Dáil Éireann debate -
Thursday, 26 Jan 1989

Vol. 386 No. 2

Financial Resolutions 1989. - Financial Resolution No. 8: 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.)

Mrs. Doyle:

Before the adjournment I had been alluding to the fact that there is a perception that, as a constituency, farmers are hard to please. I had been musing on some of the many possible reasons for this impression. I have mentioned the decrease in margins and the huge disparity in income between different enterprises, rural poverty, the threat to the future of the family farm and indeed the massive emigration from the land generally. All these factors must be analysed and acted upon despite the statistics concerning the very welcome increase in farm output and indeed in farm incomes that we read about. Let us analyse these statistics and represent the facts as they are for the majority. Let us use this golden opportunity now presented with the doubling of the Regional, Social and FEOGA Guidance Fund by way of the Structural Funds not only to close the economic disparity between ourselves and mainland Europe but also within our country between the different farm enterprises. Above all we should ensure a future on the land for the backbone of this country, the family farm.

From an agricultural perspective the FEOGA guidance section of the Structural Funds provides great opportunities for positive compensatory policies in relation to the reform of the Common Agricultural Policy. Yesterday I had tabled a parliamentary question to the Minister for Agriculture and Food asking him what provisions he had made for agriculture within our national development plan for drawing down extra money from the FEOGA Guidance Fund in view of the doubling of the Structural Funds over the next four years. He replied that an overall plan for the drawing down of moneys from the EC Structural Funds between now and 1992 is at present in the course of preparation and that it will include detailed proposals on agricultural and rural development both in regard to new arrangements and the improvement of existing arrangements. The Minister told me that plan involving national and regional programmes will be the framework through which finance for the three Structural Funds will be maximised and that until the plan has been finalised it would not be appropriate for him to provide information as to the provision being made in respect of receipts from the FEOGA Guidance Fund. I regret that we do not know, and this House will not have an opportunity to debate, exactly what proposals for agriculture he will be submitting for the national plan to ensure maximum draw-down under the FEOGA Guidance Fund.

I would also like to put it to the Minister that the recent proposals by the board of Teagasc seriously weaken our hand in dealing with the many policies that are coming forward weekly in relation to Common Agricultural Policy reform. The rural economy section of Teagasc deal with this. They had a decrease of 50 per cent in staff and resources in 1988. As we have no agricultural economic institute here we must ask what effect the further reductions now proposed by the board of Teagasc for the rural economy section, and indeed accepted by the Minister for Agriculture and Food and the Government, will have on their capacity to carry out economic and social research in view of the rapidly changing CAP.

Money under the Less Favoured Areas Directive for the disadvantaged areas, by way of headage payments are paid directly from the FEOGA Guidance Fund which is part of the Structural Funds. I am calling on the Minister for Agriculture to insist on the designation of the entire country as a less favoured area under Directive 75/268 of the EC. This would involve, first, the designation of all areas not currently included in the disadvantaged areas as less severely handicapped areas and, secondly, the reclassifying of all existing less severely handicapped and mountain sheep grazing lands to more severely handicapped status. The advantages of my proposals are, first, the significant boost to farming incomes. Secondly, up to 75 per cent of the expenditure would be met by FEOGA recoupment. Thirdly, there would be no need to carry out a further survey by the economic unit of the Department of Agriculture. At least, we would not need an immediate survey in order to be ready with our proposals for the national plan to be part of our submission on the Structural Funds by March 31. Fourthly, the timescale would be short compared with that of the last review under this directive which was completed after three or four years in 1985. Fifthly, we would still meet the terms of the directive that require payments to be graded according to the degree of natural handicap. There have been significant changes in the criteria as laid down in the Less Favoured Areas Directive governing classification, when we take figures on a national average basis, to justify the whole country being classified.

Under the Structural Fund's framework, as one of the most peripheral of the Objective 1 regions, the whole country is classified as one region. Headage payments under the Less Favoured Areas Directive are paid, as I said, from the FEOGA guidance fund. The Structural Funds are being doubled for the most peripheral regions such as Ireland, not just to achieve social and economic cohesion but also to compensate for the problems caused by the reform of the Common Agricultural Policy.

This will be our last chance to exploit the opportunities being provided by the additional Structural Funds and to ensure a future for all our farmers, not just the more commercial. I call on the Minister again to insist on the inclusion of the entire country and the reclassification of existing areas under the Less Favoured Areas Directive as part of the 1989 price negotiations to commence shortly in Europe and as part of our national plan submission under the Structural Funds framework. The Minister briefly addressed this point in a reply to a parliamentary question from me again yesterday and I shall respond with that paragraph to have the complete story on the record. His view is that to propose including all unclassified areas, regardless of whether they meet the EC criteria, would therefore increase the survey work to be done by his Department and would delay the submission of eligible areas to the EC Commission.

I disagree fundamentally with the Minister on his contention there. There would be no increase of survey work or extra delay at all because, if you bring in all the areas not classified now as less severely handicapped areas, there is no need for a detailed townland by townland survey or a review by the economic unit of the Department of Agriculture at this point. We would have our policy in this regard ready to submit with the national plan by March 31. Including farmers who may not now have expectations to be so classified will in no way take from other farmers who wish to get classification status at the moment, particularly at this point when we are talking about a doubling of the Structural Funds and of maximising draw-down for farmers to compensate for the Common Agricultural Policy reform. My views, I am glad to say, were supported and were publicly supported last November at a conference, by Dr. Brendan Kearney who is now the chief economist of Teagasc. I take it that the Minister would accept what he has to say on the matter. At that time Dr. Kearney stated as follows:

Consideration must now be given to extending the less favoured areas, if not declaring the whole country disadvantaged, so as to exploit the opportunities provided by the additional funds. Furthermore, there is now a good case for including part-time farmers in development programmes and schemes. In disadvantaged regions, part-time farmers can be the most dynamic individuals in the local communities and thus help maintain the social fabric of the area.

A brief word in relation to part-time farmers and farm income as it is treated at the moment — and I respect the sensitivity as a High Court judgment is pending on this matter generally. With the indulgence of the Chair, I would like to say that large farmers in disadvantaged areas who have no off-farm income but a considerable on-farm income get headage payments regardless of their on-farm income. This is an anomaly. There can be off-farm income of very moderate means which disqualifies a small part-time farmer. As I have said, part-time farmers are essential to the viability of local communities, especially in the more remote areas, to prevent further emigration. There will be another opportunity to develop that topic when we are not constrained by a High Court judgment.

Again, to draw down FEOGA guidance money under the Structural Funds, I am urging the Minister for Agriculture, in the context of the debate on the doubling of the Structural Funds generally and on the basis of Ireland being classified by the European Commission as an Objective One region, a single region, among the most peripheral and disadvantaged in the Community, to ensure that there is a minimum of 45 per cent to 50 per cent grant aid, hopefully far more, for anti-pollution measures under the farm improvement programme for the entire country. This is an essential requirement as the greatest concentration of silage-making and intensive livestock units is in areas now eligible for only up to 20 per cent grant aid, whereas western package areas get a minimum of 45 per cent and it goes away beyond that in many cases.

Anti-pollution measures for dealing with silage and slurry effluent must be deemed "development" in their own right, not only as part of an overall farm development plan, and therefore eligible for grant aid as such. With up to 75 per cent recoupment from FEOGA guidance funds which, as I have emphasised, would be part of the enhanced Structural Funds, an increased draw-down for environmental protection under the farm improvement programme is in all our interests by way of keeping our country and our farm and food produce among the most marketable in Europe.

Again yesterday, by way of parliamentary question the Minister responded to a point about an anomaly which has arisen. There is a higher rate of environmental grants, under the western package than under the farm improvement programme for those areas already classified under the Less Favoured Areas Directive. I asked him, in view of his statement of some weeks ago, if farmers who were participating in farm improvement programmes, including the anti-pollution measures, could switch to the western package scheme to avail of the higher rate of grant for anti-pollution measures. I welcomed his proposals of further clarification and his response to me yesterday was:

The EC Commission has agreed, in principle, that farmers who cannot complete their plans under the farm improvement programme due to the need for substantial extra investment for environmental purposes may in certain circumstances terminate their plans and apply to participate in the programme for western development.

He went on to say:

Details of the precise procedures and conditions for availing of this change will be available shortly from local Teagasc offices.

We, and indeed all farmers in all parts of the country, await eagerly the procedures that will be involved so that they can maximise the anti-pollution grant. This is for all our sakes, not just for the sake of the farming community. A good healthy environment and the perception that Ireland has air, water and soil which are pure and environmentally clean is the basis of the future for us all and for our indigenous industries.

There are at the moment in Europe on-going discussions in relation to the farm price proposals. There are some very disquieting aspects in relation to these proposals. I hope the Minister will stand firm and not lose his nerve as he did earlier this week at the Council of Agricultural Ministers——

Mr. Wilson:

Rot.

Mrs. Doyle:

——when it comes to protecting Irish interests, the interests of Irish farmers and our agri-business.

Mr. Wilson:

Rubbish.

An Leas-Cheann Comhairle:

Deputy Doyle, the Chair has been happy to allow you an opportunity to develop your arguments but normally it is taken on the Budget Debate that if there are matters that can more correctly be raised on the Estimate debate of a particular Department, they might only enjoy a——

Mrs. Doyle:

If you will bear with me, a Leas-Cheann Comhairle, you will see rapidly where I am getting to.

An Leas-Cheann Comhairle:

The Chair anticipated that you would never wish to be out of order but for the moment you were. I thought that I would remind you.

Mrs. Doyle:

You might suspect that I am getting our of order, but please bear with me. The Minister for Finance dealt quite substantially yesterday with the Structural Funds. FEOGA guidance or the farm development fund comes under the Structural Funds.

Minister for Tourism and Transport (Mr. Wilson):

There is no increase in FEOGA funds in 1989.

Mrs. Doyle:

We must put in place proposals over the next four years to draw down as much as possible for farmers from FEOGA guidance to compensate for the reform of the CAP. Our national plan must be submitted by 31 March and the strategic objectives should be included. Even if the money does not come from FEOGA this year, our objectives will have to be laid down. Bear with me a Leas-Cheann Comhairle. I will not give cause to increase your blood pressure.

An Leas-Cheann Comhairle:

The Chair will be tolerant of your John the Baptistry.

Mrs. Doyle:

I appreciate your tolerance. I was talking about the price proposals for 1989 and the outcome of the Council of Agriculture Ministers in the context of the FEOGA guidance fund and the Common Agricultural Policy generally. There is a lot to be welcomed. The Mulder agreement is a great step forward for the 1,700 farmers here who signed contracts to give up production of milk for four to five years. Most of those will be receiving back at least 60 per cent of their original quota during the next couple of years. Many questions need to be answered as to who exactly will have their problems resolved as a result of the meeting this week. Perhaps we will have occasion for a further debate and I would invite the Minister for Agriculture to come into the House at the first opportunity to debate the outcome of the meeting of Agriculture Ministers. A precedent for this was established by former Ministers for Agriculture.

The budget, so far as farmers are concerned, is as notable for what is not in it as for what it contains. There was no reference at all as to whether the PAYE and PRSI allowance should be extended to farmers and the rest of the self employed, given the changes in this area in taxation. The VAT refund was increased to 2 per cent. The Minister reneged on a commitment by his predecessor, a commitment based on the rather false premise that the reduction of the VAT refund to 1.4 per cent was justified because farmers had not paid their health contributions and levies. The Minister should have increased the refund to 2.5 per cent, as independent economic analysts have suggested during the past few months. This should have been done for several reasons, not least the amnesty. I put it to the House that the collectable outstanding arrears in relation to health contributions and levies from the farming community are now in. Any taxation in arrears from any section of the community will always have a percentage which will be considered uncollectable, for different reasons, and that percentage is no higher in the farming community than in other sector. I said last night that there were twelve Apostles and the one wrong one constituted a failure of about 8.5 per cent. There are not 8.5 per cent of our farmers in default in regard to health contributions and levies. The flat rate VAT refund should have been restored to the former threshold. We are now penalising the vast majority of farmers who have paid their just dues in this regard, perhaps for the sins of a minority. That is not acceptable and it is not a practice we can allow to continue. The Minister reneged on his predecessors commitment in this area.

The vexed questions of PRSI contributions for farmers and the self employed generally aged over 55 years was not addressed. No attempt was made to establish what their contribution pension entitlement would be at the age of 66. No effort was made to look at the major problem relating to capital tax thresholds in the agricultural community. With the increase in the price of land in recent times, particularly when a good milk quota is attached, and the increase in the value of stock, major problems are arising because of the lack of indexation thresholds under capital acquisitions tax and inheritance tax. The thresholds have not been increased since the mid-seventies with the abolition of death duties and the introduction of inheritance taxes.

I welcome the pilot scheme for investigating twinning techniques and the provision of £20 up to a maximum of 1,000 cows. Those cows have been earmarked already and there are certain big agri-business interests who will be well pleased that the Minister has delivered. I wish it could be spread throughout the agricultural community on a more general basis. I welcome the extension of stock relief for the next two years and the decrease of the clawback period from ten to seven years. The whole stock relief issue is a mixed blessing for many but if our priority is to increase our beef herd generally it is well worth pursuing, despite the difficulties it creates for some.

The £500,000 given to the Racing Board for further improvements to facilities at racecourses is very welcome. I would have preferred the Minister to go further. It is Fine Gael policy that the off-course betting tax should be reduced from 10 per cent to 7.5 per cent. The corresponding increase in the volume of business would compensate the Exchequer and the increase in volume would also increase the turnover for the bookies. With an off-course betting tax of 7.5 per cent, we could impose a 1 per cent levy on the bookmakers which would go directly to the Racing Board to fund the improvement of facilities at racecourses and increase stakes. That is as much in the Minister's interests from a tourism perspective as it is in the interests of the horse industry. I should prefer a more permanent system whereby there would be an ongoing income to the Racing Board for these facilities rather than depending on the grace or whim of a Minister. The Government should consider this objective.

This is a budget of great missed opportunities. I have directed my remarks mainly to the agricultural sector. There are many matters, not merely of an agricultural nature, which will cause problems for farmers but there are others which will be of assistance to the farming community generally. There is, however, no evidence at all that any economic fires have been lit by this budget. This is our last chance. There is no evidence of any integrated planning to benefit from the Delors package, for productive investment or programme-based physical infrastructure. We have just shopping lists of projects perpetuating the begging bowl mentality. The Fianna Fáil anthem "Arise and follow Charlie" should have the second line amended so that it reads "Arise and follow Charlie to the train, boat and plane". For farmers and agri-business generally, we are looking to the Minister for Agriculture for a national compensation strategy in regard to the Common Agricultural Policy reforms and their worst effects.

Minister for Tourism and Transport (Mr. Wilson):

My main purpose is to ask them to arise and to seek out Charlie by boat, train and plane. I am very pleased to have this opportunity to speak in the debate on the budget which was introduced by my colleague, the Minister for Finance, yesterday. The budget confirms and re-emphasises the commitment of this Government to bringing order to the public finances and of building up the economy. This commitment is consistent with the overall strategy set out in the Programme for National Recovery. That programme, which has the support of the major social partners, will continue to provide the framework for economic and social development. I want to emphasise the importance of the support of the major social partners because this is essential for success. At present the head of Government in Spain, Señor González, is trying to do what we have already done. He is trying to talk to Señors Redondo and Gutiérrez to get their agreement on a social plan. It is difficult but I am very glad that the major social partners are part of the plan.

The stabilisation of the ratio of national debt to national output, recommended in the Programme for National Recovery, was accepted as a target by Government for improving our public finances. Yesterday's budget gave further concrete evidence of the considerable progress that this Government have made towards meeting the targets set. The Exchequer borrowing requirement for last year turned out at only 3.3 per cent of GNP, less than half of the 1988 Budget estimate of 8.2 per cent of GNP. Admittedly that achievement was helped considerably by the once off benefit of about £500 million from last year's tax amnesty and by improvement generally in tax collection. Nevertheless, when adjustments are made for these benefits, the underlying level of Exchequer borrowing is 6 per cent, which is still two percentage points of GNP below the 1988 Budget target. Such lower borrowing is consistent with the moves to stabilise the debt/GNP ratio. It must be pointed out also that the lower borrowing last year will, through reducing interest payments, have a positive impact this year and in future years. This is not to suggest that we should become complacent. We have made considerable progress in tackling the problems that had accumulated in our public finances over many years. The problems have been reduced but not eliminated. The levels of debt and borrowing are still too high and we have to continue in our efforts to reduce them to manageable proportions.

As well as the improvement in the public finances there are also many positive signs that show that the Government's economic strategy is succeeding. Many of our critics claimed that in solving the problems in our public finances we would bring about deflation in the economy. This has not happened because of the consistent set of economic and fiscal policies that we have put in place.

Accordingly, the economic recovery which began in 1987 continued into 1988. Indeed the improvement in many of the major economic parameters was much better than most commentators had predicted at the start of 1988. Strong export demand stimulated growth; the balance of payments surplus increased and interest rates fell. Of particular importance for our competitiveness was the marked reduction achieved in inflation. Last year inflation was down to 2.1 per cent on average. This was the lowest rate for over a quarter of a century, well below the British inflation rate and also below the average inflation rate for EC member states in 1988.

In overall terms the economy showed real growth last year. Our real GNP is estimated to have grown by 1.5 per cent. The GNP growth rate is likely to be even higher this year. The Minister for Finance estimated in his budget speech that real GNP could rise by about 3 per cent in 1989. This estimate is broadly in line with the forecast published last December in the OECD economic outlook. The OECD projection took into account the continued fiscal restraint, the strong export growth and the significant fall in interest rates. I hope we can hold them at that level. Moreover, the OECD outlook points out that business investment may grow more rapidly than projected and that a modest recovery of employment in the private sector may bring about a gradually falling unemployment rate.

In restoring growth in the economy, this Government have been pursuing a wide range of initiatives to harness the economy's potential and to create new job opportunities. Some of these initiatives are already bearing fruit in terms of increased employment. As pointed out yesterday by my colleague, the Minister for Finance, the target of the creation of 20,000 jobs last year was in fact achieved.

As the Minister for responsibility for tourism, I am particularly concerned to develop the tourism sector of our economy, having regard to the employment which it sustains and the foreign revenue it brings into the country. I am pleased to tell the House that we are right on course for meeting the growth targets set for tourism in the Programme for National Recovery. These targets called for the doubling of visitor numbers, an increase of £500 million in tourism revenue and the creation of 25,000 new jobs over a five year period. The roads programme announced by the Minister for the Environment yesterday is highly relevant to our campaign to develop tourism.

Last year was another record year for Irish tourism. While I do not have definitive figures yet on visitor numbers, Bord Fáilte preliminary estimates show that the number of overseas visitors exceeded 2.3 million last year, a 13 per cent increase on the 1987 performance. Tourism revenue is also expected to show a substantial increase on the 1987 record earnings of over £1 billion.

Deputy Noonan in his contribution to the budget debate last evening suggested that, far from achieving considerable success in our performance, we were running a deficit in our tourism balance of payments. He cited the recent Central Bank quarterly review and inferred that the net contribution of the tourism industry was minus £61 million in 1988.

I would like to point out to the House that Deputy Noonan was referring to figures for the services balance in the balance of payments which, while it includes tourism, does not refer to tourism per se. In fact, if the Deputy were to look at the official statistics for balance of payments published six days ago — 19 January 1989 — by the Central Statistics Office, he would see that, far from a balance of payments deficit for tourism, there was in fact a considerable surplus. Specifically tourism and travel, including passenger fare receipts, showed a net surplus of over £170 million for 1987 and the corresponding figures for the first three quarters of 1988 show a positive balance of £158 million. This was not the only statistic Deputy Noonan got wrong. Yesterday he talked about 18 dollars for Brent crude oil when in fact the reading was $16.80. As spokesman for Finance he should be more careful in relation to figures.

These figures are further evidence of the continued positive growth in tourism. Indeed, it is worth noting that in the two years in question, the number of overseas visitors to Ireland has increased by almost 500,000 or 26 per cent. Our vastly improved tourism performance has directly resulted in the creation of an additional 12,000 jobs in the economy over the past two years. This clearly demonstrates the job potential capacity of a vibrant tourism industry, a fact which has been fully recognised by this Administration.

Much has been achieved in the tourism sector since this Government took office. We have, through Bord Fáilte and with the support of the industry, spearheaded a series of special and more targeted marketing campaigns in our main growth markets.

These campaigns, complemented by our low air fares strategy, have had the desired impact. It is our intention to maintain these strategies so that we can maximise our share of the growing world tourism market. The 1989 Book of Estimates provides for an £18.227 million grant-in-aid to Bord Fáilte. On top of this the Government last October allocated £5 million for a special marketing campaign for the 1989 season. This means that the Government's grant-in-aid to Bord Fáilte for 1989 for the promotion and development of tourism actually represents a £3 million increase on allocations for the 1988 season. The additional Exchequer grant of £5 million last autumn was conditional on the industry coming up with a matching contribution. The industry responded positively to the Government's offer and the resulting £10 million marketing programme is already in place.

I know that already in Britain and in the United States Bord Fáilte deserve praise for the marketing campaign they have got under way. They deserve particular praise for the television productions in Britain on two television stations and for their recent advertising in the United States.

I should like to pay a compliment to the industry for the way they have supported the overall marketing effort. I am already on record in the House as expressing my appreciation to the industry who have responded so well to the efforts the Government are making to improve the tourism industry. In the last year alone, the industry have contributed over £7 million in support of Bord Fáilte's marketing campaign overseas. This surely is an indication of their confidence in the Government's programme for the development of tourism and its future. Let other industries take note of this good example.

The Minister for Finance in his speech yesterday introduced a number of measures relating to the development of our tourist industry. I would like to refer in particular to this welcome announcement that £0.25 million will be made available towards the development of a data-base on tourists who visit Ireland. This will provide an important tool for sharpening the focus of Irish marketing efforts abroad. It also marks an innovative approach to market research in the context of Irish tourism and I have no doubt that it will make a major contribution, in particular, to increasing the level of repeat visits by tourists to this country. Success in the tourism industry can be measured by the number of repeat visits.

While obviously marketing is a vital ingredient to the development of the industry, we must ensure that we provide the necessary facilities an amenities desired by the tourist. Ireland's physical features — its rivers, lakes, mountains, woodlands and its island location — are our main strengths and offer tremendous potential for attracting an increased number of visitors. We are also strongly endowed with a range of cultural, heritage, historical and archaeological attractions. All of these features are particularly attractive to the activity conscious and special interest holidaymakers who have been identified as the fastest growing segment of the international tourist market. Let me add that some of the brochures issued by Bord Fáilte in the recent past which concentrate on special interest and activity holidays have also earned high praise from those with expertise in the industry.

There is a need, however, for investment in the further development of these attractions if we are to exploit their tourist potential. There is also a need for developing weather independent facilities which are vital in a non-sun destination such as ours. We in Government are committed to fostering the development of these attractions and facilities which are in most demand by the tourist. Their development will feature prominently in our national and sub-regional operating programmes which will be submitted to Brussels for assistance under the EC Structural Funds. As indicated in his budget speech, the Minister for Finance is anticipating £14.5 million for tourism development from the European Regional Development Fund in 1989. These funds will create significant opportunities for private investment in the tourism product and we are determined that the scheme for their disbursement will be utilised to the best advantages of Irish tourism.

The investment under this scheme will be complemented by a major development programme costing £3.5 million this year to maximise the tourism potential of publicly-owned tourist attractions, such as national parks, cultural centres, historic houses, internationally acclaimed heritage sites and inland waterways.

There are two final points I would like to make before leaving tourism. First, there is the matter of the business expansion scheme, which the Government extended to the tourism sector. This scheme represents a tremendous incentive for private sector investment in the tourism product. Since I announced details of the scheme as it applies to tourism just over a year ago, Bord Fáilte has approved marketing and development plans under the scheme in respect of 33 projects involving a total planned private sector investment of almost £45 million. Secondly, I would like to remind the House that on 14 December 1988 the first formal Council of Tourism Ministers agreed to designate 1990 as European Tourism Year. A budget of 5 million ECU has been allocated to finance projects which will be submitted by member states aimed at promoting tourism within the Community and to finance a promotion and publicity campaign in the member states and in third countries.

It is interesting to note in a European Community context that tourism was not taken very seriously until comparatively recently. For example, no formal meeting of Ministers for Tourism was held from the foundation of the Community until 1988. Therefore, the House will understand when I say that tourism was not taken very seriously. Herr Bangemann who was then Economics Minister in West Germany held the first informal meeting which in turn was followed by informal and formal meetings organised by the Greeks. At that first formal meeting the decision was taken to declare 1990 as European Tourism Year. Therefore, we are at last beginning to move. It is also interesting to note that Ireland will chair the Council for six months during European Tourism Year and this will provide us with an opportunity to beat our own drum to a certain extent while also keeping in mind the wider European dimension.

I would now like to refer to some dimensions of my other portfolio, namely transport. The role of the State in the transport sector is twofold. First, it has to regulate the sector in a way which will contribute to an improvement in overall national competitiveness and in the drive for job and wealth creation. Secondly, it must ensure that the semi-State bodies operating in the sector give full value for public money. Given the limited time at my disposal, I cannot cover the activities of all of the State bodies — given the importance of tourism — I will confine my remarks to some of the State bodies that provide access transport. Incidentally, Deputy Deasy asked me a question today about amendment of the 1932 Act in regard to buses. This has been approved by Government and at present the draftsman is preparing this Bill for presentation to this House.

I would first like to refer to Aer Lingus. I am pleased to report that 1988 has been another very successful year for Aer Lingus with continued strong growth in traffic. A substantial part of this growth has been in the area of tourist traffic where the airline has been making a significant contribution to the Government's tourism drive. In 1988, Aer Lingus carried a record 450,000 visitors from Britain to Ireland, an increase of 40 per cent over the previous year. The airline also had a record increase of 26 per cent in the number of visitors from Europe. In this regard we have been targeting France and Germany in particular. US visitors are slightly up despite the general fall-off in the number of US visitors to Europe in 1988. In other words, we have performed better in the market than our competitors in Britain and on mainland Europe.

The increase in traffic has had the effect of boosting employment in the airline. During the year, 500 new jobs were created in Aer Lingus and a further increase in employment is expected in the coming year. Deputies will, I feel sure, agree that this increase in the company's employment figures is a very welcome development.

To cater for expected further growth in traffic and to meet future needs, the airline is engaged in a fleet development programme. It currently has on order a total of ten new jet aircraft for its European fleet to be delivered over the next few years. All of the new aircraft are being purchased without any assistance from the Exchequer.

I am pleased to say that Aer Lingus' improved financial performance in recent years has been a major factor in enabling the company to undertake its essential fleet modernisation programme. The Aer Lingus results for the year ended 31 March 1988 were particularly good. Against the background of increased traffic and further substantial reductions in costs, the airline returned an operating profit of almost £6.9 million on its air transport operations, compared with a loss of £1.8 million in the preceding year. Net profits for the group as a whole amounted to a record £37.8 million, enabling payment to be made to the Exchequer for the first time of a dividend of £3.2 million gross. It may be a pipe-dream but I would like all semi-State companies operating under my aegis to start paying a dividend to the State at some stage. There is, however, no room for complacency. The same level of profit must be sustained or indeed improved upon in 1989 and future years to enable Aer Lingus to finance its very substantial capital investment programme.

During 1988 the fares initiative taken on the key Dublin-London routes was extended to routes linking this country with provincial points in Britain, resulting in much lower promotional fares on those routes. In some cases promotional fares on the latter routes were reduced by up to 34 per cent. The lowest promotional fare from France was reduced by over 40 per cent on the 1987 peak summer level, while on the German market reductions of up to 30 per cent were achieved. Further reductions of up to 14 per cent are already in place for the summer of 1989 on the German routes. This low fare policy which I have actively encouraged has resulted in significant growth in all markets, with the Dublin-London routes breaking all records. I must say that on the part of some of our partners in the EC there has been a reluctance to accept our thesis that reducing fares on these routes is good policy and stimulates growth. Almost 2 million passengers travelled on these routes in 1988 representing an increase of 29 per cent over 1987, and double the corresponding figure for 1985.

I intend to maintain as far as practicable the downward pressure on fares in 1989. Given the stable cost environment and the significant increases in numbers travelling, I am confident that low access transport costs will continue to provide a significant stimulus to the development of our tourism industry. I shall also be working through the European Community for the further liberalisation of European air transport policies so as to expand still more the opportunities open to Irish airlines and to develop and increase air traffic to Ireland.

While very welcome from a tourism point of view, the advent of lower air fares has naturally had an impact on the traditional market of the ferry companies operating to and from Ireland. Competition of this nature is not a bad thing, however, in that it helps to keep the transport sector vibrant and engenders fresh thinking. I am pleased to say that the ferry companies have reacted well to the challenge through a combination of lower fares and new marketing initiatives. In particular, they have concentrated on their "niche" market of family motoring holidays by offering imaginatively packaged holidays which are attractive in price. In this way, they are helping to fulfil their important role in the overall drive to increase tourist revenue while at the same time taking positive steps to ensure the future viability of their business.

In the case of the B & I, I am happy to be able to report that substantial progress was made during 1988 and that the company's recovery programme is on target. In 1988, the company's trading result before financial charges was a profit of approximately £2 million and after financial charges was a loss of approximately £3 million. The trading result after financial charges in 1987 was a loss of close to £11 million. The situation of the B & I at the end of 1987, when in the context of the company's survival plan the Government agreed to provide the Company with up to £11 million in 1988 by way of equity, was so bad that a sustained and concerted effort was, and still is, required on the part of both management and the staff to get the company back to full financial viability. I must say that it was a realisation by the management and staff that this was a life and death situation that induced them to accept the plan and to get working on it with such success.

The commendable improvement in 1988 was brought about by the implementation, with the full co-operation of the company's workforce of the survival plan which included, inter alia, the termination of loss-making services. There is still a long way to go, however, and I must stress that the company are not out of the woods yet. My Department are continually monitoring the company's situation and I am not without hope that with a further determined effort by management and staff, 1989 will see the company progressing still further on the path towards viable operation.

The fact that I have not mentioned the other two State bodies, namely CIE and Aer Rianta, which come under my control does not mean I do not appreciate the role they play in servicing our economy. The CIE subsidiaries are showing their commercial skill in carrying passengers and freight within the country. They are competing among themselves and I believe this is very healthy also. Of course, Air Rianta have been doing an excellent job in handling the huge increase in air passengers that I have already mentioned. Indeed, the House is fully aware of Air Rianta's activities with regard to developments at Shermetyevo Airport in Moscow and of the projected developments at the airport in Leningrad and on the Finnish-USSR border. We have in Aer Rianta an example of a company who are deploying their entrepreneurial skills for the benefit of this country and they deserve our gratitude and thanks.

In conclusion, I would like to confirm once again the commitment of the Government to solving our economic and financial problems, the sentiments with which I started. Yesterday's budget is further proof of that commitment. We will continue with our policies of tight control on public finances and prudent management of our economy. Our policies continue to be consistent with the targets set in the Programme for National Recovery, which has the support of the major social partners. This budget should encourage all sections of the community to persevere in realising the targets set out in that programme.

Mar fhocal scoir, caithfimid go léir comhoibriú le go mbeidh ár dtionscail agus ár seirbhísí níos éifeachtaí ó thaobh forbartha de. Ní féidir leis an Rialtas gach rud a dhéanamh. Caithfidh gnólachtaí, bídís ins an earnáil phoiblí nó ins an earnáil phríomháideach, a gcion féin a dhéanamh. Tá muinín agam astu.

Mr. J. Higgins:

I welcome the opportunity of saying a few words to the House on the occasion of the debate on the 1989 budget. I must say that my reaction this morning on perceiving the headlines in a number of the national newspapers was one of absolute astonishment in relation to the very shrewd manner in which the Government had managed, through their publicity machine, to market the budget through the publicity agencies and the daily press. If ever a budget had been built on speculation, anticipation and rumours deliberately sold in advance about what the Government were setting out to do in terms of achieving a further breakthrough in relation to the economy, and particularly in relation to increasing jobs for the people here at home and the young people who will sit the leaving certificate this year, it was this budget.

One of the remarkable features of the Minister's budget speech yesterday was the almost total lack of specificity in relation to the actual figure predicted for job creation. We realise that the Government's job creation programme is contained in the Programme for National Recovery. I recall that on the occasion of the Adjournment Debate a number of speakers on this side of the House in particular and on all the Opposition benches collectively threw a certain amount of cold water on the 20,000 job target and the degree of achievement of this target. At that time a number of speakers mentioned that many of the jobs if not fictitious jobs, could largely be described as jobs on paper and that when it came to counting the heads, irrespective of what the IDA said, the jobs were not provided either in the industrial sector or the services sector. In his speech yesterday the Minister was not as specific in relation to the actual job targets he was setting before him as the Government's objective for the coming year. It was a case of relying, as Deputy Michael Noonan our spokesman on Finance said, on the rising tide lifting all boats. In relation to a number of areas and, in particular, poverty, we cannot afford to wait for the rising tide to lift all boats because I believe that the poverty trap in which so many people find themselves is so abject and great at present that those who are suffering the worst vibrations of poverty will be left stranded on the mud banks before the tide rises and lifts them off; they will be gone beyond redemption. Even though the figures look nice in percentage terms, when one transfers the gains and increases, even the 12 per cent increase in unemployment assistance, into a shopping basket it is a very small contribution towards alleviating the level of poverty suffered by many families. When one examines the 12 per cent increase in long term unemployment assistance one can see that it contains, as has been said, the 3 per cent superinflation increase and the 9 per cent for long term unemployment but it only refers to an applicant himself and the knock-on effect does not translate for either an adult dependant or child dependants.

In a year when the Government were singularly successful getting in a record amount of unanticipated money, through the tax amnesty, a greater degree of financial direct support should have been given in the short term to those people to try and lift them out of the quagmire while we get on with the task of creating jobs which would be the long term salvation for such people. I was astounded, therefore, by the reaction from the media and the press because one of the sad omissions from the Minister's contribution, and the general thrust of the budget, was its failure to provide the necessary stimulus to get jobs either in the short term or in the long term.

I do not care what statistics the Minister trots out in relation to economic performance. We see that inflation is now at 3 per cent, our balance of trade has been in surplus for a record five years in succession, our competitiveness has been proven because we have managed to keep inflation down and our interest rates are at an all time low. Despite all the economic achievements and getting right the nuts and bolts of the economy, there is no buzz out there, there is no economic activity, there are no jobs and the economic achievements are not percolating through onto the surface in relation to job creation. This was very obvious over the past four to five weeks. There was a hustle and bustle surrounding every village and town in Ireland during the Christmas period when we had the return of 250,000 emigrants. Then, one fortnight later, driving through those towns, one could see the scene of desolation, emptiness, no cars, no activity, no excitement because there are no people there.

As I have said time and again, it is a collective indictment of all us — and the people who started the borrowing in particular, the people who set about a pump priming exercise in 1977 which unfortunately did not work — that our population of just over three million, less than the Greater Manchester area, could be more than sustained in the province of Connacht let alone the country as a whole had we managed our resources and our economic activities and had we been more provident in the management of this country.

One of the major gaps in the budget speech this year, by comparison with previous Fianna Fáil Ministers for Finance, is that there has not been one single reference to the construction industry. Three Ard Fheiseanna ago I recall the Leader of the then Opposition, now the Taoiseach, talking at length about the merits of the construction industry and its job creating potential. He said that, on returning to office, his Administration would pump £200 million into the construction industry to create a job boom. Not only did that not happen but on 25 March 1987 his Minister for the Environment eliminated the house improvement grants, virtually wiped out the disabled person's reconstruction grants, suspended the essential repair grants and eliminated loans, except for those who have hawked their financial credentials around the financial institutions and have been shot down as not being creditworthy. We have no major capital injection good, bad or indifferent for the construction industry. One must wonder today at the disappointment of the erstwhile colleagues of the Ministers, erstwhile friends in the construction industry, who again are left to look at minuscule projects being carried on or other projects now being terminated which had been started by the previous Administration. The construction industry is a barometer and a guage of economic activity. If nothing is happening in the construction industry then nothing is happening in the economy.

The Fine Gael spokesman on Finance said that this budget was anti-family. In relation to the small farmers who are the largest component and segment in society, it was certainly anti-family. One of the major causes of grievance from rural Deputies, from all sides of the House, for a considerable period has been the failure of this Administration, and indeed, previous Administrations, to recognise the role of the small farmer, and particularly to recognise the role of the part time farmer. A former Minister now a retiring Member of the European Parliament, Deputy Seán Flanagan while Minister for Local Government in a Fianna Fáil Administration, said that the only long term prospect for survival in the west was a recognition on the part of the powers that be of the role of part time farmers. It is a fact of life that where there is a high density of population, low acreage and small uneconomic holdings, the only way we can maintain the population structure in areas such as the west, is by a combination of off-farm income and on-farm income. We do not have viable holdings and the vast majority of people in the west would much prefer not to have to queue at a Garda barracks on a Tuesday and then go to the post office. They would much prefer to be given the opportunity of merging a combination of both, which many of them do. Much of the money gained from off-farm activity is channelled back into the farm to build up the growth, capacity and earning potential of the land.

Despite the fact that the European Community readily makes available grants — headage grants, suckler grants, beef premium grants etc. — anybody who has an off-farm income and who earns more than £5,200, or the princely sum of £100 gross, cannot qualify for any of the subsidies or grants. The time has long since passed for the Government to look at and to reappraise the discrimination that is taking place in this regard. There is no doubt whatever that if the Government could see their way to realising the import, the presence and the future of part time farming, they would put together a part time farming plan which would recognise the realities and the difficulties that face the people in order to secure and maintain the population and the demographic structure in rural Ireland.

I was heartened to see that the Minister took the signpost which had come from this side of the House in relation to the need for further emigrant support. I welcome wholeheartedly any doubling of the DÍON fund. Recently, I was in Great Britain — London, Birmingham and Manchester. When one sees firsthand the work being done there by the voluntary care agencies, the county federations, the Society of St. Vincent de Paul, the Care Agency which looks after housing, Comhaltas Ceoltóirí Éireann, the GAA, etc., to support our emigrants, one has to say that we have been remiss in relation to our input of financial support for these people. One has only to visit the Hammersmith Advice Centre to see the work being done to advising young people as to how they should make a safe start in the United Kingdom. One has only to go to Conway House to see the work being done by Father Ryan providing a shelter for 100 young Irish people between the ages of 14 and 19, the vast majority of whom do not qualify for social service payments because they are under the age or, in some cases they are not long enough in Great Britain to qualify for same as a result of the recent changes in the DHSS payments system. One has only to go to the squats in Kilburn and see the abject misery in which some of our compatriots are living to realise that even doubling the fund is a pittance by comparison with the scale of the problem.

Sometime before Christmas in reply to a question I posed to the Minister for Foreign Affairs, it was acknowledged that the number of people who emigrate from this country was 30,000 per year, 600 per week. The vast majority go to London. Fortunately, the vast majority do reasonably well. Only about 10 per cent fall into the poverty trap. In those cases, they are usually ill-prepared, they do not have contacts, they are too young, they may have no accommodation and no skills or training. I honestly think that FÁS should ensure that every school in Ireland is given the necessary resources to provide the data and information necessary so that those who go to the United Kingdom go fully appraised of the reality of life there. I might also add that FÁS might usefully deploy their resources in signposting people to the areas of main economic activity so that they will not be going to London, where the bubble has burst, but to the other areas where there are real jobs available for such people.

I welcome the initiatives announced in the budget relating to tourism. Unfortunately they are not enough. The Minister, Deputy Wilson, might usefully deploy his resources and convince his Cabinet colleague, Deputy Daly that at this time he should sit down with the angling federations and the boatmen to resolve once and for all the sad debacle of the rod angling dispute. If we do not see a breakthrough within the next week to ten days, it is going to be too late. The tourist brochures will be circulated, the bad publicity will have gone in advance and we will see places like Ballinrobe, Westport, Headford, and Cong empty, with only the signposts of unwelcome greeting the tourists who decide to venture onto the lakes.

Minister of State at the Department of Tourism and Transport (Mr. Lyons):

A terrible loss.

Mr. J. Higgins:

I honestly believe that if the Minister were to sit down with the angling and tourist interests he would find there is a willingness on the part of those people to talk and to enter into dialogue. It is peculiar that in this dispute, the people involved are not the ordinary folk one very often finds mounting a protest, manning a picket or chanting or cheering, they are reasonable people, ordinary people in many cases the pillars of society. It is most untypical and out of character for them to behave in such a manner. There is a fundamental issue involved — the ownership of the actual waters on which we fish.

Furthermore, I believe the Minister should address himself to other aspects of tourism. I never cease to be amazed at the amount of money spent on video promotions, glossy brochures and on high-powered promotions. Our own people will return to us because they are the indigenous population. Most people love to return to their native shore. However, we will never achieve the breakthrough that will make tangible the claims the Minister has made for the tourism industry, regardless of the advertising we do on ITV or BBC, unless we concentrate on the indigenous Irish population in Britain, I honestly believe the Minister should work from within. There is no advertising that has the advantage of good publicity conveyed by word of mouth. If Bord Fáilte used some of their resources to sponsor free holidays in Ireland and offered them in key locations and in the large strategic industries in England, perhaps sponsoring ten holidays here and another ten holidays elsewhere I believe that the publicity that would emanate, as a result of the friendship the beneficiaries of the free holidays would experience, would more than recompense and repay for the investment therein.

There are in the region of 40 million Irish people living abroad, in the United States, the United Kingdom and elsewhere. Many of these people are living in inner city areas on DHSS payments from the United Kingdom. They are very lonely. Others are living in inner city Boston, Philadelphia or New York. Many of them would return to Ireland and spend the rest of their lives here if they were guaranteed that they could be provided with a reasonable standard of accommodation.

The Minister may find that a viable exercise if he were to introduce a scheme which might be called "RET Ireland" a retire to Ireland scheme. Not alone would these people help to get our populations levels back up again, but they would bring friends and acquaintances to this country. With regard to the bottom line, the economic fall-out of the scheme, I am convinced that if the social services payments these people are receiving were brought into the country it would make a considerable impact on achieving real economic growth. As a nation which has failed to provide a livelihood for these people to remain at home for the greater part of their working lives, we have a certain social obligation to them to offer them accommodation and allow them return to their land which was not able to sustain them in the first place.

The £5,000 local authority tenant purchase scheme was a singular success. It enabled numerous people to move from their local authority house and achieve what seemed to have been a dream until then, the dream of owning one's own house. They built houses or they bought houses. However, it also created a series of vacancies, with terraces of empty local authority houses throughout the length an breadth of Ireland. In view of our low population and the fact that there does not seem to be an increase in demand for such housing, we should depart from the regulations which prohibit us from making those houses available to Irish citizens abroad. We should start an active advertising campaign to encourage people in inner city Belfast, Manchester or London to seriously consider coming home and taking up residence in a small county council house or cottage. From the reactions of a number of people I met in the United Kingdom I know that quite a number would welcome the chance to return home.

Instead of working through the regional tourism bodies, the Minister might actively and usefully look at the possibility of devolving powers to local authorities and local communities to do their own tourism promotions and initiatives. Many small communities have the necessary internal dynamism to successfully launch local tourist initiatives to attract people to their area. If it is done at local level, the people have a commitment to providing the welcome and hospitality that foreign visitors see as part and parcel of the Irish characteristics and one of our most attractive selling features.

The Government's budget yesterday purported to create jobs and yet there was no specific target set. It is very disappointing that having been given an amnesty for the past two years, the Government have failed to provide the necessary stimuli to get job creation programmes off the ground. Despite the fact that the economic objectives seem to have been reasonably successful, the whole economy at this time is very tenuous and even slight modifications or changes in the international climate could blow the whole ship of State off-course. Soaring international interest rates could again add to our debt repayment problems. A bad harvest, as we had back in 1984 and 1985 could call for a level of subsidisation which could throw the targets completely off balance.

May I say that the tax amnesty which brought in a short-term harvest is one of the imponderables; and we do not honestly know what its long-term effects will be. There are going to be considerable knock-on effects in the economy which will add to a stunting of growth or to restrictions in job creation. We know of many people who through their own fault did not pay their tax, but in order to get themselves out of the trap in which they had found themselves and to avail of the amnesty had to remortgage their houses or businesses. They had to borrow from banks or building societies and they incurred debts of up to £30,000 which will have a considerable debilitating effect on their enterprises over the next number of years. It will be most interesting this time next year when we look at the outturn in economic activity and returns to see whether the growth and revenue inflow the Minister anticipated yesterday will happen.

Debate adjourned.