The reference in the Official Report, volume 349, columns 571-2. The Coalition's Building on Reality stated that `children's allowances are not well directed payments' and proposed that they should be taxed. There was, therefore, a measure of agreement that there was an anomaly in this situation that should be addressed.
One of the drawbacks at present is that because of the complete lack of selectivity Governments are inclined to give increases to better targeted schemes and give those schemes priority over child benefit. If the child benefit scheme is to be improved on a regular basis for those who really need it, there should be some element of selectivity. One way would be to give any new increases up to a certain level of incomes only.
The Minister for Finance has put forward a proposal for examination and discussion, the Government having decided in principle that all aspects of the suggestion should be examined, and in particular what administrative costs and difficulties would be involved. The income limits contemplated were never intended to affect low or middle income families, and the Government were thinking in terms of not less than £30,000 per annum. It was also the intention that any savings at the upper levels would be used to improve the benefit for those on lower incomes. I wish to state categorically that there was no specific decision taken to include this change in the next budget. This could only be done after all aspects had been fully examined and in particular the administrative difficulties and costs carefully assessed.
The Government are very conscious of the difficulties encountered daily by those who have to survive on low incomes. At the same time the cost of social welfare payments is one of the problems we have to confront in managing the public finances. The really acute social problems of 20 or 30 years ago, such as widespread housing problems and seriously over-crowded living conditions, have been largely eliminated. Much has been done to improve the situation of the elderly. The problems of today must therefore, be correctly identified and addressed on an up to date basis.
This Government have consistently, even at a time of severe expenditure reductions, taken action to protect the less well-off and those on social welfare. That cannot be honestly denied. There have been no significant reductions in any major schemes. From the beginning we ensured that social welfare increases were paid from the normal date, and fully covered the rate of inflation. We rejected the advice of some economists and international agencies to cut social transfer payments. Anything of that kind would be completely alien to our political philosophy.
But we have gone considerably further than just maintaining welfare payments at the same level. In both this year's and last year's budgets we have consciously targeted additional assistance to those most in need. We have in large measure followed the strategy and the priorities set out in the Commission for Social Welfare report, by improving the basic payments for the long-term unemployed, improving child income support and extending the free fuel scheme. For instance, from these last two budgets, a single person on unemployment assistance will have received an increase of 25 per cent or almost £10 a week.
We have also particularly concentrated this year on the problems facing low income families, whether any family member is at work or not. There are a number of measures designed to help with bringing up children. Low income families with significant numbers of children are being exempted from tax altogether, as a means of obviating the poverty trap. We have also given more money for the homeless, and for the direct relief of poverty by experienced organisations.
In general, there has been a good reception for these measures from most of those concerned and the agencies involved with their welfare. We accept that more still needs to be done. I want to give an assurance, in line with my political philosophy, that a fair share of any increase in national income will be directed by this Government to the least well off and particularly to those whose problems are most acute. We will make further improvements in the system as resources become available. It is only by increasing national output that we can safely and securely improve the situation of the least well-off in our community. To seek some other remedy will only bring worse deprivation on a wider scale ultimately.
The Programme for National Recovery ensures that social equity is a specific national objective. This budget advances this objective by direct action in the areas of social welfare and taxation and by initiating a major programme of investment and job creation. The most effective way of eliminating poverty is to steadily increase the number of persons in well-paid employment. It is also the way to bring emigration to an end.
The major external influence on the Irish economy in the years immediately ahead will be the completion of the Single Market in the European Community. Our economic performance as a nation will be deeply influenced by the extent to which we can successfully adapt to this new environment and exploit all the opportunities it offers. The Government are fully conscious of this reality and are actively and comprehensively engaged in planning for this new situation. No member state has done more, has made better arrangements or is more advanced in their preparations than we are.
Three weeks before we came into office, the Delors Plan outlining a Community programme to make a success of the Single European Act and establish the Single Market by 1992 was published. The far-reaching significance of that plan and the historic opportunity it presented for us to accelerate our economic and social development was immediately obvious. It matched our commitment to national recovery based on economic development and growth. The proposed increase in, and our access to the Structural Funds to improve our competitiveness and efficiency fitted exactly into our own plans for these objectives, as outlined in the Programme for National Recovery. Accordingly, we had no hesitation in quickly and enthusiastically endorsing and supporting the Delors Plan.
Following up that endorsement, we put in place as expeditiously as possible new arrangements to handle the detailed negotiations and follow-up action required to implement the Delors proposals in so far as they affected this country. To give these matters the highest priority at national level and to ensure the greatest possible degree of co-ordination of effort we established a committee of ministers and secretaries, under my chairmanship, to take control and direct our preparations for the Single Market and the Continuing negotiations involved at Community level. This committee is a new departure in Irish governmental organisation and is designed to ensure that our progress towards the Single Market in 1992 will be steadily, skilfully and smoothly achieved.
The next step was to secure the agreement of President Delors and the Commission to establish within the Commission a task force composed of Commissioners and Directors-General presided over by the President to match and relate to our Committee of Ministers and Secretaries. This working arrangement represents a new departure also in relations between the Commission and a member state. It enables the speedy and effective co-ordination of national and Community policies and measures which is essential since both the Irish Government and the Commission now have the same objectives — to raise the economic and social position of Ireland ever closer to the Community average until full cohesion is achieved.
In relation to Structural Funds, which under the Delors Plan are to be doubled by 1992 for the least prosperous regions, we obtained recognition of Ireland as an Objective I region and, specifically, as a least prosperous region within Objective I regions for whom Structural Funds aid will be doubled by 1992, subject to the submission of suitable programmes and plans. We will insist that the commitment in regard to the Structural Funds to a special effort for the least prosperous regions and to a doubling of the aid to Objective I regions ensures our full share of the doubled Structural Funds. For this purpose we will submit, before the end of March, the national development plan for five years which will be the basis on which the European Commission will enter into a formal commitment on aid from the Structural Funds. That plan will be one for development through growth, which is also the basis of the Programme for National Recovery. It will be a plan integrated around that objective, because faster growth is necessary if we are to achieve our national economic and social objectives and attain standards comparable with those enjoyed by our Community partners.
We have already identified in our Programme for National Recovery with the social partners the sectors of our economy whose development can lead to faster growth and greater employment. The major step forward in the meeting Ministers recently had with Commissioners in Brussels is that we have reached agreement with the Commission that these are the programmes they will support, when they are spelled out in detail in our national development plan.
The objectives and programmes which the Government and the European Commission will combine to achieve and implement through the plan now being finalised have been agreed by the Government and the Commission. These objectives and programmes have also been agreed with the social partners through the Central Review Committee of the Programme for National Recovery. The objectives of the plan are: to prepare the economy to compete successfully in the internal market when completed in 1992; to stimulate the economic growth needed to reduce unemployment and to raise per capita incomes towards average Community levels; to improve further the state of the public finances; and to accompany economic growth by a greater social dimension in our society.
Two types of programmes are now agreed. One set of programmes will be directed at improving our competitiveness by reducing the costs imposed on our economy by Ireland's peripherality, inadequate infrastructure and low population density. The second set of agreed programmes are directed to developing our productive economic capacity. The programmes to improve competitiveness are the following:
an efficient road and transportation network, including urban areas, must be built to reduce transport costs within Ireland;
adequate port and airport facilities and access to them and other means of transport must be provided to minimise transport costs to markets abroad and to minimise transport costs for imports of materials and components and for tourist traffic;
comprehensive, up-to-date and competitive telecommunications, and energy networks;
development of sanitary services to meet economic and social development needs as well as environmental requirements;
the protection and enhancement of the urban and rural environment.
The programmes agreed to develop the productive capacity of the economy are the following:
the provision of direct financial assistance for industrial projects and both direct and indirect support towards strengthening and expanding the technological and marketing capacity of the industrial sector including the public industrial sector;
the development of services industry particularly international services;
the development of tourism, particularly through the provision of a suitable tourism infrastructure;
the improvement of agricultural efficiency and structures and the development of agricultural-based industry;
the development of the fishing industry, including the aquaculture industry;
the development of the forestry industry;
the implementation of rural development schemes to stimulate fully the capacity for wealth and employment creation in rural areas;
the provision of training and work experience schemes, particularly for unemployed youth the long-term unemployed and other disadvantaged groups such as the mentally and physically handicapped;
ensuring that particular skill shortages are met by suitable training programmes.
They are the programmes and the objectives of the five year plan.
The plan will provide a framework for five years in which our development potential will be integrated for the first time with an agreed programme of strategic Community aid. That is the reality we are now bringing into being and is the fruit of carefully conducted, vigorous negotiations at European level over the past two years. The plan will concentrate on increasing the competitiveness of our economy and strengthening its productive capacity, so that we can take advantage of the opportunities afforded by the completion of the European internal market. This must be achieved in a way that is consistent with further improvement in our public finances and budgetary position. We have also successfully negotiated the acceptance by the Commission of suitable investment in the agreed programmes from sources other than public funds in projects and infrastructural facilities of public interest.
The European Commission have welcomed the thorough and comprehensive work presented to them by the Irish Government in the recent discussions between Ministers and Commissioners. It was clear to the Commission — and they so stated — that the progress made would enable the plan to be submitted by 31 March next, as required. The national development plan will be elaborated by sub-national plans for each of the seven regions into which the country has been divided. I want to emphasise that this was not a requirement by the European Commission. As far as the Commission is concerned, Ireland is one region, but the Government were anxious to mobilise the views and resources of all parts of the country for this national development plan and in particular to involve the local authorities. The Irish Congress of Trade Unions and the Confederation of Irish Industries have expressed in the Central Review Committee of the Programme for National Recovery their satisfaction at the opportunity being given to them both at national and at sub-national level to have an input into the plan and their satisfaction with the arrangements for doing that. The Government have in fact brought the maximum possible degree of democracy and local consultation into play in this process.
The working groups for each of these sub-regions will soon be in a position to finalise their documents setting out the development objectives and strategies for achieving them for their region. The advisory groups for the regions are being and will be fully consulted in the process. At its completion, we will, for the first time, have a clear statement of the objectives desired for each of the seven regions.
I believe that the general strategy of the budget and the specific measures to be incorporated in our national development plan provide a sound basis for growth in the years immediately ahead. No-one can be complacent about 1992 but I am satisfied that Government policy is providing the right conditions for investment and expansion and that this process will be supplemented effectively by increased support from the Structural Funds. There are a number of key areas to which the national development plan will endeavour to direct massively increased investment, both public and private. A major effort will be required to improve the efficiency of our transport infrastructure to maintain competitiveness in the single market.
When the Channel Tunnel opens, Ireland will be the only EC country without a land connection to other member states. Transport costs of Irish firms serving mainland Europe are some 75 per cent to 100 per cent higher than those on the mainland. A significant reason for these high costs is the deficient state of our national roads and the access roads to our principal ports and airports. Arising from the successful discussions in Brussels on 16 January, the Government have provided an additional £44 million for road works in the budget. This brings the total State provision for road grants in 1989 to £194 million which is the highest annual provision ever made for road grants in real terms.
Of the additional £44 million provided, £34 million will be spent on national roads and £10 million on county/regional roads. 1989 will be the first year in a strategic plan designed to bring Irish national roads up to European standards. The Department of the Environment have practically completed a blueprint for the medium to long term development of Irish roads. The total cost of road needs over the next 20 years has been estimated at £8.7 billion. This includes £2.9 billion for the improvement of our national and major urban roads and access roads to our principal ports and airports. We are confident that we can do this work within ten to 12 years on the basis of a partnership between the State, the EC, the local authorities and the private sector. The Minister for the Environment will submit to the EC an operational programme for national roads based on the strategic plan before the end of March. This will dovetail into the Government's national plan. He also intends to publish the Blueprint for Road Development by next June, taking into account the views of the EC Commission on the operational programme in the meantime.
Under the new arrangements for funding from the EC Structural Funds, grants will not only be available for State-funded road improvement projects but also for projects such as toll roads where revenue is generated. These developments provide a welcome boost to private sector investment in roads. In particular, the prospects for such investment in the Dublin ring road look very promising. The Minister for the Environment will shortly be inviting bids from Irish and foreign firms for a franchise for tolling the ring road.
The Government recognise that county and regional roads are extremely important for all aspects of rural development including tourism, especially agri-tourism, industry, agriculture and forestry. There has been a serious deterioration in the condition of these roads in recent years. For these reasons, the Government have agreed to a three year programme, costing £150 million, for certain works on county and regional roads; £47.4 million will be provided this year; this is an increase of £10 million over what would have been possible on the basis of estimates published last October. The Minister will be announcing details shortly.
The upturn in domestic economic conditions should ensure that the increase in total employment seen in 1988 will be repeated in 1989. With exports continuing to grow and improved domestic conditions in 1989, a rise in manufacturing employment is likely to be achieved. The priority objectives set for the industrial development agencies are the job creation targets agreed in the Programme for National Recovery. The business confidence which has emerged in Ireland has given new impetus to development and investment in the manufacturing sector, as clearly indicated by the year-end statements from the IDA and SFADCo.
The small business sector has become a critical feature of job creation with every indication that the new incentives and programmes implemented by the industrial development agencies have helped speed up the pace of development in this sector. An increasing number of small companies are responding to the need for high quality management and business structures as a foundation to grow into the large Irish firms for the future.
Irish-owned industries show signs of responding to the new growth in the economy and the potential of the Single European Market. Several major Irish companies are committed with the IDA to undertake significant investment in Ireland. In the dairy co-operative sector, strategic investments will lead to the internationalisation of a number of the co-ops. The major growth of IDA-backed investment in R and D projects in the food sector can, generate significant new production capacity in the coming year. The response to international market demands, for example, by the furniture and joinery sector during 1988 has already produced improved results and will continue to show growth in 1989.
The central objective of our development approach for Irish industry during 1989 will be to continue to encourage internationally competitive Irish industries to become European majors in the single market of 1992.
International investment into the manufacturing sector in Ireland will continue at a strong pace during 1989, with a substantial pipeline of projects in discussion with the IDA and SFADCo. The arrival of Fujitsu Isotec from Japan is an important development in this regard.
The key target areas, electronics/ engineering, pharmaceuticals, international and financial services and consumer products have yielded considerable jobs and continue to show good promise from the investment during 1988. These investments are represented by both new and expanding projects. In international services we continue to break new ground and the sector is becoming an increasingly important job creation area especially for graduate employment.
In 1989 a strong emphasis will be placed on promoting Ireland as a key location for US and Far Eastern companies investing in Europe in preparation for 1992 and the Single European Market.
Over £14 million has been invested by the Custom House Docks Development Company in the Irish Financial Services Centre site in 1988, and it is estimated that £35 million will be spent this year by the company in further construction work. Over 200 people are employed on the project at present. This is expected to increase to 500 over the next six months as new construction work is commenced. To date 55 companies with an estimated employment content of 1,300 upwards have decided to establish in the centre.
Irish tourism has had two successive years of significant growth. The targets set out in the Programme for National Recovery call for a doubling of foreign visitor numbers over the period of the plan, an increase in tourism revenue of £500 million and the creation of 25,000 additional jobs in the Irish economy. We are now well on course for achieving these targets.
Overall tourism revenue in 1987 exceeded £1 billion, an 18 per cent increase on 1986. This growth continued in 1988. In their end of year review, recently published, Bord Fáilte estimate that overseas visitor numbers in 1988 exceeded 2.3 million, 13 per cent ahead of the 1987 performance.
The progressive marketing approach successfully adopted in the previous two years will be maintained this year. Towards the end of last year the Government provided a further £5 million for marketing purposes, on condition that it would be matched by the industry, to further boost visitor numbers in 1989.
The industry agreed to match this allocation, and the resulting £10 million marketing programme is already under way.
All the indications are that there will be substantial investment in the tourist industry this year from both domestic and international sources. Indeed, significant investment has taken place over the past two years; new hotels in Dublin and in Adare, Waterford and on the Black-water. Bord Fáilte have approved marketing and development plans under the business expansion scheme in respect of 33 tourism projects involving planned investment of almost £45 million. A further 15 projects involving planned investment of over £14 million are under consideration.
We are confident that greatly increased funding will be available from the Structural Funds to support both public and private sector projects of public interest and access beginning this year. The budget provided for a new scheme of grant assistance costing £14.5 million which will be included in the national development plan to be submitted to the EC Commission. The objective of the scheme is to stimulate private sector development of new tourism products such as outdoor pursuit and activity centres, recreational facilities in resorts, marine facilities and cultural centres which are analogous to public facilities.
The tourism developments carried out under this scheme will be complemented by a range of other tourism-related works to be undertaken by State agencies, including a £1-2 million package for a programme of amenity and environmental works by the local authorities on some of our larger beaches. The Office of Public Works will undertake a major investment programme costing £3.5 million to enhance and expand facilities at their major visitor attractions.
Another sector on which we have been and will continue concentrating in the national development plan is forestry. It has been performing well during the last two years. National planting in 1988 had increased to 15,000 hectares from around 9,000 hectares only two years ago. This Government took the decision to step up planting when it came to office, and to reorganise the State forests on commercial lines, which it has now done by setting up Coillte. The opportunities and incentives for private planting have been well publicised and are being taken up. The special advantages in timber production that this country enjoys and the market opportunities will now be better exploited.
The prospects for the Irish economy following the budget are good. The process of recovery will continue and strengthen on a broad front.
Our supplementary development budget and our tax relief measures will give a boost to employment. We have addressed the situation of those in the country who need help. We can look forward this year therefore to a higher level of employment and some rise in living standards. This is a sound budget and a fair one. It has been accepted as such by the majority of the general public. We are steadily laying the foundations of a better country for all, and creating a more caring and fairer society.