Dáil Éireann debate -
Wednesday, 23 Mar 1988

Vol. 379 No. 4

Financial Resolutions, 1988. - Financial Resolution No. 4: General (Resumed).

Debate resumed on the following motion:

That it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision in connection with finance.

—(Minister for Finance.)

Mr. Boylan

On the Adjournment of this debate I was dealing with cross-Border trade and how it affected people in Cavan-Monaghan and I had referred to the annoyance of the people in that constituency at the imposition of an 8p per gallon increase in the price of petrol, when it was indicated that a change of Government would bring about a change of attitude in dealing with this problem. There was every indication that an incoming Fianna Fáil Government had an ace up their sleeve, but unfortunately it turned out to be a joker because it was the 48-hour ban that was imposed. Certainly it had a benefit for the coaches from Dublin, Cork, Galway and further afield but it did not benefit the Border areas. There is grave disappointment in the Border areas as it was expected that so much would be done.

In relation to electrical goods, the difference in price of televisions and video equipment as between north and south of the Border means that one cannot blame people for crossing the Border to shop. It is understandable but regrettable. The VAT and excise duty on an ordinary 22 inch colour television in the South is equal to the original price of the television north of the Border. We just cannot say we understand the problem and do nothing about it. We must deal with the problem. A lowering of VAT and excise duties by broadening the base of VAT collection would be of major benefit although it may not be welcomed by everybody. It would be a way of sharing the burden rather than placing it on the immediate Border counties. That would be a step in the right direction.

Carrickmacross Chamber of Commerce promoted a scheme where on the purchase of petrol in excess of £10 they awarded a voucher to be used in any business in the Carrickmacross area and this scheme was an outstanding success. A voucher scheme can be operated in the Border county areas. I put a question to the Minister for the Environment asking him if he would consider reducing or abolishing rates on business premises in the Border counties and he replied that this was a matter for the local authorities. That is not good enough and I do not accept it. The Minister knows full well that local authorities cannot afford to remove rates from commercial businesses because they are already starved of cash and if they removed rates on commercial businesses it would mean that they would be defunct as regards operating because they would have no income. For the first time in the history of this State businesses which were doing well over the years are now seeking to pay their rates by instalment. At one stage they would have written a cheque for the rate collector and paid the rates immediately. This is an indication of how hard people are finding it to get by. The small family businesses, the backbone of the community in that area, whom I want to support and see thriving, are being gradually closed down. When one travels through the towns and villages of the Border region it can be noted how dilapidated they have become because people cannot now afford to paint their houses and keep them to the standard they would like.

I also requested the Government and the Minister for the Environment to include every town and village in the Border region in the environmental programme that is available to cities and large towns as a gesture from the Government to the people of that area and as an intimation that they appreciate the difficulties and that help is available. I am making that plea again. It is not good enough to say we understand the problem, that we are looking at it and that it will sort itself out by 1992, because by then many of those businesses will be gone. We expect and demand a little more than that. We have a problem that must be dealt with.

A major industry in the Border region is tourism and tourism relates mainly to fishing. Many householders in the area who have gone into the business of keeping tourists to supplement their incomes from small farms and so on have advertised in England and on the Continent what we have to offer. Their initiative must be supported. The main attraction of their advertisements was that free fishing was widely available for trout, perch and eels. I compliment the Government for last year implementing a scheme for a £10 fuel voucher to attract tourists to this country but this year that scheme has been counteracted by a £10 rod licence. There is no continuation of policy in an about-turn like that. Last year tourists were offered a £10 voucher towards petrol costs and this year they are asked to pay for a licence to fish. This licence is a major mistake by the Minister for the Marine.

I appeal to the Minister to take note of what the people involved in the business have said. They organised themselves into groups and met recently in Cootehill and Deputy Leonard was the only Fianna Fáil Deputy who had the courage to attend. He came and listened to what the people had to say at an excellent and constructive meeting at which they pleaded that the Minister should drop this charge as they had already advertised on the basis that free fishing was available. They said they were not advised that a licence charge was going to be imposed. That was a major mistake and it should be remedied. I appeal to the Taoiseach, the Minister for the Marine and the Minister for Tourism and Transport even at this late stage to drop the charges for this year and meet the people concerned with the promotion of tourism in that region.

In relation to agriculture, and the promotion of agriculture, it is a sad fact that herd numbers are dropping rapidly despite all the talk from the Minister for Agriculture and Food and the Minister of State and the massive grants for updating the factories. In the 12 western counties the Minister should drop the off-farm income provision. One cannot live on a small farm in the 12 western counties, or in the counties of Cavan and Monaghan, if one has not got an off-farm income.

I looked through the projections for expenditure on the various EC schemes this year and the average herd size in that is nine cows. It is not possible to live on a small farm supporting nine cows and raise a family without on off-farm income. We should recognise and appreciate that those people are prepared to work their farms in the morning before going to a job and to work at them when they come home in the evening. Are they not the sort of people we want rather than people who are on the dole and who are not anxious to work? I do not want to castigate people on the dole because many of them are in that position through no fault of their own, but there are people who will live off the dole and who do not wish to work. The person who is prepared to go out and work should be given every encouragement. Off farm income should not be an inhibition to headage payments. Any surplus funds those people have will be reinjected into developing the farms and building up the herds.

With regard to the western package there is no point in trying to fool the people that more money is available this year. That is not so. We must be factual and straight about what we are promoting here. Less money is available for a wider area but it will be more easily obtained when the red tape is done away with.

I have spoken here on the amalgamation of ACOT and AFT. The agricultural instructors are badly disheartened at present. All small farmers should have free agricultural advice. Those are the people we are trying to promote. The large farmer will be well able to pay for this advice. How are we going to initiate two groups of farmers, the farmer who can afford it and the farmer who cannot? I want to promote the small farmer, the man with the potential. His cattle numbers may be small and he could have quite a large acreage so the scope is there for development. The large farmer will be quite aware of what is available to him and, yes, I certainly could not crib about a charge there. For a farmer with under 30 or 40 acres free advice should be made available to help him develop his holding.

The delay of seven months in payment of grants is not acceptable to farmers doing land drainage and building. Either they have to borrow the money or have an undertaking with their contractor that he will do the job and as soon as the farmer gets the grant the contractor will be paid. A delay of seven months is not acceptable in any business. You will not get a month's credit now. That is the way business has gone. Credit must be paid for; if you get credit you must pay interest on it. There is no such thing any more in a well run business as free credit, yet the State is telling the farmers that if they do the job the State will pay the grant in six or seven months. Many farmers are in an embarrassing position. They have gone to the banks and the ACC seeking loans and have made commitments to repay as soon as the job was finished. That may take four, five or six months. When the work is complete application is made and now there is a seven months' delay. I appeal to the Minister for Agriculture to make those payments as soon as the work has been passed by the people who have gone out to inspect it. I am delighted to see the Minister of State has come in. I am sure he is well aware in his own constituency that the delay of six to seven months on payment of grants is not acceptable. It places a serious burden on many farmers and causes them serious embarrassment through no fault of their own. They have the courage to say to their bank manager or the manger of the ACC, "I want £3,000, £4,000, £5,000 to improve my farm. I will get a grant for it." Then they ask the contractor to do the job for them and promise him the final payment after they get the grant. Probably they have some money of their own. It is not good enough that they have to carry this debt. The contractors too are being put into difficulty when, having undertaken to do this work they have supplied gravel and materials and then people behind them are pushing for payment on the expectation of a grant. It is a chain reaction.

In the area I come from pollution is a major problem, and the grant mooted in the western package of 45 per cent is not sufficient to meet it. I make no apology for being parochial. I was sent here to represent people with a problem. We have a county of hills and valleys and 365 lakes. If you spread fertilizer and slurry and then get a wet day, run-off results. That is not so in the flat lands of Kildare or Tipperary. It is a problem peculiar to Cavan and Monaghan. We have a great deal to offer there in the line of tourism and it can be spoilt by pollution. I ask the Minister for Agriculture to recognise that and the Minister for Tourism and Transport to give special grants in that area since we have something to offer.

Mr. Swift

I compliment Deputy Boylan on his remarks but I would like to pass one or two comments on them. I appreciate the problems of the Border counties but it should be placed on the record of this House that no Government have ever attempted to do as much in a short time for the Border counties as have this Government. Even Deputy Boylan would acknowledge that. That is not to say they will not have continuing problems, but this Government have made serious efforts to help those in the Border region, particularly the business people.

In relation to petrol, the Minister for Industry and Commerce, Deputy Reynolds, in the last year has more or less forced the oil companies to reduce the price of petrol on several occasions. That was not done previously to my recollection and the Government and Deputy Reynolds deserve great praise for it.

I gave a general welcome to the provisions of the budget of the Minister for Finance. It might be helpful if we recall, as a background to the budget, that it is a follow up to a budget of 12 months ago introduced almost immediately after the present Government came into office in very difficult circumstances. In the previous four and a half years we had a Government of two parties and in that time we got the worst of all possible worlds. Emigration, once again became a major factor, unemployment went through the roof and the national debt doubled from approximately £12 million to £24 million, so it is fair to say almost nothing positive was achieved from the economic point of view in the four and a half years of Coalition Government.

Against that background the present Government came into office and immediately, with great courage and determination and at no little political cost to themselves, decided they were going to tackle the economic problems that bedevilled this country and to make a serious effort to eradicate those problems within the lifetime of the present Government. As we all know, the Government are in a minority and it behoves us all, particularly the general public, to remember when the Government are being criticised or when Government backbenchers are asked which way they will vote or whether they will vote against this or that cut, that this Government can be voted out of office if the Opposition parties have the political courage to do so. I believe they do not have that political courage or will. That is amply demonstrated in the fact that the Government have lasted for 12 months in a very difficult situation and are bringing in very difficult measures.

This is the first time in the last decade that a Government have done the right thing, not for themselves but for the country. The efforts to reduce the national debt have been monumental, given the timescale involved. In 1988 this Government will borrow £1,457 million. That is an enormous sum of money, by any standards. There is nobody here who would not like to see us in a situation where we did not have to borrow money. But this amount is still almost £700 million less than was borrowed in 1986 which is less than 18 months ago. The Government must be complimented on their efforts, particularly the Taoiseach and the Minister for Finance.

In Waterford, which is a very beautiful coastal county, tourism is a live issue. There is no Government Department that some Deputy would not like to see getting more resources, but I know and understand that the budgets for the various Departments have already been voted on and there is no extra money there. I applaud the fact that there will be no extra money and no further borrowing, but I would like to see a shift of emphasis in the whole area of tourism. On one occasion at a joint meeting of Waterford city and county councils with members from the south-eastern tourist board I asked, in all innocence, the reason for the very prompt manner in which tourists who landed in Rosslare Harbour were transported to counties like Kerry, West Cork, Galway and so on. I was told at that time, and that is a number of years ago, that it was Bord Fáilte official policy at head office. I do not know if that is accurate, but it is the answer which was given and the evidence is there to support the truth of it. If that is so it is regrettable, particularly from the point of view of the counties of the south-east and my own county of Waterford where there is tremendous scope for the development of tourism. I would like to see the Minister for Tourism and Transport concentrating more on the development of that region. I understand the task force is bringing in its report quickly and this is indicative of the speed and efficiency with which this Government are working. I would like to see special emphasis put on the south-eastern and eastern parts of the country with a view to developing our tourism potential. Whatever about the western counties, there is no doubt that we are vastly underdeveloped in counties like Waterford as far as tourism is concerned.

We have a small airport in Waterford operating through Ryanair which is functioning very profitably. In fact it was Ryanair's pioneer programme here. I would like to see that airport developed. It will need funds to do so and, subject to what I said myself about the lack of additional resources, there are certain areas where capital investment can be made resulting in a good return on the initial investment. I would like to see some Government funds directed towards Waterford Airport so that not just Waterford but the whole south-east can be developed.

With the cutbacks one would have expected the Minister for Social Welfare to provide no increases in social welfare payments. Therefore it was a tremendous achievement that the Minister was able to increase social welfare benefits payable this year by a staggering £110 million. It demonstrates the Government's commitment to the less well off in our community. The increases of approximately 3 per cent more than kept pace with the rate of inflation. That was a tremendous achievement in this year, but the increase in benefits for the long term unemployed of 11 per cent is a really magnificent achievement in a year in which nearly all Government Departments have taken a substantial cut. The Minister for Social Welfare, Deputy Woods, and the entire Cabinet have to be congratulated for securing the dignity and the standard of living of the less well off in our community. We realise that such benefits do not allow anyone to live in luxury, but in difficult times they can at least keep pace with inflation and in some cases go well ahead of the rate of inflation.

There is no industry more labour-intensive or more important in many constituencies than the building industry, and there were two important measures in this year's budget that will be a support to the the building industry. First there is the slight move in one of the bands in relation to the rates payable for stamp duty on secondhand houses. I compliment the Minister on his efforts in that regard. It is the first time in many years that there has been a move in that direction. Speaking as a person who has had a great deal of experience in dealing with young couples purchasing their first homes and mortgaging them and so on, I think it is time we had a look at the whole question of the rates of stamp duty on secondhand houses, particularly in the case of newly married couples buying their home for the first time. It is quite some time since the bands were increased to make it easier on couples buying homes. A rate of 3 per cent on £20,000 in an age when it is unusual to buy a house for less then £25,000 is simply too much. It is time the Minister for Finance had a look at the question of making a special provision in regard to the rates of stamp duty for young couples starting out.

The reintroduction of the section 23 incentive is very welcome from the point of view of investment in the building industry. It will be particularly beneficial in the bigger city areas of Dublin, Cork, Limerick, Waterford and Galway, but I suspect that the bulk of the benefit will be felt mainly in the Dublin area. For that reason, and speaking on behalf of the building industry, a very labour-intensive industry, an industry with great potential, the Minister for Finance might consider for next year's budget a reduction in the rate of VAT from 10 to 5 per cent. In my area most builders would have preferred that to have happened than to have the restoration of the section 23 incentive. While that incentive is welcome a reduction in the VAT rate as I have suggested would have been of more practical benefit. Such a reduction alone, apart from helping builders and their companies, would have the potential to create employment in an industry which, it is fair to say, in the last five or six years has seen a substantial reduction in the number of people employed in it. That is a matter which might be borne in mind in the future. We realise that the Minister has a very difficult task but he might consider that matter in next year's budget or, please God, that of the year after if we are still here.

One of the most heartening things that has happened in the last 12 months has been the reduction in the level of mortgage interest payable by the average family. We are used to seeing headlines about health cuts and so on but we very rarely see a great deal in the media about the help that this Government, through their policies, have given to married people in particular in regard to paying their mortgages. In some years there was a steady increase in the rate of mortgage interest payable to banks, building societies and even local authorities. It was very heartening to see that trend reversed during the last year and to find the rate reduced, not just once by way of something like 0.5 per cent but on at least three occasions. The indications are that that downward trend will continue. That kind of progress is something that we had all been asking for in the previous years but without success. The Government, through their policies, are now seeing the fruits of their labours. The beneficiaries of that reduction are the mortgage holders and that is something we welcome greatly.

Another very welcome trend in this budget — I hope and believe it is a trend and not a once-off measure — is the reduction in the collection targets in income tax. This Government have agreed to take £225 million less in tax over the next three years. The Government who committed themselves to having two-thirds of the PAYE taxpayers on the standard rate of tax within a period of three years have practically succeeded in doing so in 12 months. I think the figure is 63 per cent which is as near two-thirds as makes no difference. That, by any yardstick, is a great achievement. It is a tremendous achievement given the economic difficulties that I have already talked about.

In my area and in several other areas of the country, Deputies and the public generally have been giving an unqualified welcome to the restoration of the Government programme on decentralisation. I would like to place it on the record that the previous Fianna Fáil Government had committed themselves to a programme of decentralisation — this included Waterford — but that when the last Coalition Government came into office they reversed that decision and, in Waterford's case, almost brought about a situation in which the site which had been acquired for decentralisation had to be sold off. Through the efforts of local politicians and the city management we were able to retain that site and we were, therefore, in a position to be re-included in this Government's programme of decentralisation which was reactivated immediately they returned to office.

This programme of decentralisation has tremendous potential for the locations which have been selected. We hope to have several hundred people relocated in Waterford from certain Government Departments. I do not suppose that I need tell the House what that will mean to the local economy in Waterford in terms of additional spending power, in terms of the business of shops and stores and in relation to the house property market with the extra business that means for financial institutions and so on. There is tremendous scope for Waterford and the other centres for development and for capitalising on this programme of decentralisation. I welcome it. I know that in some areas people have already started work on the programme. I anticipate that in Waterford we will be starting the ball rolling by June of this year and we are all delighted with that. We would like to see it happen quicker but we realise the difficulties involved. We welcome the general trend and we hope to see that programme well under way in Waterford by the end of 1988.

In relation to the drink industry, we were all invited to a meeting with representatives of the Vintners Federation of Ireland earlier today. They made a number of points, one of which is relevant to this debate and which seems reasonable, that is, that the 25 per cent rate of VAT on the drink industry be reduced to 10 per cent, to be compensated for by a 15 per cent increase in the excise duty. I do not think that would result in any substantial loss of revenue to the State. It is what the industry wants and it would cure many of their ills. Perhaps the Minister would consider that request from the vintners.

In general we welcome this budget. It is an excellent follow-on to last year's budget. It was introduced in very difficult circumstances. I think by the time it passes through this House as a Finance Act it will be seen by the country at large as having had a large measure of support on both sides of this House. It is a budget which gives practical expression to the need for patriotism in this country in exceptionally difficult times. I see this budget as an exercise in practical patriotism, as a budget brought in, by a Government who are in a minority position, with great courage and determination and with the potential, if it is followed through, and if we have co-operation from all sectors of the community, to solve the problems of this nation, problems which are so great.

It is significant that the signatories to the Programme for National Recovery ranged over a broad spectrum of opinion in our society, the farming and business communities, the trade union movement and the Government themselves. It is heartening to see that people recognise there are major problems confronting the country. While retaining their independence and right to criticise — in some cases voting the other way — in broad measure they are willing to support the Government in sorting out the national finances.

Some people ask, for instance, in relation to the education cuts, what about the children? I contend that children must receive something from us but if our national finances are not placed on a sound financial footing there will be nothing for us to hand on to our children. The primary duty of any legislator, if not the primary reason for anybody becoming involved in politics in the first place, is the creation of a better society.

I believe that this Government in this budget are attempting to put the national finances in order following the course they adopted in 1987. They are deserving of great praise and this budget warrants the support of all Members of this House.

Mr. Creed

I have detected in the course of this debate a more constructive approach by all Members. Heretofore the debate on the budget tended to be predictable, depending on which side of the House one sat. On this occasion I have heard criticism of the budget from the Government side and some elements being accepted on this side of the House, particularly by members of my party. I am delighted to note that kind of approach.

At this stage it is difficult to say anything that has not been said already a number of times. I want to take issue with one point made by Deputy Swift, that is in relation to the building industry. I accept that from the point of view of employment, job creation and the economy as a whole the building industry is of vital importance. Rather than compliment the Minister and Cabinet on their contribution to the building industry I would contend that this Cabinet have been responsible for the decimation of the building industry.

It should be remembered that over the past four and a half years the attractive housing grants available were a considerable boost to that industry. It can be said that the construction industry, as we knew it, has moved to London, southern England and other places abroad. I would contend that nobody could be sincere in complimenting the Minister and the Government on their contribution to that industry. Over the past four years I can remember the present Minister for Energy and for Communications, Deputy Ray Bourke — then Fianna Fáil spokesman on the environment — express concern on many occasions at the state of the building industry, contending that if and when Fianna Fáil were returned to office there would be an immediate injection into that industry of approximately £300 million — sometimes the figure quoted was £500 million, there being a variation in the figure depending on who said it and where — because of that industry's employment content. Let us not fool ourselves. The building industry has ground to a halt. Everybody in this House is aware of it and anybody who is not is living in cloud-cuckoo land.

I hope to refer to other matters in the course of the debate on the Finance Bill. Whether one is in Government or Opposition, one is now aware that it is absolutely essential to come to grips with the national finances, that fiscal rectitude is a must. There may be some differences of opinion as to the course to be adopted but the general principle is universally accepted.

Deputy Swift referred to the record of the Coalition Government in regard to the national finances. I would remind Members on that side of the House that when the Coalition Government attempted to come to grips with this very serious national problem there was not then much co-operation forthcoming from them. However, the fact that the Government party are late converts to the idea of fiscal rectitude is to be welcomed. Everybody is now aware that unless we do come to grips with this problem we shall reach a stage where our national finances will be beyond redemption. However, we have a long way to go.

I would describe this latest as a very subtle budget, a clever one in many respects. Provisions that had been abolished under the terms of the 1987 budget were reintroduced in the January 1988 budget, being heralded with great triumph.

I will refer now to agriculture. The former Minister for Finance, Deputy Dukes, introduced installation grants to assist young farmers to take over family farms, rendering them more viable, productive units. Those installation grants were abolished in 1987 and reintroduced this year. When replying perhaps the Minister would inform the House whether applicants whose applications had not been processed or approved but rather left in a kind of limbo will be reconsidered. Will their applications be re-examined? The abolition of those installation grants was a blow to the agricultural industry particularly when stamp duty was abolished.

Undoubtedly the agricultural industry, like the construction industry, has huge job creation potential. It worries me to hear the Minister for Agriculture and Food talk about the position in Europe where land is being set aside, taken out of production. It is very serious that such an attitude should prevail here and on the Continent at a time when we are being ravaged by the effects of unemployment and emigration. That is something about which we should seek clarification. I am aware of the difficulties being encountered in agriculture in Europe but this constitutes a retrograde step particularly in regard to the creation of additional employment.

The school building programme is a scandal. For example, there was a figure of £6.7 million reintroduced in the 1988 budget, the public capital programme having being reduced by some £16 million in 1987. Many schools throughout the country were at the stage of being advertised for tender. That meant that they had gone through the different phases up to the point where they produced the bills of quantity and then advertised the school for tender. It cost a considerable amount of money to bring a school to that stage but, lo and behold, we now find that all that has been scrapped and done away with. The position now is that all that work has gone for nought even though some contractors were about to be appointed. Now the situation is being re-examined and a much less expensive scheme is being introduced by the Department. That is a considerable waste of public moneys and the Minister should be asked to account publicly for that expensive change of attitude, particularly when a considerable amount of the groundwork has been done.

Debate adjourned.