Dáil Éireann debate -
Wednesday, 1 Feb 1989

Vol. 386 No. 4

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. McCreevy

Before the Adjournment of this debate, I was stressing the fact that the budget has been described in various quarters, both inside and outside the House, as being cautious and steady. Before the budget I had made a speech where I said that I hoped the Minister would tread very slowly. When I was interviewed, the interviewer said that as I was not known as a cautious person, why was I now advocating caution? However, the reality is that a lot of the talk in the past few months has been irresponsible. It has been irresponsible in a sense that one would be forgiven for imagining that the problems that had beset the economy for a long number of years were now completely overturned and that everything was on a steady course. Everything is on a steady course but we are a long way from the end of the tunnel. It is not that we have begun to see the light at the end of the tunnel but that we have only begun to see the tunnel.

The simple and stark facts are as follows: at the end of 1988 the Irish debt ratio to gross national product stood at 133 per cent of GNP. The same ratio is projected to the end of 1989. If the Government had not taken the corrective action they have taken in the past two years, I do not know what the figure would be. However, I am already on record as having stated many years ago that if we had kept proceeding at the pace at which this economy was going, we would be totally non-viable. If we had continued with that particular debt-GNP ratio, our standing in the international community would fall and we would not be able to provide a level of public services in this country at all.

I consider the ratio of 133 per cent to be still too high. They had a major debate in the United States preceeding the last presidential election — though they seem to have a peculiar way of having elections, they talk about everything except the real facts of the economy — about the debt-GNP ratio. There is a serious crisis in the American economy because it is projected that their ratio is 55 per cent. Our rate is 133 per cent. To put that in context, it takes over £2 billion per year to service our current level of debt. The situation has been like that for a number of years. If that figure did not have to be repaid on debts incurred in the past, it would mean that we would be well able to fund a very adequate health service as the total health bill is approximately £1,200 million. We would have had current budget surpluses over the past number of years. It would be impossible for any Government to right in a couple of years the wrongs of the past 15 years.

One good thing that has happened in the past few years is that reality has dawned on all, particularly the Members of this House. It was acknowledged that we had to do something about where we were going, and we did it. This is the first Government in the past 20 years who have actually done anything about the problem. If talk could have solved this problem, it would have been solved many years ago. There was a lot of talk about this by successive Governments and they all had their aspirations but nobody did anything about it until now. Whether we win the next election or not, this Government will be remembered as the first Government to stop the rot. I have already paid tribute to the responsible attitude taken by the other parties in the House, particularly Fine Gael, which may not have paid off politically as of yet for the current Leader of the party but which in the long term will pay off because in the long term, the Irish people give credit where credit is due. This Government will get credit for arresting the decline which has been going on since 1972 at least.

If we are to learn anything at all, we should realise why we got into this mess. It was because we were not prepared, as a nation, to pay as we went along. In the 1973-1977 period there were good reasons for having current budget deficits. Perhaps I am the only person in the House who remembers the original principle of what that was about but the theory behind it was that when the economy was in decline, or due to some outside influence there was a crisis, we would not balance the current budget every year. We would pump more money into the economy to stimulate demand. Up to 1972 it was the set economic theory that you balanced your budget. However, it was never intended that a current budget deficit would become a regular feature of any economy. The principle was that it was only a short term expedient to pump up demand in times of crisis and then to return a balance. It has become a fact of life in this country that we have a current budget deficit. This Government have not balanced their budget yet but at least the budget has not spiralled in the past two years.

It is not that the level of public services we provide is excessive but that we were not prepared to pay the cost of those services or to have a level of services the cost of which we could afford. All the services that we have are necessary and very desirable. However, if you have not the money to buy a new television set or washing machine you do without. The State did not adopt that household principle, which is the fundamental reason for our having got into such a mess over the past couple of years. All the public services are necessary and very desirable but we could not afford that level. I wish to see this Government continuing on their present course, so that eventually there will be no current deficit at all. That will take further drastic action, but I think we are on course to do that. There was a good reason for trying out having a current budget deficit, but it continued apace and became a standard feature of economic life. We must reverse that thinking.

There were many irresponsible comments made during the last three or four months of last year by politicians and others. The new "in" expression was "tax reform". Other parties, particularly the Progressive Democrats, spoke much about tax reform in the last couple of months but all they meant fundamentally was tax reduction. That was grossly irresponsible. We cannot yet start thinking about things like that, about reducing the top rate of 58 per cent to 40 per cent and the standard rate down to 25 per cent or whatever. We have been down that road before. One can make a mistake once, which is hard luck, but to repeat the mistake would be grossly irresponsible and criminally negligent. The Irish people, and particularly certain sectors of them such as the poor and underprivileged have suffered hardship as a result of some measures taken in the past couple of years. It was not the poor and underprivileged who caused the present crisis. Now that we are coming to a semblance of reality and are half way down the road to solving the problem, would it not be justice, if there were any surplus funds, to direct those funds to the poor and underprivileged? Surely it would be morally reprehensible to give tax cuts to the taxpayers in the highest bands in the land — although we would all love the highest tax band to be 50 per cent or 40 per cent — after all this hardship suffered by those in the lower income brackets.

We tried the economic theory in 1977 of giving tax cuts. We abolished car tax and we gave other reliefs at that time. That policy had a short term impetus on employment but in the long term, although it did create jobs, it did not create them in Ireland. They were created in Japan, Hong Kong and elsewhere. We ended with a massive debt and increasing costs of public services and we are now trying to get out of that dilemma. There was talk over recent months about heading along that road again but the evidence is there that current budget deficits do not work in Ireland. In an economy such as that of the United States it can work because of the huge population. It does not work in Ireland because of the Irish propensity to import. If you flood the economy with extra money you will not create more jobs here and will end up having always to have a current budget deficit.

I am a reasonably fair minded person and I wish to congratulate the Minister on this budget but on another budget at another time I would equally criticise the Minister of the day, if I saw fit to do so, regardless of whether he was a member of my party or of any other. The Minister and the Government were particularly brave to resist the temptation, which must have been great, of further tax cuts. If Fine Gael and the Progressive Democrats are talking to the people about reducing taxes that is very attractive, particularly electorally attractive. I have had enough experience from 12 years as a Member of Parliament to know that if things are electorally attractive, no matter how hard people try to keep the line, it will be broken by the other party. There has to be a response. The middle class and upper classes vote in elections but the poor do not vote in such great numbers. That still does not lessen the validity of their case. All the tax cuts given in 1977 did not do the poor any good. They do not have cars and did not have cars then, either. Tax cuts are no good to them because they do not have jobs. The temptation must have been immense for the Government to go off on a spree again and end up in the same net.

As I have been saying for many years, Irish politicians are slower than the public. The Irish people know reality and respect it. They know if a Government are doing a good job or otherwise. I have talked about parties throwing money at the electorate. If I walk along a corridor and find a fiver lying on the floor and there is nobody around, the temptation is to put it in my pocket. I might take the fiver, but I would know that it did not fall from heaven. The electorate will take all the goodies that politicians throw them at election time, but they know that the day of reckoning must come. Opinion polls have proved that where measures have been harsh and much criticised people admire the Government for doing the right thing. That should be a lesson for all future Governments.

To come back to tax reform, that is not what has been spoken about in the past, but tax reduction. Tax reform is very difficult to bring about. It is like being against sin but just not now, Lord. Let us take the example of the children's allowance. The Minister in his budget speech said that the Government were thinking, perhaps next year, of restricting children's allowance in some form for the higher income groups in our society. What happened overnight? There was the greatest hullabaloo about it. I do not like anyone to impugn my motives, so I will not impugn anyone's motives. There must be only a very small minority of Deputies who would not agree that the Minister was right.

The Taoiseach referred this morning to what Deputy Desmond said many years ago about the immense pressure from political parties when any topic of this type is mentioned. It is absolutely ridiculous that the wives of people in the higher echelons of income earners receive children's allowance. I do not care whether that vexes or pleases the ladies in my constituency. It is the plain truth. There are many ways of tackling it. Perhaps the husband might be taxed and a corresponding tax relief might be given at lower income levels. Other Government Ministers have talked about monstrous thresholds for the cut off point. The Minister's idea is a good one and the principle is certainly right. All Deputies, with the exception of one or two, must agree, although they may not be prepared to admit it.

I should not like members of the Government to raise the threshold any higher because if they keep going as they are only Michael Smurfitt and Tony Ryan and a few others will not be eligible for children's allowance. The threshold should be set at a realistic level. The figure of £30,000 has been mentioned but I believe it should be far lower. Perhaps the Minister will consider taxing the husband and consider introducing a tax free allowance for low income earners. Taxing children's allowance or stopping the payment of it to certain people is not a radical step. Any really radical proposal would cause a great hullabaloo on all sides of the House and pressure groups would be formed to resist it. Despite all the talk about tax reform, it would take a very brave Government and a brave Minister for Finance to do anything about it. The political pressure would be intense.

I welcome the social welfare provisions, which represent an attempt to target the real poor in society. One problem is that the differential between income from work and income from social welfare is so small. It is not that social welfare rates are too high. An example will make the point. A person could earn a gross income of £200 per week and have a take home pay of £140. The cost to the employer is 12½ per cent of the gross salary, giving a figure of £224. Taxation is taken by the Government to pay for the problems we created in the past. We must conquer those problems by reducing the national debt to a realistic level. This Government have adopted the right approach. There is no option but to tackle the debt problem.

There are two forms of unemployment. In some parts of rural Ireland there are small employers who cannot get people to work for them unless they agree not to stop PAYE and PRSI. These people want to collect the dole at the same time and want the employer to give them money into their hand. The Department of Social Welfare should expend more resources investigating this practice. Large numbers of people are abusing the system because the differential to which I have referred is so small.

I welcome the increase in the capital budget. It has traditionally been believed that £1 million invested in the capital budget will yield a certain number of jobs, but the ratios used in the sixties and seventies are out of date. The ratio now is a lot less due to technology and lower costs. People ask why we are not experiencing an increase in jobs since the economy is performing so well and exports are so high. The same thing happened during the recession in the seventies. Firms who have let people go find when the economy picks up that they can get greater productivity from a lesser number of employees. There is a considerable time lag before they begin recruiting because they are reluctant to take on extra staff. This year will see an increase in employment and the Minister's figures may be somewhat conservative with regard to the number of new jobs.

The large export figures given by many companies are really fictitious. They are arrived at by what is known as transfer pricing. There are double taxation agreements with several governments. Export figures may not correspond with the real level of exports. The American revenue authorities are trying to take action against some companies. There is very little the Irish Revenue Commissioners can do about it because they want to increase profits here. Transfer pricing accounts for part of our export figures and such figures do not represent real export growth.

Regarding farmer taxation, I must declare a professional interest in that I practise as a chartered accountant with a large number of farming clients. Anything I say will be seen in that light and it will be said that I am protecting my own interests in that few people will talk themselves out of a job. In principle, the Government are correct in what they have said. The campaign being conducted by the ICMSA is totally irresponsible. We should learn from experience. The farmers went to court regarding the payment of rates and the Government had to scrap that system.

There was such a campaign about sales tax in the late seventies that we had to get rid of it. We got rid of the notional system. We had land tax and they wanted to get rid of that. During my early years in the Dáil in 1978-79 there were major meetings in the party rooms about sales tax. I and other Deputies played a big part in persuading the then Minister, the late George Colley, to modify the proposals. We eventually did away with it. I was very outspoken on that issue. What did it achieve? It brought 750,000 PAYE workers into the streets and it created an urban-rural divide.

The urban rural divide was created in regard to tax but the IFA have now put forward realistic proposals to the Government for keeping the accounts system with certain modifications. The problem is that successive Governments treated farmers as a separate species and said that they could not keep accounts. Many of my clients are farmers and none of them ever had difficulty in keeping records in case they wanted to apply for a grant. They now know how to live within the system. The ICSMA represent milk farmers who have done extra-ordinarily well in the past couple of years. Last year the yields were expected to be £42 million but I said they would be considerably greater in 1989 because farm accounts were a year behind.

Land tax is not income tax. It would be a great system if an accountant could be taxed on the number of square feet in his office or the carpenter on the number of tools in his box. If I owed £10,000 in tax, Deputy Nealon owed £5,000 and the Minister, Deputy O'Rourke, owed £2,000 it would be a grand system if, instead of paying the £10,000 we could divide the full amount by three leaving me to pay £5,500. However, we must be realistic and have a fair system.

I am not standing up for direct taxation but, if it is to be changed, it should be changed for everyone. If it is bad for one it should be bad for all. It would not be morally justifiable to put farmers into a separate category. The ICMSA are sharpening the urban-rural divide. Let us give the present system a chance.

I welcome the tax amnesty and the Revenue Commissioners have been congratulated ad nauseam in this regard. However, I should like to congratulate the self-employed who paid their taxes. A lot of people went to a considerable amount of trouble and into debt to get their tax affairs up to date. The compliant taxpayer has paid up but thousands of people are still outside the system and have not paid. The Revenue Commissioners should devote more of their resources to going after those people.

The self-assessment system is a great idea and is working quite well but I would have preferred if it did not start until September or October 1989 to give the Revenue Commissioners more power to organise their affairs in such a way that the system would be more streamlined. I will refer to this again in the debate on the Finance Bill. However, the self-assessment system will not work effectively unless there is a single basis of assessment. A person who has a shop or a small business may want to pay his taxes on time but if his wife has a job he has to wait until he gets her P60 after 5 April of the relevant year before he can fully assess what he owes. That will slow down the system. The Minister said that a working party will be set up to examine the whole matter, which is very welcome. It would help the system if, before next year, the Revenue Commissioners and the experts in the Department of Finance can arrive at a proper system.

I welcome the decrease in the standard rate of 35 per cent and in the top rate of 58 per cent. I am glad that the Government did not lower the top rate to 50 per cent because that would have been very unjust.

The only areas in which we can have tax reform are property and capital taxation. That brings us to the question of local authorities and local property taxation. I am on record as saying that we might as well do away with local authorities, as we should have done in 1977. There was nothing wrong in abolishing rates at that time but it was criminally irresponible not to replace them with something else. Since then every Government have funked the issue. I was glad to see in the magazine Aspect that the Minister for the Environment, Deputy Flynn, is set to tackle the issue. He might as well be straight with the people and tell them that if they want proper local authorities and funding there must be property taxation. I wish the Minister the best of luck getting such legislation through the Houses of the Oireachtas. The Government must take their courage in their hands and do something about the problem. I wish the Minister well in his appointment. The Government have done an excellent job and most people recognise that. If I did not think they were doing things properly, I would have no hesitation in criticising them. I wish them continued success.

Mr. Nealon

This is a budget of missed opportunities. For the first time in perhaps 15 to 20 years the Minister for Finance found himself in a relatively good and favourable budgetary situation. This is because Fianna Fáil in Government took on the policies of Fine Gael, jettisoned their own election policies and pursued ours without attribution or praise. Never mind, they worked because they were the correct policies.

It is also true that the Minister found himself in this good budgetary situation because the Fine Gael Leader, Deputy Dukes, turned his back on sterile Fianna Fáil type opposition and gave the Government his broad support in the national interest. With everything going for him the Minister failed miserably to bring in an imaginative innovative budget. In particular, he failed to put anything worth while in place to tackle our major problems of unemployment, emigration and poverty. He came to the budget with the yearly average of 243,000 people unemployed and an unquantified figure as far as emigration is concerned.

One of the methods of calculating emigration — a crude way but probably the only one we have — is to check the inflow of people at sea ports and airports against the outflow. Based on this method of calculation the figure for 1987 was 30,000, which many people accept as the average for emigration. According to figures given in this House a short while ago, the figure for 1988 was 73,000. I wonder if this means the true emigration figure is 73,000. If so, it is a staggering figure. Aware of the number of departures from Counties Sligo and Leitrim I believe that the actual figure for 1988 is somewhere approaching 70,000.

We should bear in mind that the level of emigration is worse when broken down by district electoral area. In the fifties the worst affected area was from Kilkelly in County Mayo, through the area around Knock Airport, Charlestown, my native place of Aclare, Tubbercurry, Ballymote and into County Leitrim across the mountains. Deputies may be interested to know that the breakdown by district electoral area was done by Deputy Garret FitzGerald. It showed that this area lost more of its population during that period than any other part of the country. I fear the same is happening again.

Recently at two branch meetings we went through the draft electoral register drawn up in November last, and found that 70 people, young people mostly and some not so young, had left and are now in Britain or America. There may be a political plus there for the Government in so far as those people who have been forced to leave the country, most of whom are highly educated, might not totally agree that the Government are pursuing the right policies at this stage.

Mrs. O'Rourke

The Deputy said that we were pursuing his party's policies.

Mr. Nealon

I am speaking about sections of our policies and about what the Government have left out. I will elaborate later on on how the Government have failed to tackle unemployment and emigration. There is nothing in this budget to make one believe things will be better in a year's time. The Minister was too diffuse. He tried to travel a little down the road with everyone and ended up going nowhere, satisfying no one fully.

Despite the fact that the budget was skilfully packaged, garnished if you like and the presentation was excellent, it is now emerging that what we had on budget day was a very big illusion. An example of this was the announcement in the Budget Statement, to the applause of Fianna Fáil backbenchers, of a three year programme costing £150 million, to improve county and regional roads. As far as the Fianna Fáil backbenchers were concerned, this was great stuff. Finally we would see the elimination of Deputy Pádraig Flynn's potholes around the country. The Minister gave a great performance on precisely the same lines the next morning on Radio Éireann, but on closer analysis we find this was no big deal. For the first year of the plan, £47 million will be made available but when we examine the figures we see that that figure included £37 million already allocated to the local authorities in the Estimates. In the Principal Features of the Budget it was quite clear that only an extra £10 million was being made available to 27 county councils, and perhaps to other local authorities also. We could easily use all this money and still not fill all the potholes in Counties Sligo and Leitrim. The budget was very big on presentation but short on substance.

We also looked in vain for funding to build local authority houses. This is becoming a serious issue at this stage. Effectively, the Minister for the Environment has managed to do what no cement strike ever did — he has brought the entire local authority house building programme to a standstill. As I ascertained from a reply to a question I put to the Minister in this House last year, only two housing schemes of more than five houses were started in the country — one in Ardee consisting of 15 houses, and one for itinerants in Dublin consisting of ten houses. All other schemes commenced were of less than five houses or the isolated SI cottages. Unfortunately, because of this, house waiting lists which had virtually been wiped out during the term of office of the Coalition Government are once more beginning to lengthen.

When I first became a Dáil Deputy in 1981 a substantial percentage of the cases I dealt with in my clinic related to housing problems particularly in the Sligo Corporation area and to a lesser extent in the Sligo County Council area but thanks to the good work done by the Coalition Government and previous Governments, we had effectively solved this problem. Towards the end of the term of office of the Coalition Government very few of the cases I dealt with in my clinic related to housing problems. In the Sligo County Council area this problem had been eliminated altogether and in the Sligo Corporation area the problem was not too bad. Now the waiting list in the Sligo Corporation area has increased to 300, but despite this for the past two years sanction for a housing scheme at Magheraboy, County Sligo, has been refused by the Government. Even if sanction for this scheme was granted in the morning, the waiting list in the Sligo Corporation area, a relatively small borough, would increase to about 500 before the first of those houses was ready for occupation.

I am dealing with some of the issues which specifically affect County Sligo and the north-west area. The leader of my party, Deputy Dukes and my party's spokesman on Finance, Deputy Noonan, have dealt with the broad canvas but it is important that people be made aware of what is happening in the areas where the budget has failed. One area which has not been tackled in the budget is the dental service, particularly as it affects adult medical card holders. Even the Minister for Health, who has made his reputation by cuts and closures, has expressed concern about the non-existence or the collapse of the dental service. Fair play, he set up a special committee under his Minister of State to look into this. We could tell him without having to set up any special committees what is happening in the North-Western Health Board area, which is not as badly hit as other areas, because it has been brilliantly administered and therefore was better able to buffet the cuts better than some of the other health board areas, and it had not built up big debts in the past.

Let me give one very simple example. Five hundred people in the North Western Health Board area had their teeth extracted on the promise that they would get dentures. Suddenly, the free denture scheme was cut out. They have been told there is no scheme in place and the health board do not know when it will be replaced. Many people were of the opinion, particularly those employed in the dental service in the Department of Health, that £2 million would be provided in the budget for health boards to tackle problems like this. At present the only service available for adult medical card-holders is that they can have a tooth pulled but only if they are in extreme pain and hopping off the chair, but nothing more.

The Government have diverted whatever meagre funds the health boards had — and this is possibly a good idea — towards child care and to looking after school children. Even in respect of this group, there is a waiting list of over 5,000. As I said, this health board area is particularly efficiently run, and I am sure the problem is worse in other health board areas. There was an expectation that this budget would make money available for this purpose. It is only fair to say that the Minister for Health has recognised this problem. Why this expectation was not realised I do not know. I believe it came as quite a shock within the Department when this money was not available. I hope some way can be found to make that money available, perhaps by some savings elsewhere. The service has virtually collapsed.

I am glad the Minister for Education is here. I am sure she was also a little disappointed. In answer to a question from me she explained that there is a shortfall of £5 million or £6 million so far as the school bus service is concerned. According to her answer to me, she had no plans for either increasing the charges——

Mrs. O'Rourke

There was no increase in the charges.

Mr. Nealon

——or cutting out any of the services. I am sure she will explain afterwards where the extra money is to come from. It was not in the budget. I thought it might be there. The Minister may have thought so, too.

Mrs. O'Rourke

Efficiencies.

Mr. Nealon

The farmers are very disappointed with the budget and with what was on offer. They had a promise of a restoration of the flat rate VAT refund up to 2.4 per cent, but the Minister failed to deliver. As in the rest of the budget he went a little bit along the way and brought it up to 2 per cent but the end result I suppose was consistent. The Government reneged on another promise and £40 million was lost so far as the farmers were concerned.

There was a number of anomalies that I thought might be tackled in the budget. For instance, there are 32,000 farmers aged between 56 and 66 who are still obliged to pay PRSI this year and in the following years — this year at 4 per cent — for no benefits at all and for no returns. I thought the Minister on this occasion might have wisely considered the possibility of giving a pro rata pension and pro rata benefits for the people who perhaps will have been in the scheme for nine years and still get no benefit, or that he might have considered allowing farmers to buy themselves into the scheme otherwise. A substantial amount of money is involved for anyone paying tax. It is £208 PRSI for farmers and for those outside the tax regime earning more than £2,500 it is £104. I am also worried to discover that those people who are paying in and who will not qualify for a contributory pension will not get their money back if at the end of the day they get a non-contributory pension. It is the first example we have of people contributing very substantially to a non-contributory pension. That anomaly must be looked at.

Farmers are often accused of seeking preferential treatment so far as tax is concerned. Deputy McCreevy has outlined what the situation was in the past and some of the difficulties that arose from it in regard to country and urban divide. Now a farmer and his wife on the same level of income as a PAYE worker and his wife have a smaller allowance, to the extent of £2,172. This is made up of the additional £800 PAYE and the extra PRSI. I have not read out the table for the new levels of taxation, but at the present levels at the lower band of 35 per cent it will cost the couple £743, at the 48 per cent band £1,060 and at the 58 per cent band £1,260. The farmers have a legitimate grievance in that case.

A contribution of £20,000 is made to Teagasc for research into the area of twinning. That means £20 is the allocation to farmers looking after 1,000 cows. That is a derisory grant to give even in a research project just starting off. The Minister might have done something overall for Teagasc which is headed by Joe Rea. We had built up an excellent advisory service through the Agricultural Institute and ACOT but it is in chaos at the moment and breaking apart. An extra £3 million or £4 million later on would make a major difference in that regard. I understand most senior people are taking redundancy and the difficulty is that those left behind lack direction to a certain extent and Teagasc are being denuded of some of their best activists. Our advisory service people, some of them taking redundancy, are being sold abroad all over the world because of the reputation they have built up here.

The west is totally bereft of any branch of agricultural research. Ballinamore, where they were doing work unique in the world on that drumlin land, is closed down as far as research is concerned. It is known now as a transmission farm, whatever that means. The real strong arm of research has gone from Belclare and Creagh also and the result is that the entire west where such excellent research work was being done particularly on drainage, and on sheep in Mayo, is desolate. Drainage is terribly important in the west and it is for young farmers the only way they can improve their land and increase productivity. It is a very severe blow for them that the only research station specifically applying to their type of problems and doing work which has been acclaimed all over the world — and regrettably used in other parts like Fermanagh and Tyrone much more extensively than it is used down South — is no more.

I am entitled to refer in passing to something that is not specifically a budget matter. All the setbacks of the lack of any action in the budget were small compared with what I would regard as the betrayal of the farmers by the Minister on the beef intervention issue in Brussels.

The climate of opinion was right in this budget and the budgetary position was right for taking significant action to tackle poverty and the poverty trap. Again we look in vain for any good, planned programme in this direction. Of course the Minister did a number of things which are welcome but, typical of all other acts in the context of this budget, they lacked any decisive thrust. There was no radical approach when a decisive thrust and radical approach were called for. You do not remove someone from below the poverty line by giving that person £1.50 or £1.70. The Minister's major failure was in producing a recognisable programme to tackle unemployment. Last year 20,000 jobs were created; on the other hand we lost 23,000 through redundancy and closures, a net loss of 3,000. We also had emigration reaching perhaps 60,000 or 70,000. There is really nothing in this budget to suggest things will be any better this time next year. The Minister had an opportunity to write himself into history. He should have outlined some general thinking towards a guaranteed basic income. He failed to deliver or even to address himself to that possibility. He did not make even a gesture there.

The Minister, in his younger days, ran a celebrated ballroom called "Dreamland" of which I was a sometime patron. He has come a long way since then but he is still stuck in the land of illusions if he thinks that the budget he has produced is the response needed today, with the wind in his back, to tackle the major problems of poverty, unemployment and emigration. I would describe it as a great opportunity lost.

Minister for Education (Mrs. O'Rourke)

In answer to Deputy Nealon, we are all products of "Cloudland", "Dreamland" and the other dance halls.

Mr. Nealon

And "Fairyland" in Moate.

Mrs. O'Rourke

Yes, I am pleased to have an opportunity to contribute to the budget debate. When Fianna Fáil assumed office in 1987 we were faced with a drastic economic and financial crisis. The current budget deficit for 1986 stood at an all-time high of 8.5 per cent and the EBR was high at £2,145 million, representing 13 per cent of GNP. The nation was faced with serious problems and found itself in a veritable disastrous situation with unemployment rising and, most of all, morale very low and people discouraged. The economy was set on a downward spiral and it seemed that it would be like that for some time.

On taking office Fianna Fáil set themselves the task of restoring confidence in their ability to manage the economy. Immediate priorities and targets were to stabilise the debt/GNP ratio by reducing the annual EBR to between 5 and 7 per cent and to create an environment which would encourage investment geared to productive economic growth and job creation. We adopted those policies and implemented them in 1987 and 1988 with great success. It has been recognised by all parties and commentators that the economy has been given a new sense of direction. Exchequer borrowing as a percentage of GNP is targeted to be 5.3 per cent in 1989, the lowest in many years. Overdraft rates have fallen since March 1987 by 6 per cent approximately, inflation, now at 2 per cent approximately, is the lowest for 20 years.

The strength of the Irish economy is illustrated by the fact that in 1988, despite successive rises in British interest rates resulting eventually in a 5 per cent gap between the UK and this country, our interest rates had remained steady.

In March 1987, and again in January 1988, it was stated by many economic forecasters that future prospects were bleak, that Government targets would not be met and that there could be zero or negative economic growth. It is now clearly evident to all and sundry that the Programme for National Recovery, prepared by the social partners and the strategies designed to implement it have enabled Government financial and economic targets to be met and, as the Taoiseach said this morning, to be ahead of target in some respects.

In 1987, and again in 1988, our competitiveness in the international market places showed great improvement. Our exports rose in 1987 and we expect them to reach an all-time high in 1989. Indeed, for the first time in more than 20 years we are likely to have a trade surplus with the UK. Outside the UK, Germany remains our biggest trading partner accounting for some 11 per cent of our exports while exports to France will exceed £1 billion for the first time. In order to maintain and improve our competitiveness we must still adhere strictly to the financial and economic policies laid down by the Government. We must continue to reduce our dependency on borrowing, otherwise we will be living in a land of illusion. Currently the national debt is £24.5 billion approximately and it costs £2.14 billion annually to service it. More than £2 billion, or more than 10 per cent of GNP, will go to creditors to service the national debt. My Department, or any Department, could do a lot with that money. It is still necessary to control and reduce Exchequer spending and borrowing, and to reduce the public sector pay bill despite the progress we have already made.

We must ensure that our limited resources are used in the most effective way to continue to generate economic growth and development. By so doing we can increase employment opportunities. The recent labour force survey showed that total employment between April 1987 and April 1988 increased by 6,000 a modest figure but an increase, and the target for 1988 in job creation in manufacturing and international services has been met. Further improvement in this area will occur as a result of measures taken in this budget. The measures announced will continue and intensify job creation in line with the Programme for National Recovery and build on the progress made during the last two years.

The Irish economy is now in a relatively sound position to adapt and prepare for the opportunities that the Single European Market will offer. The initiatives which the Government are taking — some of which have been outlined by the Minister for Finance in his budget address — will encourage the private sector to increase the volume and value of their exports and will encourage further investment and job creation. The Government intend to utilise the full amount of the EC Structural Funds available to Ireland to prepare for 1992 and beyond. It will encourage the private sector to participate in developing necessary infrastructural projects which will attract EC funds and generate employment.

The net budget allocation for the four Education votes is £1,172.174 million. This is an increase of £3.039 million on the net allocation made for 1989 in the abridged Estimates volume published in October 1988 and corresponds to an increase of 5.2 per cent on the provisional 1988 outturn of £1,114.406 million.

As already stated by the Minister for Finance, the Government are making an additional £1.5 million available to provide an increase of over 10 per cent in the capitation grant payable towards the running costs of national schools. This will allow the rate per pupil to be increased from £24 to £26.50. I am also providing an allocation of £0.5 million for two special initiatives in the post-primary sector in the areas of modern languages and in-service teacher training.

For some time Deputies, leaders of industry, parents and I have expressed concern about the general position in regard to the teaching of modern languages in our second level schools. While French is widely available and taken by many pupils, only a small number of schools offer German or another modern language such as Spanish or Italian. The position of modern European languages in the school curriculum, in particular German, Spanish and Italian must be strengthened if the opportunities which are opening up with the completion of the internal European market in 1992 are to be maximised for Ireland's benefit. The allocation which I intend announcing shortly will go a long way to match the European funds expected for this programme. To encourage schools to offer and pupils to participate in approved language programmes in German, Spanish or Italian my Department will sanction in certain circumstances the necessary part-time teaching hours to cater for the subject.

On the recommendation of the National Council for Curriculum and Assessment I have announced a new junior certificate to replace the Group and Intermediate Certificates and approved the introduction of new syllabuses in (i) Gaeilge, (ii) English, (iii) Art, Craft and Design, (iv) Business Studies, (v) Geography, (vi) History and (vii) Science into the junior cycle programme in second level schools with effect from September 1989. I am also making provision for the introduction of a pilot project in technology in a selected number of schools.

In order that schools and pupils will be able to derive the maximum benefits from these major curricular initiatives, I have arranged for the implementation of a comprehensive in-service teacher training programme. As part of this programme some 15,000 teachers will be attending one-day in-service courses during February and March. These courses for post-primary teachers are being organised on a regional basis and the scale of the operation is unprecedented. Management of schools, teacher and parent interests have welcomed this initiative which is being organised by my Department in association with the NCCA.

We must ensure that our education system, which has served this country well throughout the past decades, continues to meet the needs of our young people and to prepare them to live full and complete lives in a world subject to rapid technological, economic and social changes.

While education must have its own aims, objectives and concerns and must be true to its commitment to the full personal development of the individual, it must be influenced by the external economic forces and its programmes must be relevant to the needs of society. Indeed, the successful integration of its societal concerns with its concern for the needs of the individual is at the core of a good system of education. In practice, a school must foster the knowledge, skills and attitudes essential to active participation by each individual in society, but also it must have the motivations, aspirations and concerns of individuals in a central place in its curriculum.

Furthermore, in a world which is marked by unprecedented change, and by not a little uncertainty, a system of education must be able to provide a sense of continuity with the past and seek to uphold all that is worthwhile and of value within the culture of which it is a part.

I am pleased with the great progress being made in the reform of both the primary curriculum by the Primary Curriculum Review Body and the post-primary curriculum by the NCCA. Their efforts will result in time in curricula that will be broad and well balanced and designed to meet the needs of all our children and will prepare them to attain personal fulfilment in tomorrow's world.

The overall provision for remedial education in post-primary schools has been maintained and, with regard to areas of disadvantage, special attention is paid to the needs of pupils in such areas. There has been no reduction in the number of additional posts for remedial education in the post-primary sector and the in-service training for teachers working in this area continues to be provided and supports them in their important work.

In the related area of provision for the mildly mentally handicapped my aim is to ensure continuity of provision between post-primary and primary schools. We have 30 centres now where there is provision for the mildly mentally handicapped at post-primary level. This is of particular help in disadvantaged areas where such young people could be especially vulnerable. I plan to continue to improve this provision. These and various other improvements which I am introducing are part of the Government's continuing efforts to pay special attention to the needs of those who do not appear to benefit fully from our system of education, excellent though it may be in so many respects. The entire well-being of our community is enhanced by a caring and effective improvement in the quality and level of educational provision for those who need it most.

A provision of £661,000 has been allocated for computerisation in 1989 which includes provision for the acquisition of hardware and software for the development of a computerised examination system in Athlone. The computerisation project will be phased over the period 1989-1991 with the first phase of the project being completed for the June 1989 examinations. The completion of this phase will enable the computerised production of provisional statements of results, candidates' certificates, computer readable data for external agencies, and examination statistics.

In the last two decades there has been quite a phenomenal growth in the number of young people receiving full-time education. In 1967-68 there were approximately 700,000 persons receiving full-time education whereas 20 years later in 1987-88 the number had increased to approximately 975,000 — corresponding to an increase of some 40 per cent.

Growth in the post-primary sector has been very impressive. In 1967-68 there were some 170,000 pupils enrolled at post-primary schools whereas in 1987-88 there were 340,000 pupils, approximately corresponding to a 100 per cent increase. The increase in the third level sector has been more rapid and striking. The enrolment figure in this sector increased from 21,700 students approximately in full-time education to some 59,000 students, which corresponds to an increase in excess of 170 per cent.

I apologise if some people find figures and statistics boring, but it is salutary to note the huge demands that have been made on the country and on the people through the taxation system. All Governments have responded enthusiastically to the willingness of the people to pay tax especially for education. The proof of it is in the increasing numbers of students. It is salutary to reflect back on it now because we are at a transition period in enrolment patterns.

Up to 1967-68 outside of Dublin there was very little available in the third level non-university sector. The full-time enrolment in 1967-68 in the vocational third level sector was only 969 students, whereas the current enrolment is over 23,000.

The expansions in the post-primary and third level education sectors were due to the policies of successive Fianna Fáil and other Governments — policies such as the introduction of the free post-primary scheme, the provision of school transport services and the establishment of a network of regional technical colleges.

We have all believed in the effectiveness of education as an instrument of social and economic progress. Increased participation in post-compulsory schooling is the most effective way for the disadvantaged and underprivileged groups to improve their economic prospects.

The enrolment data which I have given above are positive and unambiguous indicators that the education system has developed and expanded significantly during the last two decades. It has resulted in much increased costs to the Exchequer. In 1967-68 the expenditure by the Exchequer on education was only 4 per cent approximately of GNP. Twenty years later some 6 per cent of GNP is allocated for expenditure on education.

Demographic projections indicate that there will be significant changes in enrolment patterns in the education system in the years ahead. Enrolments at primary level will fall by over 120,000 pupils to below 450,000 by the end of this century. Enrolments at second level are expected to drop by some 36,000 pupils. However, the demand for third level places will continue to rise, albeit at a more modest pace and the enrolment of full-time students is expected to be over 64,000 by the year 2,000.

The third level education sector has experienced significant changes in recent years. Outputs have increased and there has been substantial gains in productivity. Following on a Government decision, my Department established a committee in February 1988 to examine third level courses in VEC colleges to examine the objectives, nature and duration of courses, to examine the cost effectiveness of provision and to indicate the savings that could be made and/or the additional students that could be accommodated. I look forward to receiving the report from this committee within the next few weeks.

The work of the Interdepartmental Committee on Third Level Education in examining the provision of third-level places and the rationalisation of third level departments is still proceeding. I hope to have their report by the end of March.

Arising from the Government's decision announced earlier this month, to grant independent university status to the National Institutes for Higher Education at Dublin and Limerick, I propose to bring forward the necessary amending legislation at the earliest possible time. At the same time I hope to bring forward legislation dealing with the granting of more autonomy to the regional technical colleges and the emergence of more VEC committees.

The NIHEs have played their part in producing well qualified personnel at graduate and post-graduate level in a range of disciplines that are particularly suited to the emerging needs of our country. They have introduced a new dimension in third level education by innovative and creative methods and have contributed in no small way through their postgraduate programmes and through the quality of their graduates, to economic development. They have both been directly and indirectly responsible for a diverse range of new enterprises which has been attracted to this country or has been created by their graduates.

I pay tribute to the very generous endorsement by the Fine Gael spokesperson on Education of the granting of university status to the NIHEs. The spokesperson has very willingly expressed co-operation in the House in the swift passage of the legislation when it is introduced.

There is now a network of third level institutions, some of which have extension centres, which provide a comprehensive range of quality programmes. Due to the extent of the State's investment in physical facilities in this sector there is now a high regard at home and abroad for the quality and nature of programmes provided in these institutions and for the calibre, expertise and skills of their graduates. Foreign investment capital so essential for our economic development is attracted to this country because of the basic skills and flexibility of the young graduates of the institutions.

The VEC colleges and their staffs have been very successful in developing courses and programmes in engineering, science, business studies and other specialisms which are geared specifically to our country's regional and national needs. By so doing they have succeeded in giving third level education to an increasing number of our young people. In fact the number of full time students in the colleges has grown from just over 19,000 in 1986 to over 23,000 in the current session representing an increase of 20 per cent.

My Department, in association with EOLAS, have recently created posts of industrial liaison officer in the regional technical colleges in Athlone, Carlow, Cork, Dundalk, Galway, Sligo and Waterford.

My Department are also co-operating with County Donegal, County Louth and the Town of Sligo VECs in the establishment of business incubator units at their regional technical colleges in Sligo, Letterkenny and Dundalk. The units are being built by the IDA with funds received from the International Fund for Ireland. Approval has been given for the establishment of incubator units at Tralee RTC. These units are being funded by the IDA, Tralee Chamber of Commerce and local industrialists. They will enable the testing and development of new business ideas and stimulate employment. In addition, they will promote greater links between local industries and the educational system. Other proposals and initiatives in this area are being considered by my Department, EOLAS and other agencies, including a proposal for a Polymer Technology Unit for the Athlone Regional Technical College.

A number of new challenges and opportunities must be faced by our third level institutions over the next few years. As we approach 1992 real challenges and great opportunities exist in the field of education. In order to ensure that the education system will be equipped and prepared to make a full contribution towards the country's economic development I have submitted comprehensive proposals, within the framework of the national plan being prepared for submission to the Commission of the European Communities, for support from the reformed Structural Funds.

In the changing climate where higher education institutions are becoming more outward looking and responsive to social and economic demands current funding arrangements and financial controls may be perceived by some as being over restrictive. If they are to expand their activities and generate additional income new funding arrangements to permit them to benefit from their initiatives may be appropriate. Assuming a suitable mechanism can be devised and agreed this could include greater freedom to the institutions in managing their activities and resources, subject, of course, to the necessary policy safeguards.

In addition, another significant change that could occur would be for institutions to become more involved in international education and consultancies.

In 1967-68 girls comprised 51 per cent of all pupils enrolled in post-primary education and 20 years later the sex composition at post-primary remains virtually unchanged. However there has been a marked change in the third level sector in the same period. The proportion of young women in universities increased from 31.1 per cent to 48.9 per cent and in the total third level sector from 31.1 per cent to 45.7 per cent. There are also more young women than young men who, on completion of post-primary education, commence training outside of my Department's higher education system, for example, training as nurses or for clerical occupations.

Nevertheless despite the general high level of education of young women and the existence of legislation establishing the right of equal opportunities for both men and women not many major changes have occurred in their career choices.

In post-compulsory secondary education and especially in higher education the choice of subjects is still largely influenced by stereotyped attitudes. Arts and education tend to have high percentages of female students whereas engineering, agricultural science and technology programmes are male dominated.

Women are also very much under represented on the staffs of third level education institutions. A study by a committee established by the HEA on women academics in Ireland which was published in June 1987 showed that only 14.5 per cent of the academic staff in Irish universities were women and that the majority of these were in junior grades.

The committee indicated that there was no evidence of discriminatory rules and procedures and considered that significant factors were the lower number of women than men who register for post-graduate degrees and who go abroad for further study. The tendencies for women to be less well qualified than men and to produce fewer publications were also considered relevant factors.

What happens in higher education tends to be a reflection of what occurs in society. The narrow range of career choices and occupations for women have an impact on their earnings potential. The average weekly wage for adult males in manufacturing industries is over 65 per cent higher than that of adult females. This differential is not due to direct wage discrimination but arises from structural causes. Many male workers tend to be in technologically skilled occupations with promotional opportunities.

Gender equality is one of the central objectives of this Government. My Department are active in developing and implementing strategies to ensure that equal opportunities for girls and boys exist at all levels of the education system and to foster and encourage them to pursue non-traditional career options.

Issues relating to gender equality continue to be treated at in-service teacher training programmes. The National Council for Curriculum and Assessment and the Primary Curriculum Review Body have been requested to ensure that sexism and sex-stereotyping are eliminated from school curricula.

Following the course set by my predecessor, at primary level I have retained the working party on sexism in teaching materials. The working party includes representatives from management and teacher interests and the Department of Education. They will make recommendations on the elimination of sexism in textbooks and other teaching materials on a phased basis, taking due account of the need for restraint in public expenditure, and will monitor progress made in this area.

At post-primary level I am concerned that, although there are more girls than boys, fewer of them study physics or chemistry in senior cycle and hence find it more difficult to enter highly skilled technical occupations. A pilot scheme was started in the school year 1985-86 in one post-primary school — a salutary proposal — with the objective of encouraging more girls to study physics. I have extended the project now to ten schools and to include chemistry. The total enrolment of girls in these schools is currently 4,800 approximately and there are now 285 girls studying physics or chemistry as a result of this project. I am hopeful that that project will be diversified and be more extensively used. I know that Deputy Barnes will be interested to hear that there has been a very good evaluation study undertaken recently by two experts on how this project worked. The ripple effect it had on schools was amazing, when other young women saw their counterparts taking up those subjects and there was the effect the visiting teacher had on the participants. It is certainly a worthwhile project which I intend to have continued. While it might appear to be a small achievement it all fits into the overall pattern of how young women perceive their role.

Mrs. Barnes

So it might not take as long as had been thought?

Mrs. O'Rourke

That is correct, as every piece fits in. The EC has recognised the value of this project and will make funds available to meet some of its costs in 1989. I intend to extend it further in the year 1989-90.

An action research project was begun by my Department in 1987-88 as part of an EC gender equality initiative. It is designed to foster and encourage girls in post-primary schools to participate in school activities related to new technologies. I have arranged for this project to operate again in the school year 1988-89 and co-financing will be available from the EC.

I should say, in deference to Deputy Barnes who is chairperson of the Committee on Women's Rights, that when I was on that committee some years ago there was an important study undertaken into education which was debated in the Seanad. As I understand the position, the Committee on Women's Rights are now examining what has occurred since the publication of that first report. I am very interested in that endeavour and my Department will co-operate fully in that work. I would hope, either at that committee or in a debate in the House, to have an opportunity of participating in the evaluation process, as we in the Department and the committee found it, and in whatever are considered by the committee to constitute forward steps in the education field. I commend the work of the Committee on Women's Rights. It is my regret that, when I assumed office, my participation in that work had to cease.

I referred earlier to the network of regional third-level educational institutions, all of which can respond in an effective way to regional and national needs and demands. Apart from the gender equality initiative to which I have referred there is always a demand for general equity and participation in the education system in line with the commitments of the Government outlined in the Programme for National Recovery.

In line with those commitments in the Programme for National Recovery and specific grants made available by this Government I might mention the Youthreach scheme, a joint project sponsored by myself and the Minister for Labour which was begun yesterday in two regions, Cork and Waterford and which we hope will help disadvantaged young people who, for one reason or another, find the formal education structure not suitable to their needs. The cost of the scheme in 1989 is £11.2 million.

I have run out of time but let me just say that the fiscal, economic and social measures which the Government initiated in the context of the Programme for National Recovery will be continued and developed in 1989 as will the measures that I have undertaken and which the brief time allotted to me here today allowed me to dwell upon.

Mrs. Barnes

I was pleased and interested to hear of the progress report particularly with regard to equality in education. I commend the Minister on her energy and commitment in that area. I also welcome very much the Minister's offer to have a debate in the Chamber about this area because the Women's Rights Committee would like to have a debate activated on all areas of progress in all Departments. It is disappointing that only the Minister's Department have moved more progressively and more affirmatively than some of the other Departments, but it is important that some of the other Minister's should be here to respond also. We look forward to inviting the Minister to the launch of the update of our educational report from the previous committee.

I would like to comment on a few other areas of the Minister's address. I take the point the Minister makes with regard to the large number of pupils from the lower socio-economic groups who drop out of compulsory schooling without gaining any formal qualifications. A huge investment must be made in that area to provide resources and there must be the political and social will to do that. It is with some disappointment I note that 16 and 17 year olds outside formal education have not been incorporated into the social welfare system which would give them a base. I would encourage the Minister to include young people who drop out to be part of alternative education and training that means more to them financially, socially and psychologically when they reach the stage of being in a position to earn.

Many speakers have said this already, but it bears repetition; this year offers us a unique opportunity to do something original, creative and imaginative. It is necessary to change the structures in a fundamental way as we go forward into an incredibly developing and changing society. This will take initiative and creativity. Bandaging the wounds resulting from an older social system will not bring about the desirable healthy state we need to be in when we are on the threshold of being integrated into a harmonised Europe. This has immense challenges for us but it also has huge risks. It is startling that throughout the whole budget there is no mention of that nor is there any preparation in regard to excise duties and VAT that we need to look at if we are to cope with 1992 without tremendous trauma and shock and, in fact, loss. I hope that the next budget will cover what was omitted in this one. We are running out of time. It is important for us to remember that we have only three budgets before we have to take our part in a very tough arena. As committed Europeans we look forward to that but it will take a tremendous amount of preparation and the proper use of the funding and resources we will get from Europe. That whole dimension was missed in the budget. I hope it was not neglected. I will come back to that later.

What we have to consider is that the whole ethic of work as we know it is now at an end. The changes we must bring about in our system with regard to formal and informal work must be tackled. Again there is no reference to that in the budget. If we were to begin to build on a foundation that would integrate formal and informal work it would remove the stigma of unemployment and give value to a lot of work that goes on in the community and in the home at the moment which is not financially rewarded but which is important and will take on more importance as the years go by. This was not even hinted at. The first basic step is to introduce a basic income. It is with great disappointment I note that the necessary reforms in taxation and social welfare which would lead towards that integration have not been implemented. Until we have a basic income for everybody above the age of 18 there is no way we will get rid of the wasteful bureaucracy, the immense administration costs, and above all else, the stigmatising of certain kinds of work and jobs and the demarcation lines that we draw. If we had introduced a basic income we would certainly have avoided the controversy, the anger and frustration of women here, particularly women in the home, at the proposal to remove the only payment, the only acknowledgment given to a mother in the home for child rearing and all the other tasks in the home, without the introduction of a basic income, without any legislation to ensure that a woman in the home had an automatic and legal right to the household income earned by the other spouse. It shows no awareness of the huge leap we have to take to prepare ourselves not just for Europe in 1992 but for the year 2000 and all that will bring upon us.

Another problem is the total lack of recognition and acknowledgment of the position of women in Irish society as we have ghettoised them in the home and outside the job markets or kept them on low pay in employment. I was struck once again, as I always am when I hear the figure, by the fact that the Minister for Education was able to tell us that the average weekly wage for adult males in manufacturing industries is over 65 per cent higher than that of adult females, and that was 11 to 12 years after we introduced legislation on equal pay. What was lacking in this budget more than anything else was political will, political creativity and, above all, political leadership. That is what will be needed if we are to have an energetic and equitable society and if we are to remove poverty and inequalities. It demands leadership backed up with creative and imaginative ideas.

The Government received submissions from interest groups and a great deal of research proved we had an immense job to tackle. That could have been done in this budget because the economy is now more favourable than it has been for years and there is consensus and agreed support from this side of the House. That fact should be recognised. This side of the House expected that out of that consensus, which at times took some effort on our part, would come a better society, and the removal of some of the poverty traps and the inequalities which affect one-third of our population. It is with no joy and no party political bias but with sincere disappointment that I say that no real fundamental attempt has been made in this budget to tackle that problem.

Naturally our economy is made up of interlocking and interdependent factors. We must recognise that we face two very big challenges. The first is job creation — which will have very serious implications if we do not do something about it soon — and the second is that we should have a more equitable tax system where everybody pays their fair share. There has been no reform in taxation except for a slight alteration in the tax bands. I welcome the self-assessment for the self-employed. It has been said for many years that there is no money in the country, that there is a very narrow tax base and that there is no room for redistribution or for widening the tax base. A very heavy burden was placed on the PAYE workers who had to carry the rest of the country. What happened when we introduced the tax amnesty? We found that those statements were mythical and that we were part of a selfish society. Until they were offered a bribe to come into the tax net, some people refused to do so. More than £500 million additional revenue was collected in a country where it was said there was no wealth and not much tax evasion.

I support Deputy McCreevy and other Members who stated that we should compliment the decent, honest people who paid tax all along because they felt it was the socially just thing to do, or because it was demanded of them before they ever received the money into their hands. Let us hope they will never have to carry the huge disproportionate burden of taxation they had to carry up to now. There should be a more equitable system and those who have now come into the tax net should be made to pay a relevant amount in proportion to their wealth.

We have been talking about basic income and a self-assessment system for years. This has been discussed at European level and it has been accepted that that is the only way we will have an equitable tax system. I would like to believe that in the next 12 months before the next budget, much work will be done in that area. I note that the Minister said that a move to a single year basis of assessment would have implications for taxpayers and their agents and that discussions would be held with interested groups to explore the possibilities for further development of the self-assessment system. I would like to think that those discussions would take place before the next budget.

Taxation is tied up with our ability to create and sustain jobs and to keep our young people working in this country. Until we have an equitable tax system for our young single people in particular — they are the group who gained least from the minor tax reforms introduced this year — we will not be able to keep them here. I have listened to the Minister for Education talking about the demographic changes that have been made and the numbers of people seeking third level education. The Minister is quite right in recognising and acknowledging that social acceptance that our children should be well educated and the sacrifices parents make to ensure that they are skilled, trained and well educated. The horror is that, as of now, all our third level students are going to other countries. I am concerned not so much about the number of young people who have to go abroad for jobs — some of whom go not because of lack of jobs but because of lack of acknowledgment, lack of value and in particular lack of reward — but that if our young people do not come back within a certain number of years they will decide to base themselves abroad. As a result this society will suffer, not just financially but in terms of energy, radicalism and the kind of fervour and independence that young, single people can bring to a country, and without which a society becomes sterile, established and conservative. This is the last country that deserves that kind of haemorrhage. We have seen the social implications of the emigration of the fifties.

One of our greatest job creation areas — and the Government are quite right to pay attention to it — is tourism. The Minister spoke about setting up a tourism data base. Once again I would ask that every effort be made to target marketing. I am struck again and again — as I am sure are other Members of this House who have visited the United States — by the fact that 40 million Americans are willing to proudly say they are of Irish heritage. A great number of them, because of their skills, intelligence and hard work, have been very successful. I do not believe we have ever targeted that market base as we should. I would urge the Minister for Finance, the Minister for the Environment and all the Ministers involved, to insist that all our agencies target the right markets and people who would have an objective in coming here and who would continue to do so. We have not even begun to scratch the surface of the American market.

Regarding the environment, I welcome the fact that lead-free petrol did not suffer the price increase of 5p. It is an initiative whereby the Government can encourage people to protect the environment. I would like to think there would be more initiatives of this kind for the removal of pollution from the environment.

In the family area I welcome the fact that the monthly rate of child benefit of £21.75 which is currently payable in respect of the sixth and subsequent children will, from next October, be payable in respect of the fifth and subsequent children. I do not say this as somebody who believes we should have very large, unplanned families. Families with that number of children and especially from the fifth child onwards should get special support. Especially welcome is the initiative and, indeed, it is a long overdue right, that widowers and deserted husbands with dependent children should get the same allowances as widows and deserted wives for bringing up their children. My only regret is that it is not being introduced until October because some fathers and husbands are now in a very difficult position. What is more important is that we will encourage more fathers to become full-time parents.

The weekly child dependant allowances payable in respect of 18 year olds in full-time education will now be payable up to the age of 19. Having made the break we will have to build on it because people know full-time education does not end even at 19. In Germany child allowances are paid up to the age of 27 as long as it can be proved that full-time education is still going on. That gives one an understanding of the investment there is in other countries in families, in their welfare and in the development of children.

There has been ignorance about the opposition of women to the threat of having child benefit removed. For instance, some editorials said that we were attempting to get the State to pay for wives in the home whose husbands defaulted. We are talking about a children's allowance for the rearing of children and their development within the home. This benefit is provided at an extraordinary rate in other countries because they found to their cost that by penalising parents for having children, especially mothers, the birth rate dropped to the extent that they are now in grave economic and social danger of not being able to continue their generations. They are now beginning to give incredible financial allowances to parents to encourage them to have larger families. Because many married women in this country do not work outside the home and because the role of mother and housewife has been imposed so severely and restrictively on them makes it all the more unacceptable and unjustified that we should even have attempted to introduce this. Having and rearing children is a social function for the whole of society. It is one for which someone should not be penalised but should be rewarded, acknowledged and valued.

In Ireland we have fallen far short of that, as we still have no legal protection for the family home and its contents for women who give up their economic independence and stay in the home. The very last acknowledgment of independent means, small as it was, is actually being threatened. Women from all over Ireland have told me that regardless of the income level of their husband, the household budget they get still depends on his generosity and fairness. The fact that she is living in an affluent area and that her husband has a high income is no indication that there is a fair distribution of it in the home. The Government, having learned from this suggestion, should introduce legislation that would legally ensure the proportion of the household budget going to the wife. Then perhaps some of the male interviewers, the male commentators and the male economists would begin to realise what the women — and in particular women politicians — were getting at. We know from women's expertise the reality of their lives. I know the Government will be wise enough not to continue down this road until they introduce legislation for a fairer distribution of the household income to the wife and her children.

The Rape Crisis Centre in Dublin has received £100,000 in this budget which saves them from being liquidated. I regret what they had to go through in order to obtain this money. I would remind the House and the public at large that over £90,000 of that £100,000 has to go to Revenue and, therefore, the Dublin Rape Crisis Centre have not a secure financial base for 1989. Before the Minister for Finance frames the Finance Bill I would like to draw his attention and that of the House to the fact that rape crisis centres in large urban areas such as Limerick, Galway and Cork, which are overcrowded and have tremendous needs, as well as smaller rape crisis centres in Navan, Bray and other areas, have been set up on voluntary contributions from women and the community at large.

I want to serve notice on the Minister for Finance and all Governments that social services of the most demanding professional and urgent kind, such as those provided in rape crisis centres in sex abuse counselling and in women's aid centres cannot be expected to continue on a charitable level, not knowing how they will survive from one month to another, particularly when the people they are counselling and supporting are among the most vulnerable, insecure and damaged in our society. The political will and attitude towards funding of these organisations has got to change. We must have core State funding included in their own subhead in budget after budget. I would like to think that this is the last budget when we will have this kind of late handout without any reference to the other rape crisis centres and aids throughout the country.

Finally, I would like to make some further suggestions. I started by talking about the enormous importance of Europe, our harmonisation and the challenges and risks we will take as we approach 1992 and 1993. This Government should realise that the Structural Funds allocated to us must be spent in the most imaginative way in building up secure barriers and bases to allow us to compete in Europe. Above all those funds must be used in areas where they will give the greatest number of jobs and the most security to the community. The Structural Funds and the programmes to earn those funds must be drawn up with extensive consultative discussions involving the whole community and particularly the communities they will affect most.

A reform which is long overdue is that in regard to local authorities, who are teetering on the brink of despair because they have no power. I would like to think that in reforming our budget expenditure and taxation and in extending the tax base, as we believe it needs to be extended, we would focus on returning budgetary power and autonomy to the regions, to the reformed local authorities, so that the community would have the power restored to them and local representatives would be seen to have the power to work on their behalf.

Mr. Browne

The Minister for Finance, Deputy Reynolds, did a tremendous job in framing the budget in the short period he was in the Department of Finance before budget day.

During the lead-up to the budget suggestions and ideas were put forward by the Opposition parties, interest groups outside the House and political commentators. They were all of one mind that something should and would have to be done about poverty, taxation and job creation proposals. I am happy to see that the Minister for Finance has set out to tackle those problems. He has introduced a budget that will give substantial increases to the long term unemployed; there has been major reform of the taxation system and there has been a number of significant job creation proposals.

In the short period that this Government have been in office, they have succeeded in putting the country on the high road to economic recovery. Business confidence has been restored. Interest rates have fallen by up to 6 percentage points. Industrial output and export growth are continuing to be very strong. The balance of payments remains in surplus and inflation is running at the lowest level for 25 years. Borrowings have also been reduced substantially. I am sure that the consensus in this House helped to achieve this but it took great political courage to follow the tough line that has been followed for the past two years to try to restore economic reality in the country. For too long we had a type of "shopping bag politics" from different political parties. That continued for over ten years and landed the country in a mess which was practically impossible to get out of. However, the Government are on the right road and are doing an excellent job to create a better country for our young people's future.

I welcome the social welfare measures announced in the budget. They show that the Government are determined to improve the position of the less well off in our society. This is the second year in succession that the Government have more than maintained the position of those on social welfare. Low income families and the long term unemployed will receive substantial increases in income this year. The personal rate for the long term unemployed is being increased by 12 per cent. If we add that to the 11 per cent increase of last year, it brings the total increase in little over a year to almost 25 per cent. In the same period a husband on long term unemployment payments with a dependent wife and five children will receive an extra £26.80 per week bringing the total, including child benefit, to £145.90. This year, the Minister has again targeted the low income groups for special attention in the area of taxation. The introduction of taxation exemption will be of major benefit to the less well off.

The Government also recognise the special difficulties of widowers and deserted husbands on low incomes, and have introduced a special allowance scheme. The main elements of the social welfare scheme are as follows: a general increase of 3 per cent in social welfare payments — that is well ahead of inflation which is running at just over 2 per cent and a special increase of £5 per week in the personal rate of long term unemployment assistance bringing the figure from £42 to £47 per week. This is very welcome because unemployed single people living alone find it very difficult to survive on the small income they had been in receipt of. They were living way below the rate of subsistence, in poverty. The decision taken by the Minister in both last year's and this year's budget, to increase substantially the payments to those people must be welcomed by all sides of the House. There is a special increase of £3 per week in the personal rate of allowance for short term unemployment assistance and supplementary welfare allowance.

In last year's budget I thought the Minister made a mistake in not introducing a special allowance for widowers and single people trying to rear families. It is a major departure that this year the Minister introduced such a scheme. In some cases, such families of three, four or five children were living on a pittance because all they could claim was unemployment assistance. They were certainly being discriminated against. I welcome the Minister's decision to make provision for them this year. This will go some way towards alleviating the kind of poverty and hardship they have experienced over the years.

The extension of the free fuel scheme to people who are living with others is also very welcome. Politicians on all sides of the House had been critical of this scheme. For example, if an old person was living with some one who was on the dole, they would not be eligible to claim free fuel. I must pay tribute to the Minister for Social Welfare for extending the free fuel scheme during the past two years to people in rural areas. For many years the scheme applied only to people living in urban areas. The extension of the scheme to other situations, for instance, where a person on social welfare is living with an elderly person, is welcome too.

I would like to see the Minister examining the possibility of re-introducing a double payment in September or late August. At that time families incur heavy expenditure when children are returning to school. There is a lot of expense by way of school uniforms and books. This puts a major burden on the lower income groups and people on social welfare. Such a scheme was in operation a number of years ago but it was withdrawn.

The long delay in processing social welfare claims for unemployment assistance is a matter of grave concern. Every week we have people coming to us and saying that they have claimed unemployment assistance but that they have been waiting 14 or 15 weeks for payments. I cannot see why it takes so long to make a decision. When we contact the Department of Social Welfare we are told that the application is with the local welfare office but when we go to them we find that they have sent it back to the Department of Social Welfare. There seems to be to-ing and fro-ing for weeks. Last year I asked the Minister to take a specific interest in this problem and this year I again asked the Minister for Social Welfare to examine the system to see where it can be speeded up. When families are waiting for anything up to 15 weeks for social welfare payments, it can only cause hardship and severe poverty. The Minister should see if serious decisions could be made to minimise the delays down the line.

I also welcome the provisions that have been made for 18 year olds in full time education. During the debate on the Estimates, I raised this issue and said it was totally unfair that families on unemployment assistance would lose the allowance for a child dependant when he reached 18 years. I am happy that the Minister has decided to extend the scheme. This will involve a great many children, because most of those who go on to do their leaving certificate or intermediate certificate have usually finished by the time they reach 19 years of age. This will be of major benefit to those families. There is no doubt that it was causing hardship in trying to look after a son or daughter when there was no income for them.

I welcome the Minister's decision to examine the free electricity scheme and have the benefit carried from one billing period to another. Some old age pensioners, for fear of running out of free units and not being able to pay if they got a big bill, were inclined not to turn on the heating in winter time. This will be of major benefit to all those in receipt of free electricity. The Minister for Social Welfare is to be complimented in encouraging the Cabinet and the Minister for Finance to have this inclusion.

The family income supplement has been mentioned in this House on numerous occasions. It is true to say that a large number of families do not appear to be availing of this FIS scheme, as it is called. Perhaps they are not aware of it, or feel that they are not entitled to it. I know from experience meeting people at my clinics and from talking to people that a vast number of people have not claimed this supplement. There should be a major promotion of this scheme, whether by television, radio or any other means, to encourage people to avail of it. I am glad that the Minister is carrying out improvements to the scheme for 1989 which will cost £1 million extra. I am sure he will ensure that those entitled to the scheme will be contacted and their entitlement made known.

Child benefit has been mentioned. This has proved to be the major issue. It shows that this is a very good budget when the only issue that could be picked on is one that is not included. Children's allowances, as it is known to most mothers, will always be an emotive and controversial issue. Politicians will make it emotive and controversial to try to win votes and gain benefits for their political parties or themselves. This has caused a major stir in the newspapers and among commentators around the country. This is not the first time I have said that there is a genuine need for change in the area of payments of child benefit. Perhaps a sliding scale of allowances per child based on the income into a house might be possible. It certainly would be more fair. I take myself as an example. We get something in the region of £22,000 or £23,000 per year. I have four children but I receive the same child benefit as the person on £110 a week unemployment assistance who has four children. That is an area that should be looked at. There should be change. That type of system is unfair and is mitigating against the poorer sections in our community. Over the next six or eight months or before the next budget, there should be open and frank discussion on this whole area from all sides of the House. I am sure the Minister for Finance and the Cabinet would be prepared to listen to suggestions and ideas and come up with a fairer system which would be based on the amount of income going into the House rather than as at present, right across the board.

Generally, the social welfare areas in this budget have been well protected. The Minister for Social Welfare has done a good job over the past two years in ensuring that those on social welfare and in receipt of lower income benefits have been protected. Fianna Fáil Governments have always proved to be caring and I hope that this one will continue where possible to increase the allowances and benefits for those less well off in our society. The 25 per cent increase for the long term unemployed over the past two years has proved this Government's commitment to these people and I am sure they will continue that commitment in next year's budget and in future Governments in which my party have a say.

The taxation changes are certainly welcome. Many said that the rate of taxation, whether 35 per cent, 48 per cent or 58 per cent, could not be reduced, that the climate was not right and that if any rate of taxation was to be reduced it would be the 58 per cent band. I welcome the Minister's decision to reduce the 35 per cent band to 32 per cent. That area covers practically every taxpayer because a certain section of tax is payable at 35 per cent. Most important, it covers the area of the low paid workers. For too long the PAYE sector have carried the burden of taxation. They have been treated unfairly over very many years. I compliment the Minister for Finance and the Cabinet on a change of direction. Some people may say that it is a small matter but to reduce taxation after 20 years can only be a psychological boost to the PAYE worker. It proves this Government's commitment to the PAYE sector and to getting the level of taxation down so as to give an incentive to people to work, and an incentive to employers to employ more people. I welcome the Minister's decision to introduce changes in the taxation system to help those on lower incomes. He has decided to increase the general exemption limits from £5,500 to £6,000 for married persons and from £2,750 to £3,000 for single persons.

In recognition of the difficulties faced by lower income families, the Government decided in a major innovation to introduce a special addition of £200 per child into exemption limits. This will apply to the small farmer, small shopkeeper or PAYE worker. It is a major move in the right direction, giving an allowance for the child. It is not right across the board for every child in the country, but it is a start. It is only fair that families, particularly those on low incomes who have a number of children, would get tax allowance relief for them. This will go a long way towards alleviating the tax burden on these families and towards restoring the reward for work among parents of such families.

The Minister has also increased the age exemption limits by £300 for a married couple and £150 for single persons. The overall effect of these increases in general, of the age exemption limits and the introduction of the exemption element for children will be to exempt 24,000 taxpayers with 46,000 children from paying tax. If anyone had said two years ago that any Government would have been capable of doing this, he would have been laughed at. It shows the sound economic policy that this Government have followed over the past two years is now beginning to show rewards for the people.

The tax amnesty was mentioned earlier and its introduction was a major move by this Government. The people responded magnificantly in paying their taxes. They may have cheated over the years, but at least they responded to the promptings and the initiative of the Government. The amount of money collected as a result has gone a long way towards helping to pay for increases for the less well off. I hope that those who came into the tax net as a result of the amnesty will continue to pay their taxes and give their fair share towards the general upkeep of the country. For too long the PAYE sector had carried the burden. We have the self-employed, farmers, business people all beginning to pay a share of tax. In 1988 the farming sector paid double the amount that had paid in 1987. If this welcome move continues, it can only help to secure more tax payments from other than the PAYE sector.

Another area of major concern is jobs. During the past five or six years we have heard much talk about young people emigrating and what should be done to create jobs. This budget is designed to create jobs. During the past year there has been a significant increase in the number of jobs available. Because of the sound economic policies being pursued by the Government, low interest rates and the improved economic climate, business people and industrialists are beginning to show an interest in creating jobs. Various initiatives in the area of tourism, forestry, fisheries and the development of natural resources generally have led to the creation of a significant number of new jobs. A total of 20,000 extra jobs was created in 1988 and the target for 1989 is an additional 13,000. We can generate an even greater number of jobs if we can persuade business people to co-operate with the Government and show a commitment to what the Government are doing. I welcome the decision by the Minister for Industry and Commerce to meet industrialists and to encourage them to create more jobs. I believe there will be a response.

I am very concerned about the IDA. Their commitment to County Wexford in the past six or seven years has been an absolute disgrace. Deputies from all sides have met Pádraic White of the IDA, both in this House and in the plush surroundings of the IDA headquarters. On the first occasion he agreed that Wexford was a black spot; on the second occasion he agreed that Wexford was a blacker spot; on the last occasion we met him he agreed that Wexford was the blackest spot in the country. Despite this, we have received no commitment and there is no concern for the unemployed of County Wexford. The buck stops with Mr. White.

An Leas-Cheann Comhairle

As a Member of this House and additionally as a sportsman you will realise that it is not in order to criticise somebody who is not here to defend himself.

Mr. Browne

Despite deputation after deputation, there has been no commitment from the IDA towards job creation in County Wexford. Although 20,000 jobs were created in 1988, only 35 of those were in County Wexford. That is not a fair distribution. The county manager has been doing everything possible to improve our infrastructure. Despite the recognition by the IDA that we have the highest unemployment rate in the country, there is no commitment to job creation in our area. I ask the new Minister for Industry and Commerce to redress the situation so that at least we will get a fair share of what is available.

An Leas-Cheann Comhairle

The Deputy is at liberty to kick the shins off the IDA.

Mr. Browne

I appreciate that, but it does not always work.

Mr. Hegarty

The carrot and the stick.

Mr. Browne

I compliment the Minister for the Environment on the tenant purchase scheme which has given an opportunity to tenants of local authority houses to purchase their homes at a very much reduced rate. The take up in Wexford is almost 50 per cent. This welcome scheme ensures that people can own their own homes and it saves the local authorities vast amounts of money on maintenance and repairs.

We have heard much about potholes and the general state of county and regional roads. I welcome the decision to increase substantially the amounts of money available for these roads. A total of £150 million is being provided for this work over a three-year period and this money should go a long way towards alleviating the major problems we have experienced in recent years. It indicates the Government's commitment to rural people, who are entitled to the top class roads to be found in urban areas.

The home improvement grants were quite correctly withdrawn two years ago because they were paid to every person regardless of income. Lots of rich people in my county put in aluminium windows and built unnecessary extensions. When we came into Government £300 million was due to be paid out in home improvement grants and the Minister took the correct decision to abolish them. I am sure most of those works have now been completed and I would ask the Minister to consider the reintroduction of these grants on a selective basis for water and sewerage works and possibly for roofing. Old people and the less well off would not be in a position to pay the full amount but possibly could undertake these works if they received a grant. This would have the benefit of protecting our housing stock for the future.

There should also be selective building of local authority houses. There are many vacant houses in Dublin, Cork and other major cities but there is still a demand in rural areas for small numbers of local authority houses. This Government have a commitment to the construction industry.

Mr. McGahon

Since when?

Mr. Browne

The Minister for the Environment and the Minister for Finance should consider the selective building of local authority houses where needed. The provision of £150 million for county and regional roads and £47 million for national primary roads shows that the Government have a commitment to the construction industry. These provisions have been welcomed by the CIF. I would ask the Minister for the Environment to consider the reintroduction of home improvement grants and the selective building of local authority houses in areas where they are needed.

The budget contains an allocation of £14.7 million for the development of tourism. We have put forward proposals for the development of a marina in Wexford town. I ask the Minister for Finance to ensure that some of the moneys available in the budget will be transferred to Wexford and made available to local authorities there for the building of a marina which will go hand in hand with the development of a new heritage park which cost over £1 million. I hope when the money is being allocated the Minister will consider Wexford in relation to the development of a marina.

Miss Colley

It should be noted that this Government are an historic one in many respects. They are a minority administration and have been in office for two years. For the first time since the foundation of the State we have witnessed the beginning of the breakdown of the traditional Civil War political posturing.

We have seen an Opposition party undertake support for a Government no matter what is really happening in Government as long as there is the appearance that policies of fiscal rectitude are being followed. Since the Progressive Democrats were founded, they have been advocating a commonsense approach to a reduction of Government expenditure and an increase in employment. Other parties have been shamed into supporting these policies even though they lambasted them before the last election. A radical change has come over the political spectrum which will inexorably continue. There is no going back now to Tweedledum and Tweedledee politics with Labour as piggy in the middle.

The Progressive Democrats are here to stay and will continue to present radical alternatives to the people for Government. The hype that has surrounded the actions of the Government is no more than that, hype. There have been Ministers brazen enough to announce so-called bonanzas of jobs but, when looked at in detail, they turn out to be a couple of thousand jobs in perhaps as many as 28 locations around the country over as many as five years. What kind of bonanza is that? What does the Minister for Finance, Deputy Reynolds, consider makes up a jobs bonanza?

The hype to which I referred also includes Government self-congratulatory speeches and press releases on export figures, for example, which on examination merely throw into stark relief the weakened state of industry, low levels of imports of raw materials for manufacturing industry and low consumer spending which means that the surplus of export figures over imports are artifically at an all time high. This is not to deny that major strides have been made by Irish industry, especially in the marketing area, which pays off in increased exports. However, the scale of this improvement is nowhere near the level needed if we are to withstand the shock waves of 1992.

The manufacturing industry is only beginning to wake up to the challenge facing them when we enter a unified market. The same applies to the services industry and I lay a lot of blame at the feet of the Government who, since last July when they launched the European campaign, have simply gone to ground. There are reported to be seminars around the country but there are precious few of them and they are not impinging on the real consciousness of business. There are only three more years — three more budgets — until we are a unified market in Europe. That is a daunting prospect because there is such inactivity on the part of the Government.

The hype has been continued into the method of presentation of this budget. We are asked to believe that with unemployment figures of 16.5 per cent of the labour force according to an OECD study, the second highest rate of unemployment in 24 OECD countries, with emigration running at a minimum of 40,000 last year, with whole communities threatened by extinction by the emigration of all their youth, we have pulled out of our problems and that Fianna Fáil have led us out of them.

The hype has further extended to the state of the national debt problem. We have also been led to believe that because the current budget deficit has been substantially reduced somehow the debt is under control. The fact is we still owe £24 billion and the debt is still growing. We will not get it under control until we increase employment substantially and reduce dependence on State services. We can now see that Fianna Fáil's policy cupboard is laid bare. They are seen to operate on a day to day basis — a reactionary basis — and they obviously have not considered the long term strategies open to them or what their next move should be. They took on board the headlines of the Progressive Democrats' policies since their foundation but they did not know how to read the small print. They do not know the rationale behind it and, therefore, do not know where to go now. This budget is an example of exactly where that can lead, to inactivity in the face of the real difficulties and the real economy.

This Opposition party would look in a more positive way at the Government's policies if there was some attempt at visible planning in any area. To the country's great misfortune planning is seen by the Fianna Fáil Party as a dirty word. This budget presented the Government with the chance — an unusual chance in the last couple of years — to capitalise on the improvement in public finances and to capitalise on a certain consensus on the reform of taxation. There seems to be a unique degree of agreement that Corporate Ireland should contribute more to the taxation pool than heretofore. Even Corporate Ireland sees there is a price to pay if the economic motor is to be fired as quickly as possible. Many of the people involved and highly placed in industry acknowledge that there is room and scope to widen the tax base to include further taxation on Corporate Ireland. The Government have lost that opportunity and consensus which would allow them to look at real taxation reform.

The budget was presented by the Minister for Finance as a first step in the reform of the tax system. Does the Minister have any real idea of the meaning of the phrase "tax reform" as applied to Ireland? Is he aware that the gap between the cost of employing somebody and that person's take home pay is the largest in any of the OECD countries? Does he not understand that shifting the burden of taxation away from work is an integral part of economic recovery? It is essential to do so if employers are to be encouraged to employ more workers and if workers are to be encouraged first to stay in Ireland, secondly, to be more productive and, thirdly, to take more responsibility in their place of work. For every extra £1 a worker gets in take home pay, his employer must find £3.30. There is no greater discouragement to job creation.

What the Minister has done in this budget is to rob Peter to pay Peter in tax terms, and I say that quite deliberately. He has reduced some rates and widened some bands, but has clawed a geat deal of this back from the same sector which bears the brunt of taxation, the PAYE sector. Why is the Minister so reluctant to widen the tax base and relieve the PAYE worker of this crippling and discouraging burden? We in the Progressive Democrats have published a very comprehensive plan on reforming the taxation system. We have suggested it can be done over a five year period. It has been exhaustively costed. It has been presented in an effort to encourage enterprise and work. That is the purpose of it. We believe it is crucial to the encouragement of enterprise in work and economic development that the taxation system be reformed, not simply changed, not adding to one hand what you take away from the other hand when they are both hands of the same body, but rather widening the tax base to enable the burden to be more fairly shared.

It is very noteworthy that over the past few years the ratio of taxation on companies and property reduced drastically while taxation on income has increased dramatically. That tells its own story. As I said, we have published a very comprehensive document on this.

There are many areas in this document which will find favour with other parties. I have to ask the question: what other party, either in Government or in Opposition, have taken on this work which is so essential to the restructuring of the taxation system? The answer is none. We invite the Government and other parties to look at our plan and to support our moves to gradually reduce the standard taxation rate to 25p in the pound with a higher rate of 40p and to abolish employee's PRSI which is a direct tax on work.

It has become somewhat trite in recent months to speak about a standard taxation rate of 25p in the pound, but I would remind the House that when this party suggested it about two and a half years ago, we were derided and looked at as if we were fools. It has now come to pass that it is seen to be an essential part of taxation reform, that there be a realistic standard rate of taxation which encourages people to go out to work hard, not to mention that our neighbours, Great Britain are debating in Cabinet whether they should reduce the standard taxation rate still further from 25p in the pound. They are discussing whether it should be reduced to either 22p in the pound or 23p in the pound or stay at 25p. That is remarkable, especially when we consider the present position in Ireland. Only 60 miles up the road our neighbours live in an economy which offers this kind of incentive to work.

The Government had a real opportunity in this budget to help the less well paid in society by starting that process of tax reform with the abolition of PRSI on the first £2,000 to £3,000 of income. This would have given a real boost to the lower paid who in social equity terms deserve immediate and urgent attention. This course has not been taken. Instead the Minister chose to give tax relief right across the board, without targeting those in real need. This is reproachable. The Minister has taken the soft option. He has not put any principle forward, he has not given a lead or shown the House or the public at large that he believes there are inequities in the taxation system that work against the lower paid, as do the system of allowances. There has been no indication from the Minister or the Government that they are thinking of moving away from the allowance system towards a system of tax credits which was recommended by the Commission on Taxation. There has been no indication either that the Government feel it is right and just to target any surplus funds on those greatest in need.

This budget has given a person on the low income of £3,000 a year total relief of £10.92 in that tax year — I think that is disgraceful — and at the same time the Minister has given to the person earning £30,000 per annum tax relief of £648. The figures speak for themselves. The record of Fianna Fáil on tax reform has been to blow a lot of hot air about their good intentions, as the Taoiseach did the day before the budget, and then fail to deliver in this their third budget.

I would now like to turn my attention to another aspect of the real economy, as opposed to the figures economy to which we have been treated during the past 12 to 18 months, which seems to be accepted as a fact of life, and that is unemployment and its half brother, emigration. The paucity of Government thinking on these subjects is disgraceful. This year's budget presented by the Minister for Finance has done nothing of a radical nature to try to solve these two problems. The hype which preceded the budget, for example, the Programme for National Recovery review of job creation, attempted to persuade us that job targets were being met, thousands of jobs were being created and that all was well on the employment front. Yet we still have 236,000 on the live register; we have thousands more leaving Ireland every month, not to mention approximately another 50,000 on work and training schemes.

The media image of Government success in the job creation arena simply falls apart when we look at the position around the country. Parents look around their homes and see empty places at the table; they receive letters and phone calls from abroad on a regular basis. Each Member of this House has experience of this, I am certain, be it within their immediate family or more distant. I have experienced this. I do not believe the people outside this House are turning a blind eye to what is really happening or believe what is presented by the media and the Government press agents when the evidence before their eyes is quite different.

There is despair among parents whose children in their late teens and early twenties have left this country because they know it will be another ten to 15 years at the present rate of recovery — if that is what we can call it — before there will be any chance for their children to think of returning. Being realistic, what kind of chance will there be at that stage? What will we be able to offer to entice home these young people who, at that stage may be married with young children and have settled down in those countries? Huge numbers of communities around the country have no young people left and those numbers are growing every day. I cannot understand why the Minister for Finance in this Government has not addressed himself in a more radical way to the twin problems of unemployment and emigration. This House is waiting for a radical approach to that problem. It would applaud a radical approach. It would say that at least something was being done. The consensus I referred to earlier in my speech extends to expecting a Government to take advantage of it so that the jobs may be created and as fast a recovery as possible be effected. What a golden opportunity was lost in this budget to completely restructure the job creation agencies. We at present have working for the State the IDA, CTT, SFADCo, and a number of other organisations including semi-State companies, all vying for funds, attention and kudos in the same area.

Mr. Hegarty

Big buildings.

Miss Colley

I cannot see why we maintain this number of agencies or why there is not a real move to rationalise. Even though many of these have been slimmed down recently, there is still a very serious overlapping of functions and regions covered. Consider the areas covered, for instance, by SFADCo. I have a great admiration for some of the work that agency have done, the jobs they have created and the sense of purpose and cohesion they have created in the area with which they deal. Look at their region, then look at other agencies in the State and see how their regional structure overlaps. It appears SFADCo have been given total responsibility for job creation in their area, for tourism and for general development. Where does that leave the IDA and their offices in New York? Does it mean SFADCo must also set up an office beside them? Where does that leave Bord Fáilte? Are they not to direct tourists in Ireland to the Shannonside region? It simply does not make sense. When are this Government going to pull themselves out from under the political, cute trick approach to solving problems? It seems to me this is a real example of that. Why is there not one enterprise agency — I use that term "enterprise agency" with some deliberation because it seems that is what we need to foster — not just in existing companies that operate but in our young people coming up who will be expected to be the backbone of economic wealth in the next 20 or 30 years. This enterprise agency should incorporate all job creation, all exporting and any other allied job creation agency work. There should be a uniform regional division of the country. There should simply be no overlapping. This overlapping leads to rivalry between agencies. Consider the ridiculous position in the not too distant past where in a regional town in Ireland — I am not talking about New York, Brussels or anywhere like that — there were two separate and distinct offices for the IDA and CTT and it was simply impossible to get the personnel from each office together for a meeting because they both saw they were operating in the same area and were simply not willing to give way to each other on that. Where lies the good of the country in an attitude like that? Why is the Minister for Industry and Commerce or the Minister for Finance not initiating a real change in that?

We have the spectacle of the IDA in the person of their managing director — the Leas-Cheann Comhairle may pick me up on this but it is not going to be a personal attack — at a recent gathering of industrialists making the claim for the IDA that that organisation is the job creation agency in this country. That is quite startling because it ignores the crucial role marketing and exporting have in creating jobs. What are we to do with the industrial base we have as it is? Are we simply to ignore that? Are we to put all our job creation eggs in one basket, that is new jobs coming with new industries requiring large set up costs and great capital investment, when we already have the bones of great numbers of jobs? We have had industry pulling back over the last number of years, slimming down, getting ready to take off when the world recession ends. The world recession has ended but this Government and the previous one have ignored the possibilities of building on the industrial, manufacturing and services structures we have. It is quite strange that the IDA should see themselves as so separate and elitist, that they are the job creation agency. All I can say is it is not in the best interests of the country. It is about time that approach to job creation came to an end. What are CTT doing except promoting the exports from existing companies in order that these companies can increase their employment and expand, be it here or abroad? It seems we are ignoring a great percentage of the jobs that can be created if we think in a compartmentalised way such as is evidenced by that remark from the Managing Director of the IDA.

There is a real future for the existing companies working in Ireland whether they be indigenous or multinationals. I see a great future also in small companies, but I am not relying on simply the growth of the numbers of small companies to provide us with the numbers of jobs we need. It is unrealistic to expect that. We have to have some large industries. If you count the small industries as those who employ under 50 or under ten, the number of those companies required to make up 236,000 jobs is a heck of a lot. It just will not happen that way. I am not burying my head in the sand. We simply have to have job creation on a bigger scale than perhaps many companies in Ireland can provide but a very large proportion of the jobs that will be provided can come from existing companies operating.

I would like to refer to the appalling lack of direction on harmonisation leading to 1992; "appalling" is a mild word in this context. A figure that emerged yesterday in a question addressed by Deputy Michael McDowell to the Minister for Finance shows £550 million is required to harmonise Irish and UK rates of VAT. That does not take into account European rates. Where are this Government going on it? When will we see a plan coming from them? We have only three more budgets to 1992. What is Corporate Ireland? What are the people in industry in Ireland to think they are to do? How are they to plan for it if the Government are not giving a lead? I have referred to last July's launch of EURO-PEN and then a big blank after that. It is irresponsible in the extreme and we face a re-run of 1973 when we joined the EC and thought it was going to be a bonanza but we had not prepared for it. We did not allow for the fact that many sectors of industry would be wiped out. The same scenario faces us now. The internal market represents a huge opportunity for us but the benefits will not fall into our laps. We must prepare. The Government have fallen down drastically on that issue.

With regard to the Structural Funds I am extremely worried about the way the national plan is being handled. I want to know where it is and what it is. In my view it represents a most undemocratic process. At Question Time yesterday the Minister of State who has responsibility for European affairs told us that county managers were reporting back to local public representatives. That is not happening. Nobody knows what is going on, not even the people working on the support groups. They do not know what is being planned or what to expect next. All they know is that there is no real substance in the announcements being made about the national plan, about roads and bridges. The plan is not coming together.

We do not know to what extent the private sector will be involved in the plan. We are aware that in the budget a certain amount of money was earmarked for roads and I should like to know how it is that Governments can earmark that money when they have not completed negotiations with the EC. The Government may hide behind the lack of negotiations on VAT restructuring so that they need not do anything about the plan but what I should like to know is why in his budget speech the Minister put so much emphasis on the capital development available through EC Structural Funds when, on the other hand, he told us he could not do anything in regard to VAT harmonisation because negotiations had not been complete. The Minister cannot have his cake and eat it.

Minister for Energy (Mr. Smith)

The Government have, in this year's budget, moved further along the road towards our national objectives of greater social equity, fairer taxes and more jobs. I am glad to say that the hard decisions we have taken since taking office are now beginning to pay off and it gives me pleasure to be able to say that this has not been at the expense of the poorer people in our society.

The economic environment fostered by our policies has put hope back into our people. Inflation has fallen to its lowest figure for many years; so also have interest rates and employment is once more increasing. In 1988 our exports growth was again very strong. All of this reflects greater competitiveness and confidence within Irish industry.

The outlook for this year is for stronger economic growth and a further improvement in employment prospects. Nobody is saying that this is the end of the road, that almost overnight we have solved all the problems we inherited. We recognise that there are 236,000 people unemployed and because of that there is a need for the Government, and Irish society, to address that problem. However, problems are not solved by generalities or a maze of contradictions such as the suggestion that there should be a massive reduction in taxation and a transfer of that load to an unknown and unidentified area of the economy.

Miss Colley

It is identified in our policy document.

Mr. Smith

Deputy Colley asked how the Minister for Finance can be satisfied that Structural Funds will be available for road works and I should like to tell her that there is no comparison between the aid that will be available under the Structural Funds in 1989 and the arguments in regard to the harmonisation of VAT. One cannot argue on the one hand that we are not planning and on the other hand suggest that we should delay the implementation of Structural Funds in vital infrastructural areas which will in turn lead to the development of industry and tourism in many centres.

In framing the budget, the Government were particularly conscious of the need to continue to make progress in improving the circumstances of the poorer sections of our community. From the general reaction to the budget, it is fair to say that we are succeeding. Indeed, prior to the budget, there was an expectation by the public at large and in the media that the Government should focus the budget towards the least well-off in our society. The Government have always given priority to alleviating poverty and indeed in the Programme for National Recovery they undertook, within the resources available, to maintain the overall value of social welfare benefits and provide additional increases for those in receipt of the lowest payments. The Government went beyond the programme's commitment on social welfare benefits last year and likewise this year.

In this budget the real value of weekly welfare payments generally were yet again preserved by a general increase of 3 per cent. On top of this were special increases for the long term unemployed of about 9 per cent. This measure, taken together with the special tax measures for low incomes, indicates the commitment of the Government towards tackling the difficulties of families living long term on low incomes either on social welfare or in low paid jobs. A number of other measures detailed in the Minister for Finance's budget speech will also contribute to alleviating the problem presented by poverty.

The problems of tackling poverty and reducing unemployment are closely connected. The best solution to poverty is good sustained employment. In 1988, 20,000 jobs were created in manufacturing and international services. Jobs are being created not only in the industrial area but also in tourism, horticulture, forestry and marine activities. Such job creation is making a significant contribution to reducing the extent of poverty.

I should like to emphasise that independent commentators have accepted the validity of the Government's statement that 20,000 jobs were created in 1988. It appears that there is a sustained effort by certain people to try to prove that that is not the case. Those figures have been accepted by the ICTU and independent commentators. I accept that there were substantial redundancies but last year was the first year in five years that there was an increase in employment. I am not saying that the increase was sufficient but we remember that for many years the opposite was the case. The fact that we have turned the corner should give us confidence to build on our achievements and make further improvements. We are as impatient as anybody and we will not play second fiddle to anybody in our determination to create more jobs throughout the country.

It must be borne in mind that social welfare expenditure represents approximately 30 per cent of current Government expenditure. The reality we are facing is that the progress we can make depends on the resources which are available and this in turn is constrained by the State of the public finances. Progress on one is dependent on progress on the other. It would be foolish in the extreme to think that an economy which suffered up to recently from high budget deficits, high inflation and had a balance of payments difficulty could resolve those problems within a short space of time. Only national economic recovery can increase the resources to effectively deal with poverty. The Programme for National Recovery from which there will not be deviation is the key to achieving this goal.

One of the most radical themes of the Minister's Budget Statement last Wednesday concerned the proposed changes in the financial procedures governing the State's administrative running costs. In the two years since this Government took office, major progress has been made in redressing the imbalances in the public finances through control and reduction of public expenditure. Indeed, it is this very ability of the Government to exercise control over spending that has restored confidence and growth in the economy. I would remind Deputy Colley that on a few occasions our strenuous efforts to curtail public expenditure was not helped in those lobbies by the Deputy or her colleagues.

Miss Colley

We will judge it on its merits.

Mr. Smith

There are still, however, huge constraints on the public purse and because that is a situation which is likely to prevail for the foreseeable future, it is right and prudent that we should begin to think of how we might better organise and manage the resources involved in the administration of the State's affairs. Here I agree with Deputy Colley. As part of our programme we invite suggestions and will consider any sensible proposals to ensure that we do not have duplication or a waste of those resources in overlapping and unnecessary competition in the delivery of services.

The case for pursuing and achieving a more efficient and effective public service is most compelling. As part of this objective my colleague, the Minister for Finance, outlined proposals for fixing administrative budgets on a three-year cycle. The central philosophy underlying such an approach is to give the management in the various Departments greater budgetary responsibility and flexibility, within an overall administrative budget, set them free of excessive controls and, perhaps most important of all, encourage them to use their initiative and skills in securing savings in the day-to-day running of their offices, and provide opportunities for the promotion of developmental employment oriented activities.

There is no escaping the fact that the public service will, in terms of the resources made available to it, have to manage with less than it has in the past. There is a lot of talent at all levels within the public service but, unfortunately, existing structures and procedures have not allowed that talent to develop to anything near the maximum extent possible. The Government recognise this deficiency and intend to correct it. I am convinced that better organisation and better management will result and, moreover, it will give the taxpayers better value for their money.

This budget sets out to stimulate economic development and job creation through structural improvement utilising the additional resources now available from the EC and the improvement in our economic environment and better public finances. Energy and Forestry will play a significant role in this development.

Energy is a fundamental requirement for all our business and leisure activities. It is therefore essential that we have a regular supply of energy at as low a price as possible.

In the energy area, we suffer a number of disadvantages compared with our European neighbours. These are due to our small size and island location remote from the main centres of the Community. For example, we are the only member state with stand-alone gas and electricity grids. Our small and dispersed population structure and lower level of economic activity is an additional burden.

In recognition of these problems, I am anxious to take advantage of the opportunities offered by the increased EC Structural Funds to make improvements in the structure and competitiveness of our energy supply industries. Energy will, therefore, be a key sector for the use of Structural Funds in our development plan.

The energy programme which is being prepared will involve the following main features: In order to strengthen energy supplies and reduce costs, we intend to intensify market penetration of natural gas with a view to creating a long-term viable industry before our present source of supply of gas is exhausted; secondly, the electricity grid must be strengthened and extended to cater for increased demands arising out of economic development and industrialisation with particular attention being paid to removing deficiencies in rural and western areas; a major upgrading and modernisation of the single oil refinery in Ireland is also proposed in order to bring its costs into line with prevailing market levels; our indigenous energy resources will, of course, also be supported. We are pursuing an active hydrocarbon exploration programme targeted at finding new supplies of natural gas and oil. This area of activity is not, however, expected to be eligible for EC aid; the peat industry is essential for our energy supply and security, and the peat industry is the major source of employment and economic activity in central and western Ireland. The viability of the industry is under threat from low energy prices. A major modernisation programme involving new technology, labour force rationalisation and new product development is underway and is a classic case of industrial restructuring and rural development; finally we intend to pursue integration with European energy networks.

The completion of the Common Market requires that Ireland's energy consumers should have access to the European energy markets on the same terms as competing enterprises. This will require electricity, as a first priority, and later gas interconnectors with Europe. Our programme will put forward projects in both these areas. This development should get a particularly favourable response from the Commission as a practical example of European integration.

The position as regards Whitegate-Whiddy is again making headline news. I want to reiterate that the Government are open to proposals which would achieve the reactivation of the oil storage facility at Whiddy Island and the continuation of refining at Whitegate which will require a substantial level of investment to achieve upgrading and modernisation. There have been a number of recent comments concerning reports that the Government are negotiating with the Nigerian Government concerning both facilities.

There are a number of aspects to this issue which need to be clarified to avoid any misunderstandings. The first point is that the recent contacts with Nigerian officials and others have not taken the form of negotiations but were merely discussions about how Irish facilities could be used to the benefit of both ourselves and interested parties. Secondly, it is not true to say that other producers are excluded from putting forward proposals. There have been a number of approaches from other quarters, but these have not resulted in anything to date beyond broad expressions of interest. However, I want to make it clear, that proposals from any producer or company will receive the fullest consideration.

The action of the Minister for Finance in excluding unleaded petrol from the excise duty increase is timely. This enables unleaded petrol to be sold at a favourable price compared with leaded petrol. I hope that motorists will take advantage of this fact and, where practical, switch to unleaded petrol. At this stage, a sizeable number of outlets have unleaded petrol available and I expect that this network will expand over the coming months. This is more good news for the environment.

Notwithstanding the revision of licensing terms announced by my predecessor in September 1988, the prevailing low level of oil price continues to represent a major disincentive to oil and gas exploration. During 1988 we had three wells drilled in our waters. Given the importance which we attach to work in the under-explored Porcupine Basin area, the fact that two of these wells were located in the Porcupine was a most welcome development. The past year also saw the conclusion of an agreement between the Government and Marathon which, amongst other things, will provide for the drilling of up to ten exploration wells in the period up to and including 1991. In exploration terms alone, this is a most significant development which will enable us to assess, and hopefully realise our potential for further hydrocarbons production off the south coast.

The first Marathon exploration well will shortly be getting under way and I am sure that all in this House will share my hope that the company's exploration efforts will yield positive results. I must also mention that BP are currently making the necessary arrangements for the drilling, in the first quarter of this year, of an exploration well in Block 49/9, in which there was a previous oil discovery. Although the Marathon drilling programme constitutes a firm basis for our overall exploration efforts over the next few years I would certainly not be happy to leave it at that. Our efforts to encourage other companies to engage in exploration activities in our waters will continue, and I am confident that the 1988 level of exploration activity will be at least maintained over the coming twelve months.

On the minerals exploration front, a high level of minerals prospecting activity is being maintained throughout the country. There are at present about 740 prospecting licences held by some 55 companies whose exploration programmes are mainly focused on gold and base metals. Much of the exploration activity is being undertaken by Irish companies as distinct from the situation which prevailed a few years ago when exploration in Ireland was being conducted predominantly by multinational companies.

Hopes for new mine development centre on the Ballingarry and Leinster coalfields and the talc magnesite deposits at Westport, County Mayo. I am in touch with a number of interests about these coal and tale deposits and I hope to get new development under way later this year. The Galmoy lead-zinc find, a gypsum find at Glangevlin, County Cavan and a number of significant gold discoveries in the west continue to be investigated.

Debate adjourned.