Dáil Éireann debate -
Tuesday, 31 Jan 1989

Vol. 386 No. 3

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.)

Mr. Roche

As I said before the adjournment of the debate, the budget sets out to achieve four basic objectives; a more equitable distribution of the national cake, a further stage in the reform of our tax system, a boost in economic activity and a further reduction in Exchequer borrowing, the latter being particularly important in the achievement of the former. These potentially conflicting objectives could be aimed at because of the very real success of Government policies in the past two years. In the 23 months since Fianna Fáil took office from a hopeless, hapless and a divided Coalition, we have witnessed a quite remarkable transformation. As I mentioned, one of the measures of that transformation was the stabilisation of the debt-GNP ratio which has now been achieved. Moreover it is remarkable that that stabilisation has been achieved two full years ahead of schedule. The Exchequer borrowing requirement which in 1986 under the Coalition Government has passed the £2,000 million mark has now been more than halved. The Exchequer borrowing requirement for 1988 was the lowest for 30 years. These are very real and substantial achievements and give us all reason to feel confident.

I have pointed out that we have witnessed in the past few weeks and months an extraordinary resurgence of what I call the hard neck school of politics. Under the hard neck school of politics, by doing nothing or having done nothing, you claim credits for everything that somebody else has done. This can be witnessed in the pronouncements in this House from time to time by Deputy Noonan, in the unctuous statements from time to time by Deputy Dukes and, in more recent times, on the graffiti which Fine Gael chose to append to poster sites up and down the country. It is quite extraordinary that the senior partner in one of the most disastrous Governments of this State should have the brass neck to try to claim credit for what has been achieved in very difficult circumstances in the past two years.

As I have said, Fine Gael have elevated brass neck politics from the local level where it has always had a very healthy living to the national level. In spite of their disastrous period in Government in which we witnesses the highest ever budget deficit, a disimprovement in personal taxation throughout the period of that Government and a downturn in all measures of economic activity, that party through their Finance spokesmen and the poster designers, now seek to claim some credit for all that has been achieved by Fianna Fáil in office in the last 23 months. What we get from Fine Gael from time to time is a sort of verbal patting of themselves on their back because they have not sought to damage what the Government have done. As the polls show, the public are still aware of the gulf between Fine Gael aspirations and their achievements. Another major achievement of this Government has been the taming of the current budget deficit which is now at its lowest for over a decade. It is at half the level it was in 1986 when a Fine Gael Minister held the Finance portfolio. These economic indicators are of interest not just to academic economic commentators; they have a real impact on the lives of people.

Interest rates are a barometer which reflect confidence in Government and, more importantly, in a nation. Since March 1987 when Fianna Fáil took office, interest rates have been reduced by 6 percentage points. They are now a full six points behind the levels pertaining in the United Kingdom. It is not long since we would have failed an economics student in first, second or third year of any degree course if they had suggested that we could sustain that differential over a protracted period of time but yet that is a real measure of the confidence that exists in Ireland at present. That confidence was built day by day by hard working Ministers and a hard working Government.

As I have said, this has had a real impact on the lives of ordinary people. It means there is a saving of up to £1,800 per annum on a £30,000 loan. People buying their homes benefit from this decrease in interest rates. Businessmen and businesswomen can now contemplate investment, which a year ago would have been unthinkable, because of the threshold levels of interest. Farmers interested in expansion or in financing loans which were raised in earlier, harder times also benefit from this change. Rather than the sort of carping, innuendo and insinuation that flows backwards and forwards here, we should all in this House rejoice and feel somewhat boastful because this is progress for the nation.

There is an abundance of other positive signs in our economy. Foreigners, particularly Germans, have shown very bullish interest in Irish gilts in recent times.

Mr. Carey

And Irish land, too.

Mr. Roche

The purchase of Government gilt stocks last year rose to £855 million. That exceeded Ireland's entire borrowing requirements and allowed us to repay over £400 million in foreign debt. That is a very real achievement. The foreign debt that is now being wiped out was a milestone around the neck of this economy. It was a milestone around the neck of every unfortunate taxpayer, everybody who sought a job, who sought equity or who sought social or economic progress in this nation. While that debt lay as a dead hand it soaked up money from the economy and it meant that progress could, at best, be limited.

Economic growth, which has been stagnant throughout the arid Coalition years and which was zero throughout the period when Deputy Alan Dukes and Deputy John Bruton held office as Minister for Finance, now averages 3 per cent. That is the average over the period 1987 to the end of 1989. That is very real progress about which we can rightly be boastful.

In 1988 inflation, which bore down heavily on the Irish people and which robbed from the wage packets of each and every wage earner their value, dropped to the lowest level since 1960. Five years ago, not to talk of ten years ago, inflation rates of 2 per cent seemed like a thing of the past and yet last year the inflation rate was 2 per cent. That did not happen because Fine Gael, the Progressive Democrats or the rainbow-bright coalition on the left was prattling on in this House about what they would do and how they would do the job better if they were in a position to do so. It happened because Fianna Fáil are in Government.

Exports which are another vital indicator have also reached new heights. They were up 14 per cent in 1987 and we achieved a further 14 per cent increase in export levels in 1988. Burgeoning exports mean that we now have the biggest balance of payments surplus in modern times. I realise that the export figures from time to time can be infected by a degree of creative accountancy among major companies but nonetheless these figures are very real and we have reason to be confident that they will start to turn fairly rapidly into jobs.

The only point and the only purpose in managing an economy is to improve the lot of the people. Our job, on all sides of this House, is to improve the living standard and well-being of the Irish people. We are not just concerned with balancing books and improving statistics.

In this budget the Government, by the selective use of tax benefits, by the improvements in social welfare and by an imaginative combination of both tax benefits and welfare improvements, have made very real progress in the fight against poverty. That progress should, with a smidgen of political generosity, be welcomed on all sides of the House. Certainly, we can all say that not enough has been done there or too little has been done here, but the reality is, when times are tight — and times are tight now — this budget achieves a great deal. They are the first major steps in social progress in particular, progress in combating poverty which we all wish to see.

In all, the budget provides an extra £71 million in social welfare improvements. The budget provides across the board improvements at or above the rate of inflation with special additional benefits for the long-term unemployed and, in particular, with special additional benefits for families. I believe that in their hearts and souls all the Members of the Opposition parties believe this is the right direction. We may argue at the margin between ourselves as to precisely how far we have gone in the right direction, but the reality is that something is being done this year and something was done last year for the long-term unemployed. They are the people who are at the biting edge of poverty, who feel the brunt of the economic downturn and it is incumbent on us all to look after them. Something novel is being done this year for families particularly those at the margins, and for the families of low paid workers where the benefit of work is marginal — and it is very welcome indeed.

These increases have been criticised by Fine Gael and Labour. It is worth while looking at their record while in Government. In 1988 Fianna Fáil provided an extra 11 per cent for the long-term unemployed. In 1989 the same Fianna Fáil Government are providing an extra 12 per cent for the same long-term unemployed. Between 1983 and 1986 there were no special increases for either the long-term unemployed or for the families for whom Fine Gael are now craw thumping. It strikes me that when you look at the history of family income and family income treatment in successive budgets throughout the eighties, the criticisms which have come from the benches of Fine Gael and Labour are stinking in their hypocrisy, because the reality is that when that group were in power they did nothing for those people. The only thing they did was to introduce the family income supplement scheme. Every Deputy knows that one of the great mysteries of humanity is how you actually negotiate your way around that scheme. Every Deputy who was in the House between 1982 and 1987 knows full well that the take up of that scheme was so low in the early years that it made little or no difference. It was cosmetics at its worst.

Just how far out of touch Fine Gael are with the reality of poverty was well sign-posted last week when the party proposed a basic minimum weekly payment of £45. If they had looked at the budget they would know that the long-term unemployment payment in urban areas will rise to £47 per week. What then is Fine Gael's answer to poverty? It is a novel one. Fine Gael's answer to poverty is to propose a cut in the benefit rate which this budget pays to the most under-privileged. I wonder if we will see that on the expensive signposts and posters up and down the country. I doubt it.

I want to point out another interesting example of Fine Gael's lack of touch with the reality of Irish life when Deputy Dukes was making his contribution last week. He asked why a penny was put on the pint. The Taoiseach pointed out that a penny was put on the pint but no decent pint drinker would object because that penny was going to do something for the unemployed, the long-term unemployed and old age pensioners. Deputy Dukes then suggested that perhaps the Minister for Finance should consider seriously not increasing the price of the bottle of wine by 4p or whatever, but that he should increase it by roughly the same amount as that on the pint, a penny on the bottle of Beaujolais. He suggested that perhaps that would persuade the working man — the pint drinker of Ireland — to move from Guinness to Beaujolais nouveau. I can imagine the situation in Kennedys or in the Old Court Lounge when the lads walk in and say: "What will you have — I will have a pint and a glass of nouveau". It goes to show how out of touch with reality that party and their leadership have become.

Families, particularly those on low incomes, benefit from a wide range of measures in this budget which have been very skilfully put together. The higher rate of child benefit is being permitted to the fifth child. We would all accept that that is an overdue improvement. Low income earners are to receive a special additional tax exemption of £200 per child. That again is a very welcome sign of progress. That, plus giving child benefit to the fifth child will assist many low income earners whose families are large and on the margin, will take them out of the tax net. We should welcome that.

The child dependant allowance is to be given for 19 year olds who are in full-time education. I welcome that and I think other Deputies will too. There has been an anomaly when a child passed the age of 18, and was still in full time education, he was considered to be independent of the family and that fact could affect the benefits due to a family. That is a step in the right direction and is an improvement that is long overdue. This is particularly welcome because before this was introduced the existing arrangements were an impediment to keeping children in second level education. It was a disincentive for parents who were on the margins of poverty and wished to educate their children.

Higher rates of child dependant allowance are also provided, and again that is a welcome move forward. One of the things that has happened in our taxation system and in our welfare system over the years is that the family unit has not been properly recognised and child benefits have been diminished. For those who are on the most marginal rates of tax, the lowest rates of tax and the lowest rates of income there are some improvements and they are very welcome.

There are other welfare benefits to assist families who are disadvantaged because of family breakdown or bereavement. In particular, I welcome the fact that the Government recognise the plight of widowers and deserted husbands who are seeking to bring up their children. I am sure I am not the only Deputy who has had this group's plight brought forcibly to his or her attention over the years. The widowers or deserted husbands have told us that the options facing them are grim and sometimes there is a chance that their children may be taken into care when they cannot provide for them. This measure is very welcome and I am sure it has the support of Members from all sides of the House.

The Government are committed to improving the family income supplement scheme, which has suffered from a very poor take up rate since it was established. As I said earlier, the family income supplement scheme is something of a mystery. There is a very low level of take up. It is questionable whether we should have such a scheme, when it has such a low take up rate. There is no doubt that there are many families living in poverty, families who should have been helped by the family income supplement. However, the reality is that the scheme has never commended itself to the people at whom it is aimed. These people have had difficulties in availing of it. However, I hope that with the additional resources available to the Minister for Social Welfare there will be an improvement in the take up rate of the family income supplement scheme and that the people for whom it was put in place will benefit from it.

An Ceann Comhairle

I intervene to advise the Deputy that some five minutes now remain of the time available to him.

Mr. Roche

Other improvements in social welfare are welcome, in particular the additional funds for the homeless, for emigrants and for the St. Vincent de Paul Society. At this point I should like to take the opportunity to deprecate the language which was reportedly used by Deputy Taylor last week in an attack on the grant to the St. Vincent de Paul Society. Deputy Taylor is reported — I did not hear his speech, but it is reported in the press—as suggesting that the grant to the St. Vincent de Paul Society was sectarian. To my mind that is language beneath contempt. In my constituency this fine society attack poverty where they find it. I have yet to find a case where the St. Vincent de Paul Society have refused to help any person because of sectarian considerations. I challenge Deputy Taylor or any other Member of this House or any other elected group in this State to find cases where there is a sectarian bias in the way the St. Vincent de Paul Society go about their job. The language used was unfortunate, intemperate and probably unintended and I am sure many in this House will join with me in calling on Deputy Mervyn Taylor to apologise to the St. Vincent de Paul Society and to withdraw his remarks.

I hope Deputy Carey does not disagree with me in this regard.

Mr. Carey

The Deputy has got the facts wrong.

Mr. Roche

On the tax side, the budget builds on the foundations laid last year. While other parties talk about juggling with the tax system, Fianna Fáil are proceeding with the most progressive restructuring of the tax system in the past quarter of a century. In the budget the Government have introduced a dramatic package of tax relief. For the first time the standard rate of tax is being reduced. The tax band at the standard rate of tax is being widened. The 48 per cent tax band is being widened, too, while the top rate of 58 per cent is being reduced. These changes are very welcome. I wonder why Deputy Carey is so exasperated by this? During the past four years when Fine Gael were in office, the personal tax rates were jacked up.

All taxpayers benefit from the changes. The lower income families, in particular, benefit and almost 600,000 taxpayers will enjoy a decrease in their marginal tax rates. That must surely be a step in the right direction. These are significant achievements, particularly in a difficult time. The achievements are complemented by ongoing improvements in tax administration and are underpinned by a concerted drive on tax evasion.

The achievements in this year's budget together with the achievements in last year's budget underscore the difference between the Government party and other parties. It is easy to talk of tax reform. It is another thing to achieve it. When the Coalition were in office, they steadily increased the burden of personal taxation, that is an undeniable fact. They abolished the low rate of 25 per cent and increased the top rate. A continuation of their policies would have produced more, not less, personal taxation. This is what Coalition stood for and this is what they achieved. That is their record.

Unemployment is the ultimate cause of poverty. It is the force which drives young people from our shores and robs the nation of so much of its potential. The best way to achieve lasting employment is to build a real economy which will form the foundations on which real jobs can be created. In this budget the Government are building a real economy and are laying daily foundations for real jobs. For the first time in five years there was an increase in employment, in 1988. It was small, but very welcome. The numbers employed fell by 65,000 between 1982 and 1987. In the year to April 1988 employment increased by 6,000. People will say this is too little, and of course it is, but it is a start. The signs are now right. The seasonally adjusted unemployment figure has been falling since last August.

An Ceann Comhairle

The time available to the Deputy is now exhausted. He might bring his remarks to a close.

Mr. Roche

The unemployment statisics that are available point in the right direction. This is a progressive budget. It benefits taxpayers, lower income families and the economy and has a great deal to commend it.

Mr. Cullen

I am fortunate in that I have had some days to reflect on the contents of the budget, to sit down and carefully read the Minister for Finance's speech and the Principal Features of 1989 Budget. I have been able to give some thought to the real impact of the budget, its merits and what will be achieved in time. I have even gone so far as to try to stand outside the politics of the situation and to look at myself as being in someway representative of young people rearing a young family and looking forward to the years ahead. I have tried to see what steps this Government, as a responsible Government, should be taking at this point. However, I am afraid that what strikes me about the whole tenor of the budget is that the Government have abdicated totally their responsibility to the people.

In simple terms I think the budget is a total failure in that it deals with the cosmetic, the gloss. It appears to be doing something but when one wipes away at what it seems to have set out to do there is very little substance left. This saddens me greatly because I had understood from the two budgets I had been privileged to be here for that the Government were trying to get the public finances into some real order and to desist from increasing the spiralling external debt which has been amassed over the past decade and a half. In previous budgets this was what the Government had set out to do. Indeed, results were achieved in that area. However, that is not the only answer to what we are trying to achieve. It is very far from what the overall picture needs to be; it is but a fragment of the jigsaw puzzle and of itself is not even 50 per cent of the picture.

What should the Government be trying to achieve in 1989? I accept that within a two year period there is no opportunity for huge giveaways to the private individual, nor do I believe that in the years ahead that a fairy godmother is going to appear in the shape of some Minister for Finance, no matter what party he belongs to, who will be in a position to make everybody substantially better off overnight and that there would be substantial sums of money available to each individual to spend as he or she sees fit. What could the Government be trying to achieve in the budget? I believe they had arrived at a situation where they were trying to set in train a number of desirable objectives that we all accept cannot be achieved in a period of 12 or even 24 months but which perhaps could be achieved in a period of four to five years. Clear objectives could have been laid down in this budget that would have given a clear signal to industry, the business community and indeed to the public at large, many of whom are supportive of this Government and indeed of my own party, the Progressive Democrats, or of Fine Gael and who recognise the need for a consensus of some degree in Parliament, who recognise that there was no such consensus for many years but that a consensus is now in place.

Why have this Government refused to use the opportunity available to them in this House today? I do not understand why they did not have the courage and did not seize the opportunity of taking some major steps forward, making some major commitments in the budget for the next four to five years, so that a light would emerge at the end of the tunnel we have been in for a very long time. It is a consensus in this House that is not given lightly, yet it is not reciprocated by the Government. The Progressive Democrats as a party are willing to support this Government on many measures but there must be imagination shown, courage and clear foresight into what the Government want to achieve.

The worst possible budget has been drawn up at this time when greater depth and scope are needed in designing a forward planning budget in the national interest. This has been a weak, cosmetic exercise shirking a commitment to giving the economy any real impetus.

I am not decrying the benefits given to the long-term unemployed and to the socially disadvantaged. However, to be hailing these measures as the be-all and end-all of what a budget should be about at this time of great opportunities is pathetic in the extreme. The gloss has already gone from this budget and the media reception given within 24 hours of the budget had suddenly begun to change by even last weekend. The attitude of the individual in the public place has also begun to change. Even the business community are beginning to sound certain warnings in this direction.

Dr. McCarthy

They do not need to, any more.

Mr. Cullen

Curtailing public finances cannot work on its own. It must be accompanied by a major reform in many other areas. I would like to deal with some of these areas now. It has been said and must be said again and again that there is a huge need for taxation reform. Let the lie be nailed in this House that a taxation reform package has been put forward by this Government. It is far from a reform of the taxation system that exists here today. The Government have failed at the very first turn to do something worthwhile in the taxation area. When we look at the high levels of personal taxation and the huge disincentive to be productive, to work harder and to work longer hours, when compared with the rest of the European Community, we wonder why we lag so much behind with regard to productive enterprise. That is not the whole of the picture. I do not understand why the employers, who after all employ great numbers of people, should have penal levels of PRSI maintained against them. That is the greatest curse of the whole taxation system. Yet Minister after Minister comes into this House and talks about job creation or genuflects in its direction. They know in their own hearts and souls that if an employer cannot pay an employee a pound note without having to fork out £3, there is no incentive to provide new permanent employment.

It is right to say that there is increasing investment, that interest rates are substantially lower, that the rate of inflation is much lower and that our exports are increasing at a temendous rate. However, jobs are not being created and why is that? One of the clear reasons is that the biggest disincentive to job creation is the taxation system, taken from the point of view of the employer wanting to employ people and from that of the employee wanting to go out to work. There will never be a major gain in employment, which is so badly needed, until those issues are tackled. I accept that this cannot be achieved in one, two or three years. However, there is a reasonable chance that over a five-year period most if not all of these objectives, could be achieved. It is difficult to understand the fear on the Government side in not outlining in this House their proposals over the coming years.

We have seen a move to 32 per cent as the bottom rate of taxation, which is, ironically, the figure that the Progressive Democrats published in a document some two years ago. I am glad that the Government took that on board, but I am sorry to say that it is irrelevant in the context of what we were trying to say because it is not accompanied by any further changes in PRSI or of planning over a five-year period. We all accept that the taxation base must be widened. It might be strange for somebody like me, with the philosophy I am supposed to espouse, to say that there are many extremely viable companies in this country which, because of the corporation taxation system in operation with incentives and allowances, are paying no taxes at all. Is that equitable or even fair? Is it even what many of these companies desire? I do not believe it is.

There is an opportunity for the Government to set out a minimum tax take for companies. This idea has been nailed down in a policy document that my party have published. It has been met with a reasonable and realistic response by the business community. They may not like to have to pay more taxation or to have to pay taxation at all and this is designed mainly with regard to the companies that do not pay any tax whatsoever. They fully realise that through a quirk of circumstance they are in a false situation. A minimum tax take of a small percentage would be acceptable across the board but you cannot take these items on their own, throw them up like a kite and hope that somebody will catch on to them. It must be part of a much larger package. It must be part of a total reform of the taxation system.

There are other areas in serious need of reform. I turn to local government and the European Structural Funds. I know, and the majority of Members in this House know, that local government is in serious need of structural and financial reform. Again, no attempt has been made by the Government to look at the increasingly important role that local government will play in the years ahead because of our integration in Europe and because of the local government role in the regionalisation of our country with the aid that can be received.

The financing of local government is in total disarray. The central Exchequer has failed to achieve what Fianna Fáil claimed in 1977 would be achieved. Local government is effectively null and void; it has no voice, no power, no financial base. It is simply an administrative body doing basically what it is told to do. Local authorities are not even in a position to do what they perceive to be right in their own community due to the way things are structured. This is a great tragedy which the Government are failing to address.

The Government are paralysed by a lack of clear thinking with regard to European integration. They have failed to put in place any programme to smooth our passage into a single industrialised market. I fear we are slipping in a vacuum of our own making. If we miss this great opportunity the chance of our becoming the third world country of Europe, an irrevelance in European economic terms, is a very real prospect. I wish some Minister would explain to major civic figures, civil servants and public representatives in local bodies why there is such a shroud of secrecy about what is going on. It is not in the interest of proper regional planning that local groupings should be kept totally in the dark. My suspicion is that there is not the capability within the Government, within the leadership of the Departments to put a proper plan in place. That is possibly the greatest tragedy facing us. Already we are missing the boat.

I do not want to harp on the date 1992 since an integrated Europe is already a fait accompli and we will see bonuses coming in some years' time. While there are so many needs for infrastructural development, the Government have failed in a miserable and quite appalling way even to attempt to put a sheen on what is to happen in regard to the Structural Funds from Europe. There is a doffing of the cap to it in some of the speeches I have heard. The Minister for Finance and the Minister for the Environment, who has some mysterious involvement in this area, as well as the other Ministers do not seem to know what is going on or how they are to get sufficient programmes in place to obtain realistic funds from Europe. It is simply not happing and the Government know it. That is the sad factor.

I have spoken to city and county managers and they are not being informed about what is happening. They have attended numerous meetings at Government Department level and there is no clear indication from the officials who are supposed to be telling them what is going on. Other countries are getting their act together and we will once again be left behind. The Government will rue the day if they allow that to happen. Their failure will become apparent to the public who will begin demanding serious answers about potential developments, bearing in mind the total waste of the funds we received from Europe after 1973.

No attempt has been made to outline a plan for job creation. This is the single greatest and most catastrophic failure of the budget. There is no point in continually doffing the cap to the unemployed while failing to tackle areas in need of reform which are central to job creation. I came into the House this afternoon specifically to be present for the speech by the Minister for Industry and Commerce, but he had no follow-up on the passing remarks made by his colleague, the Minister for Finance, in the budget. He had no new ideas or initiatives to announce. He simply applauded what is already in place and said it would solve the problem of unemployment. If the Minister thinks that is sufficient he has a severe shock coming.

The Minister for Finance, the former Minister for Industry and Commerce, should let his successor know that we are not achieving the targets which are desirable in respect of unemployment. The Minister said in his speech that in the industrial sector we achieved last year the target of 20,000 additional gross jobs per year. That speaks volumes. He knows quite well that the net gain in employment in the past 12 months has been extremely low and bears no relation to the opportunity provided by low interest rates, low inflation, increased investment and increased exports. There is no correlation between the two.

Dr. McCarthy

It has been a gain.

Mr. Cullen

The Minister had to state the gross jobs figure, knowing that he could not stand over the net gains in 1988. That says it all. He is failing, as are many other Ministers, to realise that there must be an inter-relationship between many of the Departments. No one issue is isolated. No one Department is an island which has no bearing on what is going on in other Departments. There must be a cross fertilisation between the Departments. On numerous occasions the inter-departmental committee has been mentioned. How many times has the committee ment and what has been decided upon? Perhaps we could be enlightened about the plans drawn up for future development.

In relation to privatisation, Ireland stands alone not only in the western world but in the communist world. Given the opportunity and the support the Government would have from the majority of the Opposition, I cannot understand their failure to being even in a very small way some semblance of a programme of privatisation. The Government seem to be trapped into some traditional ideological stance on this issue. I have never considered Fianna Fáil a left-wing party, although they may not be right-wing either. They are certainly broadly in the middle ground.

Mr. Carey

All things to all men.

Mr. Cullen

Perhaps this is the problem. They want to be all things to all men but the reality is that all men are suffering because nobody has benefited. They can see the difference in France, Australia, New Zealand, in the great so called arch enemy of the western world, Russia, and even in Poland and Czechoslovakia where major reform has taken place because there is economic reality.

This problem will not go away and the day is not too far away when the Government and the Fianna Fáil Party will have to bite the bullet in regard to this matter. The Minister may smile but he knows that this is the reality and not something on which the Progressive Democrats ideologically want to hang their hat. It is only part of a programme we have set out; in real terms it is achievable and, in terms of the economy, desirable. There could be gains to the Exchequer in the sale of major assets and State companies by releasing funds back to the Exchequer, perhaps for some repayment on our foreign debt but even perhaps for reinvestment by the State in new companies. I do not say that the State and the Government should not be involved in public enterprise companies, quite the opposite. There is certainly a role for the State to play in developing companies but, when they are developed, up and running and profitable, the Government should seek to capitalise on that by getting their money back with profit for further reinvestment in State enterprise. That would certainly complement the private sector. I am not one of those people who say that all the answers are in the private sector, they are not. There is a role for the public sector but it should be a more imaginative and forward looking role. The Government have failed to grasp that nettle but they know they will have to do so because it is political and economic reality. It will have to happen whether we like it or not but the problem is that, by not tackling it now, the opportunity is being missed. Why not take it now when it will have to be taken in a year or two anyway so that the rolling benefits will accrue to create a strong economy for integration with Europe?

There is still a great opportunity for the Minister for Finance and the Government to redress the balance substantially in the Finance Bill which is obviously now in preparation and which will be brought before the House in the months ahead. If the Government were to make certain strategic changes they would have tremendous support in the House. They would probably increase their support outside the House because the public are highly educated and articulate and want to see this kind of thing happening. The budget is a failure because it is a standstill one. That was the worst possible thing to happen. Budgets in the past which were disastrous did something, even if they went in the wrong direction. The Government nearly had a seizure and decided that the best thing to do was to hold the tiller firm and see which way the wind might blow over the next six to 12 months——

Dr. McCarthy

The Deputy fairly froze on the Barringtons bullet.

Mr. Cullen

When the opportunity is presented the Government must accept the reality and the goodwill available to them in the House. They do not have to run in fear, they can hold their head high and have the confidence to go ahead. The simple reason they can do so is that they are being allowed to do it by the generous co-operation of the Progressive Democrats and other parties in the House. This opportunity should not be lost as even a majority Government may not have been given the opportunity this Government have been given, more than has been given to any Government in the past 20 years. Now is the time for imagination and courage and for dynamism of the highest order from the Department, the Ministers involved and the Government. If they do not take this opportunity the sorry road to ruin will recur.

Mr. T. Kitt

Like Deputy Cullen, I have had time to take an objective and independent look at the Minister's speech. I cannot say I have come to the same conclusions as Deputy Cullen because I am convinced that this is a good budget. I will speak about it in conjunction with last year's budget to some extent because it is important to look at it from that viewpoint.

Broadly speaking, the budget has won the approval of the financial market which I am sure Deputy Cullen will accept. It has meant a substantial reduction in personal taxation, in particular for the lower paid and has, when looked at in conjunction with last year's budget, meant that we have now in place significant, progressive and historic changes in our social welfare system that can only bring about very necessary improvements for those in need in our community. It is the issue of the needy I should like to address at the outset.

The social welfare measures introduced in this budget — and that of last year — must be viewed in the context of the report of the Commission on Social Welfare which was published in 1986. I am using the commission as a yardstick because it is a fair analogy and a most objective way of analysing the social welfare measures in the budget.

The commission's report provides a very useful framework against which progress can be measured. The commission indicated that the social welfare system had developed in a piecemeal manner over several decades and recommended greater rationalisation of the entire system. While the commission made about 65 recommendations, they summarised them into four priority areas. I will deal with each of them in turn and in doing so will indicate the substantial progress that has been made as a result of this and last year's budget.

The first priority recommendation of the commission was that there should be an improvement in the basic payment for those on the lowest payments so as to narrow the differences which exist at present in payment levels between the different categories of recipients. Those on the lowest payments are the long term unemployed and, as Deputies will be well aware, last year there was an 11 per cent increase to those recipients as compared with the 3 per cent increase for all other recipients. This year that trend has been continued with a further 12 per cent increase for the long term unemployed and a 3 per cent increase for all others. The net result of this is that the difference between the highest social welfare payments and the lowest have now been narrowed substantially. In 1986, the lowest payment, i.e. that for a person on unemployment assistance, was 58 per cent of the highest payment, the old age contributory pension. As a result of this budget and last year's the lowest payment is now 65 per cent of the highest payment. By any standard that represents considerable progress and in the process those recipients with the lowest payments have benefited substantially. They have also benefited in other ways as I will point out later.

The second priority recommendation of the Commission on Social Welfare was the provision of more adequate support for families especially those long term dependent on social welfare. Once again this year's budget, combined with last year's measures, has brought about a substantial improvement here. The commission referred to the fact that there were no fewer than 36 different rates of child dependant allowance with the amounts varying, depending not only on whether the child was that of a widower or an unemployed person but also on whether the child was first, second, third, fourth, etc. in the family. The lowest payments were for the children of the unemployed. Not surprisingly the commission recommended that this complex system be rationalised. Last year the number of rates was reduced to 18 and the lowest rates were increased so that families of the unemployed benefited most. This year further rationalisation will occur with the introduction of a minimum payment of £10 per week per child. The main effect of these measures over two years is to substantially simplify the system of child dependant allowance and to bring about more equity between all categories of social welfare recipients and, in the process, to improve the relative position of those who are on the lowest payments.

The other measures affecting families announced by the Minister, such as the extension of the child dependent allowance to children of the unemployed up to 19 years of age as opposed to 18 years of age previously where they are in full-time education and the payment of the highest rate of child benefit for the fifth child as opposed to the sixth child, will also be of considerable benfit to the families concerned.

The third priority area of the Commission on Social Welfare was to broaden the social insurance base. They recommended that immediate action should be taken to include in the social insurance system those groups who are currently excluded. The commission had pointed out that the social insurance system in Ireland was not comprehensive, and that certain groups, mainly the self-employed, were outside the social insurance system and therefore were not liable for PRSI contributions. In this respect Ireland was very different from other European countries. The view of the commission was that all income earners would contribute to the social insurance fund. The basis of social insurance is that it should be an expression of social solidarity in our community in which the risks, costs and benefits should be shared as widely as possible. In this context, the decision by the Government last year to extend social insurance to the self-employed, including farmers and other groups, such as all ministers of religion and members of religious orders, must be considered to be the single most important development in the social welfare system for decades.

Since the mid-seventies various references had been made to extend social insurance to these groups but no action had been taken. As a result of last year's historic decision we now have a comprehensive social welfare system. Under social insurance, people will have entitlement to benefits as a right, and with the extension of social insurance the necessity for means tested payments will decline over the coming decade. I have no doubt that in time this measure will be seen as one of the most significant in the development of our social welfare system.

Furthermore, the decision in principle by Government to extend the full social insurance cost to 160,000 public servants, who are currently paying only the modified rate, and to raise this matter with the Irish Congress of Trade Unions with a view to implementation in 1990, is further proof of the Government's commitment to make our social insurance system comprehensive and fair so that all income earners, irrespective of the source of their income, will contribute to the social insurance fund and benefit accordingly.

The forth and final priority recommendation of the commission was to improve the delivery of the social welfare service, for example, through the development of computerisation. Strictly speaking, while developments in this area are outside the ambit of the budget, it is fair to say that much progress has been made during the past two years. The Minister for Social Welfare has taken measures and provided the resources to streamline the system and further measures are now being considered. A key factor, however, is the simplification and rationalisation of the system along the lines recommended by the Commission on Social Welfare.

There is little point in having a very efficient service if at the same time people applying for social welfare payments are confused by the various conditions of legibility and see little rationale for the different payment levels. In this regard it can be rightly claimed that the system is being rationalised and simplified. This will make a substantial difference to those claiming social welfare payments. One example of this is the decision of the Minister to introduce a payment for widowers and deserted husbands with dependent children so as to put them on a par with widows and deserted wives. At present the payments they receive are lower than those of widows and deserted wives and as a result of the Minister's proposals the system will be simplified and rationalised to make it fairer to all applicants irrespective of the cause of their income needs.

In summary on this aspect of the budget it can be said that the social welfare measures introduced in this year's budget and in last year's budget can be judged favourably against the yardstick of the main recommendations of the Commission on Social Welfare. As a result of these measures those on the lowest payment levels will benefit substantially and the gap between them and those on the highest payments will have narrowed considerably. Relatively speaking, therefore, those on the lowest payments are now much better off than they were two years ago, and this is very much in line with the thrust of the report of the Commission on Social Welfare. It can also be said that these reforms in the social welfare system will in time be regarded as the most significant in the development of the system. It is worth noting that these measures are being introduced at a time when the public finances are being brought under control. Many would have argued that this was not possible, but in fact it has been achieved.

I am by no means suggesting that everything is perfect and that all is well. We live in imperfect times and there is plenty of evidence of this imperfection all around us. Many people are poor, principally because they cannot find gainful employment. The younger ones, the unattached and those with a responsibility for bringing in a weekly or monthly wage have emigrated. Many of them have been lost to our country, some perhaps forever but we hope others will come back. The responsibility of giving these people the option of returning lies heavily on our shoulders as legislators. Others do not find it possible to go. They choose or maybe are forced by circumstances or temperament to stay. The great majority of the unemployed who stay bitterly regret their enforced idleness, they feel the ebbing away of their self-esteem, and they see their position in the local community slowly but surely going from bad to worse. The time will come when all hope, self-esteem and motivation will go, and they will become part of what we call the long-term unemployed. As I pointed out earlier, the Minister for Finance has made a very brave effort — and in my view has succeeded — to help those who most need it.

Social welfare is one means through which wealth can be redistributed but of course social welfare does not create wealth nor does it provide jobs. There are conflicting political arguments as to what percentage of the wealth of the nation should be taken from those who have and given to those in need. There is a degree of intervention by the State which is among the highest in Europe, yet this alone does not seem to be solving our problems of poverty and waste. Some Members in this House, obviously unimpressed by the clear lessons of history, are willing to see the well established trends in other countries, and still shackled to the failed old-fashioned reactionary ideologies of the extreme left, prescribe an even bigger dose of State intervention as the solution to our difficulties. It is reasonable to subscribe to a particular political philosophy and it is acceptable to seek to persuade others that they also should support that philosophy, but it is neither reasonable nor acceptable that those who subscribe to the philosophy of the left should attempt to lead astray those who are most vulnerable, or should stand in this House and offer false hope to people who need real hope.

Above all else, it is the duty of Government to so order the affairs of the nation that the economic and social well being of ordinary people is safeguarded. It is the duty of Government to maintain law and order. Our present position in this regard is by no means perfect and much more remains to be done, but generally we can truthfully say that we live securely under the rule of law. It is also the duty of Government to provide a stable and progressive environment in which the enterprise and self-esteem of the people is permitted to flourish. Can we truthfully say that such conditions exist? I think much needs to be done.

It is popular nowadays to speak of the need for Government to create new jobs. Governments do not create new jobs; it is wrong and monstrous for the likes of Deputy Higgins of the Labour Party to hold out to the unemployed the prospect that if only the Government were to spend a lot more money they would all find the jobs they want. It is also wrong for the same Deputy to argue that the private sector should invest more and more while at the same time demanding that the resources of that same sector be diminished by imposing higher rates of corporation tax. Even Deputy Higgins will have a sufficient grasp of reality to know that one cannot provide investment unless one has the money to invest. The answer lies in the measures already taken by this Government. One cannot save the harvest on a wet, stormy day. No matter how long one works one cannot succeed as well as the person who has the weather on his side. Governments do not control the weather but there is another climate which Governments do control — the economic climate, a climate which is as essential for reaping a good economic harvest as the weather is for saving corn. The Government have worked wonders on economic climatic control over the past two years and I will repeat a list which has been referred to here many times already: low interest rates, the balance of payments in handsome surplus, inflation at a remarkable 2½ per cent, debt-GNP ratio stabilised. The dark winter days of the famous doom and gloom have been left behind us and there is a touch of spring in the air, a feeling of hope. It is fragile, there is much to be done, the harsh winds of unemployment still blow and spring can be a hard season, but it is spring and hope and confidence have been restored.

How will this hope manifest itself this year? What should we look for? We are certainly entitled to look for some progress in reducing the number of people out of work and a corresponding increase in those at work. It is not acceptable for us to go on solving our unemployment problems by exporting our fellow countrymen and women. If we could put even 10,000 extra people to work the effects would be real and tangible for the whole economy. It would mean up to £40 million less in social welfare payments and a tax yield of, say, £20 million for the State. It makes good sense in so many ways to put people to work — good economic sense and even better social sense.

We are also entitled to look for a continuation of the trend towards equity in the tax system which has been a feature of recent budgets. The admittedly small but nonetheless welcome reduction in the direct tax burden on PAYE workers is part of that trend and I welcome the acceleration of the move towards self-assessment throughout the corporate and self-employed sectors. In passing I note that the rate of corporation tax will go down from 47 per cent to 43 per cent from 1 April next as a consequence of decisions made in last year's budget. I welcome very much the moves, as yet limited, towards a simplified tax code for all taxpayers. Subject to reasonable safeguards it is better that allowances be curtailed and rates reduced than to have a proliferation of complex allowances and a resulting high rate of taxation. I urge the Minister to continue this trend as part of the reform of the tax code.

I was somewhat surprised that the Minister has decided to allow what he defines as "small businesses" to remit PAYE and VAT annually. I do not think this is a wise provision. Twelve months is too long a period. Whatever argument could be made for a longer period in which to remit VAT there are no reasonable grounds for allowing employers to retain PAYE and PRSI for a whole year. VAT is a trade-generated revenue and many traders must wait three or four months in order to collect the VAT charged to their customers. Therefore, it would be reasonable to allow them to make returns quarterly or even half yearly. There is no valid reason why any employer should hang on to PAYE and particularly PRSI for any longer than they do at present. If traders argue that the paper work is too onerous then it should be very easy for the Revenue Commissioners to devise a scheme involving the use of direct debit mandates which would meet this objection by the traders and still ensure that revenue was being returned promply. Allowing traders to retain PAYE and VAT for 12 months will be of marginal assistance to profitable traders and will be a real temptation to people with cash flow or other trading difficulties. Perhaps the Minister would re-examine what I regard as an unwise concession.

I do not object to the moderate increase in excise duties imposed this year. They are generally less than the rate of inflation and, therefore simply maintain the status quo. I was disappointed that the Minister did not go further in encouraging the use of unleaded petrol by introducing a meaningful differential between the price of leaded and unleaded petrol. One extra penny duty imposed on leaded petrol would have enabled the Minister to reduce the price of unleaded petrol by up to 20p per gallon. This is the kind of figure necessary if a real swing to unleaded petrol is to be encouraged. I ask the Minister to go even further in getting the lead out of petrol.

The Minister rightly restated the Government's concern for our environment. A major public debate on the environment has been taking place in Ireland over the past number of years and will most definitely continue into and beyond the next millennium. The real political issue that must be tackled sooner rather than later is how to expand this country industrially while at the same time protecting our clean environment. Well publicised and controversial examples of this struggle between the industrial and environmental lobbies are popping up monthly all over the country. We had the Merck Sharp and Dohme versus John Hanrahan case. We should all be greatly indebted to Mr. Hanrahan for singlehandedly taking on this major corporate body.

An Ceann Comhairle

I am sorry to interrupt the Deputy but the Chair would much prefer it if no refence was made to persons of that kind who are outside this House. The matter may well be sub judice.

Mr. T. Kitt

I accept you ruling on that, a Cheann Comhairle, and I will move away from that case. The debate on the environment versus industry began in earnest as a result of issues such as the one I mentioned. Other examples are now cropping up, for example, the Merrill Dow Chemical Plant proposal for Cork. This proposal was welcomed by the unemployed but suspected and not trusted by the environmentalists and some of the farming community. Another example is the Goodman processing plant for Tuam. This was welcomed with open arms by the Tuam Chamber of Commerce but opposed by some local residents. In this case An Bord Pleanála, to their credit, included so many conditions when granting permission for the plant that the health of the local residents and indeed the life of the local rivers appear to be more than protected. The dilemma which has resulted from these cases is how we are to know for certain if these industries are safe and will remain safe.

A very predictable and dangerous trend is emerging. The industries in question have environmental and health consultants to defend and promote their side of the arguments and the environmental lobby bring forward specialists and experts who tell us the opposite. The end result is that the public are confused and do not trust the industrialists regardless of the support and backing they get from the IDA. They are not convinced that the local authorities have the resources or the expertise to carry out the monitoring of waste treatment and disposal. Seeing that my colleague from Cork is here, I should point out that Cork is an exception. The local authority in Cork have a number of chemical plants within their jurisdiction and I am aware that they have always managed to carry out a proper monitoring service but this does not exist in many local authority areas. I should like to see the establishment of a recognised independent agency who would carry out research and arbitrate in cases such as those I have mentioned where industries want to set up in Ireland but meet with opposition on health and environmental grounds. We need the jobs but we also need assurances that these are safe industries. If anything goes wrong with one of these new chemical plants then the damage done will be irreparable to our image as a clean air and clean food producing country. Our bottom line must be to protect this major marketing image. If public conflict between industry and local environmental and health interests cannot be resolved, the Government should be able to call on the expertise of an independent national research institute to act as consultants in helping the Government to decide whether particular projects should go ahead. Such an independent agency could work closely with the university research units and internationally recognised health and environmental institutes in ensuring that new industries would not effect our environment adversely. This agency or institute should also have the power to monitor and control the disposal of waste, waste emission, incineration etc.

A reconstituted EOLAS, a body who, to their credit, have always acted in an independent manner and have laid down specific guidelines in these areas but who have not enough flexibility or power when it comes to the monitoring process once the industry under investigation is set up and running, could liaise closely with international and health environmental institutes, our universities here and universities throughout Europe and abide by agreed international environmental and health safety standards. We are heading into a European dimension in the run up to 1992 on this issue. It is no longer an Irish issue; it is very much a European issue — in fact it is an international, worldwide issue. The establishment of such a body, I am convinced, would lead to a more co-ordinated and planned approach to industrial expansion and would allay the genuine fears of those who are concerned about lack of proper planning and monitoring of the new plants setting up here on a regular basis. The business community I referred to should contribute financially to this monitoring and research process.

I do not for a moment underestimate the task of the Minister for the Environment in dealing with this issue. Tough decisions will have to be made. We produce 2.13 million tonnes of industrial waste every year and of that 52,500 tonnes are toxic; 15,000 tonnes of hazardous waste are exported for dumping and burning while the remaining two thirds are disposed of here. It has been estimated that 20 per cent of toxic waste produced here went unaccounted for last year. Much of our waste is dumped off the Irish coast. The Minister will have a difficult decision to make regarding the issue of a national disposal plan and the option of a national incinerator or national waste disposal site. However, he has faced up to difficult decisions in the past and I know he will not be found wanting on this issue in the future. The time is ripe for the establishment of an independent research and monitoring agency who would have powers and would strengthen the Government's hand in ensuring that we can expand industrially, provide the necessary jobs and at the same time protect our invaluable and precious environment.

On the issue of protection of our environment and our health we must move towards the concept of an international monitoring forum. For example, the approach could be applied to this proposal by BNFL to construct a cavern under the Irish Sea where they would dispose of their nuclear waste. Such a proposal would constitute a major threat to our environment and health on this side of the Irish Sea, when one considers the record of accidents at the Sellafield plant. Since all countries within the EC are endeavouring to harmonise taxes etc. in the run up to 1992, why can we not also harmonise our health and environmental safety standards on a European basis and establish a monitoring body within the EC who would have real powers to protect countries like Ireland from a proposal such as that made by BNFL?

The Government have rightly placed an emphasises on the EC Structural Funds. They were quite right to send a ministerial team to discuss their plans with the Commission on 6 January, and I would go as far as to say that the Government are the first administration who have really got their act together in relation to European funds. They have negotiated the doubling of the Structural Funds and moved quickly to set up the different regions so as to maximise the advantage for our country. These additional funds will change the face of Ireland in the next five years. I hope that by the end of the five years we will have a ring road around Dublin, to include the Southern Cross route, as this is, after all, part of the European route from Belfast to Rosslare to Le Havre. Also I hope we would have built by then, if you will forgive me for being parochial — I am sure the Minister of State, Deputy Brennan will not mind — a by-pass for Dundrum village, with the aid of the EC.

An Leas-Cheann Comhairle

You have not enough time to go any wider.

Mr. T. Kitt

This budget has been a good one for young people in that it has placed a strong emphasis on job creation. I welcome greatly the involvement of the main banks who have agreed to make £10 million available to young entrepreneurs. The doubling of the allocation to DÍON is very significant.

In conclusion, I compliment the Minister for Finance on a very fair and progressive budget. He has managed to continue the historic achievements of his predecessor in his handling of the public finances, the Exchequer borrowing requirement and the current budget deficit. The measures he has introduced with regard to personal taxation mean this Government have more than fulfilled the commitments made in the Programme for National Recovery on this issue. The most significant aspect of the budget is the area of social welfare. The reforms in the social welfare system this year, combined with last year's budget, will be regarded in time as probably the most significant in the development of the social welfare system.

Mr. Carey

I always like to speak on the budget when it arises. I come here and listen particularly to speakers on the Government side. I find some of them entertaining, some of them factual and some totally erroneous. They are all sucked into this hype and expectation that was raised about the 1989 budget and the largesse the new Minister, Deputy Albert Reynolds, would have to give away when this great day, 25 January 1989, would dawn, when the Opposition would crumble because of the generosity of the Minister. He had so much to give away. He was going to give PAYE people the major relief they have sought down the years. He was going to relieve poverty in the way the clergy had sought through the Conference of Religious Superiors. All this was to be done with a stroke.

The media play a big part in establishing reality. In this case they have gone very far from it, but I must compliment the editor of the Donegal People's Press whose leading article in his edition of Friday, 27 January 1989 began “Was it Doctor Johnson who reassured us all with the quote: `A woman is only a woman but a good cigar is a smoke'?” Another remark about tobacco is, “A cigarette is just long enough to leave you dissatisfied”. That is the sort of budget produced last week by Deputy Reynolds. He made a valiant effort to do everything and nearly succeeded in doing nothing. Under strict orders to maintain fiscal rectitude he tried also to tickle the tax system, boost employment, help the poor and skim a little more cream off the blosoming financial institutions without frightening them away altogether. Faced with a multitude of deserving causes, he offered help to some and inevitably ended up offending others. Of course, as a Minister in a middling popular minority Government, he had his positive actions all construed as political window dressing in preparation for a possible general election.

I would like to congratulate Deputy Reynolds on his new assignment as Minister for Finance. He is an amiable and affable person and one of the first industrialists to hold the post of Minister for Finance. I am disappointed the Minister did not grasp that nettle. Deputies on the Government side have been suggesting to the House that the performance of the previous Government was very poor. They have told us that the Coalition failed in their task but I would ask them to reflect on some of the problems we faced when in Government.

Deputy Kitt referred to emigration and I should like to draw his attention to the figures issued last week which show that approximately 73,000 people left our shores last year. To me that represents disaster stakes. Immediate action is required to remedy that. My party have generously offered to participate in a conference with other parties to discuss tax reform with a view to producing a package in preparation for 1992. We must have a medium and long-term strategy. The budget was designed in case there will be a general election in the next few months, in case the Opposition combine to vote down a beleaguered Government.

I do not think the Government can afford to ignore what has been a feature of Irish political life since March 1987, the stability that this institution has given to all sides of the economy. I listened to Deputy Roche pouring scorn on the actions of the Fine Gael Party when doing their national duty in regard to the national debt. The Minister for Industry and Commerce, in the course of an interview on television tonight, was optimistic about the future but I am sure he will admit that since the Government took office there has not been any drastic effort by us to destabilise the institutions of the State. I should like to remind the Fianna Fáil Party of the actions they took between 1982 and 1987 to try to bring about the downfall of the Coalition Government.

Between July and November of 1986 Deputy Séamus Brennan, now Minister of State, forecast that there would be a budget overrun of almost £1,000 million.

He told us that we could not meet our budgetary targets. Deputy Harney made a similar forecast. I cannot say that members of my party were silent because Deputy Skelly was active with his shopping basket, as was Deputy Cluskey of the Labour Party. There is no doubt that there was a run on currency and that Government securities were sold but Fine Gael faced up to their task and produced the 1987 budget which was implemented by the former Minister for Finance, Deputy MacSharry, almost word for word.

If Deputy Roche wants to criticise he should refer to March 1987 when Fianna Fáil were converted to the need for financial rectitude. I am not saying that Deputy Brennan was not aware of the meaning of solvency or of the need for the country to meet its debts but in his efforts to get Fianna Fáil to power he said anything that came to his mind if he thought it would ruin the Fine Gael-Labour Coalition. I am not complaining about that and I have no doubt that if I did I would be told that that was politics. However, as a result of the actions of Fianna Fáil during our term of office we have had the greatest exodus of young people from our country. Cynicism still abounds and the budget, with all its cosmetics about social welfare being increased and income tax reduced, is not of much use to the unemployed. There is a need for a major reform before we can achieve long-term growth.

I appreciate that Fianna Fáil must portray themselves as the only party who can instil confidence in the economy. I should like to tell them that our spokesman on Finance, Deputy Michael Noonan, when he addressed the national conference of chambers of commerce in Ennis last year, was given the loudest applause. He gave industrialists hope for the future because he offered more of the Tallaght strategy which allowed the country to progress. I do not expect Fianna Fáil members to acknowledge the success of the Tallaght strategy but the Minister for Finance should acknowledge the rapport that exists in this House. He should give us the opportunity to suggest different schemes to improve the lot of our people. The offer by Fine Gael to prepare, in conjunction with Fianna Fáil, a package of tax reforms should be accepted by the Government. It represents our best hope for the future. The Minister for Finance and his colleagues are aware that there is little difference in the income of the lowly paid and those in receipt of social welfare benefits. In most cases it is more attractive for the lowly paid to go on the dole because if they do they can avail of many benefits. The whole system is in need of change. I do not know where the confidence Deputy Kitt spoke of will come from.

A person interviewed after the budget was asked if he thought there were more jobs available now than in the previous year and replied that he thought the Minister was on the wrong bus. That man was telling the truth. I do not wish to get involved in an argument with the Minister of State or the Minister for Industry and Commerce about the validity of the figures for new jobs but I wonder if they are aware that at my weekly clinics many people ask me to help them obtain employment. Others seek my assistance to get them to Australia or to get a visa for the United States. It is pathetic that our young people have to leave. We should be ashamed of ourselves. We are turning our backs on those young people. The budget, which is a sham, does not help them.

Deputy Kitt told us that the financial sector had welcomed the budget. Deputy Brennan is aware of how critical current budget deficits are and how critical Exchequer borrowing requirements are to interest rates. He will be aware that for 1989 the Minister has estimated that our borrowing requirement will be £1,057 million and that the financial market told us that a borrowing requirement of £1,100 million would be critical. We are budgeting for a borrowing requirement that is less than £50 million off a critical figure. A slight jerk in interest rates could bring our total over the top.

Will Fine Gael make a show of themselves shouting of over-runs or lack of confidence in the economy? Will they encourage the emigration we have seen over the past few years? Fine Gael will not do that. From what I hear an election my come sooner rather than later and I ask people to remember when they vote what responsibility to the nation means. Fine Gael put the 1987 budget to the people and we were told that it could not be countenanced. We were thrashed, because on the other side of the House the Fianna Fáil Party offered self-financing tax breaks and other things like that.

The Taoiseach did not make any real promises. However, economic correspondents, particularly in the Irish Independent, were saying that the Taoiseach had won the debate. The Taoiseach said nothing. In the interests of honesty the Fine Gael Party put up and were prepared to be shut up in the national interest. There is a big challenge for Fianna Fáil.

This cosmetic budget does not address any of our real problems and it does nothing to combat the cynicism and the attitude to politics and to politicians. This kind of massaging that is going on will be utterly rejected by the people. The opinion polls are saying nice things about Fianna Fáil and I wonder why they do not go to the country so that the Taoiseach can get his mystical overall majority. The reason they do not go to the country, and I give the Taoiseach credit for it, is because as long as they have a majority on this side of the House and a majority on the Fianna Fáil side there will be no trouble and the country has a reasonable chance of getting on.

The Taoiseach was against the 1977 manifesto as was the present Minister for Finance who is even on record as having said that he never read it. Imagine that Deputy Reynolds who was first elected for the Fianna Fáil Party in the 1977 general election never read the Fianna Fáil manifesto. Little children in schools around the country knew what was in the 1977 Fianna Fáil manifesto. The Minister knew what was in it, too.

This country is virtually insolvent. It is time we looked at reality. It is right that Fianna Fáil should boost confidence.

There has to be life after the debt crisis, but it is how one eliminates the debt that counts. The budget published last Wednesday is not a great leap forward. We have not too long to wait until we are into the single market. Trains will be going from the top of Scotland to the bottom of Italy at rates of 180 miles an hour and in Ireland, Irish Rail will operate at an average speed of 50 miles an hour and we will have 60 miles of sea between us and the mainland. Ireland's cost structures will be totally out of line with the rest of Europe and we will be trying to compete. I sympathise with Deputy Brennan in trying to persuade Irish people to buy Irish.

An Leas-Cheann Comhairle

Minister Brennan.

Mr. Carey

Sorry, Minister Brennan. The Minister is making a valiant effort. He has more than once appeared on television exhorting people to buy Irish and he has produced schemes for which I commend him. He should talk to the Minister for the Environment who has imposed a hidden tax. Less than 15 months ago the Minister for the Environment produced a Bill to make sure that the ESB would pay £24 million in rates on their buildings. The ESB must recover that sum from their customers. Ironically that money will be collectd by the county councils to be handed over to the Minister for the Environment and the spending of it is controlled by the Minister for Finance.

In my constituency the Moneypoint project was a major project. The roads were uprooted and people drove from every corner to Moneypoint. The roads are now pitted with potholes. There is no reference in the budget as to what will happen in relation to this £24 million in taxes from the ESB. When the Department of the Environment decided to impose those rates the buildings in question were under-valued. The correct rate would probably be more like £48 million. I suppose a future Minister for Finance will be inspired about that aspect of it. However, I reject the whole programme because it is an added cost factor in the production of goods and services which we need to improve our economy. The Minister has not looked at that aspect in the budget at all.

None of the newspaper commentators dealt with the likely inflationary effects of this budget. Fianna Fáil Deputies have talked about 2 per cent inflation. This budget will lead to an addition of 1½ per cent on inflation and at the end of next year we will have at least 4 per cent inflation. The Minister did not say anything about that because it might lead to wage demands which he will have to resist.

During the lifetime of the previous Government we had demands for wage increases. Ireland at that time was virtually insolvent, too. The teachers were invited into this House; they were crowded into every nook and cranny and Fianna Fáil said "Pay them £75 million". They roared at us. Was that responsible Opposition? Was that responsible politics and did it show responsibility towards Ireland Incorporated? One might well ask: should Fianna Fáil even be shareholders on account of what they did? Where are the teacher union leaders now? Why are they not claiming their £75 million? I am afraid they have gone to ground; they have got more lucrative posts. I believe some of them are even changing political parties. I read in the papers the other day an account by one of the jazzy correspondents that, following on the budget, she had noticed that the mohair suit brigade was back in Leinster House, that seven or eight Deputies were wearing the same coloured suit with the same stripe. I have to say I support the Minister for Finance and am wearing one of his company suits.

The position is that all of the vigour displayed in protesting at the harsh treatment of the Thatcherite Fine Gael and Labour Government has ceased. I wonder could the same vigour be resurrected and brought to bear on the Government to increase employment? Could it be brought to bear on the Government in an endeavour to keep costs down? For instance, could it be brought to bear on the Minister for Energy to have petrol companies reduce the cost of a gallon of petrol to its real value because we are now paying at least 70p more a gallon than we should? Where is the report of the committee he had been reporting on? Imagine the political kudos for the Government were they able to bring the price of petrol down by 70p per gallon because 70 pence a gallon is being extracted by the cartel of petrol companies supplying our economy. We have an awful lot to do.

In retrospect one can only say that we offered a consensus to Fianna Fáil they would not accept. That is not different because during the last war between the years 1940 and 1945 — when there were no political kudos to be won or lost — this country failed to utilise its best resource, its land. Rather than being owed millions by Britain and the USA at the end of the war we had to go cap in hand, for Marshall Aid. In the sixties under the leadership of the late Deputy Seán Lemass — described as the greatest period of Irish industrial history — we went mad and had wage inflation. In a Cork by-election the same Deputy Seán Lemass, the great judge, allowed a pay award for which there was no need, that was in the Mrs. Galvin by-election.

An Leas-Cheann Comhairle

Deputy Carey will accept that he is taking a long distance view of matters.

Mr. Carey

Again — and Fianna Fáil have failed to recognise it — there is now a consensus in this House they have failed to utilise. Indeed, this budget illustrates the degree of nervousness, the unsteady position in which they find themselves. I would surmise that was the real reason the former Minister for Finance decided to go to Brussels. He could see that people in Fianna Fáil did not want to face up to taking the hard decisions, did not want to arrive at a consensus, did not want to improve this economy so as to ensure that a similar number of people would not be forced to emigrate this year.

I agree with the sentiments expressed by the editor of the Donegal People's Press to the effect that the Minister for Finance made a valiant effort by way of this budget to do everything and nearly succeeded in doing nothing. That summarises this budget for me.

Mr. Flood

I congratulate the Minister for Finance on his first budget. I might refer to a few points relevant to this budget and the previous one and draw Deputy Carey's attention to what can happen when real decisions are taken in budgetary terms. For example, last year the then Minister for Finance took the decision to designate part of my constituency for the purpose of incentives for urban renewal. Arising out of that decision I am happy to report that the Tallaght Town Centre project is now under way, with men working in what had been, heretofore, green fields, where there are machines on site and worth-while employment is being provided. I understand that the labour force on that site will total at least 400 over the next three or four months. That is a direct result of the decision taken in the 1988 budget. We look to the provision of this budget to move on, particularly in the area of investment in infrastructure which is extremely important and capable of linking the public and private sectors, resulting in the creation of substantial numbers of jobs.

There is also in the same area, resulting from finance having been provided in the 1988 budget — as Members of the House will be aware — considerable road construction such as the project to which I have just referred and in respect of which a sum in excess of £30 million has been set aside by this Government to build the western parkway. Taken in conjunction with the Tallaght Town Centre project, considerable jobs are being created which, when both projects have been completed, will change the whole of the south side of Dublin city. I might add that those projects constituted demands made on successive Governments over a long period. For example, the Tallaght Town Centre project has been on the cards for over 12 years. However, a particular developer found it impossible to organise the requisite financial package until such time as he was able to work with a Government capable of taking the appropriate decision to allow the public and private sectors to work together. The same applies to the motorway to which I have referred where the private sector is funding what I believe to be one of the largest bridges to be constructed in Europe, forming part of that motorway.

While on local matters I applaud the Minister on having made special mention and provision in his budget for Tallaght. As Deputies will know, last autumn we had a major debate on Tallaght, courtesy of the Labour Party, which proved helpful in focusing on the needs of Tallaght, of which we are all conscious, but which were neglected by successive Governments over many years. The Government are now recognising that there is a problem in Tallaght which must be tackled. Consequently, I welcome the commitment of £3.5 million for the provision of industrial infrastructure, particularly on the west side of the town which is the most disadvantaged part of the overall area.

The social welfare changes announced will be important for that constituency also because of the large numbers of long-term unemployed. Of course these changes, which are welcomed by all of us, have implications nationally. The debate prior to the budget indicated that something special would have to be done this year, as last year, for those on the lowest social welfare payments. I am particularly pleased that the Minister has been able to provide additional help for this category of social welfare claimant. I hope this process will continue in future budgets so that we can make up the big gap between those on the lowest form of social welfare payment and what is a decent livable income for those on social welfare.

Debate adjourned.