Deputy Jim Higgins is in possession. The Deputy has seven minutes left of the time allowed to him.
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.)
The week just past has seen much of the lustre that seemed to surround and embellish the budget disappear. Now as various facets of the budget come under closer scrutiny and analysis and as the microscope is applied to them much of the verbiage is being stripped down, a great deal of the reality is beginning to sink home and many of the pressure groups who thought they had been generously bestowed with additional cash in the budget find it is a case of the swings and roundabouts, the gains and the losses, and that at the end of the day it is very much even Stephen. Despite the fact that the Government claim they have made considerable inroads in getting the key components of the economy right and that our stabilisation of the GNP-debt ratio etc. will eventually cause the rising tide to lift all boats, it is obvious there is no deadline, no target, and the light is still very far down the tunnel, if visible at all.
It is very much a case of the Minister producing a medical report that the patient is still very sick but the doctor, unfortunately, has gone away. As our spokesman for Finance said in his very fine budget reply, if ever a Government missed a golden opportunity, it was this Administration. They failed to take advantage of the consensus. They failed to cash in on the amnesty in relation to the handling of the economy and they failed to carry out many of the structural changes that would be and are necessary if we really are to get the show on the road again.
We are given to understand that there has been a radical reform of taxation. There is a consensus on all sides of the House that taxation is the greatest single inhibiting factor to economic growth. We have had no reform of taxation. We have had a traditional taxation budget; in other words, we have tinkered around with the various bands — reducing the 58p band to 56p, broadening the 35p band — and that is about the extent of it. In relation to removing the real deterrent factor in the budget itself, which is generally acknowledged as being an inhibiting factor to economic growth, nothing substantially has happened.
The reform of local authorities or the powers devolved in them, centres still very much around whether we are to have refuse labels, refuse bags or refuse bins. There is no real devolution of power, no real giving of fund-raising or finance-raising powers to local authorities. They are, by and large, being strangled by whatever bit of local autonomy they have.
In relation to creating jobs in the economy, we are left with the Programme for National Recovery which is very much a paper exercise. In terms of the counting of the heads the heads are not there. We have broad general assertions in relation to tourism, industry and commerce, service areas and so on but tangible jobs which call for itemisation are not there. The social employment scheme introduced by the last Government had a lot to commend itself. It topped up the dole and assumed that because a person was registering for unemployment benefit he was available for and capable of work and genuinely seeking it. It was our suggestion that an additional £20 should be put into that person's hand, that he be given a pick or shovel or a scheme to work on so as to restore the dignity of employment to that person. We did not want people to lose the will to work. However, there was been a cutback on that scheme.
Let us look at the components of the economy. Our trade surplus is at a record level. The lastest figures issued by the Central Statistics Office show that for the 12 months, January to December 1987, there was a surplus of £1,568 million and for the 12 months, January to December 1988, there was a surplus of £2,090 million, a very commendable performance. However, there is no buzz, no economic activity, no job fall-out or real economic achievement. We measure real economic achievement in the following way: (1) job creation and (2) the cutting down or the phasing out of emigration. The national scene is in chaos. Let us look at the education system as a result of the savage cutbacks in the last 12 months. At primary level, as a result of the infamous circular 87/20, schools throughout the country have lost teachers. There is a further threat of a diminution in the pupil — teacher ratio. In second level education, an area that we thought sacrosanct, for the first time there is rationalisation, redeployment and people being moved from one town to another at considerable cost. Every time a teacher is moved it invariably means that a subject is dropped in his or her former school. As we approach 1992 it is a sad indictment of our priorities that in certain schools in the west French and German has had to be dropped. In fact, some schools have been unable to offer a full range of continental languages. Fees for third level colleges have escalated to such an extent that they are outside the range of the vast majority of middle income families.
We have had a litany of broken promises in regard to education. The plans for regional technical colleges for Thurles and Castlebar have been scrapped. The health services are in chaos. People have to be accommodated in corridors in hospitals. A patient admitted to the general hospital in Castlebar on 22 November was told that there would be no X-ray facility available before 8 December. She has since died. Morale is at an all-time low in the Army. The ebb and flow in regard to Army pay is causing members to buy themselves out in advance of the embargo announced by the Minister for Defence. The same applies to the Garda Siochána. The Minister for the Marine proposes to erect jetties and marinas throughout the country but the big single factor that is vital if we are to improve tourism in the west, the rod angling dispute, has not been dealt with by him. It looks as if we are in for another stalemate, another confrontation and another year of unwelcome notices for foreign tourists on the rivers and lakes of Ireland.
The tourism figures released recently reveal that there has been a net loss in that more people spend time and money outside the country than are catered for here. When the Minister for Industry and Commerce announces a job package there is a major hullabaloo but none of them has been for more than 500 jobs. God be with the days when, under a former administration a Minister for Industry and Commerce on returning from a visit to the United States would announce a package of 5,000 or 6,000 jobs. That is an indication of the slump in our ambitions for industrial growth.
I accept that communications are vital if we are to attract industries and promote Ireland as an industrial base, but Telecom Éireann are not working efficiently. By and large the performance of Telecom Éireann, compared to that of their predecessor, the much maligned Department of Posts and Telegraphs, has not been successful. Our telecommunications system is not as good as that of other countries. God be with the days when a letter posted in the town of Westport would reach the GPO in Dublin the following day but now, although we have had mechanisation and speedier means of conveyance, it takes two, and possibly three days for a letter from the west to reach its destination in Dublin. We are not the thriving, booming economy that some people would have us believe. We are not on the road to recovery. We have made very modest progress but it is very tenuous. It is so tenuous that a variation in interest rates on the international scene, or a bad harvest, could blow the ship of State off course. It has not been a good budget.
The 1989 budget is a further step in the measures which the Government have been taking to rectify the financial situation of the country and put it on the road to recovery. It tackles all of the problems which face the country, the imbalance in the public finances and the root causes of unemployment, emigration and poverty. It is firmly in line with the Programme for National Recovery, the framework within which the Government and the social partners are working together on the measures needed for development.
There is now a widespread recognition that a major transformation of the Irish economy has occurred. Two years ago this country faced an economic crisis. We knew that things could not continue on the same downward slope of the previous four years. What was needed was an integrated and practical programme of economic recovery which would have widespread support. We had no false illusions that there were simplistic answers to economic problems that were deeprooted and serious but we knew that solutions had to be found within a comprehensive framework. We recognised that any programme of recovery would have to encompass five main elements and that progress would have to be made on each element.
The first essential requirement was to bring public expenditure under control by reducing it to a level consistent with the capacity of the economy to pay for it through reasonable levels of taxation and prudent levels of borrowing; secondly, we needed to create an investment environment which would encourage and promote increased investment and the achievement of improved competitiveness by the business sector leading to job creation; thirdly, we recognised that there was a major need to reform the taxation system to make it more equitable, more efficient and more widely-based; fourthly, new policies were required to support employment creating development initiatives in different sectors of the economy; and fifthly, there was a need to achieve a greater degree of social equity in society; the creation of employment opportunities and taxation reform were important components in achieving that end.
The sum total of these measures was to restore the country to the path of wealth creation with much better prospects of sustainable jobs for more of our people.
While the Government had a clear view of the areas where action needed to be taken to achieve economic recovery we also recognised that the precise nature of the action to be taken could take a number of forms. We saw the vital importance of achieving widespread support throughout all sections of the community for decisive action to stop the downward slide into economic anarchy and to release again the potential for significant growth and development that existed throughout the economy. We knew that the action that needed to be taken would require sacrifice and understanding on the part of many sections of our people but the Government were determined to ensure that the burden of adjustment did not fall unduly on those least able to bear it. We, therefore, worked closely with the social partners to draw up a comprehensive national recovery programme drawing on the combined knowledge of Government, the public service, employer and worker representatives to produce a pragmatic and realistic blueprint for development.
The recovery programme has now been in operation for a little over a year. Already we are beginning to see worthwhile results: in 1988 inflation was down to a rate of just over 2 per cent on average — the lowest level for over 25 years and less than half that of the UK; prime overdraft interest rates are down by up to six percentage points since March of 1987. They are now some 5-6 percentage points below equivalent rates in the UK; an Exchequer borrowing requirement of 8.2 per cent of GNP was set in the 1988 Budget. The 1989 Budget sets a figure of 5.3 per cent of GNP — well within the targets set in the Programme for National Recovery; output in manufacturing industry was up by 11½ per cent in 1987 and I expect a similar two digit level of increase in 1988; the turnaround in trading performance of the economy has been spectacular; in 1987 we had a surplus on the current account of the balance of payments for the first time in 20 years; and in 1988 this surplus doubled; the improvement enabled the Government to repay over £440 million of foreign debt during 1988;
The significant reductions in Government borrowing and in inflation and the turnaround in trading performance have been important factors in maintaining the downward pressure on interest rates. Competitive interest rates are crucial to the increase in employment and living standards which are the key ultimate objectives of Government policies. The improvement in economic performance has also contributed significantly to the actual and projected stability of the Irish pound within the EMS which has reduced a significant area of uncertainty in business planning for Irish firms engaged in internationally traded operations.
The turnaround in the investment climate is now beginning to come through in terms of employment creation. The year to mid-April last saw the first increase since 1980 in the total number of people employed in the Irish economy. The increase recorded in the CSO's Labour Force Survey is the most encouraging sign yet that the Programme for National Recovery is beginning to have the impact sought by all the social partners. Some may consider that the level of increase relative to our needs is small. The crucial fact, however, is that the haemorrhage of falling employment has been halted and turned about. In the industrial sector we achieved last year the target of 20,000 additional gross jobs per year set in the Programme for National Recovery. The growth of the small industry sector has been particularly impressive with the number of new start ups — more than 500 over the past year — breaking all previous records. This is a clear indication of widespread confidence by the business sector in the future economic prospects of this country.
I am confident that in 1989 we will again achieve 20,000 new jobs in industry and international services and that, as a result of the measures taken in the budget, we will have an even higher net outturn for industrial employment this year. In this, we will be running against the international trend. There are very few countries internationally where direct employment in manufacturing is increasing. This is due mainly to industrial restructuring and new technology. It is particularly gratifying, therefore, to see the current performance of industry in Ireland in this positive way.
In considering industry's contribution to job creation, we cannot simply look at the direct jobs provided in industry itself. We need to look beyond that to the jobs and wealth created indirectly in the wider economy. More than £9,000 million is now spent in Ireland by industry each year on wages und salaries, the purchase of Irish goods and services and raw materials. This level of spending demonstrates the important interaction between industry and other sectors of the Irish economy. It shows that, in addition to the 208,000 factory jobs the manufacturing sector now sustains some 150,000 non-manufacturing jobs in the economy. We saw some practical evidence of this in the 1988 Labour Force Survey which showed an extra 10,000 employed in the services sector over the previous year.
The progress which has been made to date, although significant, is nothing like enough to meet our needs. A great deal more need to be done. We need more sound, sustainable jobs so that all our people can live here with reasonable prospects for themselves and their children.
For this reason, we remain firmly committed to the goal of developing a strong internatinally competitive industrial sector which maximises its contribution to employment growth and higher living standards in Ireland. We must position Irish industry to face the increased challenges that will arise with the completion of the internal market. This will demand a continuing improvement in the competitiveness of the economy and strengthening and expansion of its productive capacity. This is what the additional capital spending announced in the budget will do, with the further support to be drawn from the EC Structural Funds.
The measures already announced, and the further elements to be included for future years in the national plan now being finalised, will address the needs of the industrial and other productive sectors, and our infrastructural requirements. The improvement of our roads network and the strengthening of our external trade links have been identified as key elements in overcoming cost penalties arising from our island location. These aspects will feature largely in the national plan.
We are now dealing with a new vigour with all the areas of potential for growth and development. This extends right across the economy: industry and services, agriculture and food, fishing and forestry, tourism and leisure, rural and urban.
In the areas in which I am most directly involved, the various aspects of industrial and services development, the various State agencies are now working with clearly focused objectives. Jobs are the priority and the key areas for growth are being strategically addressed. Small industry, for example, is now being supported by simpler employment related grant schemes which minimise bureaucracy and maximise productive output. As a result, the IDA small industries programme broke all records in 1988 in terms of start ups, over ten per week. The positive outlook for this sector is reflected also in the optimism displayed in CII/Small Firms Association surveys.
The scope for building on progress to date is being strengthened by making use of Community enterprise initiatives, business innovation centres and new steps such as the mentor, patron and academic support programmes launched by the IDA in recent months.
Small industry offers the possibility of creating new jobs quickly, frequently in response to short term growth in demand of the sort which can follow from the positive measures announced in last week's budget.
Industrial incentives for indigenous firms generally are increasingly being targeted to deal with key business weaknesses in management, marketing, product development and technology. Programmes such as company development and linkage are regularly refined to generate the optimum return from market opportunities.
There has been a wide recognition that the most substantial part of the growth of industry in the past two decades has come from overseas companies locating here. Happily there are now clear signs that this imbalance is being corrected. Substantial developments are coming forward from indigenous companies. These arise in food, for example, where we must have considerable natural advantages, and also across a range of other sectors. As a result, we can expect the downward trend of jobs in this sector over the past decade to be reversed.
The Government have taken the necessary steps to create the right conditions for profitable investment here. I am particularly keen to see more developments taking place in Ireland by Irish companies, and it is for this reason that I held a special forum yesterday with the leaders of 33 of Ireland's most prestigious businesses to encourage a major push by them for new projects to create wealth and employment in Ireland. We had a very useful exchange of views, and as a follow-up, the IDA and SFADCo will be in contact with each company, and will report back to me on developments, before the end of March.
Our future wealth and prosperity will depend most of all on what we can do for ourselves. That is why we want Irish industry to invest in Ireland. But we will also continue to seek out overseas industry to create wealth and employment because that is of mutual benefit to overseas companies and to us. We offer particular attractions to American and Far Eastern investors seeking a base in Europe in preparation for 1992. I have already been able to announce this year a number of important new projects which will be located here. I am confident that a number of other substantial negotiations will be successfully concluded before long.
In our search for overseas investments the State agencies are careful to seek out those which are likely to prove of lasting benefit to us. We concentrate on sectors showing significant growth, offering as full as possible a range of business functions and with possibilities for developing worthwhile linkages here. That approach can continue to pay increasing dividends to us as it increases our industrial output and exports, the consumption of Irish supplies and sevices and strengthens our management, technological and other business capabilities.
We must hold and take advantage of the new business confidence now apparent. In this context there is one announcement in the budget with which I am especially pleased. This is the special allocation of £3.5 million to upgrade the industrial infrastructure and to promote industrial development in the Tallaght area. Tallaght, with a population of over 70,000 people, suffers from one of the highest rates of unemployment in the country. A special effort is needed to make some headway in dealing with the problem. For this reason I am allocating £3.5 million to the IDA for the upgrading and development of industrial property in the area, the construction of a 40,000 square foot special advance factory and the building and development of an enterprise centre in the Whitestown Industrial Estate. This will be additional expenditure which will give rise to construction jobs this year and provide essential facilities to attract significant new industrial projects to Tallaght in subsequent years.
We are also making additional provision in the budget for an increased allocation to CTT to enable them to improve their support services to, and upgrade the marketing capacity of, Irish companies with good export prospects in the lead-up to the completion of the internal market by 1992.
One of the most exciting aspects of my Department's work in the last few years has been the development of the new science and technology programme. The Government have decided to make substantial further investments in science and technology in 1989. This year will see the commencement of a number of major new programmes.
One of these is the optoelectronics programme. Optoelectronics is fast becoming indispensible to all aspects of communications from telephones to cable TV. This new technology has an estimated world market of £6 billion and is growing at 20 per cent per annum. Other new programmes which will be developed this year include a national programme for the mouldmaking industry and a technology development programme in SMEs.
Turning now to Structural Funds, the Government intend to make a further £5 million available in 1989 for capital expenditure programmes in science and technology infrastructure. This additional money will be used to strengthen the technological infrastructure for industry.
A number of sites and proposals are under examination in relation to the development of a science park at a central location in Dublin. The objective is to promote industrial development by linking high-tech industry to the expertise and facilities available at third-level institutions and ultimately to create a whole new community of advanced industries in Dublin, with a significant spin-off of new products, processes and manufacturing facilities and employment opportunities for graduates of higher education institutions and for workers at technician and services level.
Deputies will be aware that the capital allocation for Bord Telecom Eireann for 1989 is £160 million, compared with an outturn of £135 million in 1988. The increased allocation will not be a drain on the Exchequer as the investment programme will be funded entirely by the company from their own resources. In addition, grants of over £6 million from the EC STAR Programme will be available. It is expected that a number of BTE's investment projects will qualify for substantial assistance under the European Structural Funds.
Telecom Eireann's investment proposals for the current year contain two major additions to those of last year. There will be a substantial investment of £20 million in the private trans-Atlantic optic fibre telephone cable and an extra £10 million is allocated to deal with the problem of "long lines", i.e. connections mainly along the western seaboard requiring more than 0.5 km. of new pole route and the problem of inadequate cabling in the Dublin area.
Investment in the private trans-Atlantic telephone cable will provide Telecom Eireann with 630 telephone voice channels to and from the US and to and from the UK and Europe. As no existing trans-Atlantic cable lands in Ireland, this investment represents great potential for new business opportunities for the company and will be of particular significance in the development of the Financial Services Centre. It is expected that the trans-Atlantic cable will be commissioned in 1989.
Telecom Éireann also own 1 per cent of two new trans-Atlantic cables which will land in Cornwall, in England. These new developments, together with the provision of optical fibre cable links between Ireland and the UK and, internally, between the main population centres of Ireland, ensures that Ireland's telecommunications network is firmly placed among the leaders. The remainder of the programme relates to provisions for expected growth, necessary replacements and essential improvements to system security in basic services along with provisions for accelerated development of advanced data and mobile communications systems.
Ireland now has a fully automatic telephone system of 750,000 subscribers who can dial direct to over 84 countries worldwide and, with operator assistance, to over 120 more. Telecom Éireann are continually striving to further improve both the technical quality and the reliability of the network. Nearly 50 per cent of customers are attached to digital exchanges. The average waiting length for service has improved to 3.3 months from date of application and telephone connections in the west and North-west of the country increased by 40 per cent. The company's target of not more than 3 per cent failure rate for trunk calls was achieved and the target of not more than 2 per cent failure rate for local calls was well surpassed at a failure rate of 1.2 per cent.
I was particularly pleased that in addition to returning a profit of £17 million for the year ended 31 March, 1988, the company repaid, ahead of schedule, part of their indebtedness to the Exchequer. Current trends indicate the company will return an even greater profit in the year ended 31 March, 1989. The Board should be congratulated for the manner in which they have achieved a turn around in the telecommunications operations here.
Turning to broadcasting matters I am glad to be able to report significant progress since this time last year. Two very important pieces of legislation have successfully been steered through this House. Already we are seeing the hectic activity which has been generated as a consequence.
The Independent Radio and Television Commission are to be congratulated on the speed with which they have set about their task. The Commission have not allowed any grass to grow under their feet and I am delighted by their business-like and professional approach to the task in hand. The enactment of the legislation and the activities of the commission have released a surge of energy throughout the country. The interest shown by the general public in the developments suggest that an audience is there waiting for the new services to commence.
The successful applicant for the national radio service has already been chosen by the commission. I understand that the parties involved are now down to discussing the details of the contract. In this case there were four very professionally prepared applications and newspaper reports of the public hearing suggest that the contest was very competitive and that there was little to choose between them. I have heard a commencement date of early summer for this service and I hope that this can be achieved.
In the case of the local stations the commission have released the names of the 85 applicants for the 25 service areas. The commission are currently lining up public hearings to help them make decisions about the successful applicants. Again the big numbers of groups chasing franchises is heartening. I have no doubt that the quality of the proposals by the majority of the applicants will be of a high standard.
It is also heartening that many of the applicants for franchises have no past connections with illegal broadcasters. I believe that the fact that so many people, not connected with pirate operations, have come forward justifies the stand taken by the Government in closing down pirate stations at the end of last year. The Government took action and were seen to take action against illegal stations. I am satisfied that this gave many people the confidence to come forward with applications that they might not have submitted otherwise.
If the Commission continue their work with the speed with which they have commended, I would be hopeful of the first local stations being on air before long.
We must not forget also that side by side with all this activity on the radio side the commission have sought applicants for a television programme service. I understand that there are two very strong applications before the commission for this service.
Indeed it has been quite a hectic 12 months for broadcasting in this country. The next 12 months should see the hard work put in by the Oireachtas and by the new commission come to fruition. I look forward, with some justification, to a varied and competitive broadcasting scene in this country in the not too distant future. Diverse sources of news and current affairs will be available to the listener and viewer for the first time. I believe that this can only stimulate healthy interest in public affairs. The chaotic situation on the airwaves which is now thankfully a thing of the past will be replaced by a vibrant, competitive and healthy broadcasting environment.
An important consequence of these broadcasting developments is the fact that secure full-time employment will be on offer to many of our young people. I have said before that I expect that up to 600 jobs will be created by the new services. I remain confident that the target can be achieved and may even be exceeded with spin-off jobs being created in the whole audio-visual area. Indeed I am convinced that the new broadcasting environment will pave the way for a major expansion of opportunities for Irish producers, directors, writers and performers.
An allocation of £9 million has been provided in the 1989 Public Capital Programme for An Post, as compared with an outturn of £8.2 million in 1988. The 1989 allocation will be spent on the company's building programme, fleet replacement and provision of items of equipment and machinery. There will be no draw on the Exchequer as An Post will provide the necessary funds from their own resources, borrowing and an EC grant of £0.45 million. In the period 1984 to 1987 An Post had made satisfactory progress and achieved improved financial results each year. While mail volumes grew they did not reach the expected levels. In addition pay costs were higher than anticipated. It is too early yet to indicate the financial outturn for 1988. There was no increase in postage charges last year. Those charges have remained unchanged since March 1986 which means that there has been a reduction in real terms in the level of postage charges.
During 1988 An Post gave a high priority to the introduction of measures to resolve the serious problems of the parcels service which has been a substantial loss-maker. The company have now launched a recovery plan for that service and new premises for a central parcels office to handle that traffic have been acquired.
Another area in which An Post have been particularly active is in a study of public electronic mail services. The company have received approval for grant assistance under the EC STAR Programme for the initial development phase of an electronic mail service. I hope to issue the necessary licences to An Post very shortly.
During 1988 An Post made major changes in the systems of mail handling in order to alter out-of-date practices. These changes were introduced side by side with a productivity scheme which resulted in pay increases for mail staff.
In implementing the new systems certain problems arose which resulted in a downturn in the speed of mail deliveries. These were exacerbated in late September/October when the end of the UK postal strike resulted in the receipt of 8,000,000 items of a mail backlog which delayed the processing of normal mails. Again in early January of this year there was a major problem in the mail which was due to serious absenteeism in the post-Christmas period.
I have indicated to An Post that I am very concerned at the deterioration in the quality of service. An Post share my concern in this area and are taking steps to improve the situation. The company monitor the delivery standards by means of internal checking procedures and independent surveys. Recently An Post launched a restructured survey system. A market research agency are carrying out quarterly surveys, the results of which are being published.
The first survey, carried out in November 1988, showed that overall An Post achieved a next day delivery rate of 82 per cent for letter mail. Neither I nor An Post regard this level of performance as satisfactory. The House can be assured that I will continue to press for greater efficiency as nobody can be satisfied with the current level of delivery. In this regard, An Post have indicated that they do expect to improve their prformance significantly in the current year.
The continued success of the national lottery is evidence of An Post's expertise and capacity in the provision of agency services. In the collection of television licence fees An Post's record in recent years has also been satisfactory. The company continue to seek out new agencies in both the public and private sectors.
The Government have clearly demonstrated over the past 18 months their capacity to manage the affairs of our country with competence and flair. We are entering a new period of opportunity and change and the foundations for success have been well laid over the past 18 months. We have started to make modest inroads into the unemployment problem and are committed to make further progress in this area. As a trading nation exporting over three quarters of what we produce the Single European Market will provide significant new opportunities for those firms who are competitive and well prepared. The information and awareness campaign conducted by the Government on 1992 has meant that the business sector are well informed on the changes coming into place, on their implications and on the measures firms will have to take to avail of the new opportunities which are already arising. I believe that the transformation achieved in business confidence in this country over the past 18 months, the concrete progress made in dealing with our economic problems and opportunities arising from the Single European Market will together give rise over the next ten years to a major step forward in economic and social progress in this country. The 1989 budget will give a further impetus to the confidence of investors in the Irish economy, leading to job creation which is what we all want to see. Our aim as a Government is to ensure that those who wish to stay at home and have a job here can do so. With that, a Leas-Cheann Comhairle, I thank you.
That was quite an impressive speech by the Minister and quite an impressive outline of the great performance of the Government to date.
Of course the Minister did not follow up by telling us what he was told by the captains of industry whom he called together the other day. The last Government maintained, as do this Government although they do not say so quite so clearly, that it is not the job of Government to create jobs but to create the climate and that then private industry will create the jobs. The Minister has been talking about the great climate that has been created. The climate is there but the jobs have not turned up.
The Minister said that the target of 20,000 additional gross jobs per year has been achieved. It is interesting that he uses the word "additional" because it is very hard to know what exactly the programme intended. I understood it to mean additional jobs over and above job losses. The phrase normally used now is "new jobs", not "additional jobs". The Minister says 20,000 "additional" jobs have been created. This is not the case at all because when the job losses are taken into account it is reduced to about 3,000 or 4,000 extra jobs in the manufacturing area.
What the captains of industry said to the Minister was precisely what the Government said. It was said on television that their job is to manufacture a product or to provide a service, that they are not in the business of creating jobs but that if jobs come along in the course of what they are doing that is fair enough. They are there to provide a service and manufacture a product. So it seems it is not the Government's responsibility to create jobs and it is not the responsibility of the private sector to create jobs, and I am sure that is what they told the Minister.
The Minister's statement outlines clearly what he meant. The Minister said that output in manufacturing industry was up by 11½ per cent in 1987 and the he expected a similar two digit level of increase in 1988. We may ask why, with manufacturing industry achieving that magnificent output, with fewer jobs and lower pay, they would be in the business of creating jobs? Obviously they are not in the business of creating jobs; they are in the business of making profit, and unless the Minister and this Government and the Taoiseach understand that, there is no way they can provide the jobs for the 240,000 or so people who are unemployed and for the additional 35,000 to 40,000 people who are leaving our country every year. It is the job of Government to create jobs, to provide work for people who have the right to work. All citizens have a right to work and it is up to the Government to ensure that they can do that as is done in other countries, for example, Sweden and Norway; the Governments there ensure that jobs are provided. That is what government is all about. That is what the taxation system and every Act of legislation is about.
The Minister for Finance, in his budget, did the very minimum he could do and get away with. He had to appear to act on the question of poverty because of the great campaign that was carried out for a couple of months before the budget on the issue of poverty in our society. The issue of the inequity of the taxation system and the need to do something about that has been with us for a long time. The third area where the Minister had to appear to be doing something was the area of jobs.
Let me deal with those three areas of poverty, tax and jobs. I suppose they are the key areas on which the citizens of this country expect the Government to act and on which they should act.
The increases in social welfare of 3 per cent, just in line with inflation, are not adequate given the level of poverty, and we have been clearly shown the level of poverty that exists. Increasing social welfare in line with inflation would be fine if the existing basic levels of social welfare were adequate and satisfactory, but they are not. Keeping the levels of social welfare in line with inflation is simply keeping the level of poverty at the disastrous level at which it is. The fact that this increase of 3 per cent might put some people into a different bracket as regards, say, differential rent, means that most of the 3 per cent increase could be clawed back. The additional increase for the long-term unemployed was very welcome but let us look at what it does. A single man or woman will get an extra £5 a week; that will allow them to have, say, meat for Sunday dinner, something which they may not have had for a number of years now but they are still 80 per cent short of the amount that the Commission on Social Welfare identified back in 1985, four years ago, as the basic minimum necessary. No real step has been taken by the Minister in regard to the long-term unemployed, and everybody should know the effects of the constant level of poverty on these people, whether single or married, because each year they are poorer. They cannot live on their income. They have had to sell various articles in their houses since they became unemployed three, four, five or even six years ago. Each year they have less to sell and each year they are poorer.
The Minister for Social Welfare is very proud of his actions against fraud in the social welfare system. He placed great emphasis on the effective management of the resources devoted to social welfare. He introduced a range of management and control of activities to eliminate fraud and to prevent abuse of schemes. This is something he was delighted with and he had saved the Government millions of pounds in what he called action against fraud. The Minister is only beginning to deal with the real fraud. The only real area of fraud that exists in social welfare is that with which he is now dealing, that is, the fraud of employers who drive people to the labour exchange to draw their dole, bring them back to work and pay them their wages, less the amount they received on the dole. These fraudulent employers are ripping off the social welfare system and their employees by paying them low wages and getting them to draw the dole to make up the full amount. It was only now that the Minister is dealing with the real fraud.
What has the Minister been dealing with for the last couple of years with the setting up of the new external control unit and the joint investigation unit? He has been dealing with families earning £60, £65 or £70 a week. Families cannot live on those amounts. They cannot provide sufficient food and clothes for their children or meet the various demands their children make for school items. The husband or the wife has to go out and do some job for £10, £20 or £25 to feed their families and to survive. The external control unit and joint investigation unit go around harassing people who are trying to earn a couple of pounds for their families. Those investigators stand in the labour exchanges and watch how the people coming in are dressed. If today a person is well dressed or has a new coat he is approached and asked how he could afford the new clothes. These people at the labour exchanges are being harassed. The investigators tell them they are not looking for work and they ask young people why they are not working. We all know why they are not working; they cannot get a job. Yet they are being harassed at labour exchanges by public servants, people whose wages are paid by the public who pay taxes. They are treating the unemployed like dirt. They try to get into people's houses to see what they have. People come to me and ask if they are entitled to refuse entry to these people and I tell them they are and that they should tell those people to get a search warrant.
I know a family who have never taken a drink and who never go out for entertainment. Any penny they ever had is put into improving their house. They have a beautiful house but they are being harassed and asked where they got the money to do that work. It is often forgotten that people worked for 20 or 30 years before they were let go from their jobs and they are now being harassed because they are unemployed. The special external control unit and joint investigation unit were set up specially to harass the unemployed about what they call fraud.
One has only to think of the enormous fraud in the taxation area, as was proved when £500 million was received in one or two nights, stuffed through the letter boxes, to save a few more millions in interest rates. That £500 million was only the tip of the iceberg. A whole series of investigation units that were operated by the Revenue Commissioners have been closed down because of embargoes on employment in the public sector, but new units have been set up to deal with the long term unemployed, for whom this Minister for Finance said he did something wonderful.
The area of poverty and social welfare has not been addressed by the Government. I do not know if they are aware of what happens at unemployment exchanges, how the unemployed are treated or how they live. People often ask how do families manage on £70 or £80 a week. The only way they can manage is by getting a "nixer" and in that way put food on the table or buy shoes or clothes for the children. They should be allowed to do that work because it is their duty to provide for families but they are being prevented from doing so.
In the area of taxation, the Minister has done the very minimum to appear to be keeping up a tax reform line. Tax reform has never been tackled by any Minister. The present Minister has tinkered with the tax bands in the same way as the last Minister. He has given a higher reduction of tax to those in the highest income bracket and a lower reduction to those in the lower income bracket. The obvious thing to do when dealing with poverty and unemployment is to raise the threshold. It is unbelievable that people earning £3,000 a year are put in a tax bracket. How could a person live on £3,000 a year? That is a poverty level yet those people have to pay tax on every pound earned above £3,000. That area has not been dealt with. The Minister has reduced the 58 per cent tax rate to 56 per cent. In 1976-77 the highest tax rate was 77 per cent and that rate has been reduced to 56 per cent. The richest people in society get the greatest relief, whether it is the Michael Smurfits or the O'Reillys. These people do not need tax relief, but they know so many ways of evading tax that when we tax them it should be at the highest rate possible.
The decrease in the tax rate from 35 per cent to 33 per cent, while welcome, is also applied to non-earned income such as bank interest, the DIRT tax, and the professional fees covered by withholding tax. There is no need whatever for such tax relief. Surely the intention in reducing the 35 per cent to 33 per cent was to reduce the level of income tax on the lower paid workers, and that is a good thing, but to include the DIRT and the withholding taxes is missing the original point one would think the Minister had in mind. All these matters do not deal with tax reform. One area of tax reform that has been recommended and that we have advocated for many years is tax credits. No Minister for Finance has had the guts to address that issue.
On the subject of the Minister's changes in the area of mortgage interest relief, the issue of tax credits again becomes wide open. Let us take the example of somebody who had a very good job in Irish Shipping as first mate, captain or whatever. He has a good house, worth £50,000 to £70,000, with a high mortgage. When Irish Shipping was disbanded he was out of a job. He and his family managed all right for the first couple of years on benefit but after that he is on long-term unemployment and there is no relief whatever on his mortgage because he is not in the tax bracket. The higher your tax bracket, the more relief you get. Why not give tax credits? Why not ensure that such credits are given where relief is not available to people with mortgages etc? The whole area of tax reform is not being dealt with when areas such as this are not dealt with.
Everybody, even the economic gurus, expected that there would be some aditional tax on corporate incomes and on property. The Irish Times of Friday, 30 December 1988 included an article anticipating that enormous tax changes were on the horizon. How mistaken that article was. The table in the article showed that tax on corporate income fell from 9.1 per cent in 1965 to 3.2 per cent in 1985, down to one-third in 20 years. It fell each year until it reached 3.2 per cent in 1985, the lowest taxation on corporate income in Europe. Similarly, on property the tax was 15.1 per cent in 1965 and was down to 3.9 per cent in 1985. In 20 years that tax was down to one-quarter what it had been in 1965. Again, taxes on property are the lowest in Europe.
The Minister for the Environment raised the question of taxes on property last summer and was so badly mauled that he withdrew the proposal and has not been heard of since. When the Minister was talking about property, he was simply considering houses. The only property that one has is considered to be a house; that is nonsense. What the Minister was really talking about was rates, a different matter altogether from property tax. Property in its real sense, which should be taxed, concerns the area in which surplus wealth is invested. This is a whole wide area. The property invested in can be a second house, or you might have 20 houses for that matter, as many landlords have, or apartment blocks, or office blocks, or land, or fine art. Investment in fine art, in jewellery and in stocks and shares amounts in cases to thousands and perhaps millions of pounds. That is the area to which property tax should have been applied.
When we are talking about tax reform we talk about widening the tax area to ensure that all pay their fair share of taxes and so reduce the amount on labour and increase the amount on capital. This is what we have been saying for years. People like the Progressive Democrats are now saying that taxation on labour is too high but, of course, they do not use the phrase "taxes on labour", or the phrase "taxes in capital". They say that taxes on personal incomes are too high. We say that taxes on labour are too high and taxes on capital are too low; that is the real area of tax reform that must be addressed.
I come now to the question of jobs, the most important area of all. All the Minister had to say on this matter in his entire speech was what he expected from the Euro-slush fund which they are preparing at the moment which I described in this House before Christmas as the Irish stew, this big pot into which everything is being tossed. This includes roads and hospitals, and the Minister for Education, Deputy O'Rourke, said that she was throwing in the Tallaght Regional Technical College as well. This mixture was being sent to Europe and money was expected back. From the Euro-slush fund, according to the Minister, 3,000 jobs would be created. Yet, because of the continuation of his embargo on jobs in public employment there is an indication that 3,000 jobs in that area will be lost, so absolutely nothing has been done on job creation.
The most important thing the Minister could have done in this area would have been to restore the capital programme, particularly with regard to the construction industry. When people working in the construction area voted for Fianna Fáil they thought they would do something about jobs in construction. That is an area in which there have been huge job losses and thousands of people are travelling to Britain, as they did in the fifties, to work on construction sites there. The Channel Tunnel construction site is full of these people. The Minister has done absolutely nothing on the capital programme.
In 1989 Exchequer capital expenditure will actually be less than in 1980. Even though employment numbers were far lower in 1980, in that year £660 million was invested by the State in the economy while only £617 million is planned for this year. When you take account of inflation and so on, it should be more than double that amount. Yet, that is all that is planned for this year in the construction area. At the same time, there is a huge gap in the area of housing. In 1989 we are still not going to have any local authority houses built, which indicates that the Minister is happy that emigration will continue at an even higher rate and houses will not be necessary. Nothing is being put into local authority housing, or into hospitals which are required.
The whole western area of this city of Dublin, from Tallaght right across to Finglas, a whole new area which was planned many years ago to contain three major new cities with a population of 100,000 has been totally abandoned by this Government, as by the previous Government. The town centres have been untouched, while huge shopping centres have been built in other areas of the city and are planned for areas outside the city. The Government in this budget have done nothing to ensure that these three new town centres will be built. The people living in those areas have been abandoned, without town centres, without transport, without a DART system, without a hospital, Plans for Tallaght hospital have been abandoned and the James Connolly Memorial Hospital in Blancharstown which was to be upgraded has been downgraded and will continue to be downgraded. The regional college has not been built although a number of secondary schools have been rebuilt. None of these matters has been attended to in the western area of the city: it is time for us to look at the west of Dublin as the most totally deprived area in the country rather than the west of Ireland. On a visit to Lucan last week I heard of many job losses as places of employment were closed down, such as Hill and Sons Limited of Lucan, Leixlip meat factory and Clondalkin Paper Mills. Not one new job came to the area, despite the fact that the Tánaiste represents the constituency. The western area of the city of Dublin is an absolute disaster so far as this Government are concerned. New jobs are required in town centres, hospitals, schools etc.
This budget has been totally lacking in the areas of poverty and social welfare, taxation reform and jobs, despite the fact that the Minister talked continually about poverty and the disadvantaged. He also talked about tax inecuity and the need for jobs but talk is of no use. The Minister had the power to make the money available. He had more money available than any Minister ever had. The £500 million taken in last September was money which had been outstanding for the previous year and probably for two years before that. Due to the fact that those moneys had not come in when due, massive cuts were imposed in the areas of education and health in particular. There were also cutbacks imposed on local authorities and so on. When the money became available to the Minister, people felt that at least some of it would be put back into the health and education areas.
Everyone welcomes the increase in capitation grants to the primary schools which will ensure that children will not have to look to their parents to help to run the schools, as has been the case for the past two years. That enormous burden on parents will now be reduced but nothing has been done in respect of second level schools. Nothing has been done about disadvantaged areas, which the Department of Education know all about. They are aware of the need for special remedial teaching in the primary and second level areas. They must know aobut the enormous damage which has been done by the cuts to the vocational education system, which provides an essential educational facility for people in disadvantaged areas. This is the only area of education which is non-selective. All pupils, irrespective of who or what they are, irrespective of their disadvantage, are welcome. There is selection in the secondary schools; they decide who they will or will not take. Everybody is accepted by the VECs, but they have been smashed to pieces by the most severe cutbacks. We had expected something to be done in this area.
The health care system in 1989 will be far worse than in 1988. During the past few months warnings have frequently been given by consultants, junior hospital doctors and nurses who have spoken about the deterioration in medical care facilities and the huge queues of people waiting for treatment. These are people who have not the money to pay for it. The two-tier health system which has been created will grow. Many people expected that the Minister would put back into the health service some of the money which had accured to ensure that people would not die from heart, liver or other ailments while awaiting treatment.
This is definitely a rich man's budget. Certain people are very happy with the budget. The Taoiseach is the man who is running this whole show and he tells the Minister what to put in and what not to put in. The Taoiseach is happy so long as the majority are kept happy. He will keep his 50 per cent support and to hell with the deprived and the unemployed and those who will not be voting for him anyway.
The main thrust of this year's budget is to provide for increased economic growth. It is a developmental budget with the major emphasis on job creation in several sectors of the economy. The budget provides for substantial capital investment to be made in areas which have been identified in the Programme for National Recovery. One of the most significant areas is that of tourism, which will receive significant support for capital investment. The Minister for Finance has provided £3.5 million in the budget for tourism projects which he is confident will obtain approval for increased aid from the European Regional Fund. In addition he has proposed that a new scheme of grant assistance for the tourism sector will receive funding of £14.5 million direct from the ERDS without involving the Exchequer. This will help the development of new tourism projects such as outdoor pursuit and activity centres, recreational facilities in resorts, marine facilities and cultural centres.
Many of the projects will be sports based projects or will have close relationship with various types of sporting activity. The Government have recognised that an essential part of tourism development in Ireland is the improvement and development of our tourism product. Sport and special interest holidays are now an integral part of that product and consequently it is most significant that in this year's budget there are significant amounts of money for the development of sporting, recreational and leisure facilities which are part of the development of our tourism product.
In the next five years sport will make a major contribution to economic growth. As a result of the initiative in this budget, major private sector development is now set to take place in the provision of state of the art, sport and recreational faciities such as sub-tropical water and aqua sport centres, theme parks, equestrian centres, multi-purpose sport and leisure centres, watersports and marine facilities, and championship golf courses. This major development programme will transform the face of Irish tourism and will make Ireland the most attractive sport and activity holiday centre in Europe.
From an Exchequer point of view many thousands of jobs can be created at a low cost to the State in the development of those facilities. For instance it is interesting to note that 56 people are at present employed in Ballybunion Golf Club. Due to the success of Bord Fáilte's marketing of Ireland as a leading golf destination there is now a need to develop several championship standard golf courses to cater for the ever increasing demand.
In addition to the measures announced in the budget the Government's investment programme in sports facilities continues at full pace with a £50 million programme of facility development now at various stages of planning and construction. This huge amount of development is as a result of moneys which have been made available to the Exchequer from the national lottery and I am glad to announce today that the development of the national sports centre is proceeding according to plan. Land acquisition is in progress and the completion of the development brief will be taking place within the next couple of weeks. The national indoor centre which incorporates a 50-metre swimming pool will be a major contributor to economic growth in Dublin.
The centre, which will be one of the most modern and finest in Europe, will be designed to cater for not alone sporting activities but a whole range of activities which will generate significant amounts of international tourism. The objective of the Government is that the centre will compare with the best in Europe and will be managed by a professional facility management company which will be one of the top class such companies in the world. From the point of view of tourism the centre will attract a variety of events during the course of the year which will bring at least 5,000 or 10,000 people to Dublin at various shoulder periods of the tourism season.
The Department of Education recognised that the development of prestigious sporting events in Ireland can have a significant impact for tourism and the economy. The recent Emerald Isle Classic is an example of a sporting event being the focus of attracting tourists into the country. This event attracted approximately 10,000 people to Ireland from the United States and Europe and generated revenue of the order of $20 million. It was seen on cable channel right across the United States by an estimated 10 million people. Indeed, there was a half hour special on Ireland on American television as a result of that event. Many of the major newspapers in the United States covered the event and, consequently, that sporting event made a major contribution towards the enhancement of Ireland throughout the United States.
It is interesting to note that the Budweiser Irish Derby this year was seen by 150 million people worldwide on television. The event was televised to approximately 70 countries, and was watched in 40 million homes in the United States alone. It was a 20 minute television special on Ireland as well as on the race. This shows the promotional impact a sporting event can have for Ireland in the United States and indeed throughout the world.
We are at present endeavouring to attract several other events in a number of sports which will have a similar impact and generate significant tourist traffic in the years to come. An example is the 1991 world boxing championships which are now at an advanced stage of negotiation and which will involve over 10,000 people coming to this country during a shoulder period in the tourism industry and will involve television crews from all over the world coming here. They will represent the 78 countries which will take the television pictures of this event. It is worthy of note that RTE will have control of those pictures and, therefore, will be able to show the best of Irish to the world through the medium of a sporting event.
It is interesting to note that some of our existing sporting events, such as the all-Ireland hurling and football finals and the rugby and soccer internationals, have the potential to attract a minimum of 50,000 foreign visitors to Ireland in any one year, generating in the order of £100 million in tourism revenue. A week in Ireland taking in the rugby international involving Ireland and France would be a very attractive holiday package on the French market as, in the most recent game between Ireland and France, there was a huge black market demand for tickets. A person who paid £80 for a £15 ticket informed us that he could sell thousands of tickets in France to people who wanted to see the game. This is an opportunity to market Ireland around this event and to have people take in the game as part of a package. A similar package involving England, Scotland or Wales would be equally attractive.
A two week holdiay in Ireland, including a ticket to the all-Ireland hurling and football finals in September, would also be a very attractive holiday package in the United States and in Britain for the ethnic Irish community. The time has come for sporting organisations, like everybody else in the community, to see what contribution they can make to economic growth and job creation. Of course, stadium capacity at present does not allow for sporting tourist traffic to rugby or GAA events to which I have just referred, but perhaps the time is opportune for sporting organisations to get together with us at Government level to examine the potantial which exists in this respect. It is also interesting to note that several people from the United States and Europe are now talking to us and to organisations about the possibility of locating further major events in this country which will have a very significant economic spin off for us. We have a natural amphitheatre for many events which would become world class. We have some of the finest golf courses in the world. The Nissan Classic has shown that we have very suitable terrain for several sports—cycling is only one.
We are at present engaged in negotiations with the world body for motor rallying to have Ireland earmarked as a location in the first event for a round of the European rally championship. I hope in future Ireland will be earmarked for a round of the world rally championship. This would show — especially in regard to the west — the most scenic parts of our country in a very professional way on European and world television. What better way is there to market our country than through the staging of an event such as this? These are the kinds of options now being considered by the Government to enhance our image abroad and to generate more tourist traffic.
It is quite clear that sport can make a major contribution towards economic growth. Thousands of jobs can be created in the development of sporting events and facilities. Such jobs would be created at a very low cost to the State. The international tourism market is clearly a lucrative one with inflation here firmly under control and VAT rates on tourist related activities among the lowest in Europe. With a healthier and competitive access transport environment, Ireland is well positioned to attract its share of the growing tourism market.
Grants to sporting organisations in 1988 have, for the first time, allowed us to address the whole area of long term development for sporting bodies. An increasingly sophisticated sporting environment has resulted in the need for increased professionalism in organisation, marketing and administration. Nineteen eighty eight saw the appointment of ten new development officers to ten sporting organisations. These officers will be responsible for the ongoing growth and development of efficient and effective administration structures. Similarly the House of Sport, which opened in 1988, provides an effective and efficient administration structure for smaller organisations who could not sustain the cost of a full time administrative structure.
Allied to those developments, during the last year with the increase in annual grants to sporting organisations of 22 per cent, now more than ever I see the need for effective and efficient management and marketing structures among the governing bodies of sport to cope with growth and change. My Department will continue to support and encourage the governing bodies to develop efficient, effective and commercially orientated organisations. In line with overall Government policy, I wish to develop a reduced dependence by sporting organisations on State funding by encouraging them to become commercially viable through the development of marketable events, teams and products to attract the support of the private sector through sponsorship.
Sport sponsorship represents a powerful marketing communications medium for many companies while, at the same time, providing essential funding and exposure for many sporting organisations. There is now a need for a much more professional approach to event management and I want to say in this respect that we are now looking again at a further area where sport can make a very useful economic contribution and a contribution towards job creation, that is, the very quickly developing area of the sports marketing sector.
It is evident that in the United States sports marketing companies are now a very important and essential part of the international service sector. At present we in the sports section of the Department of Education are talking to a number of companies in an effort to attract them to come here with a view to setting up their European headquarters in Ireland. We have a very attractive package to offer in the context of Ireland's entry into the single market in 1992. There again the evidence is clear that sport has now become a vital marketing tool for the commercial sector. We have ensured that so far as this country is concerned we are up with the best in Europe in being in a position to accommodate the requirements of such service industries.
My second area of responsibility is youth affairs. Like sport, the past year has brought significant developments to the youth service through substantially increased funding from £3.7 million in 1987 to £10 million in 1988. Of particular note was the allocation of £4 million to new projects in deprived and disadvantaged areas. This allocation facilitated projects in areas which were substantially under-funded in the past and, in particular, it was aimed at the most deprived and disadvantaged young people in our community. New programmes have now commenced for the homeless, drug abusers and young people in trouble with the law. A combination of six departments have got together in the first ever joint attack by the various departments dealing with young people to try to improve the lifestyle of the most deprived among us. It was with much satisfaction that during the past 12 months we were involved with people like Sr. Stanislaus and Focus Point, Fr. Peter McVerry and a number of others who over the years have provided a very worthwhile service for under-privileged young people but with very little support from the State. It is clearly evident now that the £4 million which has been allocated to those organisations from the national lottery has done much to enhance the lifestyles of those young people and to give them a worthwhile lifestyle to look forward to.
The other important development which has taken place is in the increased funding which has allowed for the development of youth services and programmes in new and existing areas to the tune of £4 million. Major developments in 1989 will seek to maintain and support those developments which have taken place in 1988. Of prime importance, and one which we are actively addressing at present, will be the recruitment of additional voluntary leaders in the youth service; improving the image of the youth service generally; enhancing the training opportunities for leaders and members and establishing a responsive local youth service through the medium of local voluntary youth councils.
"Take A Leading Role" is a slogan which Members will have become familiar with during the past few weeks. This awareness exercise is specially designed to attract more voluntary youth leaders to help sustain and develop the considerable work that has taken place in the youth service during the past year. Now more than every we need voluntary leaders at local level to support and develop our youth services.
There are currently over 1.5 million people under the age of 25 living in this country. In fact it is the largest young population in Western Europe. Of this number 500,000 are members of youth organisations. There are an estimated 15,000 voluntary youth leaders active with the various organisations. This is not sufficient to service the anticipated large increase in membership arising from the major expansion in operation which has been made possible through the increased financial support made available with the advent of the national lottery. I have set a target for this campaign to attract a further 2,000 adult voluntary leaders into the service.
To coincide with the general awareness campaign a series of short introductory courses will be run in 53 centres in February, under the auspices of a training working group which I established last year, as a move towards a more co-ordinated local voluntary youth service. The course is designed to give an overall view of the youth service and to introduce potential volunteers to the variety of youth groups they may join. I should like to add that this exercise represents the first of its kind in Ireland where all the various organisations are putting their resources together for a common aim, namely, the recruitment of additional voluntary youth leaders. It is heartening to see the co-operation and synergy which exists between all of the youth organisations in this exercise. However, the major difficulty for the youth service in this country at present is trying to ensure that the general public have an understanding of what youth work is all about. This campaign is designed with a twofold objective: first, to inform the general public of what is being done by the youth services — in particular, to get across the message that much important preventative work is being carried out by way of the out-of-school activities of youth services, that much important personal development work is being carried out to enhance the lives of young people through their involvement in the youth services, and, as I mentioned earlier, that those in our community who are deprived and under-privileged are being given a much improved chance of having a more reasonable lifestyle than they would otherwise have had if the youth service provision was not in place. One of the main difficulties the organisations have is that when one mentions youth work people tend to wonder what is youth work. The "Take A Leading Role" campaign has succeeded in putting youth work to the forefront in the past number of weeks and the response to the campaign has been very significant, with several thousand people coming forward to offer their services to the youth organisations.
The second objective is to take up the offer being made by those several thousand people who want to become involved as adult leaders. It is important to state that the most significant aspect of youth work to the State is that it is a most cost effective service from the State's point of view. Because of the voluntary nature of the youth service, a very comprehensive mainline service is being provided throughout the length and breadth of Ireland for £10 million. There is a very good return on investment to the State for the amount of money being spent and this is because the mainstay of the youth organisations is the reservoir of "volunteerism" which is to be found throughout the country. We now want to build on that reservoir of "volunteerism"; we want to raise the status of youth service by an increase in the number of people involved and the attraction into the youth service of many people, particularly older people and professional people, who have a contribution to make. It is noteworthy that this campaign has succeeded in bringing about an interest by several thousand people to become involved. The first step of their involvement will be an induction course which, as I have said, will run during the month of February and will give those people an introduction to the youth services, to the work involved and to the role they can play. It is hoped that after having had that induction course many of them will become full time adult leaders in the various organisations such as Foróige. The National Federation of Youth Clubs, the Boy Scouts, the Girl Guides, the Junior Chambers of Commerce, Macra na Feirme and a whole range of youth organisations, 33 in all, who are working in various aspects of the youth service at present.
The final area of youth service provision which has been considerably expanded in the past 12 months is the service being provided to those who are deprived and under privileged. This is the one area in which we can claim the lottery has made most impact on people's lives. Four million pounds has been spent specifically on people from deprived backgrounds. This money has been spent in deprived areas with the emphasis on the deprived areas of our cities and towns and also in some deprived rural areas. The national lottery has proved to be a great source of finance and my intention is to see that source of finance increase in the present year as a result of the very good work that has been done in that respect in the last 12 months.
The last number of years has seen a very serious emigration problem arising from job opportunities not being available to young people. The Government have tackled this problem on two levels, one with regard to the difficulties in the US, and in that respect it is gratifying to see that the work carried out by the Taoiseach and the Minister for Foreign Affairs is now bearing fruit with a considerable number of extra visas becoming available. In this budget the Government have recognised the difficulties in Britain by doubling the amount of money being made available to DÍON from £250,000 to £500,000. This is definitely a welcome increase to an organisation or group of organisations who are doing very significant work in Britain. It is a recognition by the Government of the work they are doing and the value for money which is being got from that work. It is a recognition that there is a problem in Britain among young Irish people.
However, it is interesting to note that, certainly in the west, many people who came home last Christmas remained at home and are now taking up employment opportunities which are becoming available, particularly in the construction industry where many tradesmen had to leave in the last number of years. With the improvement now taking place in the construction industry, many of those people who returned home for Christmas found that job opportunities were again becoming available on the ground and they can now stay at home. Again this Government in this budget have tried to ensure that similar opportunities are created. Aside from the various opportunities which will be created as a result of capital investment in various projects, again one of the more important ones for young people is the scheme to make funding available from the commercial banks to young entrepreneurs. As Minister for youth affairs I welcome this initiative particularly. It will have significance for young people and I ask that young people who have emigrated look at the possibilities of coming back to Ireland and taking up the employment that is becoming available or perhaps setting up their own employment opportunities with the help of schemes such as that announced in this budget.
There has been much discussion about the budget and its impact in the last week. This budget has set out to build on the sound economic foundation which has been laid over the past two years. We are now into the second stage of that economic development which is the development of an enterprise economy and of opportunities for job creation. The most important objective in the Programme for National Recovery was the creation of jobs. The most important target group in that document were young people. I welcome the opportunities this budget has provided for the creation of those jobs and I am confident that 1989 will see one of the most significant improvements in job creation we have seen since the Lemass years of the sixties.
It is now very clear that the 1989 budget debate is much ado about nothing. Like the attractively presented book in the shop window the budget last week brought initial superficial favourable reaction, but cooler analysis of its contents confirms that its impact on the great economic and social problems of our day will be minimal. Even within the octave of its presentation informed commentators are beginning to question the timid, cautious conservative nature of the Budget Statement. The real question then is why the Government avoided tackling the major issues and why they have virtually ignored the huge problem of unemployment, the horrendous depths of poverty affecting levels of our society, the crippling burden of PAYE taxation and the momentous changes that are needed to prepare the country for 1992. Essentially, therefore, the budget is noteworthy for what was not in it coupled with some measures which are not actually to be implemented this year but were promised or, to be more accurate, threatened for next year.
It is fair to say that on the periphery there were minor improvements in our tax and welfare systems. I am thinking in particular of such as the removal of the anomaly affecting widowers and deserted husbands with dependent children which I strongly advocated and the small changes in tax exemption limits for the low paid, but no explanation has been forthcoming as to why the consensus potential for major structural changes was not exploited.
Very simply the Government succumbed to the temptation to tinker with minor changes in the tax system and modest adjustments to social welfare payments. They have ignored the fact that unemployment and poverty are inextricably interlinked. They have passed up the historic opportunity to both reform the tax code leading to much greater employment opportunity and to make a real assault on poverty. The consensus is now available in the Dáil to support the kind of radical approach needed to make a significant impact on both fronts.
The real failure of this budget, therefore, is that it has missed the opportunity to introduce meaningful measures for which there is such substantial support. Instead the Government have produced an unimaginative and uninspiring response with modest adjustments resulting in merely tinkering with the system. Unfortunately, the consequences of this approach will be continuing high levels of unemployment and unacceptable levels of poverty in our society.
In addition, of course, the Government have totally funked the 1992 issue. The Minister for Finance admitted that changes in indirect tax will have to be phased in over a number of years and then promptly postponed any action into the next decade. The lack of wisdom and foresight involved in this approach will become fully evident when attempts are made to concentrate all the changes required by Community harmonisation on VAT and excise into a couple of years. Again a further opportunity has been missed when there is substantial agreement in the House on the need for action, and on an approach which ensures that we do not opt out of Europe or fall behind in the opening up of the internal market or seek long-term derogations for Community harmonisation proposals.
The question whether real progress can be made by the politics of consensus and compromise is more than a philosophical one. Evidence of the success of such an approach in solving deep-seated national problems is available from the United States and some continental countries. No one will deny that we have enormous problems here which were compounded over the years by the old tradition of adversarial politics. There is no need for me to remind the Minister of State, Deputy Lyons, of what I have in mind. The approach of the Opposition in the last Dáil is well known. At every hand's turn when the last Government made an effort to deal with the enormous problems facing the country they were tripped up and a head of steam was built up in the country to block them. The Minister of State will be aware of the advantage of a more responsible approach by an Opposition, which he has got from this side of the House.
That new approach was enunciated by Deputy Dukes in Tallaght in late 1987. The pity now is that the potential for national progress opened up by that approach has not been availed of to its full extent by the Government. We have seen its advantages in relation to debt management. I am sure the Minister of State will agree with me that there was progress made by the Coalition in regard to that and that progress has been made and continued by the Government, facilitated to a great degree by the approach of our party. However, the Government have been too timid in lifting their horizons and exploiting the possibilities for significant advance in other major areas.
I accept, as Professor Basil Chubb said in the Brian Farrell edited book, "De Valera's Constitution and Ours" that:
Compromise and consensus politics will not easily replace adversarial politics in Ireland.
He went on to say:
The fact is though, that the dichotomy of the De Valera epoch has disappeared, and Irish governmental and parliamentary practices need to be adjusted to this fact.
The Government, unfortunately, have not yet fully appreciated that fact and consequently the budget we are debating is a non-event which will rapidly sink into oblivion as simply a missed opportunity.
Within the narrow parameters decided on by the Government there are changes of which I approve. They are minor in the overall context but, to be honest, they are of importance to those directly affected. The Government sensibly saw the error of their ways in imposing in the Estimates such an anti-employment measure as the proposed £20,000 ceiling for employers' PRSI and, thankfully, have moderated that ceiling to £18,000. That is not as far as I would have liked them to have gone but at the very least the voices of protest raised by me and others, have been listened to. The encouragement to those on social welfare to maintain their children at school is to be welcomed and the payment of child dependent allowances up to 19 years of age for those in full-time education is a step in the right direction. It is proper social policy and I hope that step will be extended in future years to the age of 21.
The establishment of a minimum payment of £10 per week in the child dependent allowance is the right approach but the Minister should also have taken the opportunity to establish similar minimum payments for all applicants and spouses. There is much dispute about the actual level of poverty in our society. In truth, there are different levels since poverty is relative. My approach is that the first priority must be those at the bottom of the pile, those at the lower end of the social welfare spectrum. That is why I advocated a minimum payment of £45 for all applicants and £30 for all dependent spouses. This approach, apart from helping in particular the poorest of the poor, would have the additional advantage of establishing a basic minimum income for all recipients at the lower end of the social welfare spectrum by combining and raising the rates for a number of those on assistance and benefit and those on supplementary welfare.
While the approach adopted by the Minister has at least maintained the real value of welfare payments for recipients, and in relation to the long-term unemployed recipients has produced some improvement, the same cannot be said for dependent spouses — mainly women though not exclusively — and in particular children whose lot has been disimproved. The additional increase for long-term unemployed does not apply at all to spouse or child dependants. At that level therefore the best that can be said is that some payments are maintained in real terms, but since indexation was only applied to weekly payments and not to the monthly child benefit payments, the lot of many children has in fact been disimproved by the budget. The child benefit payments have been further reduced in real value as a result of no indexation again this year, something that is compounded by the fact that there was no indexation last year. It is important that we note the erosion of the real value of such benefits as a result of the failure to apply indexation.
I proposed, on behalf of Fine Gael, prior to the budget, a minimum child benefit of £20 and £30 for sixth and subsequent children in a package with a price tag little more than the amount the Government say they are allocating to social welfare measures in the budget that is an indication of the support in Fine Gael for the family income supplement. The Government have taken a different tack by both disimproving the lot of children in real terms and also by threatening to remove child benefit altogether next year from families above a certain income level.
It is now very clear that this was a completely ill conceived proposal with little appreciation of its implications or consequences. This is borne out by the fact that different interpretations on the proposal are being supplied by different Ministers, each one of whom appears like a fish on a hook when questioned on the issue. The enthusiasm of the Minister with principal responsibility in this area, the Minister for Social Welfare, Deputy Woods, is evidenced by the 25 page script from which he spoke in this debate with not a single mention of the issue.
The latest justification for the proposal — not originally mentioned — is that it will result in getting more money to those on middle and low incomes. This defence is of course ridiculous when one examines the figures. If, as suggested, the cut-off points is to be £30,000, savings of £1.82 million per annum would result. The re-allocation of this sum would involve increases totalling 12p a month or 3p a week, the price of one lollipop. The Government should learn their lesson from the reaction to this ill considered proposal. First, it is obvious that piecemeal changes to our tax and social welfare systems will run into trouble. We have pointed this out in the past. The Government should reconsider their attitude to the Fine Gael proposal of an all-party approach leading to radical reform.
The Government should now decide on their attitude to family income support. Demographic trends clearly indicate a decline in the fertility rate and in fact a projected fall in the child population under 15, of around 16 per cent over the next ten years. We cannot be unaware of the efforts much too late to encourage a reversal of such a trend in Germany and now in France and indeed elsewhere. I accept that we cannot afford the generous children's allowances of the European pattern. In Germany they run to about £13.50 a week for every child. However, we cannot be unaware of the policy considerations underlying such apparent generosity. Any consideration of child benefit cannot be in isolation from other aspects of family income support including child tax allowances or tax credits if we ever get around to implementing that system. There are no tax concessions of any importance for children at the moment other than in special cases. We also have to consider the social welfare child dependency rates, the family income supplement and non-cash benefits and we have to consider the position of women for many of whom child benefit is the only direct income. The role of child benefit is to redirect income from childless individuals and families to families with children. Therefore, the main idea is what is referred to by the experts as horizontal equity, and this highlights the importance of child benefit in the absence of tax allowances for children. It is clear that child benefit is not a policy instrument for vertical distribution across income groups. There are other policy instruments specifically designed for this purpose, principally the tax code and the means tested social welfare code. What is very clear is that as between families where the income is the same the idea of child benefit is to give some support to a family with a child or a number of children as opposed to the position of the couple who have no children. That is essentially the concept of horizontal equity and that is really the main concept behind the theory of child benefit for all children in this State.
The Government obviously have not considered the well-researched paper on family income support submitted by John Blackwell to the Conference of Major Religious Superiors last September where he concluded his examination of this policy option now being proposed by the Government by indicating that the result would be a worsening of the poverty trap and its extension up the income scale, more administrative complexity and costs of administration and less than full take-up of the benefit in a means-tested form. He also concluded that this option would dampen the impact of child benefit in achieving horizontal redistribution towards families with children at a time in their life cycle when outgoings are relatively high and also would dampen the redistribution of income within the family towards the mother. This proposal clearly does not have any social or economic merit and should not be proceeded with.
It is also worth noting that in the tax changes the position of families has not been recognized and relative to single people they have fared badly. For instance, a single person on PAYE earning £10,000 a year will save £235 per annum or £4.51 per week whereas a married couple with four children earning a similar amount will save far less — £144.22 per annum or £2.77 per week. How any government can agree that that kind of approach is just and equitable and at the same time indicate support for the rearing of children is beyond me. To give a saving of £235 to the single person in that income bracket and £144 to the married person with four children just does not make sense. This type of anomalous treatment of families is further evidence of an ill-thought out policy, if there is any policy at all.
When we are dealing with family income support we are obviously involved in a very complex area. I am proposing to the Government that the Combat Poverty Agency be asked to fully investigate all aspects of family income support including tax, family income supplement, child benefit and other related areas and to report this year with recommendations on a realistic policy in this vital area.
The other controversial proposal in the budget concerns the extension of full PRSI cover to all public servants. At the moment there are 140,000 public servants who are insured at the full rate and there are a further 160,000 who are paying at a reduced rate. I have no objection in principle to the extension of full PRSI to all public servants. I am, however, concerned that the move may fuel claims for special pay increases since the justification for the lower rate in the past has been that it is reflected in salary scales.
It is also suggested that because they are unlikely to avail fully of the benefits that is another justification for the lower rate. It is important, since I am concentrating my remarks on children and the family, that the Government should bear in mind the impact of that proposal particularly on lower paid public servants. It could impose considerable hardship on lower paid public servants with children. However, I note that there are to be discussions with the public sector unions concerned and I will reserve judgment on this issue pending the outcome of these discussions.
In conclusion, I do not see this budget as having any significant impact on levels of unemployment or poverty. Ludicrous claims have been made in particular about the impact this budget will have on levels of poverty in our society and about the priority being accorded by this Government to the underprivileged. The figures speak for themselves. The Social Welfare Estimate last year was £1.627 million which, when revised to cover the budgetary provisions for 1989, totals £1.543 million. This Government, who contend that they place such high priority on the elimination of poverty, have actually cut the financial provisions available for that purpose by £84 million.
I accept that there are financial constraints and, accordingly, I have refrained from making extravagant demands which clearly cannot be paid for in our present circumstances. On the other hand, we need a comprehensive programme to eliminate poverty, one which should be well researched and cover all aspects of the problem. The Government should recognise the serious concerns of so many of our people on this issue, not just those directly affected by it but so many others, fortunate enough to be above the poverty level, who have genuine, caring concern for those less well off. Because of this concern, widespread among our people, I contend the Government should publish a White Paper setting out a comprehensive, integrated policy on poverty. Such a White Paper should be produced as soon as possible and its proposals implemented within the shortest possible time.
Ag tagairt don cháinaisnéis a mhol an tAire Airgeadais, tá sé thar a bheith soiléir gur sliocht eile é as an dul chun cinn atá déanta agus á dhéanamh in eacnamaíocht agus bainistíocht na tíre. Luaigh sé san ráiteas a thug sé an toradh iontach atá againn agus go bhfuilimid chun leanúint ar an chúrsa céanna sin chun tuilleadh dul chun cinn san eacnamaíocht a dhéanamh ó thaobh bochtanais, fostaíochta agus rudaí eile nach iad.
The budget introduced in this House by the Minister for Finance on Wednesday last sent a clear message to all concerned and involved in the economic development of this country whether in the public or private sector. By reference to a number of key economic indicators the Minister was in a position to present an impressive record of achievements to date as evidence of the basic soundness of the Government's economic policies. Furthermore, he pledged unequivocally that there would be no deviation from the overall strategy outlined in the Programme for National Recovery which would continue to provide the vital framework for our future economic and social progress. The budgetary course the Minister charted for the year ahead not only reflected but served to validate and inspire the spirit of renewed confidence in our economy to which he referred.
Within my area of responsibility I should like to deal with tourism first. No where does that spirit, referred to by the Minister for Finance on Wednesday last, find a clearer reflection than in the turn-about wrought in tourism since we assumed office. The basis for that success was the realisation that tourism constitutes a major industry here with enormous potential for job creation and foreign earnings. We must carefully identify—at both State and private sectoral levels—objectives and opportunities and vigorously pursue a specifically targeted programme of investment if that potential is to be fully realised. Past policies which often serve to generate temporary surges only have been reviewed and reassessed. One might contend that tourism has been rescued from a Cinderella existence, set on a definite path to future wealth and prosperity. There will be no more stop-go, hit and miss attempts; no more lack of identification of the industry and its potential; no more tagging on to other Departments for the sake of convenience —Industry, Trade, Commerce and, as an afterthought, Tourism; Forestry, Fisheries and again Tourism stuck on as an afterthought. We realised the benefits and potential of tourism so that the relevant Department is now known as the Department of Tourism and Transport, integrating two sectors of our economy very much inter-related.
Ireland's strengths have been identified and policies tailored to capitalise and concentrate on them. There has been new emphasis placed on activity holidays using our abundance of open spaces, fine scenery, mountains, rivers, lakes and other indoor and outdoor recreational assets which now dominate our marketing approach. Moreover, we have changed course to a targeted salesmanship strategy, concentrating on carefully selected markets to maximise results. Considerable progress has been made in meeting the challenging but necessary targets we have set for the industry. Since they were set it has often been contended that those targets were over-ambitious. I might suggest that ambition is the method by which we aspire to such targets. We know our targets are set high but we are convinced they are attainable. For instance, we have set ourselves the target of an increase of £500 million in tourism revenue and the creation of 25,000 new jobs over a five year period.
The information available to date for 1988 suggests a 13 per cent increase in visitor numbers over the corresponding 1987 figure; indeed an overall increase of almost £500,000 or 26 per cent over the two years 1987 and 1988, resulting in the direct creation of an additional 12,000 jobs and a substantial increase in tourism revenue in 1988 over the record £1 billion earned in 1987.
I must avail of the opportunity to express my satisfaction at the positive response of the sea and air carriers to the Government's policy of low access fares. That response played a vital role in the achievement of those very encouraging results. For example, in the case of air carriers, it is now possible to fly to Dublin from Birmingham for £65; to Cork from Manchester for £81; to Dublin, Shannon or Cork from Paris for £120 or to Dublin, Cork or Shannon from Dusseldorf for £199.
The budget builds on the measures already in place go give a major fillip to tourism development in 1989. For example, some £3.5 million will be spent providing vital elements of the Irish holiday package, such as the archaeological sites, historic houses and national parks under the Office of Public Works, and £0.5 million has been allocated in the budget for improvements in access to and basic facilities at beaches throughout the country; £2 million has been set aside for the environmental upgrading of urban renewal areas. A further £250,000 will be spent boosting the recycling of waste materials thereby assisting in the achievment of a cleaner and more visually appealing environment. More important, the budget has made a timely provision of £14.5 million with which Bord Fáilte and SFADCo will grant aid tourism development. This will offer financial assistance to promoters willing and able to operate amenities open to the public which will contribute to enhancing the total package of attractions for foreign visitors. It is essential that the developments which secure assistance will offer the best long term potential for improving Ireland's range of visitor attractions and its appeal to the tourist.
The business expansion scheme which has proved to be a very valuable incentive in promoting the development of our tourist infrastructure will continue to have an impact in 1989. The decision to extend that business expansion scheme, which was previously only available to manufacturing industry, through the tourism sector, has been of tremendous importance to the industry because already some £45 million have been invested by the private sector in tourism amenities since the scheme was extended in 1987. For example, in the south-west region every hotel has undertaken extensions, modifications, refurbishments, etc., and much of this work is undoubtedly as a result of the very wise decision on the part of the Government to extend the business expansion scheme to the tourism sector. All this investment by the private and public sectors in tandem implies a solid vote of confidence in the future of tourism here.
I have long been conscious of the importance of allying all sectors of activity both public and private in support of our common goal of a prosperous and expanded tourism industry here. It is essential that all hands are on deck in this important objective and it is imperative that we all keep our eyes on the target. One of my roles as Minister of State at the Department of Tourism and Transport has been the chairmanship of the interdepartmental committee who work to co-ordinate policy and expenditure in the areas of Government activity that impinge on tourism.
The promotion of tourism must not be seen as tangential to the operation of our cultural institutions, our forests, our employment training courses and our environmental awareness efforts. They all form part of the crucial jigsaw puzzle as far as the industry is concerned and it is important that their significance in that context be constantly identified and emphasised. My committee have aired many important ideas and initiatives and, in a way never attempted before, have focussed attention within State agencies on the manner in which policies and expenditure over a wide area impact on our efforts to upgrade tourism.
For too long the development of the tourism infrastructure and its promotion abroad were seen as desirable but insignificant elements of Government policy. That has all changed radically in the past two years. Not alone is tourism now a top priority on the Government's agenda and one which ranks high amongst its many successes, but the tourism content of numerous State activities is now prominent in the policy formulation and expenditure planning of every Government Department and agency.
I should like to draw the attention of the House in particular to a measure in the budget which has a direct relevance to our tourism promotion efforts, the special provision in relation to unleaded petrol. In last year's budget the Government brought the price of unleaded petrol down to that of the leaded variety and great strides have been evident in the past year in the provision of a steadily growing national network of unleaded petrol outlets. Indeed, I had the pleasure of officially opening some of those outlets in Dublin and in Cork. This year's budget has now made unleaded petrol cheaper than the leaded grades and I hope that this will help to provide an impetus towards the use of unleaded petrold by Irish motorists leading to a wider retail availability of unleaded supplies. Quite apart from the benefits to our health and to the environment, this will facilitate our efforts to attract continental tourists, motorists in particular, a growing number of who are users of unleaded petrol only, and will help to promote the image of Ireland abroad as a clean, healthy, quality destination.
I should like to move to some of the transport activities in our Department. The spirit of optimism and positive achievement that has characterised our efforts in the tourism area is readily apparent in the transport sector also. Given the underlying importance of this sector of the economy ws a whole, the quality of the transport product has a crucial significance for our overall drive towards greater productivity and efficiency. Here, I am happy to say, the transport companies operating under the aegis of my Department continue to rise to the challenge of the Programme for National Recovery.
My colleague, speaking in the House last Thursday, gave an account of the recent developments in the field of aviation and referred in particular to the very satisfactory performance recorded in a tough competitive environment by Aer Lingus, the State airline, in terms of increased passenger numbers, the creation of additional sustainable jobs and the advance of their fleet development programme. The company are to be complimented on their contribution to tourism growth and on their financial performance. It is particularly satisfactory that the airline have been able to make such an impressive start on the upgrading on their cross channel/ European fleet without any assistance from the Exchequer.
While still on the subject of aviation, I should like to put on record my appreciation of the tremendous performance and achievement of Aer Rianta both as regards their management and operation of State airports and their efforts to diversify and win new markets abroad. Passenger throughput at three airports in 1988 amounted to over 6.3 million persons which represented an increase of 21 per cent on the 1987 figures. The most significant increase was recorded at Dublin Airport where passenger traffic amounted to 4.4 million persons, up by almost 25 per cent on the previous year. By any standards these are remarkable achievements. They directly reflect the vigorous growth in passenger numbers to UK and European destinations experienced by the airlines in the new competitive environment which this Government's policies have fostered. The traffic picture at Cork and Shannon was equally encouraging with substantial increases of 23 per cent and 12 per cent, respectively. On the financial side, while final figures are not yet available, I am confident that the company's results for 1988 will show another record performance.
I would like to pay tribute to Aer Rianta's pioneering success in securing the contracts for the Moscow duty-free shops and the painting of the Aeroflot fleet at Shannon Airport. These achievements are regarded as milestones in the Irish-Soviet trade relations and a superb example of what it is possible for Irish companies to achieve in new and untested markets. The company are continuing to capitalise on their success in the Soviet Union and have recently announced further joint venture projects relating to duty-free shops at Leningrad and Viborg on the Finnish border. Both of these projects will be modelled on the duty-free shops at Moscow Airport which, last November, won the Airport Retailer of the Year Award at the world tax-free trade show at Cannes, only six months after they commenced operations. Aer Rianta are also pursuing a wide range of other possibilities for joint ventures in the Soviet Union.
Aer Rianta's successes in Moscow remind us that the Programme for National Recovery aims at achieving a general three-fold expansion of turnover in overseas consultancies by relevant State agencies. This is a market which has been enthusiastically embraced by the State transport companies, with earnings of approximately £35 million from this source projected up to 31 March 1989. For example, the establishment of a special consultancy division, CIE Consult, was one result of the reorganisational changes that took place in CIE in 1987. This is clear evidence of the spirit of enterprise and market awareness which we have come to expect from the CIE group. The group's subsidiary companies continue to face very daunting challenges on all fronts. The difficulties faced by Bus Átha Cliath in providing a reliable, cost-effective service for the capital city immediately spring to mind. In this task the company have the support of the reconstituted Dublin Transportation Task Force whose 1988 investment programme of approximately £170,000 included a considerable element of bus priority and managment measures.
Our concern to ensure that State-sponsored transport companies perform to the best of their ability is of course only one part of our strategy. In the interests of overall economic wellbeing and progress we must continually strive to ensure that the necessary conditions exist to enable all transport modes to contribute effectively to the national effort and that transport costs imposed on industry and in particular on the exporting sector, are minimised. These concerns are sharply focused as the goal of a single European market becomes a reality. Our island location on the edge of Europe highlights the need for a sufficiency of low-cost, high quality and efficient access transport services to serve Irish industry if we are to survive as an exporting nation and to facilitate the growth of Irish tourism.
In the context of the Single European Act objectives of integration, convergence and cohesion of member states, it is absolutely vital that the competitiveness disadvantages inherent in our geographical position be recognised and taken into account, particularly in the context of the Structural Funds. This is a key element in our negotiation in Brussels. In the lead-up to 1992 we must continue with our efforts to ensure that good quality road and rail links are provided to our ports and airports and that we are ready to capitalise on such external developments as the channel tunnel.
We will be drawing on the EC Structural Funds to assist in funding the necessary infrastructural investment in the transport sphere so that we can gear up for the challenges of the internal market. The announcement in the budget of an additional £34 million of direct Exchequer expenditure on necessary road improvements, in the confident expectation of increased funding from the Regional Fund, is a case in point. In the sphere of aviation for example, the State is making £2 million available this year to up-grade regional airports. This investment is in addition to the £1 million provided last year and the £1 million subscribed from local resources. A total of £4 million will enable the regional airports to be up-graded and to contribute to the Government's target of doubling tourist numbers. In addition, it will provide improved transport links for industry and industrialists in the region in which the airport serves.
At the same time the State airports are not being neglected. Aer Rianta have built a manificent new runway at Dublin Airport which will come into service in the middle of this year. Cork Airport has had its first runway extension in 25 years of its existence, with an addition of 1,000 feet to the main runway, allowing larger and fully-laden aircraft to land and take off and so serve the city and the region. These projects involved expenditure of £35 million and further major investments in the State airports, totalling £18 million, are also planned for 1989.
An investment programme, costing £30 million, is also under way to up-grade the radar and navigational facilities at our airports and in our Irish airspace. Tenders for the radar equipment are being evaluated and a contract will be placed in the next few months. That contract will represent the largest single investment ever undertaken by the State in our air navigational sphere. The upgrading of the system will ensure and enhance the provision of safe, regular air transport operations. Hand in hand with these infrastructural developments we are continuing to pursue a liberal air transport policy in the interests of improving the quantity and quality of our access transport services and of reducing the cost of air travel to Ireland. The success of this policy to date and our determination to keep up the pressure for favourable developments were outlined in the House by my colleague last week.
Liberalisation has also been a feature of the road haulage area. Road freight carrier licences have been and are being granted under the Road Transport Act, 1986. The licences which are unrestricted are being granted to all applicants who meet th EC-wide qualitative criteria of good repute, appropriate financial standing and professional competence. On the international front and to serve the growth in economic activity we have been seeking new openings and opportunities for the Irish haulage industry. To this end we have consistently advocated and supported policy measures for the liberalisation of the industry and obtained an increasing number of international licences for our hauliers. We are working in the belief that after 1992 intra-Community transport will be subject to qualitative criteria only. We must therefore gear ourselves for the opportunities which will be presented by the opening up of a huge new market for Irish hauliers.
The budget which is the subject of this debate is a clear affirmation of the success of th Government's policies on the economy. That these policies are on course is evident all over the country but nowhere more so than in my own native Cork. If the people of any other part of the country or beyond suffered the same trauma as we experienced in Cork due to the closure of three traditional labour-intensive industries like Fords, Dunlops and the dockyard, not to mention the many supporting service industries which depended on them, I doubt very much if any area anywhere would have bounced back in the same manner as we have done.
It is clear that the Government, by the confidence, the hope and the commitment they have shown played their part in not only lifting the morale of the people but, by their leadership and co-operation, ensuring the ingredients for the turnaround of our economy. For example, following the very successful tourism forum in Kilmainham I organised a similar exercise for the south west and it, too, proved very successful. Many initiatives emanated from that forum and the spirit of co-operation with the local economy, the business people and commercial life generally was evident. There are many other practical examples I could enumerate ranging from the establishment of the free port at Ringaskiddy to the extension of the hours of broadcasting for Cork local radio. The conditions are ripe for the kind of development we need to put Cork and its hinterland back on its feet.
A further instance of this co-operation, when the need was greatest, was the unique response to public meetings in raising funds to help ensure the continuance of the Cork-Swansea ferry. I recently conveyed to the company the decision of the Government in relation to the company's request for further Exchequer assistance. In doing so I reiterated the stance which the Minister and myself have consistently adopted— that no more than £500,000, by way of grant from the Exchequer, could be made available to the company. However, bearing in mind the importance of the Cork-Swansea service to tourism in the Cork-Kerry region and having regard, in particular, to the funds raised and pledged by local interests, the Government are prepared to provide an additional £500,000 loan to be repaid by September 1989. I would like to compliment the fund raising committee who went from town to town to raise that money.
Finally, I am very pleased to have been offered the opportunity of contributing to a most important debate. I speak from the standpoint of an area of ministerial responsibility of which we have come to take a much more realistic view, first, of the practical inter-relationships of tourism and transport and, secondly, of their importance to the economy as a whole. From this realisation has flowed a new sense of optimism and confidence about what we can achieve. This is a process I believe has taken place in many other areas, both public and private. The budget serves to underline and encourage that positive forwardlooking spirit and is yet another affirmation of this Government's intention to maintain a course whose underlying wisdom has already been clearly vindicated by results. Leanaimís go léir ar aghaidh leis an obair fónta.
I could not help thinking that Cork seems to have won everything except an All Ireland medal.
That is on its way, too.
I want to take this opportunity to highlight a major disturbing development which has taken place as a result of the speech by the Minister for Finance on budget day last week. The Minister made the following point on special pay increases; as reported at column 229 of the Official Report for 25 January 1989:
An allocation of £30 million will be made for 1989 in a Vote for increases in remunerations and pensions in respect of special pay increases. This is in addition to the £12.5 million cost of the package of increases agreed for the Defence Force which is already reflected in the adjusted position for non-capital supply services which I referred to earlier. I will return to the question of special pay increases later in my speech.
The Minister returned to the topic again and I quote from column 237 of the Official Report:
The £30 million allocation for special pay increases, to which I already referred, will meet the cost in 1989 of settlements which, however, could ultimately cost £150 million a year.
A situation cannot be allowed to develop where there would be an unrealistic roll-up of increases both generally and for particular groups. I have decided, therefore, to invite the Irish Congress of Trade Unions to meet me to discuss the whole issue of special increases with a view to arriving at a mutually acceptable solution.
I should mention that the cost in 1989 of the package of increases for the Defence Forces recommended by the inter-departmental committee, whose report was adopted in full by the Government with one small adjustment, will be £12.5 million and that the annual cost of the package when fully implemented will be £25.7 million. These costs are in addition to the costs I have already mentioned and are so substantial that offsetting savings including the closure and disposal of military barracks have to be made. It should be clear to all that, in the general context of public service pay, the Defence Forces have been treated as a special case.
It must be now obvious to everybody in the Defence Forces that the original announcement of the Defence Forces pay deal by the Minister for Defence misrepresented the facts as stated by the Minister for Finance. A clear indication was given on that occasion that the lower paid members of the Defence Forces would receive a 12 per cent increase. However, all the bad news has since begun to be known. There will be no increase in basic pay until 1 July 1989 when 4.8 per cent of the award will be paid. This is an increase of 2.4 per cent over the entire year. That is what the Defence Forces got in 1989. However, while the press statement did not carry any definite date for the payment of the second instalment the message was that the entire increase would cost £25 million in a full year.
Despite my best efforts to get clarification, the Minister for Defence almost went underground for the entire month of January. My efforts at raising this urgent matter of vital national interest by way of a Private Notice Question failed as did my plea to the Government to provide time to discuss the matter in the Dáil. The reason for all this dodging and side-stepping became abundantly clear in the budget speech. The Minister for Finance states that there is a build up of £150 million in special pay claims and that this must be renegotiated with the trade unions. My reading of the position is that there will be a dramatic curtailment of the amounts to be paid by way of the special deals and we can imagine the pressure that will be exerted, by the pressure groups, for the much smaller cake on offer.
They were badly neglected for four years.
Who will argue the case for the Defence Forces? They will have no direct input into the negotiations and they will hardly get excited at the prospect of the Minister for Defence carrying the can for them. The stark reality for the Defence Forces is that the second part of the pay award of 7.2 per cent is not coming as they had been led to believe and it might be years before they get their hands on even the most minute part of that. This is deplorable conduct by the Government and it illustrates the lack of clout of the Minister for Defence at the Cabinet table. Obviously, that Minister is not taken seriously by the Government and, worse still, the Government do not take the Defence Forces seriously.
What were you doing for four years?
The truth is bitter but that is it.
What were you doing for four years?
Fianna Fáil are in office long enough to have done the job if they wanted to do it. I want to place on record that the storm clouds that are gathering over the Defence Forces pay issue will not go away. Two recent events clearly indicate that morale in the Defence Forces has reached a dangerous level. The spectacle of Army spouses taking to the streets and the mass resignations of Army sergeants are matters of great concern. However, the response from the Minister for Defence was swift, negative and, in my view, deplorable. I believe he has made a most insensitive move by signalling his intention to increase the buy-out fee, or discharge fee, from the Army. What the Minister has actually done is to commit the time-honoured labour relations principles to the dustbin and to introduce a heavy handed, shortsighted, oppressive policy that is sure to extract minimum goodwill from the members of the Defence Forces.
Even with the particular command structure of the Defence Forces, it is still not obvious to the Minister that a good working environment is conducive to having a contented labour force. I wonder, will the Minister ever learn? We Irish possess an individual stubborn streak, which is an absolute plus if harnessed properly, but certainly it can be a huge impediment if it is used the wrong way. If the Minister persists with this policy of coercion—as I call it—very few young people will want to join the Army. After all, who would want a job that would impose severe penalties on your decision to leave it of your own free will? Let there be no doubt in anybody's mind of the extent of the problem in the Army. Over 70 technicians left the Air Corps in 1988, so many in fact that the Air Corps was able to show a saving of over £9 million in its subhead for aircraft parts in that year. The personnel was not available to use the parts and this is only the tip of the iceberg as far as the Air Corps is concerned. Indeed, were it not for the fact of a High Court judgment, several more pilots would be taking flight from the force at present.
Everybody now accepts that the problems emerging in the Defence Forces are entirely linked to low basic pay.
It was not very high when you were in office.
It is a hell of a lot lower now.
You did nothing for four and a half years.
This is the bitter part, the bad part of the budget and you know it, Minister. What has annoyed the members of the Defence Forces is that this very element has not been addressed in the pay deal. The increase in the rates of allowance is very welcome but let there be no trumpeting about it; the allowances were so low that any increase would seem high as a percentage rise. However, increases in allowances do not substitute for an increase in basic pay. Not everybody can avail of allowances as these are paid for certain selective duties. When the pay deal of 12 per cent was first announced there was reasonable acceptance of it in the Defence Forces. Many understood that the special public service pay deal, believed to amount to 10 per cent and payable in June-July of 1989, would apply to the commissioned officers as well. Indeed many officers believed, despite the Government's sleight-of-hand, that the award pending in June would be safe. After Deputy Reynolds's statement last week, it is far from safe and instead of a possible 22 per cent rise in pay, the only additional increase in pay this year will be 2.4 per cent over a period of 12 months.
Do the Government believe the Defence Forces merit this type of treatment? It is widely rumoured that after the interdepartmental committee requesting an Army input into the pay deal, the considered view of the Defence Forces was that a 25 per cent hike for the lower ranks was necessary and desirable. Will the report of the interdepartmental committee be made public? Surely this document should be laid before both Houses of the Oireachtas immediately? If this does not happen, the lack of confidence currently displayed by the Defence Forces in this body will increase. Indeed, after the question of low basic pay, the next priority of many members of the force is their perception that their views are not taken into account and that nobody speaks for them. Certainly, after the debacle of recent times, the announcement by the Minister that the present committee will stay in operation rings very hollow. Shades of the fox guarding the chickens comes to mind.
Many Defence Forces personnel do not see the existing committee as being independent of the Department of Defence, or indeed the Government. Most experts agree that any type of trade union involvement must be ruled out of order as far as the Defence Forces are concerned but surely the Government must see the need for some outside expertise to head a commission to explore the current situation and then put its report to the Government. Irrespective of what the existing committee will do, I believe they will not be taken seriously by the Defence Forces.
The debate on the Army pay crisis has captured the public's attention. The concept of security is uppermost in people's minds and for the first time in many years the Defence Forces are not being taken for granted as they normally were. That in itself is good; after all, the defence budget is approximately £300 million per year, inclusive of pension payments, and by any standards this is a lot of money. I believe we should have a debate on what we require our Defence Forces to do and, having decided on the priorities, we should then invest in the areas that need expansion and withdraw funding from areas deemed to have a low priority. This whole question must have a European dimension. What will be our stance if and when the Americans cut their European defence budget?
Perhaps Deputy Connaughton can tell us if we need to cut the numbers in the Defence Forces?
Have we thought about our role in Europe? What is wrong with Deputy Roche is that nobody in his party has bothered to think of the role of the Army in the future. The Deputy has forgotten about them as the Army spouses who are on the streets, will tell him. Do we use our neutrality to our best advantage? Those are the questions that the Minister for Defence should be looking at. What type of society do we expect to see here in 25 years time? Obviously, the free movement of capital and labour in Europe will change our profile somewhat. Will we need more naval protection vessels to police the high seas against illegal shipment of arms and illegal drug trafficking? Everybody is aware of our great contribution to UNIFIL and to world peace and this has been commented on favourably by world experts. We sincerely hope that will continue.
The question of our commitments to the Border has to be looked at. There is no doubt it is important that we have a strong presence there. Subversive activity has to be looked at, and this is something that every national army has to contend with.
Our search and rescue service obviously needs reorganisation and I am very disappointed that the Minister has not acted on the issue of relocating the Dauphin helicopters at Shannon. Everybody on the west coast wants this and it seems to make very little sense to have the helicopter fleet based at Baldonnel when a huge proportion of the accidents take place on the western seaboard. For the life of me, I cannot understand why the Government have not acted on this issue. It would make great sense and it appears that Members on all sides of the House would agree to it, but yet it has not happened. If the Minister for Defence is replying in the Dáil, I hope he will let us know the reason this has not happened.
May I put on record that recent events and accidents on the west and south west coast—indeed one not too far away from the shores of my own County Galway— show that we need helicopters of that type in close proximity. Might I add that we have an ideal opportunity of ensuring that we have an adequate rescue service. We are starting from a greenfield situation. Until we had a fleet of Dauphin helicopters and had trained pilots to fly them night and day, there was no point in talking about a security rescue strategy, because we did not have the equipment to fulfil that role. That has been changed. We now have the staff complement and the machinery, and all that is required is the political will to locate the helicopters in a strategic position to ensure that we get the best value from the service.
The Dauphin helicopters have a limited range but I do not accept the criticism of some experts as I believe they are very useful and are needed. However, we need a much bigger craft such as the British Sea King to effect long-range rescue, with a capacity to hold 20 to 30 people.
At present, we do not have that type of helicopter, I do not think the Exchequer could be expected to purchase such a machine but there is no reason whatever why it cannot be leased out on a private basis. This has been done in many other countries and there is no reason for the Department or politicians to feel threatened by it. The oil rigs have had such facilities for many years and there is no reason it cannot be done. It would not be that costly. I believe an opportunity was lost when some announcement of this type was not made so as to ensure that in the event of relocation it would be effected some time in 1989, because the years are beginning to slip by.
Government speakers referred to the fantastic upsurge in growth in the economy. I accept that; we all rowed in behind them. My party put that foundation there. I sincerely hope that the graph will continue in this direction. I cannot reconcile the Fianna Fáil statements of the past week with the fact that emigration never ran at such a high level as today. That party went to great lengths two years ago, before the last general election, to inform the electorate at large that once they held the reins of power this stream of emigration, as they called it, would be down to a trickle. If the statistics which I have prove correct—it can be accepted that about 30,000 people leave our shores every year through emigration—around 70,000 people had emigrated by 1988. If this is correct, that stream has not become a trickle but a river. Ask any young people what they think is happening in Ireland, after the so-called good times, that they are forced to emigrate. That will bring us back to reality. The budget did not address this issue in any shape or form.
With regard to the social welfare aspect, I genuinely believe that credit should be given where it is due. I was particularly grateful to see the Minister addressing the question of deserted husbands and of widows. That is terribly important. I hope that the remedy will be brought in quickly, because there are very many people caught in that particular poverty trap.
As far as agriculture is concerned, the Government hid behind the fact that, due to no great effort on their part, incomes rose by 16 or 17 per cent in 1988. No great thanks to the Government at all. The acid test will be the type of increase that agriculture is likely to witness in 1989 and 1990. The signs are there and there are so many people, as the Minister of State will be well aware, who do not share in this huge uptake as far as agricultural incomes are concerned. It is true to say that there are certain categories of small farmers who did not share at all in the increased incomes because they had to buy in their stock by way of calves for weaning. That type of farmer is under greater pressure now than ever he was. As a result of the decision by the Minister for Agriculture and Food to accept the Brussels deal on intervention, I understand that this very week a tremor has been felt going through the cattle trade. I am told that there has been a fairly substantial reduction at factory level in the price of cattle. I hope that this will be only a temporary shiver, but confidence could not be there.
The Minister for Agriculture and Food said before Christmas that he would have no trouble whatever in using the veto in this vital national interest. Three or four weeks later, everything is accepted by him. Many farmers will want to meet Minister O'Kennedy and ask the reason for such a dramatic change in his tune. If the tremor that is understood to be going through the agricultural industry at the marts and factories in the last few days continues, a great many more people will want to see the Minister.
I was extremely disappointed that no reference whatever was made in the budget speech or any recent speech by any Government Minister, and particularly by the Minister for Agriculture and Food, to the reclassification of the disadvantaged areas.
Hear, hear.
The Deputy is not reading the speeches.
This is something that I hope Minister Treacy will do something about. He knows very well that the application was put in two years ago.
What about Rosslare Strand? They are still waiting.
It is still there. Deputy Yates told me that it would be gone.
Thanks to the county council.
His Government never did a thing about it since.
(Interruptions.)
At the European election, the Government will be getting it out all right. It is cheques that should be given, not promises.
The Deputy said in 1987 that it was coming. It was a gimmick.
The Government lost two years. It was there and they did nothing about it. They should be ashamed of themselves.
It was not even ratified. It was disgraceful.
I call Deputy Roche. The Deputy appreciates that we shall be coming to deal with Private Members' Business at 7 p.m.
In the closing paragraph of the Minister's Budget Statement the aims are very clearly stated. These aims accord with the general consensus that has emerged in recent times as to the economic, social and fiscal priorities facing the nation. The budget sets out to achieve, first, a more equitable distribution of the national cake through improved social welfare payments. It also sets out to achieve a further stage in the reform of our taxation system. The third priority is a boost to economic activity and to jobs. Finally, the budget aims at achieving a further reduction in Exchequer borrowing, directed both at stabilising the nation's finances and at enhancing and consolidating the growing confidence in the economy which is evident in many, indeed in all sectors.
These potentially conflicting objectives could be aimed at because of the very real success of Government economic policies over the last two years. In the short 23 months since Fianna Fáil took over office from a hapless, a hopeless and a divided Fine Gael-Labour Coalition, there has been a quite remarkable transformation in our economy. Stabilisation of the debt-GNP ratio has now been achieved. Moreover, the stabilisation has been achieved two years ahead of schedule. Two short years ago I doubt if any Member of this House would have believed that that situation could have been achieved.
The Exchequer borrowing requirement, which in 1986 under the Coalition Government peaked at £2,145 million, has been more than halved. It is worth while reminding ourselves and putting again on the record that the Exchequer borrowing requirement peaked during the last years of the Coalition Government. The actual Exchequer borrowing requirement for 1988 was the lowest for 30 years. During the years when the Coalition Government mismanaged the economy, Exchequer borrowing requirement fell, not from the fictional figures of 21 per cent to 10 per cent as suggested by that master of digital dexterity, Deputy Noonan, last week, but from 15½ per cent to 13 per cent, while at the same time the debt-GNP ratio rose inexorably year after year. What we have seen in Deputy Noonan's contribution last week and in his party's political graffiti decorating so many expensive poster sites at present is an interesting example of the new genre of politicians.
Such as health cuts hurt the old, the sick and the handicapped.
Yes, an interesting example of a new genre of politics, the emergence at national level of the hardneck school of politics.
The Government have not been up there for a long time.
This type of politics has long flourished in council chambers, where frequently members who are noteworthy for their singular lack of contribution or achievement call for support for this project and yet oppose any measures aimed at financing these activities. Then they go on to illustrate their lack of familiarity with both truthfulness and integrity by claiming credit for all that has been achieved. That is how it is at present with the main Opposition party.
Fine Gael have elevated the hardneck type of politics from local to national level. In spite of a disastrous period in Government which witnessed the highest ever budget deficit, a disimprovement in personal taxation, a downturn in economic activity, through their financial spokesman and their poster designers, they now seek to claim some credit for all that has been achieved by Fianna Fáil since they came to office. They even try to claim credit for not sabotaging the good work being done by this Government, and that surely is an old thing for politicians who are supposed to be dedicated to the national interest.
As the polls show, the public are still acutely aware of the gulf between Fine Gael aspirations and Fine Gael achievement. Another major achievement of the Fianna Fáil Government has been the taming of the current budget deficit.
Debate adjourned.