will include research into the drug culture with particular emphasis on how the culture is responding to the AIDS threat. I note that the World Health Organisation are proposing similar research on an international basis and Ireland would like to participate in it. We are already participating in an EC study on paediatric AIDS which, in Ireland, is a problem related to IV drug abuse among mothers.
I am also concentrating upon the educational system. It is my intention that no child should leave school without being aware of the facts about AIDS. My colleague, the Minister for Education, fully supports me in this and planning for the introduction of such a programme of information is now in hand.
Apart from the human misery involved in drug abuse, the rapid spread of AIDS and HIV infection amongst intravenous drug abusers demonstrates the serious threat which drug abuse poses to society today. The Government have developed a coherent and comprehensive strategy to tackle the problem through the National Co-Ordinating Committee on Drug Abuse which is chaired by my colleague and the Minister of State, Deputy Terry Leyden.
Drug traffickers are the root cause of drug abuse and grow wealthy by distributing drugs to others, an activity which results in misery and death and which is affecting the community at large, as evidenced in the AIDS situation.
I propose to introduce legislation designed to prevent drug traffickers from being able to benefit from their ill-gotten gains or to finance further drug trafficking operations. The legislation will be designed to provide a framework to seize the assets of drug traffickers, I hope to submit proposals to Government on this as soon as some constitutional issues in this area are cleared up.
As part of the continuing development of services at the levels of primary health and community care, my Department introduced a measles immunisation programme in October 1985. The programme is aimed at eradicating this disease which, regrettably, the majority of persons regard as not being serious but which, in fact, is a major cause of morbidity and mortality amongst infants and young children.
The measles immunisation programme is being delivered through the health boards, with the participation of general practitiones. This joint approach of health board personnel — community physicians, public health nurses and administrators — and general practitioners resulted in an uptake of 95 per cent in measles immunisation during the first 18 months of the programme. The high uptake brought with it a dramatic reduction in the number of cases of measles reported and the number of persons suffering from the disease admitted to hospital.
In 1984, a total of 5,275 cases of measles were reported and in 1985, a total of 9,903. In 1986, the number of cases reported had dropped to only 451. Admissions to Cherry Orchard Hospital of persons suffering from the disease dropped from 283 in 1984 to 13 in 1986 and only four in 1987. In addition, there have been savings to the GMS of medicines prescribed to persons with measles.
Clearly, the measles immunisation programmes has been a success to date, both in terms of cost-effectiveness and, more importantly, in preventing serious illness and human suffering. Since 1986, however, the uptake of 95 per cent has dropped to a disappointing 45 per cent nationally and there is a danger that the objective of the programme to eradicate the disease will not be achieved.
Eradication requires a constant uptake of 95 per cent of susceptible children and I am taking steps with the health boards and with general practitioners to ensure that this is achieved. I would like to take this opportunity, however, to ask both directors of community care and general practitioners to participate fully in the immunisation programme and parents of children to have their children immunised against the disease.
The House will be aware from the Minister for Finance's Budget Statement that the Government have found it possible to provide an additional £11m in the current year to fund the community drugs schemes. This will enable the long term illness scheme and the drugs refund scheme to be retained in full.
As Minister for Health I am particularly pleased that in spite of the current financial situation we are able to do this. I am all too well aware that there was a considerable degree of worry and anxiety on the part of people who avail of these schemes following recent speculation that they may be abolished or severely curtailed. I am sure that the House will acknowledge that this further reflects our commitment to protect services for those most in need and particularly the handicapped and those with heavy expenditure on drugs and medicines.
I am conscious of the fact that the two schemes as they operate at present have been the subject of some criticism over the years. Personally I believe that there is some basis for this. Consequently my Department will, in conjunction with the health boards, immediately review the operation of the two schemes in conjunction with other aspects of community care services. Following this review I hope it will be possible to bring about some improvements resulting in more effective and equitable arrangements in the provision of the schemes.
Food and nutrition policy is a major element in health promotion. The Food Advisory Committee have produced a number of excellent reports which form the basis of our food and nutrition policy. My Department continue to fund the nutritional surveillance system which was set up on the advice of the Food Advisory Committee to monitor the diet of the general population and to assess the effect of policy interventions. The Food Advisory Committee has just completed a major review of their guidelines for preparing information and advice to the general public on healthy eating. These guidelines will be published shortly and are intended for health professionals and others such as teachers who provide advice on diet. I propose to have special publicity campaigns to encourage the development of healthy eating habits.
Deputies will be aware of the Minister for Finance's statement in relation to the schemes operated by the Revenue Commissioners in relation to disabled drivers. Rationalisation of the schemes which also involved the Department of the Environment is to take place. Specifically, the present schemes will be discontinued. They will be replaced by schemes to promote the mobility of physically disabled people administered by my Department through the health boards.
Officials of the Department are in consultation with the health boards about proposals for new and revised schemes and will be meeting the organisations representing the disabled within the next week. Following these consultations I will announce details of the new or revised schemes.
The full cost of the revenue and environment schemes in a full year is £3.34 million. A sum of £2.8 million will be added to my Department's allocation to cover the balance of 1988. The full amount will be used to promote the mobility of physically disabled people.
Deputies will be fully aware of my view that re-organisation of health services both from the statutory perspective and from a service point of view will take place within the existing eight health boards. Insufficient evidence in my opinion is available which would warrant an alteration in board numbers. I consider that a debate on those lines is misdirected and only tends to deflect from the central issue of how, within defined resource parameters, a quality service to meet genuine need in an equitable and effective manner can be provided.
My examination of existing structures is primarily concerned with the role of health boards, the relationship between boards and their management, and the requirements of an effective and efficient delivery system geared to meet the health needs of the country in the future. Deputies will be aware that the existing system and statutory structures were proposed in the mid-sixties.
The health board structure as we know it to-day came into operation in 1970 to meet the health and personal social service requirements which existed at that time and which were perceived would exist in future years. The changes which have taken place since then in economic, budgetary and social terms have been immense. In addition the health and social services requirements of the mid-sixties are different to those which are now required and which will be required in future. It is precisely because of these changes, and potential changes in the future, that I have initiated a review of existing services and an assessment of current and future conditions. Structures which have been in place for well nigh 20 years and have remained virtually unchanged since then must be examined to see whether there is a need for such structures, what contribution they have made to the effective delivery of services and what role, if any, they should have in the future. It is an obligation on all public representatives to ensure that services which are in receipt of Exchequer funding are regularly scrutinised to answer the questions I have just posed.
In recent months major developments have already taken place within the health service. While the pace of change has caught many by surprise, on reflection there is general agreement that many of the initiatives which have taken place and the direction the health services have taken were long overdue. As Minister for Health in the present difficult financial situation I have noted a genuine concern for and a reappraisal of the role of health care workers. The recognition that the patient is the core and pivot around which the entire delivery system is built is critical for future development.
In the management of change in an era of rapid change it is important that the pace be such that improvements are correctly planned, phased and implemented. It is also important that change be part of a genuine consultative and co-operative process. Such an approach is best reflected in selected areas or sites where pilot studies can be initiated, developed and readily scrutinised as to their benefits, wider application and possible role model for wider application. From careful study of such pilots new organisation structures may emerge, suitably tested concepts and delivery systems may be introduced.
I wish to draw the attention of this House to two specific projects which are at the very early stages of implementation. I have identified the North Western Health Board area as a suitable pilot site for the development and testing of new options for organising and managing health services. This project which will commence following appropriate consultation with professional organisations will assist in establishing what changes are needed in existing organisation of services to ensure that they are appropriate and responsive to the needs of the population, that the personnel resources are sufficient to achieve an appropriate service standard and that the working relationship between the personnel concerned is fully productive. The pilot will cover a range of services including community medicine, mental handicap and some social services. I have allocated funding for this project from national lottery funds.
There is no doubt that particularly in the recent past health section managers have been asked to perform with limited financial and personnel resources and yet the demands on them for a greater range and quality of service have never been higher. An effective resolution of the conflict between demands and resources will be reflected in the calibre of management in the health service. There is no denying that the quality of health sector management is reflected in the quality and range of services even within resource constraints. The reporting hierarchies and relationship will come under particular stress with greater flexibility and more fluid and responsive arrangements to meet the demands of a changed situation. There is a clear case for change of moving from the existing programme structure to a structure within which managers will have an integrated responsibility for a specific geographical area. The divisions between programmes of care are generally regarded as artificial divisions which have increasingly less relevance in the future direction of health policy and the emphasis on primary care services. A geographic manager, easily identifiable within the community would be responsible and accountable for the effective delivery of health and social services within a designated catchment area. With an employment level of approximately 60,000 in the health services a high quality of management is vital.
I have already spoken of legislative changes which may well be needed in the organisation, development and delivery of services in the future. While my thinking in some of those areas is not finalised I am convinced that where changes have been identified as desirable and the existing legislative framework is insufficient to meet today's requirements legislative changes should be introduced, as expeditiously as possible. One such area concerns the control of smoking in public places.
The statistics on smoking in Ireland indicate that while there are broad trends pointing in the right direction, there remain areas of particular concern and there is absolutely no room for complacency. On the positive side, only one-third of the adult population are now smokers as against some 43 per cent of the population in 1972/73. This represents a significant improvement on the overall position in regard to smoking. However, closer analysis of the available data gives some cause for concern in regard to the proportions of young people who smoke. In particular, the proportion of teenage girl smokers appears to have increased. The research shows that while in the early teen years, more boys than girls smoke, by age 17, the percentage of each sex smoking converges at around 30 per cent.
While we have had some success in controlling the promotional activities of the tobacco industry in this country under the Tobacco (Control of Advertising Sponsorship and Sales Promotion) Act, 1978 and regulations made under this Act there have been no legislative initiatives so far to control the activities of individual smokers for the benefit of nonsmokers. We intend to introduce such legislation within the next few weeks.
Another controlling legislative measure which I propose will concern a restriction on the use of services outside a person's health board area without the approval of the appropriate board. There has been much misinformed comment about the so called ‘tertiary referral charges', which are wrongly named. I am glad of the opportunity in this House to explain briefly the measures I propose.
What has always been a source of concern and at times wonderment to me in my capacity whether as general practitioner, health board member or Minister for Health is the genuine vigour with which local interests demand the development, extension and retention of acute hospital services to meet the needs of a particular population in a defined catchment area. Yet when it comes to the use of such services which have been made available for local use, a certain proportion of the local people choose to ignore those services and avail of similar services of similar quality elsewhere. In many cases there is no medical reason for a referral to external services; perhaps it is historical, or lack of understanding that the necessary services are available locally. It is my intention to introduce a controlling mechanism which will discourage and unwarranted use of external acute services where quality and adequate services are available locally. The basic principal of the change will be that referrals outside a person's health board area will be subject to the approval of the appropriate health board.
The disincentive will be by way of a charge on patients who refuse to accept services made available by their health board and opt for similar services elsewhere without board approval. Patient well-being will be the overriding concern of the administration of this control. Deputies will appreciate that the existing situation of referrals of patients to other sites for services which are available locally needs to be rationalised. I will be in a position to introduce this measure shortly and I trust that Deputies will be supportive of my initiative in this regard. It has nothing to do with a limitation of the use of high technology services. Such services will continue to be available for use, subject to what I have outlined above.
Work on the drafting of a new child care Bill is almost complete and I expect to be in a position to circulate it within a few weeks. The Bill will replace the Children (Care and Protection) Bill, 1985 which lapsed with the change of Government.
We hope to proceed with the Committee Stage of the Adoption (No. 2) Bill, 1987 in the Seanad within the next few weeks. My Department are examining, in consultation with the office of the Attorney General, a range of complex issues relating to costs and the constitutional rights of the child which have been raised since the Bill was published.
Since becoming Minister for Health, I have become increasingly concerned at the rise in the number of cases of alleged child abuse being reported to the health boards. In July last, my Department published a new set of guidelines which incorporate procedures for the identification, investigation and management of child abuse.
They set out in some detail recommended procedures for the reporting, recording, investigation and management of cases of child abuse, including sexual abuse, which are suspected or have come to notice. They are primarily designed to ensure a systematic and sensitive approach to caring for the victims of abuse. The problem of child abuse above all requires an effective and coherent multi-disciplinary response from our health and social services and this central aspect is emphasised in my Department's guidelines.
I fully accept that there is a real need to increase the range of services available, particularly for sexually abused children and I have already allocated special funds to enable the present services at Temple Street and Crumlin Children's Hospitals to be significantly expanded. There is, of course, a need also to improve services on a countrywide basis outside the Dublin area and I will, therefore, be allocating special funds from my Department's share of the national lottery surplus to the different health boards to enable them to improve their capacity for the assessment and investigation of alleged cases of child sexual abuse.
It is over 20 years since the last overall review of health and social services. A White Paper entitled The Health Services and their Further Development was published in 1966 which signposted a number of major initiatives and developments in the administration and delivery of health and social services. Since taking up office almost a year ago I am convinced of the need to develop a strategic plan for the future development of health and social policy. In order to be effective such a plan must have specific developmental targets against which the progress of various elements of the plan can be monitored and assessed. It must also have specific target groups who require particular attention over the lifetime of the plan. A considerable amount of preparatory work has already been carried out.
The Beaumont conference on my Department's discussion document entitled, "Health — The Wider Dimensions" was highly successful in that, despite the financial constraints and the limited resources available to health services, a large degree of consensus was apparent in the general direction of future health policy. My Department will be working on this plan taking into account the valuable contributions made at the conference.
The Commission on Health Funding which I set up after coming into office will be reporting later this year. I look forward to receiving their report and incorporating their recommendations in our development plan for the future of the health services.
The outcome of the deliberations of the commission will assist the refining of the developmental plan for the health and social services. The merging of expert funding proposals and health service proposals into a single strategic plan for implementation over a specific period will give greater direction and purpose to the efforts of those engaged in the health services. I hope to have the document available before the end of this year.
The approach of the Government to the country's economic and social problem is, as I have said, positive. From my experience as Minister for Health I am convinced that the goodwill and the commitment of health sector workers generally will produce a maximum level and quality of services within the resources allocated to the health services. I look forward to the continuance of the cooperation of effort required to continue to have in place a quality health and social service to meet the genuine needs of our people.
I appreciate the opportunity to contribute following the comprehensive speech by the Minister for Health and before I make any other comments I would like to respond to some of the points he raised. The Minister has outlined his plans and planning is probably the most important area because in all our hard-won lessons on financial stringency and the sacrifices that have to be made we have all come to realise that we must have planning. I particularly welcome the fact that the Minister when outlining his plans and assessments of the health service has aligned them with social planning. We hope, and I know this would be the Minister's wish, too, that we can achieve, as the Minister said in his last remark, a quality health and social service to meet the genuine needs of our people. We hope it will meet the needs of all our people because part of our concern at present is that some of the cuts have been carried out in a mandatory and peremptory way without, perhaps, being able to see the full implications and consequences of them. There would seem to be a danger, unless we are all very careful, of creating a two-tier health system which people who have insurance or money to cover fast health assessment, examination and relief could avail of easily. However, a great number of our population are not in that privileged position. Our health service should never be based on privilege. People find themselves, even now, having to wait for attention for very long periods sometimes for examination and treatment for serious conditions, particularly in regard to children's illnesses. I would like to outline in the Minister's presence a few details of the type of waiting periods that I have learned of this week. A young child with what would seem to be a very serious hearing problem will have to wait four months for an examination in the Eye and Ear Hospital. During that period the problem may not alone intensify but maybe a huge deterrent to the child in learning. It may in fact act as such an impediment that the child will fall back in class to the extent that he may never catch up. That is an example of the social consequences we have to take into consideration when we curtail our health services to any group within our population.
I ask the Minister to ensure that his Department concentrate on monitoring the extension of dental treatment to the spouses of insured workers. Again, let me quote an instance. I met a mother of six children, whose husband is now unemployed but who had paid contributions for years. She lives in an area where there is about 60 per cent unemployment among the whole community. One of her teeth was literally shaking and was ready for removal. It was causing her great pain but within her particular catchment area there was not one dentist on the list who would accept her. A great many dentists have refused to include among their patients the spouses of insured workers. This scheme was broadly welcomed. We had lobbied for it for years. There never was a greater need demonstrated than the need for dental treatment for women in the home. These women had voluntarily given up their economic independence and social insurance contributions in order to stay in the home and bring up children. They find now that not alone are their teeth rotting in their heads but that they are actually suffering pain for which they cannot get a remedy. I have addressed my remarks to the Minister because this innovation which we welcomed when it was brought about is not working. We have raised expectations after many years of frustration without being able to deliver.
I welcome, as do many Members of the House, the decision by the Minister to continue the community drug refund scheme and the long term illness scheme. I have noticed, and I welcome the fact, that the Minister is going to monitor those schemes and review the efficiency and efficacy with which they work. When the review group are examining those schemes they should bear in mind that there is one group who really call out to be included. It has been argued up to now that the cost prohibits the inclusion of this group. I refer to the people who suffer severely from asthma on a long term basis. They suffer in a life or death situation with breathing difficulties and they would need to be included in the scheme for a long term refund. It was suggested to me that the inhalers should be included in the scheme and given free because for some very severe asthma sufferers it is absolutely essential that they never travel anywhere without inhalers. This usually means that they should have at least two. People on low incomes or on social welfare find that these are very costly. In the long term I think that if the review group could make some savings within other areas of expenditure asthma sufferers could be included in the scheme. I think all Members of the House have great compassion and understanding for those who suffer from asthma, which is a frightening and long term illness.
I was interested to hear that the Minister is funding from the national lottery a pilot scheme in the North Western Health Board area to establish what changes are needed in the existing organisation of services and to ensure that they are appropriate and responsive to the needs of the population. Like every other discipline or area where bureaucracy enters there comes a point where perhaps the very reason for it being set up would seem to be overwhelmed by the bureaucracy that actually guides it. The Minister is quite right when he says that we have to set up a health service and spend the country's money — and a large amount of it at that — in an appropriate and responsive way to the needs of the people who most need it, and not in containing and continuing a bureaucracy and administration that takes far too much money proportionately and denies the population their needs. I honestly believe that in a small country with a population of 3.5 million it is ridiculous that the Minister should insist that we need eight health boards. This point was confirmed more than ever, taking into consideration what I have just said about administration costs, when the Minister said that he would look to setting up a geographic manager to deal with the catchment area within a certain sized community and that that geographic manager would be accountable for the effective delivery of health and social services but also — and this is really the most important point and I applaud it — that he be easily identifiable within the community. Surely such a structure, hopefully a less costly structure, should confirm once again that we do not need eight health boards but that if we had community health workers working within designated catchment areas who are easily identifiable and also accountable on a personal level instead of the empires we have managed to build around the country, the cost effectiveness would be tremendous. Also we would be giving a much more personal and pivotal health service within the areas where it is most needed.
I welcome the fact that the services for the treatment and assessment of child sexual abuse are now operating at Temple Street and Crumlin Children's Hospitals. The setting up of those two units within childrens' hospitals was widely welcomed as being the more appropriate approach but I would ask the Minister to monitor the services on all levels, first, to try to find out the level and severity of the incidence of such abuse and secondly, to ensure that statistics are kept right along the line.
The problem seems to be increasing every day, probably not in reality but certainly in terms of its reporting. Therefore, I welcome the Minister's admission of the need to improve services countrywide outside the Dublin area and his commitment to allocating special funds from his Department's share of the national lottery to the health boards to enable them to improve their capacity for the assessment and investigation of alleged cases of child sexual abuse. It has been suggested that there would be a real case of geographic discrimination, so to speak, if children and their parents or sponsors were obliged to travel the length and breadth of the country to reach two units in Dublin.
In discussing this on the Joint Committee on Women's Rights the point was well made that there is a need for anonymity because of the sensitivity and seriousness of the type of abuse we are talking about. Even so, it is not right that people be expected to travel to just two units. Moreover, those two units alone will be unable to meet the needs in this area. When such abuse is feared or suspected and units for treatment are not accessible, it is a matter of shame to us. We claim we cherish all children equally; we must surely cherish the victims of such damaging and destructive abuse.
Monitoring is absolutely essential on all levels. I am delighted the boards will be able to produce statistics and figures relating to their area and break them down into levels of abuse and areas where abuses occur inside or outside the home. At the moment we have not the facts we need to set up the kind of programme the Minister is anxious to set up.
"Within a few weeks" has become the slogan for the Children (Care and Protection) Bill. In the tortuous progress of that Bill through this House we were disappointed to find so many amendments necessary under the last Administration and we agreed that the incoming Minister for Health might be well advised to draft the Bill anew. However, that means we start again at stage one when we had reached Committee Stage in 1988, by which time we had hoped, in 1986, to complete Report Stage. We are told it is hoped to have the Bill circulated "within the next few weeks". It had better be, and when it comes into the House it must be treated with all urgency in an effort to get it through, largely in this session and completed by summer. I cannot believe we can live with ourselves if we allow such a Bill to go past another year's work in the Dáil and Seanad. A special committee was set up to deal with Committee Stage under the previous Administration, and that was a welcome measure. I hope the Minister, in an effort to process this as fast as possible because of the already long delay, will agree that a select committee be set up in order to expedite the matter.
We all look forward to the many programmes and the education which the health promotion unit in the Department of Health, which replaces the Health Education Bureau, will provide. We welcome also the establishment of the advisory council on health promotion. The Minister commented that the council had wide representation of skills, talents and experience. He had not time today to give details to me of the exact representation of men and women on that board. Very often when boards claim to be representative, gender does not enter into the matter in so far as members of boards are chosen on grounds other than that. Here is the perfect opportunity, if we need an advisory council to promote health rather than ill health, to have full participation and representation of women in that regard. Women bear the brunt of caring, nursing and even community care, particularly where there are cutbacks in the health service. If we recognise that the work and experience of women in those areas are proportionally greater than those of men, that women are the great educators in the home where all education begins, then it is essential to acknowledge such experience and influence and insist that at least 50 per cent of members on such boards be women. In the light of women's education and their influence in regard to health in the preventive and care areas, then that proportion of representation should be higher. However, we will settle for 50 per cent women on that advisory board.
The Minister seems to be using proceeds from the national lottery in an innovative way in setting up pilot schemes and programmes in a return to what the ministry should be about; as he said, he is Minister for Health, not Minister for disease. The people must realise we should be talking about a state of health, of "wellness". The Minister referred to the community, the disabled, the handicapped and the children and I hope he will make allocations to these areas through the budget and from the national lottery funds. He did not mention women's organisations who have been cut back thoroughly in some ways. They have no funding to enable them to continue to survive, yet those women's organisations have been providing education, social welfare, counselling and support for people in the community. If they are prevented from providing that help and support, even with the meagre funding which they now have, it will cost the country far more in real terms because not alone will the State have to invest money in trying to provide those services but the services provided by it will not be as personal as those by the women's organisations. The voluntary contributions provided by most of the women in these organisations will be removed to the detriment of the people who rely on these services.
I hope that the women's organisations who have been working with the vulnerable sections of our community on an incredibly impractical and low level of funding will have that funding restored to them. The investigation that is going on in the Department of Health should focus on the fact that we should be funding, supporting and acknowledging the work of voluntary organisations in the community. This would be the most effective way of dealing with cutbacks because the funding given to those organisations would have such a voluntary contribution in it that it would be the most cost effective way of dealing with community care.
Another fact which struck me as the budget was being read on 27 January is that the Minister, the Government and the majority of people have come around to recognising that it is essential that our financial position and national debt should be addressed and controlled. I think there is a consensus about that. However, there is a lot of truth in saying that has become the focal point of Government policy. However, that cannot be allowed to remain the focal point without taking a few other items onto the agenda as well.
Not alone must we deal with our economy through the sacrifices and cutbacks we are making now, but we must do so in a way that will not destroy the very fabric of our society and be left with a Pyrrhic victory. I would like to put two other items on the agenda which, outside this House, are real and relevant but have not got the same sense of identity and acceptance as has the national debt. Unemployment is one of the items and poverty is the other.
While we have an acceptance and a sense of powerlessness about our unemployment problem, poverty has been to a certain extent ignored or else we like to pretend that it is not there. The least we can do for the people who are caught below the poverty line or continually on it is first to identify it and, secondly, at least acknowledge that it exists. From the next budget onwards all of us on all sides of the House should insist and make sure that that poverty is addressed much more fully, widely and radically than it has been up to now. I do not think we can continue to live in a country that claims to be a republic if we allow the gap between the rich and poor to widen.
I agree with some of the pre-budget submissions received by the Government and all of us before the 1988 budget. I would like to quote from the pre-budget submission of the Catholic Social Service Conference which I believe is the concept of what budgets should be about:
The Catholic Social Service Conference believes that the primary goal of all social policy should be to ensure that every citizen has a right to an adequate income related to the prevailing living standards and to equality of access to health care, housing and education.
That has to be our guiding principle. If we want to ensure that every citizen has a right to an adequate income related to the prevailing living standards, which is modest, just and unbelievably logical and fair, then we have to redistribute much more of our resources. The Catholic Social Service Conference also made suggestions as to how this could come about. They asked the Government to look at the possibility of broadening and extending the taxation base in the areas of corporation tax and capital acquisitions tax. They suggested the introduction of a property tax, a limited wealth tax and the inclusion of farmers and the self-employed in the PRSI net.
Above everything else what we should be striving for, and there is no better time to strive for it than during a time of crisis when all of us feel that our backs are to the wall, is an examination of our values. The values of a country cannot be based on economics alone because, unfortunately, economics in isolation can be at best inaccurate and, at worst totally unfair and indiscriminate. Therefore, I believe that during a time of crisis we must have a new way of looking at things because crises have shown us that the old ways and outdated structures have not served us. Now is the time for us to look at transformations, innovation and creativity. My biggest disappointment with this budget is that it did not have that kind of thinking, thrust and direction.
We should accept the fact that the simple dimensions of left, centre and right power struggles in politics are outdated. Extremes are as much part of the old culture as the status quo they impose. Therefore, we must have a new social value which would not have existed in the old outdated ideological culture. We must have a value system that addresses itself not just to economics but to social planning. That means we have to look at our values in a totally new, different and creative way. We also have to look at them in a cost effective way. I am wise enough not to indulge in visions of pie-in-the-sky ideas which we do not have the money to meet.
Our education is totally outdated. The edifices of education which were built in the past will not meet the needs and demands of a new age. We should be more flexible in our use of school buildings and structures and we should move education into the community. We should also invest more in adult education, so that we can ensure equity of access to education. We should structure education to be a lifelong process and we should restructure our values system so that people who did not have access to education when they were young can have access to subsidised education in later years. It is ludicrous to subsidise education in the early years and refuse to give but a morsel to people who wish to avail of adult education. Our policies discriminate against people who want to avail eventually of adult education and it is not good sense economically. The evolution of adult education here has shown that education can be much more effective based on human relationships and working within groups without placing all the emphasis on individual achievement and competition. Our education system should contain conflict resolution skills. Education is supposed to develop people to live in society so one of the most basic skills needed is conflict resolution. A large number of our economic ills and our industrial and employment difficulties arise from the fact that we have never developed that dimension of our human capacity.
At long last we are recognising that we have not yet developed our natural resources to their full potential. I welcome the emphasis placed by the Minister for Energy during his speech on investment in forestry but we have a long way to go before we realise that resource. A person working in forestry told me that 60 per cent of the ash used for making hurleys here is imported from Wales and that 40 per cent of the birch needed to build barricades at racecourses is imported from Suffolk. Surely this hits at our heritage and culture, as well as economically, especially when we consider that this country was once covered with trees and that it has a climate that allows trees to grow faster than is the case in most countries even in Europe. Europe is running out of timber. We could fill the gap in the market there. The optimistic way to look at this is to be thankful that we still have such a resource that can be realised. We are now becoming aware of how this asset can enrich our environment and of how it can create a huge number of jobs.
In relation to agriculture, farmers will say that long ago we should have anticipated the dismantling of the CAP. It would be morally and economically unsustainable to continue the CAP as it was, where we paid people to produce food which we could not use and which could not be used properly in the rest of the world and which cost more to store or destroy than it cost to produce. To date we have not realised our full potential in agriculture. We now have a glorious opportunity to keep our environment clean and to become recognised as an agricultural country producing goods free from chemicals, pesticides and additives. We can serve a market willing to pay a very high price for that type of product. Unfortunately, the environment in other countries has become so polluted that they can no longer produce the sort of products we can produce here. In the context of the survival of the planet, apart from the potential for the development of agriculture here, it is frightening to learn that the large ranch like factory farms that were created in the South of England on their accession to the European Community, to produce large amounts of food, are now scientifically estimated to be in such a state that a tonne of subsoil per acre is eroded every year from that land because of the over use and abuse of chemicals and additives. If we continue to abuse our subsoil, which is only a layer of our planet, we will end up by not just failing to cope with famine in the underdeveloped world but we will make our developed land a desert.
I know that some people feel that we throw out the areas of agriculture, forestry and tourism as good hope cards, but if we are to cope with poverty here and do away with unemployment we have to direct our attention to develop these areas. Our country has the scenery and the climate to compete with any others. I will not believe and do not want to tell future generations or the thousands of young people who have had to go abroad to work that it is beyond our competence to develop our natural resources for all our people when other countries have done it. We are recognised as an intelligent workforce. When one looks at the excessive charges we have for transport, telecommunications and energy it is a miracle that we can export goods at the level we export them. Those extra charges are something that we can tackle in future budgets. If we can compete, despite the extra charges, there is room for optimism and it points to the fact that we have a skilled workforce and a productivity here of which we can be proud.
If the Government, instead of making the decision to take £30 million from the ESB, had allowed them to keep it on condition that they used it to reduce energy and industrial costs here, in the long-term it would have been much more effective and productive. If in future budgets we find that some of our industrial companies have an opportunity to either pay something into the coffers or reinvest it in order to help productivity and exports, I hope the second choice will be made.
We should work on the consensus within this House and outside it; we should work on the natural resources whose potential we have only begun to realise; we should work on the confidence that is coming back, against the harsh reality that time is running out for us if we wish to bring our young generation back. We cannot afford to lose a whole generation. This country has lost whole generations too often. That is one of the reasons for our present problems. This time it is too serious; we know too much; we have experienced it too often to allow it to happen again. I shall end by quoting Teilhard de Chardin as follows: "The future is in the hands of those who can give tomorrow's generations valid reasons to live and hope." That is our responsibility and that is what future budgets must ensure.
Having listened to Deputy Barnes, I should comment that her contribution was most positive. It is a pity that we do not get that type of contribution from other sides of the House. It is not possible at the best of times to produce a budget which fulfils the expectations of all the various interests in the country which hope to benefit from concessions. We are all painfully aware that the times in which we live are far from being good. In the circumstances, the Minister for Finance is faced very sharply with conflicting demands. On the one hand, we try to give relief to the sections of society which, by common consent, are most hard pressed, the long term unemployed in particular, whilst at the same time keeping firmly in sight the overriding requirements to reduce the budget deficit and stabilise the borrowing requirement. The 1987 budget and this budget have been described as tough budgets. This is indeed so, but the reality remains that to finance even these tough budgets we still need to borrow £1,786 million, or 8.2 per cent of our GNP in 1988. This is better than last year's requirement of 10.3 per cent but is still miles away from the aim of a balanced budget which is now generally accepted by serious commentators as a necessary prerequisite for sustained recovery.
Given the limited scope available to the Minister to raise additional finance, it is inevitable, in order to go some way towards this goal of eliminating borrowing that he must seek to control and where possible reduce spending. Nobody denies that the results of these reductions are unpalatable for those who are directly affected. No Government will willingly embark on policies or programmes which result in people losing their jobs, but it is the task and duty of the Government to take an overview of the nation's affairs, to balance the prospects for the future with the demands of the present, to balance realism with hope, concentrating most of the realism on present problems so that there may be some hope for the future. This is the theme of my contribution — realism now so that we may hope that next year and the years after that the country will be given some chance to grow and prosper.
It has taken this nation, this House, a painfully long time to come to the realisation that tomorrow cannot be postponed indefinitely, to accept that decisions and actions made and taken today have a direct and proportional influence on the future. Today's concessions become tomorrow's borrowing requirements. It cannot go on; it must stop. We cannot condemn our country to a future of perpetual debt and poverty. This budget has to be seen in the context of the situation to which I have referred. It is a step along the road away from over-borrowing debt and declining hopes and towards self-sufficiency, prosperity and rising hopes.
But, the budget is not just a financial balance sheet of the nation's affairs. It is also a social statement. It states, for instance, that in spite of the overriding need for restraint in spending, those in most need of assistance will be afforded some relief. The most striking features of the budget are those relating to the public finances and taxation. Much has been said by previous contributors on public finance so that I shall try to concentrate on one positive development, that is, the reduction in Exchequer borrowing requirement. The EBR has been reduced very significantly since Fianna Fáil came into Government. I think that I should repeat the figures that have been produced by the Minister, In 1986, the EBR was £2.1 billion; in 1987 it was £1.8 billion and the target for 1988 is £1.5 billion. This has occurred due to some very imaginative planning and shrewd decisions made by the Department of Finance. This is more than worthy of mention in the budget debate because from time to time we forget to mention the people in the background who are helping the Minister.
Firstly, because of the commitment to reduce the borrowing requirement, nonresidents saw fit to buy over £400 million of Irish Government paper last year. Let us not forget that bank interest rates were around 14 per cent at the beginning of last year and the previous Government were selling our debt to Irish institutions at this rate. In the period of this Government to date, interest rates have come down from 14 per cent to 9 per cent and the present Government are selling debt to the institutions at 10 per cent. This has been achieved, in the main, by the reduction in the EBR and the active debt management programme. The measures adopted by the Department are — firstly, they have prepaid and refinanced foreign loans at a lower cost. Secondly, they have issued new instruments in the domestic market such as the ECU bond, £77 million and tax exempt bonds from multinational companies, £60 million. These measures have produced saving in funding costs to the Exchequer. Thirdly, they have been innovative in terms of their interest rate swaps which, especially with regard to the foreign debt, are resulting in sizeable savings this year. Fourthly, they have introduced 14 and 30 day Exchequer Bills. This is bringing in more money and making the debt more attractive to institutions. Fifthly, a very positive development has been the promotion of the small savings schemes as a stable source of funding for the Exchequer especially at a time when equity markets are not safe. Sixthly, they have prudently managed the Government Stock Market by acting as net suppliers — i.e. selling and not buying back.
The Minister and his staff in the Department of Finance are to be commended for being so innovative in their debt management programme. They have played no small part in helping to reduce interest rates. I find it amazing that the previous Government could not have seen fit to examine all these options. What, in effect, has been done is that the taxpayer has been saved unnecessary debt serving costs as a result of this Government's actions. Had we continued the approach of the last Government in managing the public finances, I have no doubt that there was a real danger — and I am not being an alarmist — that the IMF would have been called in.
The PAYE sector have been finally recognised as a sector that has propped up the economy over the last number of years. The fact that the Minister has reduced tax by three times the amount committed in the Programme for National Recovery is a deserved boost to the PAYE worker, who has been understandably in a state of depression and frustration for some years. This is not a cosmetic change but a genuine attempt to restore taxation equity in this country. The PAYE taxpayer will realise a real improvement in take-home pay as a result.
This relief given to taxpayers while by no means as much as full equity would demand, is seen and accepted by me as a step along the road towards a more equitable tax regime. I am particularly gratified that at least a genuine attempt is being initiated to bring some regularity to the position of those pesonal taxpayers who are not part of the PAYE tax scheme. I welcome wholeheartedly the Minister's move towards a system of self-assessment for self-employed people and company directors. This move, together with the inclusion of these categories of taxpayers in the PRSI scheme will, if and when properly implemented, go a long way towards removing the suspicion in the minds of the general taxpayers that these groups were somehow not being treated as seriously as the PAYE sector for tax gathering purposes.
The incentive arrangements to bring tax payments up to-date are to be welcomed. These arrangements which will come into effect on 30 September are most practical. To be eligible there must be a payment of tax up front. Tax must be paid in full. If the conditions attaching to the arrangements are met, interest and penalties subject to limited exclusions will not apply. The problem of mounting arrears of tax is being finally tackled. We have heard for so long from many quarters, "What about the uncollected taxes?" This Minister has faced up to this particular issue.
Changes in the corporate tax structure appear on the surface to be small and could more usefully be described as a change in emphasis rather than in scale. I welcome the move to remove first year capital allowances on new plant and machinery from 100 per cent to 75 per cent and later to 50 per cent. I also welcome the corresponding reduction in corporate tax rates from 50 per cent to 47 per cent and later to 43 per cent. These moves are well in line with current international practice and have found a broad welcome in industry. However, may I introduce a word of caution.
The reasons for the introduction of accelerated capital allowances on investment in new plant and machinery was mainly to do with the need to modernise our existing industrial plant and to attract new investment. One of the real bright spots in our economic performance in recent years has been the tremendous increase in output from these very businesses which availed of accelerated capital allowances in making investment decisions. It is important that the rate of capital investment and productive resources should be encouraged and increased. It is an essential part of our aim for national recovery. The Minister should watch this situation and be prepared to make adjustments, if necessary, in the light of future trends.
The introduction of PRSI for self-employed is also ensuring equity and is in line with developments in other countries. The self-employed comprise over one-fifth of the workforce and over £320 million was paid out in 1987 in non-contributory pensions. The cost of this again falls back on the Exchequer, that is, the general body of taxpayers. It is only right and proper that the self-employed should contribute to their non-social welfare pensions and to relieve the Exchequer of this burden. The self-employed will obviously, as a result, improve their financial position against age or death.
The introduction of self-assessment for the self-employed taxpayers and companies to be phased in over a period is something that has been talked about for so long and finally now is being implemented. It has to be pointed out that this Government have vigorously pursued those evading taxes since taking office. This new and radical move towards self-assessment will merely help them in that task. The self-employed have been a much maligned sector in recent times when it comes to paying taxes. The reality is that this sector includes the entrepreneurs, the men and women this Government depend on for the development and growth of the economy. These new measures will mean a more efficient means of tax collection and will eliminate abuses, measures that will be welcomed by the sector itself. It puts the onus on the taxpayer to meet his or her tax obligations. The volume of appeals will, no doubt, be reduced and there should be a dramatic decrease in the number employed in the Revenue Commissioners.
With regard to the cutbacks in the number in the public service, I would like to compliment the Minister for Finance on the progress made to date on the voluntary redundancy scheme. This has, I have no doubt, led to a more efficient public service and the voluntary nature of this programme has allowed for a smooth yet very significant change. The fact that 1,100 people had left the public service in the period to the end of 1987 is no mean achievement and the Minister for Finance can take a bow for this amazing achievement.
The fact that this scheme is voluntary is the secret of its success. I take exception to the remarks by Deputy Keating that the voluntary element of this programme was a weakness in the Government's strategy. He said the present Government strategy "serves the individual rather than the State". given the success of the present policy, I believe the Progressive Democrats should either withdraw or clarify that statement.
The general increase in social welfare payments in line with anticipated inflation is also welcome and necessary. This Government have gone further than expected to meet proposals outlined in the report of the Commission on Social Welfare. We are well on the way to the reforms outlined in that report. Compared to the previous Government, we are seeing action instead of verbiage on this issue. Social welfare payments will be kept in line with the cost of living, with a 3 per cent increase from July. This Government, true to the Fianna Fáil tradition, have set out deliberately to protect those who are less well off. There is an extra 8 per cent increase in personal rates of unemployment assistance and supplementary welfare payments on top of the 3 per cent indexation addition. An increase of 11 per cent for the long-term unemployed is no small effort to alleviate the genuine difficulties of people who have suffered the soul-destroying effects of prolonged idleness. I wish it could have been more, and I am sure the Minister does as well, but nevertheless it is very welcome.
The child dependant allowances system has been simplified and a 6 per cent increase for the children of unemployment assistance and supplementary welfare allowance recipients has been granted. The special favourable treatment for families with six or more children is to be welcomed. An example of this is that the rate of increase for the sixth and all subsequent children of unemployment assistant recipients is 31 per cent. The cost to the Exchequer to these increases are very significant. There will be an additional cost of £44.8 million this year and £101 million in a full year.
The figures produced by the Minister in his speech in relation to the Jobsearch programme are impressive — 141,500 people were interviewed, 40,400 were placed on Manpower schemes, AnCO training courses and Jobsearch programmes and 4,200 found jobs as a result of this scheme. When invited to avail of assistance under the programme, 12,700 people left the register voluntarily.
The Minister for Social Welfare has obviously made considerable progress in tackling the problem of social welfare abuse. It is most distressing to hear that abuses are still going on in this area. We all hear of people on the dole working and being accommodated by employers in collecting the dole. This abuse must be tackled. I believe the Minister for Social Welfare has genuinely tried to tackle this issue but he must get back-up support from employers. Unfortunately, a number of employers are not co-operating in this area. This is most regrettable.
The Government have also rightly recognised that a reduction in the community drug refund scheme and the long term illness scheme operated by the health boards will impose considerable hardship on the handicapped and the long term ill. The allocation of an additional £11 million to the Health Vote to ensure these schemes are continued were examples of the caring and detailed approach adopted by this Government in putting this budget together. Personally, I am very pleased to see this measure introduced. Like other Deputies, I have a knowledge of individual cases where any other move would have caused tremendous hardship. This is a very good decision.
The special allocation of £3 million to provide accommodation for homeless persons by voluntary organisations means that this Government have recognised the special needs of the homeless. I would accept that this is only the beginning but it is a very positive step forward. The special grant of £50,000 being made available to Focus Point towards the cost of accommodation for the homeless in Dublin recognises that the problem of homelessness is particularly acute in the Dublin area, as you, a Leas-Cheann Comhairle, will appreciate.
I believe this policy of granting financial aid to specific projects in the Dublin area is one that should be developed as a means of coming to grips with the immediate needs of the homeless. To cater for the long term solution, I look forward, as do many Members, to the introduction by the Minister for the Environment of the Homeless Persons Bill.
The building industry have had to readjust to changing economic climates and to a Government that have taken away many of the hand-outs that were falsely propping them up over recent times. The introduction of the section 23 relief should give a deserving boost to those in the building industry. To ensure the success of the scheme, where incentives are established for the construction of modest residential accommodation for renting, I would appeal to planners in local authorities to co-operate and ensure that there are no lengthy delays in processing planning applications for construction or conversion of residential accommodation in the city.
In Dublin there have been very positive developments in this area in recent times. Old historic buildings have been restored and preserved and, from an architectural point of view, this has been most desirable. However, I have seen cases where there have been lengthy delays in processing planning applications. We should be able to adhere to specific planning guidelines on preservation and maintaining high architectural standards and at the same time ensure that developers are not frustrated by lengthy delays in the processing of planning applications.
In regard to environment, the Government have taken on board a proposal to which other Deputies and I referred in this House some time ago when we debated the Air Pollution Bill, that is, the concession in the excise duty applying to lead free petrol, putting it on a par in cost with leaded petrol. This will lead to a dramatic increase in the use of lead free petrol and will have a great effect on our environment and health, particularly in the Dublin area. The allocation of £250,000 to establish smoke control measures in Dublin is also a very desirable development but this decision will have to be backed up at local authority level. They will have to come up with concrete proposals to tackle this major problem in our city.
The crucial factor in regard to decentralisation is to ensure that the decision making process devolves to the lowest local level, namely at citizen level. If there is a need to build a school in a rural constituency it is ridiculous that the decision on such an issue is made in Dublin. I would agree for more decentralisation and I am sure the Minister will welcome that as it would be much less work for her.
I particularly welcome the decision to ensure the continuance of the NSSB. The community information service provided by this body is very important and their expansion and development will lead to the eventual decline of clientilism. They always provided an excellent and efficient service in my own locality in Dundrum.
The budget, in many ways, is a reassessment, adjustment and a statement of how things have been going and will be in the years ahead. To this end I must also refer to the establishment of FÁS. This move to rationalise the State agencies and to cut down on duplication is a major step forward and another example of a Government who act rather than speak. In a marketing survey carried out on behalf of Business and Finance contrasting last year's Government with the present one, business managers expressed confidence in the economy in the aftermath of this budget compared with the negative response of last year. They obviously believe that the Government have a definite sense of direction and purpose. They have seen results in interest rates falling, inflation coming down and business confidence being restored. They witnessed the establishment of a Programme for National Recovery which has been endorsed by the social partners. This is a framework within which the business community can expand and plan, cushioned by the degree of stability that this very significant achievement has put in place. There is a feeling of security that has not been there for some time that the country is being managed by a competent and hardworking management team.
The performance of industrial output and exports has also been most impressive. Industrial output increased by 8 per cent in 1987, more than two and a half times the level reached in each of the previous two years. Industrial exports increased by 15 per cent in real terms compared with 1986. The Estimates decision for 1988 has meant a most desirable shift in State support from fixed assets to research and development, management development and marketing support. Total exports for 1987 have topped the £10.5 billion mark, the first time that the £10 billion figure has been exceeded.
The Minister in his budget speech rightly confirmed that Governments can introduce specific measures to greatly enhance our vital tourist industry. For example, access fares led to a significant recovery in tourism in 1987 and the decision to introduce another package of special measures for tourism in 1988, costing £4 million, will pay dividends. I particularly welcome the establishment of a special task force involving key personnel such as Gillian Bowler and Mike Murphy who are energetic and positive. They are not part of the "knocker" brigade who encourage people to emigrate to Australia or to shop across the Border. Apart from their expertise and optimistic outlook, their attitude and belief in this country's potential has always created a sense of awareness of the need to look closely at what this country has to offer. I have every confidence in their ability to reach out to new markets and to bring in many new visitors. The decision not to increase the tax on drink was correct, taking the needs of the tourist industry into account.
The Minister in his Budget Statement outlined progress to date on Government performance. He reaffirmed his sense of direction for the country which has met with a positive response from practically all sectors of the community. A sense of political and economic awareness has been positively established and also a sense of leadership that has been missing for some time. The budget is a courageous one as the Minister for Finance has finally taken decisions and action on the taxation issue. He has recognised the plight of the PAYE sector and introduced self-assessment and PRSI for the self-employed. It has been a skilful budget in that he has been able to introduce for the first time a sense of equity. He has had time to put his own mark on the budget and the results have been most impressive. It is a caring budget in that it protects social welfare recipients and recognises the needs of the homeless. He has established a sense of fair play and consensus. The message has now filtered through from this minority Government that we must all play our part in creating a future for our children. We may have to make sacrifices but the Government have ensured in the budget that the burden will fall equitably on all sectors of society. This sense of discipline and direction, one that is most evident in this budget, must be maintained in the years ahead.
There is no doubt that this budget is seen by commentators generally as a competent and well thought out one. It is in many ways a scene setting budget. Perceptions are sometimes as important as dry statistics. There is a perception that this budget is one of an integrated series of budgets, drawn up as a careful part of an overall, longer term plan. It now appears that clear goals have been defined and generally accepted by politicians, the electorate and industry and commerce. The means of achieving these goals are also generally accepted — or at least recognised — by those same groups. This acceptance of goals and the recognition of the means to achieve them puts us on the right road. The Minister in the budget advanced us several steps along the road. He has encouraged us to increase our pace, he has not promised us false comfort but he has shared with us a reasonable expectation that we can get to our destination and still be in reasonable shape.
The Catholic Social Services Council and the Combat Poverty Agency do not share Deputy Kitt's view that this is a progressive budget in so far as the poor are concerned. Certainly the start on helping the lower paid is very welcome but the proposed minimum figure of £42 as against the £48 put forward by the Combat Poverty Agency and the Catholic Social Services Council as an interim figure on the way to the £60 recommended by the Commission on Social Welfare is hardly sufficient to meet their needs.
I am disappointed that single people living alone and in receipt of unemployment assistance or disability benefit will not get out of the poverty trap. I welcome the progress made but we need to proceed more quickly. In my constituency — I put my hand on my heart when I say this — a man is in receipt of £35.50 per week, it should be £40 but he was overpaid by £5 per week when he was on supplementary benefit. As he is receiving disability benefit he does not qualify for the national fuel scheme and he literally had to burn his sofa to provide heating for his home. I called on the man and I saw the mark along the wall where the sofa had been. I am sure Deputies on both sides of the House have come across similar cases of this kind. He is considered to be on short-term benefit, and therefore, does not qualify for the national fuel scheme.
We must identify those poor people as our priority for assistance. The budget moves in that direction, and I welcome the move but it does not go far enough. In many cases single people living with aged parents are able, with the help of the parents' old age pension and their own unemployment assistance, or disability benefit, to make ends meet. However, when the parent dies, the individual is left at home on his or her own on a small income out of which they have to feed and clothe themselves, heat the house, pay the rent or mortgage and everything else. That is a deplorable situation.
I welcome the efforts made by the Combat Poverty Agency and the Catholic Social Service Conference. I read both of their reports last night. These were both post budget reports. Those two agencies took the time to inform Members of the House of their reaction to the budget. That was a very good and useful exercise. We must identify as people for priority assistance those who are suffering abject poverty.
I note that the Minister for Education is in the House and I would ask her to raise at the Cabinet table with her colleagues the question of extending the free fuel scheme for the remainder of the winter, to those people living alone on disability benefit, people like the man I referred to earlier who has only £35.50 per week. The only way he can become eligible at present is by making a case based on special medical grounds. I have tried to do that for two or three people but it is just impossible to get people into the scheme. If nothing can be done for the remainder of this winter I hope she will find it possible at least to have something in the Finance Bill for the commencement of winter next year.
The second point I wish to refer to is that the Catholic Social Service Conference and the Combat Poverty Agency also point out that the budget does not make inroads towards tax equity. The reality is that those on higher incomes benefit disproportionately to a higher extent than those who are on smaller incomes. It is time we had a look at the whole question of tax credits. It is time that any benefits given in the budget are the same for people down the line as they are for people up the line; if not, there should be some sort of inverted bias in the system so that the poorer people, and those on lower incomes, get the most advantageous benefits. It is of no benefit to tax equity if people who are earning £20,000 a year get £600 of an increase while people earning only £6,000 a year are getting only £200 of an increase. Where is the equity in that? Tax credits would at least give the same amount to everybody. It is time we looked at the whole question of tax credits again so that there is equity in the system and also so that those on lower incomes get the same shake as those on higher incomes but, preferably, I would like to see them getting a better incentive from the system.
I would like to refer to the administration of the tax system because the resolutions and the Minister's speech affect the whole system of tax assessment. I welcome the introduction of self assessment. As Chairman of the Committee on Public Accounts I felt it necessary to make a pre-budget statement this year because my view is — and the Minister has said this since — that the whole system of the administration of tax is on the verge of collapse. It is literally on the verge of collapse because we have got the officials in the tax administration system into the business of moving mounds, tons and tens of tons of paper from one office to another. The whole machinery of assessment is grinding to a halt.
The Committee of Public Accounts have been examining the whole question of the accountability of the Revenue Commissioners, how they administer their system, the accounting systems they use and the efficiency with which they carry out their business. We will be making a special report on that shortly. I welcome the start which has been made in the introduction of self assessment because that, in turn, can free officials to audit only one in 20 of those who make the returns. The penalties for those who make false returns should be severe in order to discourage that practice. The staff so freed, instead of pursuing complying taxpayers, should be used to pursue those who are not complying. How do we identify those who are not complying? This is an important point which is referred to in the Fifth Report of the Commission on Taxation.
In the United States, within the revenue service, there is a tax compliance measurement programme which is literally a section of the revenue commissioners there which sets about identifying sections of the community, or members of the community, who are likely to be evading tax. As a matter of great urgency, the staff who will be freed by the introduction of self assessment should be assembled into a tax compliance section within the Revenue service. Their job should be to make profiles of those who are likely to be major tax evaders, whether they be sections of the community or individuals. They should be identified and gone after. That is the primary task which should be given to those who are freed from the mountain of paperwork which is clogging up the machinery at present.
The second thing I would like to see at this stage is the appointment of an external advisory committee made up of lawyers, accountants and tax agents who would advise the Revenue Commissioners of the difficulties being faced by the taxpayer in complying with the present system and as a priority, advise the Revenue Commissioners on how to unclog the administration of the tax system. If we can free up the administration of the system, we can start looking at the whole question of equity, of fairness of people paying on time and sending out correct assessments as opposed to sending out inflated assessments, which tend to give rise to people thinking there is much more outstanding in tax than there actually is.
Those two things — a tax compliance section within the Revenue Commissioners and an advisory body of experts outside the Revenue advising the Revenue Commissioners — which are included in the report of the Commission of Taxation — would, in my view, if coupled with the introduction of self assessment, go a long way down the road to the commencement of the introduction of equity in the tax system. I ask that that be given urgent and priority consideration. It is a matter the Committee on Public Accounts will be addressing and reporting on by way of a special report, before the Finance Bill comes before the House.
I would like to make one or two other points. Much has been said about the reduction in the budget deficit, the control of the public finances and the great steps which have been made towards this. There are two things I want to say on that. First, there is little point in reducing one liability on the nation's balance sheet by increasing another liability and there is even less point if that liability happens to be employment because there are already 250,000 people unemployed. What we are doing, because of the Programme for National Recovery— as the Government call it — is making 10,000 more people redundant, taking them out of the public service in order to pay for the public service pay increase. Those 10,000 people are going on to the unemployment register to compete with the other people who are there for fewer and fewer jobs. I do not see any sanity in that. I do not believe cuts should be made in the budget deficit which are cosmetic in the sense that they increase a greater liability, in this case, unemployment, on the same balance sheet.
Second, a great deal has been made of the reduction in the Exchequer borrowing requirement. If you look at the figures the current budget deficit has only been reduced from 6.8 per cent to 6.3 per cent. In terms of the actual figures it has not been reduced at all. I do not see how we can take great joy in making all the savings on the capital budget side. If there is to be any employment it must come from the public capital side — the investment side — which the Government can hope to use as a State vehicle for encouraging employment. Where is the point in axing that? It has been axed to the extent of 1.9 per cent, if my memory is correct, but the current budget deficit has hardly been reduced at all. I do not see the logic in that and I cannot see why people can welcome this budget with such warmth from the point of view of fiscal rectitude considering that the current budget side has hardly been touched at all. That is something that needs to be addressed if the nation's finances are to be got into some semblance of good order.
The budget did not even mention the word "unemployment" and it did not address the question of unemployment. For that matter, this House has not addressed the question of unemployment which is the single biggest problem facing this country. There should be monthly debates in this House on unemployment. There should be monthly reviews on unemployment and there should be cooperation from all sides of the House. Unemployment should be public enemy number one and the creation of employment should be our top priority ahead of all others, including Northern Ireland. We have not even spent time in this House debating the possibilities for creating jobs, what can be done to ensure that we do not lose jobs and what can be done to minimise the number unemployed. We have never debated that, at least not since I came into this House in 1981. A number of us have tried to raise it from time to time but the House should address and monitor that question. There should be progress reports at least once a month so that people would know that we are aware of and addressing the question. There are now 250,000 people unemployed and that figure is increasing.
Everybody in this House is aware of the number of people who are talking about migrating. Yesterday I spoke to a very prominent businessman who told me that he is going to Australia for five or six weeks and that he was bringing his family with him. If he likes what he sees there he is going to go back and stay there. The other day I spoke to a young man of 25 who has eight honours in both his intermediate certificate and leaving certificate. The only job he has ever had was a part time job putting petrol into cars. He went to New York as an illegal immigrant but, unfortunately, because of a family bereavement he had to come home where he is still unemployed.
We have never addressed the question of unemployment in this House. That is not the Government's fault. It is very handy for all of us on this side of the House and everybody else to blame the Government but if we identify the wrong target we will let the problem escape. Not only should this House address this question now but it should do so on a regular basis and we should seek a pluralist, all-party approach to deal with this cancer in our society. Until we do that there will be no restoration of hope and there will be a continued haemorrhage of emigration. The Taoiseach, Deputy Haughey, wrote a book called the Spirit of the Nation. Where is the spirit of the nation now? We need to harness that spirit and the only way we can do that is by giving people hope. There is no hope because we are not addressing that question.
I welcome the fact that £1 million has been made available in the budget for homeless persons but I deplore the fact that a homeless persons Bill has not been introduced by the Government. The Bill which was introduced by the previous Government is still on the stocks, and could very easily be reintroduced. We should make it one of our priorities. While providing money is welcome, a proper framework is also needed. Regular reviews should be carried out and this can only be done through the provision of a homeless persons Bill. The Vatican issued a document on this important subject this morning and the Catholic Social Service Council and the Combat Poverty Agency have also raised this issue. I have received letters from about 20 nuns and community leaders in my own constituency about this issue. It is an important issue and should be given priority during this session.
Little mention was made of the Millennium in the budget. I believe that provision should have been made in the budget for the implementation of the Metropolitan Streets Commission report on Dublin during this the Millennium year of our capital city. Probably one-third of the population of the city constantly move in and out of the city. All of the people of the country take pride in Dublin and I regret that the Minister did not see fit to refer to this fact in his Budget Statement.
There have been various suggestions in regard to the proposed monument for O'Connell Street. We are aware of the suggestion put forward by the Metropolitan Streets Commission but in regard to the monument which is proposed and for which financing is available in the private sector, I believe the most suitable project for the site would be a monument commemorating the literary giants who lived and wrote in this city when it was the literary capital of the world. It is they who should be commemorated on the monument to be erected on the site of the old Nelson Pillar. I regret, and it shows a lack of imagination, that little or no reference was made to this in the Minister's Budget Statement. I hope the Minister will find it possible in the Finance Bill to make funds available to enable this project to be carried out.
I do not know what the Minister has in mind as regards urban renewal for Tallaght and I do not know whether anybody has been putting a gun to his head or what his relationship with Monarch Properties, Dublin Corporation and Dublin County Council is, but I do believe the town centre in Tallaght needs to be developed. I hope the Minister did not find himself being pushed into giving these tax incentives by threats not to develop it but I would like to see at an early date the specific boundaries which the Minister is proposing. In the urban renewal proposals the Minister should not just incorporate Tallaght town centre but should also look at the possibility of giving urban renewal tax-type incentives for the development of a rapid rail system from Heuston Station to Clondalkin and Tallaght. There is no reason why this cannot be done by the private sector if the correct tax incentives are made available.
Only for Mr. Tom Roche, there would never have been a toll bridge. There are people with imagination who can obtain the resources and if the State cannot do it we should try to make provisions in the tax system which would enable the private sector to do it. When the Minister addresses the question of the provision of tax incentives in regard to urban renewal for Tallaght he should also address the question of the provision of a rapid rail system. Similar tax incentives should be given to the private sector to enable it to develop that system.
I will conclude by dealing with the question on the way State spending is audited. If we include Appropriations-in-Aid gross spending is of the order of £12 billion a year. Half of that figure goes on wages and salaries and let us presume for the sake of the exercise that none of it is wasted. Of course, we all know that is not true because, for example, there are a number of people in the tax profile section who have been paid for the last six months and yet are sitting at home. Leaving that aside, let us take the remaining £6 billion. If 2 per cent or 3 per cent of that figure amounted to wasteful expenditure and could be eliminated, we would be talking about a saving of between £120 million and £180 million. Does anyone in this House believe that we could not identify at least 2 per cent or 3 per cent of wasteful expenditure? Of course, we could. If we could cut it out we would be making a major contribution towards the elimination of the current budget deficit.
I would like to inform the House that the Committee of Public Accounts have undertaken an examination of their role and that of the Comptroller and Auditor General. They have appointed an expert advisory group who will report to them by the end of March. It is my hope that an all-party report will be presented to this House which will recommend the implementation of a modern audit and accounting system which will cut out wasteful expenditure. It is very unsatisfactory that the Comptroller and Auditor General has to work under legislation passed in in 1966. We should attend to these matters and I hope the House will have an opportunity at an early stage to consider an all-party report from the Committee of Public Accounts in this regard.
May I take it that the Deputy is not concluding? Is the Deputy moving the Adjournment of the debate or is he concluding his contribution?
Will the debate be continuing after Question Time?
Yes, I intend to continue it.
I have concluded my contribution.
Then, the Minister for Education will be in possession once the debate resumes after Question Time.