Deputy Kenny has 34 minutes left of the time allotted to him.
Financial Resolutions, 1988. - Financial Resolution No. 4: General (Resumed).
In my opening remarks last night I referred to the fact that most budget debates are flattened by the time the budget is a week old and this one is no exception, particularly as the Government announced the Estimate prior to Christmas and most organisations and Members of the House knew, to a great extent, the contents of the Government proposals. I referred to the fact that, having served for over 12 years in this House, the ability of the Fianna Fáil Party to put across their proposals, either in Opposition or in Government, to their own supporters has never ceased to amaze me.
Between 1982 and 1986 when Fianna Fáil were in Opposition they claimed to have the interests of the country at heart, to put the national interest first, and yet on not one single occasion did their Leader, the Taoiseach, stand up on this side of the House and say to the then Government: "You are doing the right thing for Ireland and my party back you on this issue". Constrained as they now are by the economic realities, this is a budget of contradictions, for a party that has espoused the national cause in so many ways. It is, indeed, somewhat galling for me as a Fine Gael Deputy to have to see the general policies which were pursued by the Fine Gael Party when in Government now being implemented by the Fianna Fáil Party and being endorsed to a great extent by some sections of public opinion. However, I recall other budgets introduced by other Ministers for Finance throughout the years which were very well received — they were dressed up in the usual glossy language of the Department of Finance — but which, when less than a month old, reduced the poll standings of the various Governments seriously and drastically.
This budget makes absolutely no provision for employment. The case has been well made by various spokesmen that Government strategy is to reduce public expenditure on capital and current account. The net result will be that the national debt problem, having been forced onto the agenda by the Fine Gael Party, will become very clear in this context. The fact remains that within two to two and a half years the engine, initiative and energy for growth will simply not exist. One can prune a tree so far only before stifling all of its growth. If this series of premediated cuts and their consequences are not seen by the Government we shall approach that point before very long.
As a rural Deputy representing a fairly significant geographic area, I know that many smaller businesses are and have been experiencing serious difficulties for a number of years. In some cases these difficulties have been the result of their having had poor accountants, in other cases from blatant non-compliance with the laws and in others on the inability of the Revenue Commissioners to get their act together in terms of a commonsense approach to people whom they deem to be assessable for various levies and taxation. Since new technology has streamlined this Revenue procedure it is now the experience that smaller businesses struggling against the competitive forces of multinationals and larger stores in various high technology areas are in serious difficulties, being faced with a list of arrears they are totally unable to meet. In that context I welcome the amnesty introduced by the Minister for Finance. I hope it will go some way toward relieving the pressure on a great number of smaller businesses experiencing such difficulties. One sheriff appointed told me recently that, in one day, he had received over 400 new warrants for the area he represents. That is a massive amount of warrants entailing human and personal difficulties for a great many people. I would hope that common sense would prevail and that, between implementation of the amnesty introduced by the Minister and a commonsense approach on the part of many sheriffs, the burden would be eased to the lowest possible point at which people could pay what they can now, making arrangements to pay outstanding amounts later.
Many accountants who deal with small business throughout the country are not in a position and do not give the kind of advice necessary to their clients. Certainly not all accountants are guilty in that respect. But in many cases businessmen have requested accountants to examine their books, prepare accounts, pay the fee demanded by the accountant but find later that court cases have not been attended, the Revenue Commissioners have not been responded to with regard to various charges and so on. There is a great need for a higher level of efficiency and advice in relation to difficulties at present being experienced by businesses and projected difficulties foreseen by accountants on behalf of their clients. I have knowledge of many small businesses having been built up over the years by their proprietors, families and so on, who are now out on the road, as it were, seeking business, not having an understanding or knowledge of the complexities of the taxation system. Handing the whole lot over to an accountant, in many cases, has resulted in large bills being presented to them which they might not have had to meet had they been given better advice at the outset.
The Programme of National Recovery, the Government bible, spoke of the creation of over 20,000 jobs annually. Even in good times, when a pound was a pound, when it was easier to attract industry here and set up in business, very rarely were those targets met.
I am disappointed at the thrust of the Minister for Finance's remarks and those of Fianna Fáil Deputies since because they have not really addressed the problem of unemployment. When they were on these benches, they were awash with the tears of nationalism, patriotism and the better way brigade. There has not been any firing of that engine in this budget.
I listened for many years at public meetings and speeches in this House to Fianna Fáil speakers comment on emigration, the haemorrhage of the young souls of Ireland heading across the Atlantic, to Britain, to a lesser extent, the Continent and to the southern hemisphere. On many occasions bitter words were spoken on this subject. The Coalition Government of 1982 to 1986 were branded as being monetarist, Thatcherite, not having the ability to address our economic problems or those of emigration and unemployment. We were informed of diplomatic onslaughts having been made to Capitol Hill. We were told of the various methods available to arrest the tide of emigration, keeping our young people at home, providing them with jobs and a decent standard of living. Emigration now is worse than ever, with over 30,000 leaving annually. I did not live to appreciate the seriousness of this problem on the last wave of emigration in the late forties and mid-fifties. From my work as a public representative I now understand what it really means.
One can have all the high technology one likes, faster travel than before, instant communication, but they do not do away with the personal heartbreak, the tears of sorrow on the breaking-up of families, on sons and daughters leaving for places across the water where they have no contact or real chance of employment. It is not so bad if people who have to or want to emigrate have contacts, friends and relations in various business abroad, when there is always a chance of their finding a job at least initially. Many of our younger emigrants, forced to leave, go to England and to the USA legally or illegally. They find themselves with no real contacts in the employment world. In the working class areas of London in particular, there is a surplus of employment. There is a boom in the building industry. The gangers and the employers can go back to the days of the spailpín fánach. They can choose who they wish to employ from the queues of those looking for work. The rates of pay can be as low as £25 a day and taking into account accommodation, food, etc., it does not leave a person with much over in his pocket than he would have if he were in receipt of social welfare payments here.
People with contacts in the major cities can earn as much as £1,000 a week. This is an indication of the quality of our vocational education, the hand to eye education which is so essential. Many subcontractors across the world, particularly in Britain and the United States, employ a great number of young Irish engineers and navvies.
In one area in County Mayo over 300 people have left in the last 12 months. In Carraroe, County Galway, at least 500 people have left in the last 14 months. This has had a devastating effect on the economic, social and sporting activities in the area. Families are being forced to break up. Husbands have to leave wives and children behind them; husbands and sons are emigrating in an effort to earn enough to provide their families with a decent standard of living. This is a social time bomb the consequences of which will last well into the next generation. I am not sure how those who have to emigrate will view the politicians on all sides when they look back objectively and see the difficulties the people who are working here have to contend with.
This Fianna Fáil Government, who promised so much in "The Better Way" slogan, sat around the Cabinet table and deliberately, wilfully and consciously decided on a programme for action which every year will send at least 30,000 young people across the water and will give no hope of employment to those left behind. This is fundamental to the strategy of the budget and it has not been addressed by the Government. I hope that the general support this party have given to the Fianna Fáil Government in the national interest, and for which we have suffered in the last 12 months, may force the Government to address the real problems of emigration and employment and try to solve them.
The Taoiseach has taken on board the question of tourism. This has been addressed by the Minister for Finance and other people on the Government side. Bord Fáilte have taken a hammering over the last 12 months. The regional tourist boards are being starved of funds and are operating with skeleton staffs. They will be unable to do any effective work this year. There appears to be great hope placed in the tourism task force set up by the Government with a budget of £4 million. I welcome this task force provided they are effective and address themselves to attracting tourists. Lower access fares, the advent of Ryanair, the de-regulation of the airlines and so on, are all important matters. It is interesting to note that the travel agents, who produced their holiday brochures a few days ago, expect almost 250,000 Irish people to leave on continental holidays this summer. They state that their fares are lower now than they were seven years ago. While I wish the task force well, various members on that task force have been associated with travel abroad for many years. I hope there will not be a conflict of interests here.
It could be said that after Franco's death Spain exported her sunshine because she did not have anything else to export at that time, but we do not have such an attraction. I hope the perception of tourists who come to Ireland is not that of dirty Ireland with tinkers at every crossroads, bags of rubbish dumped in our most famous beauty spots, surgical gloves stuck to fishing boats in Claddagh Bay, as was reported in theGalway Advertiser recently, rubbish tips and a general lackadaisical approach to keeping our comparatively unpolluted country clean. A keen eyed farmer from my county, who rarely travelled beyond the borders of County Mayo, was persuaded last year to visit his brother in Australia. His observation on his return was that we could learn many lessons from the Australians about how to keep Ireland clean. He said he saw men walk ten yards to put a cigarette butt in a dustbin. Would that we had the same respect for our country.
Other countries have learned bitter lessons from industrialisation and flagrant acts of pollution. I support the Minister for the Environment and the Government in their determination to ensure that commonsense would be used but that the law should apply where deliberate breaches of that law occur. We have one of the better countries in Europe, irrespective of the weather, and the peculiar quality of the Irish nature is something which cannot be sold. It can only be experienced. It is that above anything else which makes holidays in Ireland worthwhile.
I want to refer to the Minister for Education's announcement that £6.5 million is to be made available for the capital building programme. This is no great achievement. In 1987 the figure for the national school programme was £30 million. This was reduced to £15 million in 1988. The provision in 1988 for the national schools building programme is £18 million, an increase of £3 million on the original proposal. I understand £2 million was saved last year. This means only £1 million is being made available this year. Small though this sum is, it is welcome.
If I were to make personal representations to the Minister I am not sure she would give me a favourable hearing in view of some of the comments she made about building which was carried out west of the Shannon in previous years. I note that most of this money is to be spent in rural areas, which is commendable. I am also in favour of the position the Department have negotiated in that rationalisation should apply where space is available, but the paltry sum now allocated will do nothing to alleviate the desperate problems experienced by teachers, parents and pupils in many parts of the country. Irrespective of any rationalisation procedures, schools will have to be provided in certain areas and that problem will have to be addressed seriously. We have never cherised the children of the nation equally. Some of them are attending schools in Dickensian conditions. I had the privilege of being involved in the mechanics of the Department of Education for a short time and during that period the difficulties people were experiencing were brought to my attention.
I want to deal with the installation grants which have been restored. I know they come under the EC directives, but there is so much red tape involved that it is neither feasible nor practical for young farmers to apply for assistance under this scheme. I urge the powers that be to look seriously at removing this red tape because young farmers with 250 man-days, with 70 suckler cows, or 400 ewes, will not make application under this scheme because of the red tape. I ask that something be done about this.
As I said, over the years we have seen the particular ability of the Fianna Fáil Party to promote sensitive issues and to cause controversy on various matters when the Coalition were in office. One which was brought to my attention very forcibly when I was in the Department of Education was the politicisation of the Gaelic Athletic Association with which my family and I have a very long association. I very much regret that this campaign took place when the president of the association was from my own county. The campaign, backed by Fianna Fáil, was launched throughout the country in relation to rates on GAA grounds, DIRT tax and VAT on hurleys. While it was very well explained by the then Government and special concessions were made to the GAA in terms of grants in respect of their centenary year, the campaign reached a climax when, for the first time, the then Taoiseach was refused an invitation to attend the All-Ireland Final in Croke Park. What has happened to the campaign for VAT on hurleys? In answer to a Dáil Question on 2 December 1987, the Minister for Finance said he had no proposals for a concession in this regard. The campaign seems to have died out completely, which I regret, because it is a contradiction for the Government to turn their backs on it now when they were so vociferous about it previously. In the recent spate of conventions for election of officers within that organisation, several Government Ministers were very prominent in canvassing delegates and it might be more appropriate if they addressed themselves to the creation of opportunities for employment and jobs.
In relation to the Irish language, all Governments over the years have failed to appreciate its potential economic impact. It should never be underestimated, it is part of what we are, part of our culture, heritage and tradition. It is what makes us different, what makes us stand apart and has a lot to do with why Irish people do so well in the various walks of like into which they enter abroad. This cultural driving force has never been evident to the same extent at home and it is time to examine the State's investment in the area and, if necessary, to change the direction or the methods to achieve a higher level of personal development. Thousands of teachers spend many hours each week teaching Irish and thousands of students emerge every year, some having spent ten years in the cauldron of education but they have little or no meas on the language. Compare that to Wales, Finland and Japan, where the whole economy is built around their culture, and it is obvious that we have a lot to learn.
We have been dominant abroad in many walks of life for some years and we have employed many different nationalities beyond our shores. We have reversed that trend because State agencies are now inviting those same nationalities into this country where they employ us. Probably one of the reasons is that, being an island nation and having an insular mentality, we are not exposed to the competitive instinct of mainland Europe or the greater nations beyond. It is only when we are faced with reality that the inherent and latent talent of Irish people, which is part of our culture and language, really comes to the fore.
The Minister for Education should ask her experts in that Department and others to look at how we could turn around the State's investment in the Irish language, culture and tradition so that we might improve our personal development and driving force which makes us the people that we are in other countries but which we have never developed as we should at home. As they say as Gaeilge, "níl aon tinteán mar do thinteán féin".
Ó thaobh na coláistí samhraidh de, ba mhaith liom soiléiriú a fháil ón Aire Airgeadais faoi seo. Téann níos mó ná 20,000 Gaeilgeoirí isteach chuig na Gaeltachtaí ag foghlaim Gaeilge sna coláistí samhraidh chuile bhliain. Nuair a bhí sé ag caint ar an cháinaisnéis dúirt sé nach mbeadh deontas Stáit iníoctha gan cháinuimhir curtha isteach chuig an Roinn. An mbeidh gá ag mná tithe na tíre cáin ioncaim a bheith acu, mar má bhíonn, mura bhfuil fear chéile ag iascaireacht nó ag feirmeoireacht go páirt-aimsearach, ní rachaidh siad isteach sa scéim sin níos mó mar bheadh an iomarca trioblóide acu ag deileáil leis an rud seo. Níl siad ach ag fáil fíor-bheagán airgid mar dheontas, ach mar sin féin tá sé ráite ag an Aire Airgeadais go mbeidh gá cáin uimhir a bheith acu. Ba mhaith liom soiléiriú a fháil ón Aire faoin fhadhb sin.
Is fíor a rá go bhfuil an-seirbhís tugtha ag Raidió na Gaeltachta do na Gaeltachtaí agus don Ghaeilge ar fud na tíre. Tá siad ag craoladh ó 8 a.m. go dtí 1.30 p.m. agus arís ó 5 p.m. go dtí 8 p.m. Sílim go bhfuil sé molta ag RTE go líonfaí an t-am idir 1.30 agus 5 p.m. le cláracha ó RTE as Béarla. Tá a fhios agat, a Leas-Cheann Comhairle, go bhfuil Raidió na Gaeltachta ag craoladh ar an ardmhinicíocht — tá an wavelength sin acu — agus dá mba rud é go raibh pop-ceol agus cláracha Béarla ag teacht i rith an ama sin ar fad, chuirfeadh sé sin isteach go mór ar na cláracha atá molta do Raidió na Gaeltachta.
Bhí díospóireacht anseo inniu faoin mBille Raidió agus ba mhaith liom go mbeadh soiléiriú agus dian-mhonatóireacht déanta ag an Aire Cumarsáide faoi na coscanna a chuirfí ar na stáisiúin raidió áitiúla ionas nach mbeidís ag craoladh isteach in áiteacha Gaeltachta an t-am ar fad as Béarla. Tugann Raidió na Gaeltachta seirbhís náisiúnta agus idirnáisiúnta. Caithfidh siad deileáil le scéalta ón tuaisceart, ón iarthar agus ón deisceart agus thart faoin tír go coitianta. Ní bhíonn siad in ann deileáil an t-am ar fad le Conamara, le Dún na nGall nóle Ciarraí, agus dá mbeadh stáisiún áitiúil i gCathair na Gaillimhe mar shampla, agus é ag craoladh isteach i mBéarla go Conamara an t-am ar fad, chuirfeadh sé sin isteach go mór ar chláracha Raidió na Gaeltachta. Ba mhaith liom go gcuirfeadh an tAire Cumarsáide dian-chosc isteach sa Bhille Raidió ar na stáisiúin sin i dtreo is go mbeidh seans ag an Ghaeilge agus ag Raidió na Gaeltachta craoladh mar a dhéanfadh siad go dtí seo.
Tháinig tuarascáil amach ón Údarás le déanaí. Aontaim leis. Tá job sáchmaith déanta acu, ach aontaím leis an bpríomhfheidhmeannach go gcaithfear níos mó béime a chur ar achmhainní nádúrtha, agus beidh mé ag caint faoi seo leis an Taoiseach trí cheisteanna agus mar sin de. Sílim nach bhfuil an t-airgead ag muintir na Gaeltachta féin chun fostaíocht a chur ar fáil agus caithfear níos mó airgid a fháil ón Chiste Réigiúnach agus sna háiteacha in a bhfuil an t-airgead faoi láthair i dtreo is go mbeidh seans ag an Údarás na hachmhainní nádúrtha, is é sin, turasóireachta, iascaireacht, feirmeoireachta agus cúrsaí portaigh a fheabhsú agus a fhorbairt as seo amach.
The Minister mentioned that the Minister for Energy was given a recommendation that the moneys from the Valorem fund would go into the provision of hydro-electric facilities at ten locations and for various other matters. My understanding is that we have an over capacity and a surplus in the electricity area at present. It seems to me that personnel within the Department have influenced the Minister unduly to allow this money to Bord na Móna, who, because of weather conditions, can have severe losses. That matter should be looked at again. There are other areas in the private bog development that could be looked at.
The mineral development announced by the Minister is welcome. I tabled a question to the Minister on 9 February in relation to mineral development on the Croagh Patrick site, County Mayo. The Minister replied:
These operations are carried out in accordance with the general rules pertaining to the grant of prospecting licences including provisions in relation to safeguarding the interests of local-landowners and in relation to preservation of the amenities of the locality.
I should like to inform you, a Leas-Cheann Comhairle, that Ireland's holy shrine at Croagh Patrick, or the reek, as it is referred to locally, is now being savaged commercially on one side by an unauthorised development for which planning retention has since been applied for, all in the interests of commercial activities. One cannot serve God and mammon and I wonder what would happen if a mining company were to apply for rights to mine for minerals on other sacred mountains in various other countries. It is a disgrace that a mountain associated with hundreds of thousands of pilgrims over the years, in the pursuit of their religious beliefs, should be plundered in this way and I would seriously ask that the Minister for the Environment and the Minister for Energy would see to it that if a Klondyke is discovered there that at least the most stringent conditions are attached to any development that may take place.
I welcome the announcement by the Minister for Health that he has made an allocation for the commencement of operations for the opening of Castlebar hospital, that is phase I, later this year. However, I would remind him of a commitment given on his behalf, on 4 February 1987, with regard to phase II. That matter will be dealt with later.
The Minister for the Environment referred to the Opposition as a crowd of ideological hitchhikers looking for a bandwagon to jump on. I would remind him that if one sees a bandwagon it is already too late. I would also like to remind him of a statement inThe Irish Times on 21 January 1988 in which he is reported as saying:
.... business people who are looking for "cheap Brownie points" are identifying somebody currently famous in seeking to get a bit of that person's credit.
We saw famous personalities from this country at the end of the Champs-Elysées when Stephen Roche, fair play to him, did his job for Ireland — and indeed also when Eddie, the aviator crossed the Atlantic we all took our line in the pecking order. I will have more to say on the details of this budget at a later time. I am disappointed at Fianna Fáil have never owned up in the context of their opposition in saying that the then Government did a good job for Ireland and that they would back them. Our conditional support — and I would stress that it is conditional — has made us suffer but then maybe we should suffer temporarily in the national interest. Our time will come, too.
Deputy Kenny raised a very important question which requires an answer. He asked why the Taoiseach, when in Opposition, did not support the then Government. I would like to put it this way to the Deputy: how could he have supported them when that Government doubled the national debt in their four and a half years in Government. On coming into office the Taoiseach had a national duty to perform and that was to get the public finances in order. That is exactly what he has done.
The 1987 budget marked a major step forward in the Government's determined programme in correcting the public finances. The cornerstone of that programme was the bringing under control of public spending and Government borrowing. The 1988 budget takes a further major step in achieving that objective. The current budget deficit is expected to be £1,125 million or 6.3 per cent of GNP and public borrowing is targeted to be £1,457 million or 8.2 per cent of GNP in 1988. These figures are a significant improvement on the corresponding figures for 1985 and 1986, and the borrowing figure as a percentage of GNP is the lowest since 1980.
What are the benefits of this improvement we, may well ask? The most immediately apparent benefit has been the reduction in interest rates. Up to 1986, the then Government appeared to have an insatiable desire for funds. These funds were borrowed thereby keeping Irish interest rates at an inordinately high level. The improvement in the Government's borrowing position has contributed significantly to a substantial reduction in interest rate levels. This reduction has helped to increase business profits and to put more money in the pockets of PAYE workers and mortgage holders. Of course international factors have contributed to the reduction but the key factor has been the reduction in Government spending and borrowing. In addition, inflation has fallen dramatically and it is now at its lowest for many years. Inflation is widely expected to stay at this low level. In a sentence, this reduction in interest rates and inflation has contributed to increased confidence in the business community and in the country generally. Lower interest rates must be the stepping stone to major increases in employment levels.
Many of the detailed budget provisions will also contribute to this increased business and personal confidence.
On the personal taxation front, the tax reduction contained in the budget will amount to £91 million this year and £152 million in a full year. This is substantially more than the Government undertook to provide on an annualised basis under theProgramme for National Recovery. These benefits will accrue mainly to the PAYE sector and accordingly are to be particularly welcomed. The extension of the 35 per cent rate band by £2,000 for a married couple will be a major incentive to PAYE taxpayers to earn more, by way of increased effort on their part. This, couplied with decreased interest costs on the borrowings and especially on mortgages, will put more disposable income into the pockets of ordinary workers.
The corporate business sector will also benefit significantly from the budget. The proposed reduction in corporate tax rates will contribute to business confidence. Business will prefer to have lower tax rates, although allied to lower capital allowances, than higher tax rates and high capital allowances. The after tax profit of a business is the acid test; the lower corporate tax rate will allow retention of profits for reinvestment into those companies. The service industries, which tend to be more employment intensive, will especially benefit from the reduction in tax rates. Manufacturing industry will also continue to benefit from the special 10 per cent manufacturing tax. The establishment of the special trading houses proposed in 1986 and recently approved by the EC, will contribute to the export marketing success of smaller manufacturing companies. In the UK, comporate tax rates and capital allowances have both been reduced at this time. These have undoubtedly assisted in increasing business confidence: and while the corporation tax paid has increased, after tax business profits have also increased and that is significant. This has benefited both the Exchequer and business, through higher taxes and higher profits respectively.
A further development aspect of the budget is the proposal to allow tax free repatriation of overseas profits. This is a welcome relief to progressive Irish companies who expand their Irish operations by overseas expansion. The tax free repatriation will be subject to certain conditions. I suggest that the type of conditions imposed on repatriation should be no more onerous than the conditions imposed on foreign companies setting up in Ireland and qualifying for our tax incentives. The repatriation of overseas profits will assist in the development of Irish profitable operations and, therefore, in increased Irish employment and output from Irish facilities and factories.
I would like to comment here on an issue which has received some adverse coverage in recent years. This is the alleged black hole caused, it is said, by the repatriation of profits by foreign multinationals set up here.
What is very often overlooked is that the profits had to be brought into Ireland in the first instance by these companies. Most, if not all, of the multinational companies established in Ireland export their total production. They contribute to this country's export performance and the Irish subsidiaries leave substantial amounts of money in Ireland through employment and locally sourced goods and services.
Is it to be suggested therefore that these companies be prohibited from repatriating the profits which have been earned overseas in the first instance? In any event I could point out that the section 69 securities, issued by the Minister for Finance, are a constructive and novel manner of retaining these profits in Ireland, and a contribution to the Government's debt service reduction programme.
The proposal to increase the threshold for capital allowances and car running costs from £4,000 to £6,000 is to be particularly welcomed by the motor industry. This is a 50 per cent increase in the tax deduction for business, and the motor industry must benefit. The increase will help to bring forward the decision of many companies to change their motor car fleets.
In looking at business taxation, there is one sector which has suffered significantly from the budget. These are self-employed persons or partnerships which do not or cannot trade as companies. While these persons will suffer from the lower capital allowances as proposed in the budget, there is no reduction in their rate of tax. This, allied to the introduction of PRSI, and the acceleration of the effective date of payment of income tax by the self-employed, will result in a fairly significant loss to self-employed persons. Many self-employed partnerships are very substantial employers. There is a very strong case for the taxation of such partnerships as corporations, with the income of the individuals being taxed on withdrawal from the company, with a credit for corporate taxes paid.
The measures to expedite the payment and collection of tax will be welcomed by almost everyone. The new system will allow the Revenue to devote its resources to scrutinising the real defaulting and offending cases. This can only be good for the tax system as a whole.
I now turn to the area of tourism which is a Labour-intensive industry and which will be a major beneficiary of the new company tax regime. The Government are committed, as demonstrated by the additional £4 million allocation in the budget, to a new package of incentives for tourism to help this industry achieve its full potential. Let me suggest two further incentives. First, the retention of 100 per cent capital allowances throughout the entire country for hotels. Secondly, the extension of capital allowances for industrial buildings to restaurants. At present restaurants located within hotels generally qualify for capital allowances; it seems discriminatory that "stand-alone" restaurants do not qualify for tax relief. They play a major part in out tourism trade and should be recognised as such — of course, to qualify for tax capital allowances the premises should be registered with Bord Fáilte. I hope that with the establishment of the tourism task force something like this will be brought about.
The tourism industry is of vital importance to the south west area of the country. One of the trends of recent years has been the growth in the "low budget" end of the holiday market, yet many of our guest-houses and camping and caravan sites are totally uncontrolled and make little or no contribution towards the development of the industry.
I have been approached by people offering tourist accommodation with the suggestion that they should be required to attain minimum standards and that all such operators should be licensed by the regional tourism organisation.
If we take as an example the Cork-Kerry tourism board, there are 600 Bord Fáilte registered bed and breakfast outlets in the region but it is estimated that there are at least 1,000 unapproved outlets in the same region. Were we to levy £25 per outlet, which is approximately the cost of accommodation for two persons for one night, it would bring in £25,000.
Should we not also look at the various craft shops and allied retail shops and pubs which are deriving direct benefits from tourism and ask them for a contribution towards brochures which could be used internationally to help the local tourism board market their own area? Should we not, also, strive to introduce a major element of self financing to regional tourism boards? Cork-Kerry Tourism, for example, have received direct funding of £213,000 out of a total budget of £640,000. Therefore, they are left to find £400,000 with 15 staff members. If a levy system could achieve £50,000 in the region then it could be more purposefully used for marketing rather than for balancing the books.
In promoting tourism we must ensure that attractions which have international renown are made accessible to tourists and impediments to their proper exploitation eradicated. I speak in particular of the Blasket Islands and Sceillig Rock where not one approved boat is operating to these amenities. Surely the time has come to change the law whereby local authorities can licence boats carrying up to 25 passengers. These two amenities could be worth millions of pounds as an integral part of the Ring of Kerry and the Dingle peninsula and it is reasonable to assume that in any other country they would be exploited to the full. I would exhort the Minister not to allow this ludicrous situation to continue as it has for over a 20 year period.
In the Cork area there are also major attractions which have a marine and defence theme. A great opportunity now exists for the proper development of Fort Meagher in Crosshaven because the Department of Defence have decided that the fort is surplus to requirements. I am pleased that Cork County Council have indicated that they are prepared to retain it in public hands. Dunree Fort in Donegal would complement it; it could be compared with Charles Fort in Kinsale which dates from a previous era and it could incorporate as a tourist package the French Armada Museum in Bantry House; the Powder Mills in Ballincollig and the Coffin Ships Project at Blennerville in Tralee.
I suggest that the Minister in allocating amenity grants from the national lottery take cognisance of tourist promoting projects such as the ones I have mentioned to ensure an increase in the interest levels necessary to attract tourists to particular areas.
The survival of the Cork-Swansea car ferry is vital to the south west of the country and should get every assistance. Even though it was a "start up" operation it has proved that the business is there. Tourist inward traffic is reckoned at 60 per cent on a national basis with a 40 per cent outflow. However, the inward traffic on the Cork-Swansea ferry is well over 70 per cent, well above the national average. Therefore, as a state value and as a vibrant economic factor for the area it is fundamental that proper funding in the short term should be made available to sustain its operation.
The Cork area has been particularly hard hit over the past ten years or so by the effects of the recession. The demise of a number of the traditional industries which provided very substantial employment in the area is very well known, and the effects of the loss of earnings and purchasing power in the area has resulted in less dramatic but nonetheless substantial reductions in employment throughout the entire economy of the region. There was welcome news from the Taoiseach in Cork last Friday with the expectation of 1,500 jobs through new industry. I should like to thank the IDA's Cork task force whose hard work on behalf of that region is at last coming to fruition.
The setting up, and making-up of substantial investment in the new freeport area in Ringaskiddy is, therefore, a most welcome development. In view of the need of the Cork area to have the benefit of the economic activity generated in the freeport as quickly as possible, and to make it as attractive as possible to investors, I would earnestly request the Government to extend the benefits of the 10 per cent rate of tax to freeport area activities. I suggest that this should be on the lines of the provisions already announced for the Shannon Free Airport Development area and the Dublin Custom House Docks area where qualifications for the 10 per cent rate of corporation tax would be based on certification by the Minister for Industry and Commerce that the activity is likely to benefit the development of the freeport and subject to the approval of the Minister for Finance. I would urge that provisions on these lines should be included in the forthcoming Finance Bill in order that the marketing of the investment opportunities available in the freeport area can be done with the benefit of certainty of tax treatment.
I also welcome the concept of the setting up of a port development authority to manage and control the freeport area. It is vital that such an authority should not consist of not more than 11 members who would have no personal vested interest but who should have an expertise and entrepreneurship vital to the progressive, professional and profitable management of such an authority.
I wish to welcome the Government moves on the relocation of Government Departments and the signing of contracts for phase 1 of that programme. I also welcome the assurance by the Taoiseach that Cork is earmarked for part of that relocation programme.
I wish to remind Deputy Allen, an Opposition Cork Deputy, that it was his Government who, in the 1982 budget, cancelled the decentralisation programme and sold off the site earmarked for such an eventuality. Surely his craven carping on this issue at this time can be seen only as the rantings of a Deputy hanging from his umbilical cord; a Deputy whose Government were devoid of ideas for the development of Cork during their term of office and whose penchant, anything for a line, is well known to all.
The second city of the Republic offers an ideal location for a substantial Government Department having already the infrastructural requirements for access and communications, and the variety of third level educational institutions, including a full university, to meet all education requirements. The region appears particularly well suited as a location for the Departments of Forestry, Tourism, Energy or the Marine. Such a relocation would not only ease the pressure on Dublin and help redress the substantial imbalance in the distribution of population but would also lift the national and international profile of the second city and provide a welcome boost to the economy of the region.
The actuality of a huge national asset lying idle and disintergrating at Verolme dockyard requires to be addressed immediately. The revelation that fees of £300,000 were paid to the liquidator suggests a great waste of equipment and it is reasonable to assume that additional fee payments will be paid through further asset stripping. Surely, private companies alleged to be interested in purchasing the yard must have a time limit placed on them to decide as it is a national asset should we not now seriously look at the possibility of retaining the yard for ourselves and return it to the debenture holder, Fóir Teoranta whereby the premises can be leased to a consortium of semi-State bodies, and private concerns involved in heavy engineering projects identified in theProgramme for National Recovery. In that document we asked semi-State concerns to produce proposals on heavy industry. It stands to reason that the ESB, Bord na Móna, Comhlucht Siúicre Éireann and many others could have major engineering works which could be successfully completed in the yard. We have many instances of private companies leasing the yard to carry out ship repairs profitably since the yard closed. There remains the possibility of offshore oil works and the icing on the cake would be the inclusion of the yard within the free port zone. The facilities are there to be used and only by making them available can the State achieve a return.
I welcome the move by the Minister of Education, Deputy Mary O'Rourke, in seeking further gains in productivity in the third level sector. It is important that we evaluate the necessity of some four year degree programmes. It is essential that the cross-fertilisation of ideas between our third level institutions and industry is increased to achieve a much higher level of financing within the third level sector. No longer can we allow classes of four or six students in degree or diploma programmes to be maintained. There is room for rationalisation and this must be pursued vigorously.
We should strive to make much more use of expertise available in universities, regional colleges and institutes of higher education in planning and executing training courses under the auspices of FÁS. Greater EC funding could be made available to this sector by using the facilities, the equipment and qualified staff already funded by the State.
The issue of modern language teaching has been well documented and education must have a greater link to economic factors. The fact that as a country we must export or die means that modern language teaching must be introduced at primary school level. After all is it not ironic that Gaelscoileanna can have French as a subject on their curriculum yet the ordinary national school is debarred from having modern languages on their curriculum? It is being suggested that the spending of £160 million on the teaching of Irish is too much. Perhaps one could say that we are spending too much on the teaching of geography and history. There has to be rationalisation of resources to ensure greater allocation to the teaching of modern languages in our schools.
In summary, the 1988 budget moves us further along the road of controlling public finances. The budget will assist to restore confidence in industry and the workforce. People will have more money in their pockets as a result of Government policy and business confidence has grown. All polls since the budget confirm this. With the increased confidence will come extra employment and a brighter future for everyone. For those reasons I will be voting in favour of this Resolution.
The Minister's efforts to reduce the level of the public sector borrowing requirement are to be commended but one should immediately sound a warning in this regard because I fear that if a similar methodology is applied for 1989 the delicate fabric of the national economy could be irreparably damaged. Clearly the Estimates part of the budget, as published last October, seeks to reduce the public sector borrowing requirement and the final projected level shows a significant reduction for 1988 but I see a serious problem in the future if the targeted reductions are to be achieved in a manner which was employed for the 1988 budget.
I am not belittling the Minister's efforts in dealing with the reduction in borrowing but I think he will acknowledge that the fundamental problem will not be alleviated simply by enormously reducing the provision for capital spending whilst, relatively speaking, playing down the necessity to deal with the level of recurring current expenditure. It is a remarkable fact for a country that is so extraordinarily over-borrowed that our borrowing for capital purposes is perhaps the lowest in Europe and is a tiny percentage of our GNP this year.
In respect of recurring current expenditure as opposed to capital expenditure, I have to refer to the arrangements contained in the so-calledProgramme for National Recovery whereby public sector employees were provided with guaranteed annual increases for a period covering three years. That was an extraordinary provision in that it was quite unnecessary and was not seriously sought or seriously accepted. It has had a direct cost in this budget and of course will have a recurring cost in excess of £70 million a year. That extra £70 million will have to be found next year and the year after, as well as a further £70 million on top of that next year and the year following.
At the same time as that expensive operation is going on, we have in parallel with it a scheme of redundancy for people in the public service which has not yet, to the best of my knowledge, been fully costed or quantified. The more one looks at it the more it seems to be extraordinarily expensive. One wonders whether it is necessary. It is being paid for not from current expenditure but in some slightly off-balance sheet way by mortgaging the projected future surplus of the Central Bank for this purpose, keeping it out of the national accounts. I do not quite see the value of doing that. It is something of an illusion. The future annual surpluses of the Central Bank would be available to the Exchequer in the ordinary way in the years in which they arise. Therefore this rather extraordinary system of paying people very large sums of money to give up work is being funded out of current expenditure, except that this is future current expenditure rather than present.
I might digress briefly to say that it is a matter of great regret to me from what I have seen of individual public servants who have chosen to resign or retire under this scheme that, in some of the agencies at least, the very best people are getting out. When a scheme of that kind is made available which is attractive to individuals it is to be expected that the best people will avail of it. Those who might find it more difficult to make their way successfully in the private sector are those who would be most likely to want to retain their employment in the public sector. What is happening in the IDA is very distressing, knowing the calibre of the people involved. What is happening in CTT and Bord Fáilte is also very distressing.
In particular I was sorry to see the early retirement of a man who is generally regarded as perhaps the best county manager in the country. I refer to Mr. Haslam from County Limerick, whose early retirement was announced within the past week or two. In his case it was not just a matter of the attractive terms; there were other factors to which I will refer later, particularly his frustration at the way in which local government finds itself constrained. It is regrettable that during these months we are seeing the resignation or early retirement of many of the finest public servants. With the best of them going, we are not achieving a great deal, particularly when we are paying for it out of future current expenditure.
I do not have to spell out the inevitable consequences for any farmer if he begins to consume the corn which he should be keeping for seed. It is a great pity that the easiest way has been found to reduce the borrowing requirement. No significant evidence is apparent of coming to grips with the recurring burden of current expenditure. We are now spending not just what is currently available from revenue but also what will be available to us in four or six years' time.
The Progressive Democrats have advocated vigorously over the past two years the necessity to reduce borrowing. We advocated the kind of figures that have come to pass in the Estimates for this year. We were denounced from all sides, not least from the present Government side, for what we were doing. We were told that anyone who thought in those terms was Thatcherite, which in their eyes is the ultimate political insult.
In advocating that necessity to reduce borrowing we recognised that great care would be required to avoid inflicting fundamental damage to the very delicate balance in the economy, particularly in the sick state in which it has been in recent years. We recognise that our economy is more than a mathematical programme fed into some computer in the Department of Finance. It requires a delicate approach to maintain the balance between four principal factors. These four factors are sectional aspirations, long term responsibility, consideration for the weak and reward for enterprise. In trying to achieve a balance between these four factors we must not forget our people, our responsibility to them and to their potential to contribute.
We have to recognise that the economies of the western world have been in a period of stagnation and that countries everywhere have had to accept the necessity for prudent housekeeping. We can no longer expect the growth of our economy to come from the expansion of large-scale international corporations who move into new locations to increase their sales in newly-formed economic blocks. We must develop an environment in which indigenous industry and services can prosper and we must realise that the nature of much of that industry and those services will have to be quite radically different from what they were even as recently as ten years ago.
We need to look at the industrial policies we pursue and begin to realise that what can be pursued and what was pursued very successfully in the latter part of the seventies, and particularly at the turn of this decade, is clearly no longer relevant today. It is disappointing that so little has been put forward by the Government at the level that is necessary to transform these policies so as to take account of the very changed situation which we are in. It is not necessary to draw anyone's attention to the total absence in this budget of any strategy which could have this effect or will take account of the huge changes in industry and in services, and of the extraordinarily serious unemployment problem that we face today.
At the Progressive Democrats' second national conference on 10 October last, Deputy Anne Colley, who was our spokesperson on labour and on related matters, said that there has been a forty-fold increase in the numbers of long term unemployed since the mid-sixties and that in social and therefore political terms this means that we live in a divided society and that expected levels of growth will not erode the huge numbers of long term unemployed. Is it not time to offer the long term unemployed an opportunity to be part of our work force, an opportunity such as the third sector idea which is so widely used in many other countries, countries which do not have an unemployment problem as bad as ours or a long term unemployment problem even remotely as bad as ours? Nothing was done in this budget in that regard.
I would like to draw attention to that statistic. Those who were in authority in the mid-sixties, those who were in this House at that time, agonised about unemployment and about unemployed people. They agonised about people who had been unemployed for as long as 12 months or more. Today we in this House face a problem 40 times greater and I do not see much agonising or much effort to come to grips with the problem. It is very disappointing that in this budget while the fact that we have a large number of unemployed people is recognised, the only thing that is done for them is to hand them a little more money. Money is regarded as the only solution open in this State for those people. It does not solve any of the problems. It is a minor temporary palliative which ensures that the situation they are in continues all the longer.
Giving them a little more money simply ensures that they will be kept a little quieter than they would otherwise be kept and that they will not rock the boat in this rather divided society which, other things being equal, could easily be a society that could be torn by violent social disagreement. The absence of any reference to any serious expectation of growth in the number of jobs is proof that employment creation is not part of the objective of this budget. If one wants proof of that, the tables in the budget assume that the average level of unemployed for 1988 will be 253,000. The only thing that might put that wrong from the Government's point of view and increase it substantially, would be if they were to suffer the misfortune of a drop in emigration.
The figure quoted these days for annual emigration is 30,000 to 31,000. What is sometimes overlooked is that that is net emigration. It is frequently forgotten that every year, whether or not the economy is going well, at least 20,000 people come back into this country to settle here permanently, usually on their retirement from employment in other countries. Therefore, the gross emigration from this country last year and, presumably, unfortunately again next year it will be not fewer than 50,000 people.
In the lengthy speech on the budget, which the Minister for Finance took an hour and a half to deliver, neither the word "emigration" not the concept of the problem were once referred to. We were told that we now had GNP growth in real terms last year of 3½ per cent and that this is a marvellous achievement. In the last resort the only thing that counts so far as most people in this country are concerned, is not some statistic on paper that might impress in a slight way a small number of foreign bankers, but the availability of employment here and the existence of a climate that will encourage people to become involved in this economy. Here we have this huge number of people who are long-term unemployed — 40 times more than we had 20 years ago — and all that can be done for them is to pay them some more money to keep them quiet and quiescent over the next 12 months and then something similar will be done again.
It is not too soon to think about the strategies needed for the next budget where these factors will be taken into account rather than the ones which unfortunately were taken into account in this present budget. In the meantime the Government should apply themselves to identifying additional areas of potential savings of current expenditure in the public sector, to addressing themselves particularly to those sectors which waste taxpayers' money and which contribute little or nothing for the money spent. It seems that the State spending machine is used to lubricate structures for the benefit of those involved with or in them, losing sight of the original purpose of meeting the needs of those who pay for them. The Progressive Democrats have repeated this message time and time again over the last two years. It is beginning to be heard but it will only be heard properly and will only be acted on properly when we introduce some form of zero budgeting which does not begin from the premise that what a Department or agency had last year is where one starts from and that one adds to that inflation or whatever else. Unless we are prepared to begin on the basis that no agency is entitled to anything unless it justifies itself, then we will never solve this problem. Many of these structures and bodies that exist only for their own institutional sake and welfare remind me of dinosaurs which became extinct centuries ago. In this country we seem to be helping with their rebirth.
The Minister has achieved some recognition for his efforts in slowing the mad rush of debt burdened economic suicide with which we were faced. It is therefore with some regret that although some months have passed since the publication of the departmental Estimates in October, there was no significant effect caused by their publication on the providers of new capital for industrial and economic expansion in this country.
The Minister for Finance must be aware of the banking sector's movement in a substantial way into the housing mortgage market. This trend has accelerated to a point where a few banks now account for 43 per cent of the funds advanced in 1987 for new housing loans. The Minister and all of us should ask ourselves what kind of an economy we are in where we have a large building society movement, as it is called, where the building societies are tripping over themselves to lend money at present and yet 43 per cent of the money for housing — which by no stretch of the imagination is productive in the short term — is being lent by banks which should be lending it for productive and employment creating purposes. That money when lent by banks is largely a waste because it could so easily be lent elsewhere. The volume of housing, of course, has dropped enormously.
The drop in new housing construction to a level which is now equal to 50 per cent of what it was five years ago has resulted in a very significant increase in the liquidity of the traditional source of house mortgage loans, the building societies. They are now circularising their existing borrowers asking them if they would like to borrow more money and saying that the societies would double their mortgage. They are saying that they have so much money and are restricted from lending it for other purposes. The banks are lending such a huge amount to house buyers that the societies cannot get rid of their money. They are asking their borrowers if they would like more money. I got such a letter myself from one such society with which I have a loan, asking me if I would like to take out a loan twice as large as the one I have. Perhaps they have not looked at my personal financial affairs when they send that out to me.
That was before the Deputy gave up his pension.
It is pretty appalling that at the same time as all of this is going on, we have over 250,000 unemployed and industry and services, commerce and business generally very seriously short of capital in a country which is, by comparison with many others, largely capital starved.
There are residential areas in and around every town and city which are devastated by unemployment and emigration at the present time. Millions of square feet of State-owned industrial premises have become economic graveyards while the financial institutions play "Pass the parcel" with exotic financial instruments which they have now developed, fixed assets based lending, funding external investment and at the same time they are doing as little as possible to provide finance for employment creating manufacturing industry at realistic interest rates.
There is an ever-growing number of institutions competing for the spending by the consumer on imported consumer goods. These institutions are providing leasing and hire purchase facilities at exorbitant rates of interest and they tell you that they need to charge high interest rates to cover the losses that they incur with bad payers. They seem to be blind to the fact that people cannot maintain their payments because they have lost their jobs, because their employers are being driven out of business by exorbitant PRSI contributions, by high interest rates, by insufficient capital, by inadequate profit levels, by high rates, by high energy and transport costs, by high telephone costs, by high market costs.
If we are to judge by the budgetary expectations of funding from the Central Bank for what I have already referred to and what is described in the budget as the "Advance of Projected Future Profits" of the bank, it is apparent that there is a very special relationship between the Minister for Finance and the Central Bank, as there should be. I would ask the Minister to use his good offices with the bank so as to obtain the assistance of that bank when it sets its guidelines for sectional lending for the financial institutions so that a much larger percentage of lending is allocated for export-related and import-substitution manufacture. There is an urgent need to broaden the base of the productive sector of the economy to reduce the level of debt, in addition to reducing the level of current expenditure. Economic strategies should be directed towards achieving these objectives at one and the same time.
The philosophy expounded by Seán Lemass in the 1950s and 1960s when he spoke of a rising tide being able to raise the level of all craft that were afloat is regrettably unworkable in present-day conditions. I am not wishing to be unfair when I say that I detect some threads of this philosophy in the somewhat passive way in which this budget moves the counters from one place to another, trying to leave it to the future to see if the tide will rise, in the hope that if it does it will give a lift which somehow or other will not create too many waves. I do not think that we can afford to wait and see what may happen. I believe we have to take things by the scruff of the neck and positively make them happen.
In this regard I have to say that there is little evidence of any real sense of urgency with regard to State asset disposal and development. As a nation we are obsessed with retaining the ownership of assets at the expense of depriving ourselves of working capital. A private company which turns over the capital it has twice, three times, or even four times in a year, will generate activity, profits and growth which will bring benefits to the owners of the company and the workers in it alike. We cannot live off the land simply because we own it; it is what the land produces that creates the food to sustain us. We seem to have lost that point entirely, so far as our State companies are concerned and also many of the State assets.
As I have said recently, I greatly regret that in this budget the opportunity was not taken to announce the privatisation of the Irish Life Assurance Company, which is the obvious first candidate in a programme that will have to be followed here and that this Government will have to follow, notwithstanding their solemn undertaking to the Irish Congress of Trade Unions last February in a letter from the present Taoiseach that nothing would be privatised. They will have to follow this course, because even at this stage we are the only country in Western Europe where the State is not disposing of assets of this kind that it has available to it.
We should remind ourselves again by taking an analogy with a private company. If a private company have incurred enormous debt as a result of consistent borrowing and if they find themselves with a huge amount of assets on which they are getting either a negligible return, or no return, or even a negative return, then it is commercially crazy for that company to continue to service the burden of debt that they have at 10 to 13 per cent interest and retain assets on which they are getting little or no return. The Irish Life Assurance Company are a classic example of that. The dividend payable to the State is about £400,000 a year. It recently increased to that figure; it had been lower. The potential sale value of that company is about £300 million, we are told. If it was sold that saves us, straight away, assuming a 10 per cent average interest or marginal interest rate, £30 million a year. Why therefore retain something for the sake of £400,000 a year when by disposing of it you will make a profit of £29,600,000 a year, not just there and then but every year into the future,ad infinitum? A country that runs its affairs in that fashion can be accused of being commercially crazy. It is not exercising common sense. Equally if we look at those operations which are asset rich on which the State gets a negative return, the classic example is CIE where the taxpayer gives it a subsidy each year in excess of £100 million.