Deputy Sean Barrett is in possession and has five minutes remaining.
National Economic and Social Council Report No. 88: Statements (Resumed).
I have five minutes available but because of the pressure of speakers I would like to give that time to my colleague Deputy Finnucane who will be making his maiden speech.
Is that agreed? Agreed.
I found the NESC report a very interesting document which has great significance for our country and our economy. It is obvious from the report that Ireland has not fully benefited from our 15 years' membership of the EC. Therefore, it is important that as many as possible of those in business read the report so as to be able to appreciate its great importance for the future of the economic and social life of this country.
I wish to refer to one specific comment in the report, that is, that there is a strong case for a Community role in the policies of direct income aids which are necessary for maintenance of a viable rural economy in many areas of the Community, including parts of Ireland. It is recognised that many of our farmers have low incomes. I do not think we have addressed this issue in the past.
When one considers that the guidance fund during the period 1973-86 was only 5.5 per cent of the overall grants and subsidies to Ireland and that this guidance fund covers expenditure in different areas such as providing grants to improve the productivity and structure of farming, assisting investment in fish and fish processing industries and providing direct income support for disadvantaged areas, one can appreciate the low level of grants allocated to this specific sector. There is a very small amount spent in providing direct income aid in the disadvantaged areas. The Government have an excellent chance to address this situation in the near future by way of a further extension of the disadvantaged areas. As the Minister is aware a lot of the survey work has now been completed and soon the Government will be making a submission to the EC. One would hope that the details of the areas which will be included or excluded will be revealed prior to our submission. This is an area which is of interest to us in County Limerick and indeed to many other areas of the country also. I would encourage the Government to move swiftly in making their submission so that the direct income will be paid as soon as possible.
I would also encourage the Minister for Agriculture and Food to remove certain restrictive clauses such as the population statistic of 27 adults to a square kilometre and the rigid stocking level which are insisted on in the existing criteria. The Government can give credibility to this document and assist farming by moving swiftly and looking for a maximum extension of the disadvantaged areas.
I have concentrated on this specific area because I know it is pertient and very important. Over the past year a lot of survey work has been done and at this stage farmers are looking very critically at what is happening. A sense of mystery prevails in this area at this stage in relation to who is in, who is out, or whether we will qualify. I would encourage the Minister — it is timely that it is the Minister for Agriculture and Food who is present — to move with great haste in order to remove this uncertainty.
There were many other interesting areas in this document which I have read from cover to cover, but, unfortunately, due to time constraints I will not be able to dwell on these various issues.
Go raibh maith agat a Theachta agus cómhghairdeachas ar ocáid do chéad oráid bheith curtha os ár gcómhair agat.
Go raibh míle maith agat.
Ba mhaith liomsa ar dtús mo cómhghairdeas a ghabháil freisin leis an Teachta ar ocáid a chéad óráid.
I should like to congratulate the Deputy on his maiden speech and to point out to him that the issues he referred to are the responsibility of the Council by way of Council regulation. I am conscious of the constraints involved and hopefully, as in other areas, I will try to persuade 11 other Ministers from 11 other countries to change the regulation in relation to stocking rates and population criteria. If that is not possible the regulation as it stands now will be very limiting.
Having said that I welcome the opportunity to comment on the NESC report. This report represents a major stocktaking of our performance since we joined the European Community and outlines the challenges we will face in the coming years. It can only be positive that the challenges, risks and strategic options are spelled out in this report — and that they should be debated in the Dáil and as widely as possible outside the Dáil. The agenda which has been set out for 1992 and beyond represents such an important set of issues for our future that they need to have the backing of a well informed and committed public opinion if they are to gain full acceptance.
My remarks on the NESC report will focus primarily on its comments on the agricultural and food industry and in particular on its references to the problems of low income farmers and the slow development of the food industry. I welcome the detailed discussion in the report on the industry, even if there may be some of the report's conclusions about which I would be reserved or would have qualification.
The report sets out in clear terms the performance of the agricultural and food processing industry since we joined the European Community in 1973. It has been — and I think this is worth saying — a tale of a number of periods; the accession years which saw farm incomes per head double in real terms between 1970 and 1978; the sharp fall in farm fortunes between 1978 and 1981 due to the severe price/cost squeeze; the recovery in the years to 1984, followed by a sharp downturn again in 1985 and 1986; and finally, the last two years, 1987 and 1988 which have seen a remarkable recovery in farm incomes and I am confident that 1989 will also register a further increase on 1988 incomes.
For the period as a whole, the report concludes that the performance in the agricultural and food sector was not as good as might have been expected and it outlines the reasons for this as it sees them. I will deal with this judgment and the various factors which led NESC to arrive at it in a moment. However, even if there have been some disappointing aspects in the way the CAP has developed over the years, there is no gainsaying the major contribution it has made to this country. In the period from 1973 to 1986, total receipts under the FEOGA Guarantee and Guidance Funds amounted to £5.5 billion, which represented 4.3 per cent of total GNP over the period.
But these direct transfers are only part of the picture. When account is taken of the higher prices at which trade in agricultural goods is possible by virtue of the CAP, the value of the CAP to the economy is much more substantial. The NESC report shows that taking both FEOGA transfers and the trade transfers into account, the net value of CAP transfers over the 1979-86 period amounted to £6.1 billion or 6.1 per cent of GNP for this period.
This is the starting point for any discussion about the CAP, the European Community and Irish agriculture. Whatever disappointments, policy deficiencies or other criticisms can be made about the CAP, the scale of the resource transfer it has brought about has been of critical importance to this country's economic welfare since we joined the Community.
As I have said already, the main problems identified in the agricultural sector related to the persistence of low incomes for a large segment of Irish farmers and the slow rate of development of the food industry. The problem of low income is correctly attributed to the structural problem within Irish farming — mainly due to the existence of a large number of small farms. Many of these small farms are operating enterprises at low levels of intensity, which do not give very good returns. In many cases, there is a further link to a disadvantaged demographic structure on the farm, in terms of the age and educational status of the farmer and the high proportion of the farmers who are unmarried. This structural problem is a very real and major difficulty for the agricultural sector and there is little point in pretending that there are any easy answers to it.
The NESC report contends that the lack of a socio-structural policy at Community or at national level is one of the reasons for the persistence of the structural problem. The criticism is valid only up to a point. It has taken a considerable time for Community structural policy to address itself to many of the problems and the level of the Community funding for actions in the structural field has only been a fraction of its funding for the measures for price support which were funded 100 per cent. Thus the signals being provided to national policy makers and to national Ministers for Finance were not necessarily helpful in moving to a greater concentration on structural policy. But again, due to our success in the negotiations on the Structural Funds, we can look forward to a better and more balanced structural policy in the future.
The increase in the size of the European Community Structural Funds and their co-ordinated action should help us to tackle some of the major economic and structural problems in agriculture and in the rural areas. The single most serious structural problem in these areas is the lack of jobs. The only solution to the problem is the provision of more jobs and income opportunities. This can best come through an integrated form of development and through a diversification of the rural economy. This has to be a major objective of Community and national policy. As Deputies are aware, I anticipated the Community's move in this direction when I set up the pilot integrated rural development programme in 1988. The NESC report states that we should be one of the leaders in the analysis and in the provision of solutions for our own and for Europe's rural regions. We are already fulfilling this role of leadership in that we were the first country to initiate a pilot programme for integrated rural development. This is being supported by the Commission. I am hopeful that its results can serve not only to assist us in the formulation of national policy, but can also feed into Community policy on rural development. The maximum development of the productive base in rural areas naturally has to be our primary objective but, as the NESC report points out, more off-farm employment will not solve the income problems of some farmers. This leads the report to advocate direct income aids.
To date, direct income aids take the form of payments under the disadvantaged areas scheme (mainly headage) and social security payments. There has also been agreement at Community level that member states may introduce a direct income aids scheme for farmers. The terms and conditions of this scheme are currently being negotiated in Brussels. A decision as to the application of this scheme to Irish conditions cannot be made until we see the final outcome of these negotiations.
In terms of the areas of policy which are under domestic control, I am glad to see the acknowledgement in the NESC report of the progress made in the field of agricultural education and training. The fact that almost all young farmers entering the industry now receive this training through Teagasc's certificate in farming, and that grants are linked to this certificate, is a major step to addressing the problem of inadequately trained human resources in the sector. As recently as eight years ago fewer than 20 per cent of those entering farming had this background qualification and there has been a dramatic change in recent years. I would also have to point out that I have consistently followed the recommendation made in the 1986 NESC report, Strategy for Development that production opportunities and quotas should be directed towards low income farmers.
I have from the beginning of my term of office been very concerned about the difficulties of producers with small scale quotas. For that reason I secured agreement from the Council of Ministers in 1987, within months of joining that Council, to introduce a restructuring scheme giving special priority for the purchase of quotas, without land, to small scale producers. I decided that the scheme here would, in fact, be restricted to producers with quotas under 50,000 gallons and of these the first priority category is confined to producers with less than 30,000 gallons. I have also sought to help this category of producers by giving them priority under the scheme for temporary leasing of quotas introduced in 1988-89 and in that year I further amended the rules on flexi-milk in their favour.
Furthermore, I introduced in December 1987 a clawback system under which a percentage of quotas transferring with a lease of land will be retained in a national reserve, if the lessee's total quota exceeds 50,000 gallons. This is designed partly to add quota to the national reserve for distribution to small scale and young farmers and, more importantly in the way the scheme works, to give smaller producers priority access to quotas becoming available for leasing with land.
It was also as a result of a request made by me at the EC price fixing negotiations last spring that the Commission brought forward their proposals for the allocation of an additional 1 per cent in quotas to small scale producers and other farmers who were particularly hard hit by the quota system. These proposals are currently being considered by the Council of Ministers. I would hope we would conclude at the next meeting of the Council of Ministers in November. I consider that within the limited degree of flexibility available to me under the Community regulations I have made every effort possible to assist these producers as recommended in the NESC report.
The second main problem identified by the NESC relates to the slow progress of the food processing industry. One thing needs to be said first on this question. We are accused of having greatly over-used intervention as an outlet for our produce. This is simply not true.
Since 1973 we have produced annually between 5 per cent and 6.5 per cent of the Community's manufacturing milk. Despite the fact that over two-thirds of what we produce is in excess of domestic consumption, our sales to intervention over that period amounted to less than 6 per cent of the Community's total. The Netherlands, a surplus producer like ourselves, accounted for over 11 per cent of intervention and 13 per cent to 14 per cent of milk production. The UK, a deficit producer, accounted for 12 per cent of intervention and had normally less than 10 per cent of the manufacturing milk pool. In the case of butter intervention, the Netherlands and the UK accounted for almost 15 per cent and over 13 per cent respectively. Our share was 5.75 per cent.
It is true that in regard to beef intervention we accounted for more than our relative share of production might be thought to justify. In this decade we produced over 7 per cent of Community beef but accounted for 18 per cent of its intervention. But we have, by a long way, the largest beef surplus in the Community, exporting a proportion of output nearly three times that of Denmark, the next most export-oriented country. France, with less than 120 per cent self-sufficiency, normally accounted for under one-quarter of production and almost one-third of total intervention. In some years we have been close to 700 per cent self-sufficiency. All of this suggests a greater ability to market successfully than we normally give ourselves credit for.
It was the unlimited possibility of intervention rather than its excessive use which influenced our production pattern. The need — especially in the milk sector — to handle rapidly increased production concentrated in a highly seasonal way inevitably meant that processors manufactured bulk products for which there were, if it was necessary to avail of them, clear intervention outlets. It was the combination of a rapid rise in production, a small domestic market and the availability of intervention which pushed the industry to concentrate on the safer bulk production. This is in any event changing.
The agricultural industry has been moving gradually away from bulk commodities towards added value manufacture. This process would have happened to some extent in any event but has been given a substantial impetus by the changes which have taken place in Community support arrangements in recent years. The introduction of milk quotas has highlighted the need to maximise the value of a limited milk pool. The weakening of intervention mechanisms has removed the overwhelming incentive to concentrate on bulk products for which there are intervention outlets. This is critical. Intervention was originally intended to be a safety net; it became an insurance policy. It is now simply a safety net again. This has important implications for the industry and how it approaches the years up to and after 1992. It is also important to note that certain other EC policy measures which have hindered the development of food processing — especially the way in which the MCA system applied — have now been eliminated as a result, at least partly, of sustained Irish pressure.
This greater emphasis on added value processing was, of course, given a further fillip by the Government's decision to bring agriculture and food together in one Department. This meant that ultimately policy for all sections of the food chain are the responsibility of one Minister, assisted by a Minister of State with special responsibility for the food industry. This is the type of integrated approach that the NESC report demands. The pity is that this approach — followed by many of our Community partners — was not adopted earlier. By taking this action the Government were indicating that they share the NESC disappointment at the slow pace of the development of the food industry.
Of course in an integrated agriculture and food strategy increasing the rate of development depends also on the primary producer and the pattern of production he engages in. For that reason I have given special emphasis to gearing production patterns to market realities. This has been particularly true in areas that had perhaps received less attention in the past, that is pigmeat and sheepmeat where a new vigour and confidence has now emerged. Integrated breeding programmes in the pigmeat sector with producer and processor involvement, the code of practice in the sheepmeat sector from the producer to the end of the chain all encourage consistency and quality based on consumer requirements. Agricultural production must now be geared towards the consumer as a main priority.
The increased emphasis given by the Government to the food industry since 1987, as well as the reaction within the industry itself, provides considerable ground for hope. The NESC report points out the importance of developing those industries with "a genuine, sustainable and renewable competitive advantage". A key to gaining this competitive advantage is through innovation in our food industry, greater application of science and technology and better marketing and distribution. In an increasingly environmentally conscious world, our green image is also a vital part of this potential competitive advantage. The importance of pressing home our advantage in the agri-food sector was further highlighted in a report produced this week by Teagasc, which showed that in 1988 the agri-food industry contributed 42 per cent of foreign exchange earnings from exporting. That is an enormous and unique figure, which was arrived at having made the necessary adjustments for import content and profit repatriation for the agri-food industry and for other exporting industry. It also showed that each £100 in additional export earnings in the agri-food sector was worth a net £90 to the economy whereas for manufacturing industry the corresponding net figure was £28.
The need to focus on innovation in our food industry and our industry generally is one of the crucial messages which emerge from the NESC report. It is vital that the whole of our natural resource based industries is adequately underpinned by the type of scientific and technological development which will be vital if they are to remain competitive in the future. The same comment applies to our efforts at regional and rural development. We must be fully aware of, and use to the maximum effect, the various programmes for scientific and technological development which the Community has been promoting in recent years. Furthermore — and this is where leadership in policy analysis must play its part — we must be willing to encourage the Community to invest in forward looking programmes which are of particular relevance to the regions of Europe — programmes such as the forthcoming STRIDE programme, Science and Technology for Rural Innovation and Development in Europe. I will be advocating that the agri-food and natural resource based sectors will receive due attention within this and other such programmes.
I have reacted to the major comments made about the agri-food industry in the NESC report. It concludes its discussion on Irish agriculture by emphasising the need for long-term national policies "concerning the role of agriculture in the overall development of the economy, and the need for national policies to achieve agricultural objectives which were not addressed by the CAP". We are all very much aware of the scale of change which has occurred in the CAP and in the agri-food industry in recent years. Further major changes are ahead. The outcome of the current GATT round will shape the trading and policy environment for the nineties. Thus, the need for a fresh look at the type of policies which we advocate in EC and GATT fora, as well as that policy which remains exclusively our domestic concern, is obvious.
In order to meet this need, I intend to establish within my Department a small group of senior officials who will have the task to carry out this review. They will consult with other Departments and with the major interested parties outside the Department. In addition to receiving the views of the main farming and agricultural organisations on matters of particular concern, I would expect this group to draw upon the expertise of the resources in our institutes and universities to examine particular policies. I have chosen this path to conduct this policy review as I think it is the most expeditious way to arrive at a conclusion. I would expect to obtain the group's report in the first half of next year.
The debate on the European Community is being conducted in a dishonest and misleading fashion. The reasons for this are obvious. If the implications over Ireland's EC membership, and the problems associated with European integration, were seriously addressed, they would undermine the fundamental principles of the right wing parties here. Rather than face that, underlying realities are ignored and what we get instead are aspirations and vagueness, unsubstantiated optimism and intellectual dishonesty. Concepts like convergence and regional strategy are thrown about, but for fear of their political implications many are loathe to put any flesh on them.
The NESC Report, Ireland in the European Community, could have been an important instrument in challenging this dishonesty. In many respects it succeeds. However, by its own criteria it fails to make any contribution towards confronting the underlying obstacles to convergence and regionalisation, on which it puts so much emphasis. It fails to draw the logical conclusions from its own well informed and well argued analysis. It succumbs to a defeatist policy for future EC strategy. Because of this it unintentionally contributes to the dishonesty of the EC debate. The report becomes one more obstacle to clear thinking and courageous action.
Let us first acknowledge the enormous service the report has done. It has laid to rest a number of important myths surrounding European integration. The first myth is that completion of the Single Market will reduce national and regional disparities in the EC and help weaker economies catch up with stronger ones. The second myth is that integration will assist new and emerging industries, especially in the weaker regions, to break into larger markets. The third myth is that the Single Market will facilitate the pooling of economic assets such as investment, information and corporate skills. One by one, the NESC report challenges these myths. Its own words are:
After consideration of all the arguments our general conclusion must be that the long run benefits of market completion are likely to be unevenly distributed — with the greatest benefits accruing to regions in which industries with economies of scale and highly innovative sectors are most prevalent. Ireland is not such a region. Consequently, completion of the internal market should not be expected to narrow the income disparities between regions in the EC, let alone bring about convergence. This is the fundamental conclusion which informs the rest of the report.
The NESC report shows that not only will the completion of the Single Market fail to end regional and economic inequalities, it will, in fact, concentrate economic assets and skills in the richer economies of Europe, leaving the poorer nations and regions in greater poverty.
The Single Market will deprive poorer regions of the ability to break into new markets. It will deprive them of the ability to acquire new skills in research and development, marketing, distribution, innovations and product differentiation through the operation of economies of scale. The emerging economies of scale will concentrate these factors in a few regions and firms, which, in turn, will provide a greater profit advantage over competitors in weaker regions, which, in turn, will reinforce the economies of scale and so on in a spiral leading to greater concentration of wealth and power.
In short, integration and the Single Market will give full licence for market forces which are concentrating wealth, skills and information technology in richer economies, leaving poorer ones to pick up the scraps.
This is not idle conjecture. The NESC report accurately describes Ireland's performance in the EC. We have the second highest unemployment rate and one of the worst gross domestic product figures in the Community. Our position, in terms of wealth has not changed since 1973. Our growth rate has declined in comparison to the EC average and smaller European economies. Since 1980 we have the worst record of any country in the important categories of gross domestic product growth, private consumption, and investment. In a word, our performance has been disastrous.
We cannot lay all the blame on our membership of the EC. Policies pursued by consecutive right wing Governments have completely undermined our ability to compete effectively in the international marketplace, and would have done so despite membership of the EC. Our failure to pursue policies to create a strong native industrial base, our blind reliance on multinational intervention, neglect of our physical infrastructure, combined with the failures to overcome our structural defects in agriculture, have all meant that Irish industry and agriculture are ill-equipped to compete effectively in post-1992 Europe.
I would like to mention another feature that the report refers to indirectly and that is the role of corporate and multinational interests. The reinforcement of regional inequality cannot be separated from the changing nature of international and European corporate activity.
There used to be a time that corporate growth meant new factories, new offices, new lines of production and more employment and wealth. That type of activity is changing. Corporate growth is characterised more and more by acquisitions, mergers and take-overs. An increasing amount of scarce resources are being tied up in financing this type of activity, an activity which does not produce one extra product or service, does not employ one extra worker, which does not increase by one pound or franc the total amount of wealth to society. It is an economic cannibalism practised by corporations which are trying to gain a competitive advantage in anticipation of 1992. It is this type of activity, accumulating vast sums of corporate debt, that has precipitated the recent destabilisation of the international stock markets. The result of this activity is to concentrate financial resources, skills and information into the hands of fewer corporate entities. This, in turn, fuels the regional and economic inequalities in the European economy.
After all this, after describing the operation of the Single Market and the history of Ireland's economic performance, after concluding that the Single Market and economic integration will not bring about convergence but actually reinforce economic inequality, the NESC report turns its back on its own analysis. Instead of attacking the underlying forces behind the economic concentration of power and resources inherent in the Single Market, it throws up its hands and puts forward proposals which not only ignore the very issues it raises, but confines Irish options to damage limitation. This is done through the recommendation for an economic and monetary union.
Economic and monetary union, as advanced by the NESC, will not create the structural basis for convergence. It will not halt market tendencies towards concentration and centralisation. It will not provide access for weaker economies and regions to the decision making process that determines enterprise location, investment, and research and design functions. It will not make corporate and multi-national activity more accountable to democratic institutions. It will do none of these things that might lay the basis for real economic and social convergence in the EC. And yet, these are the very issues which the NESC report highlights as the fundamental problems confronting Ireland.
The fundamental rationale behind its proposals for an economic and monetary union are not that it would confront the economic forces of inequality and regional disparity. Instead, the NESC report seemingly accepts this as inevitable. The proposals for an economic and monetary union are advanced as the only way we can claw back some of the wealth that other nations will be creating. It proposes to establish a re-distributive mechanism through an enhanced Community budget, capable of pursuing and financing public expenditure programmes in the areas of health, education, and pensions. In other words, we give up on the fight for convergence and argue for money. Again we present our begging bowl.
The NESC's reasons for advancing economic and monetary union are welfarist in nature. It is nonsense to suggest that a Community budget, pursuing social expenditure programmes, can somehow bring about convergence. We only have to look at our own country to see this is not so. Otherwise, we would not have the disparities between Ballymun and Foxrock. The Single Market will reinforce economic inequalities in the peripheral nations. An economic and monetary union is about spreading someone else's wealth, not creating our own. It is not about exercising power in the EC to create the conditions for real equality and participation. That the NESC report tries to dress up its recommendation as a strategy for convergence is misleading and is directly contradicted by its own analysis.
Whatever about the desirability of an economic and monetary union and a Community budget — certainly there is much to commend a more interventionist role in enhancing the social conditions within the EC — the NESC's proposals mark the end of convergence as a concrete strategy for Irish policy.
This is the politics of defeat. Under these recommendations Ireland's dependence on free market mechanisms and subservience to the political power arising from those mechanisms becomes complete. Instead of proposing strategies to undermine the economic concentration of power and restore the primacy of convergence and real regional control as our main political priority, we are asked to opt for a strategy merely content to mitigate the worst aspects of an inevitable concentration of economic power.
There may be sound reasons for economic and monetary union, but the NESC's reasons are fatalistic and defeatist. What Ireland needs is a strategy to confront economic concentration, and provide a real basis for economic participation in the EC, to establish a democratic framework of accountability over European market forces and create Community institutions which involve a real devolution of economic power to the regions.
No blueprint for convergence exists, but ironically the analytical content of the NESC report provides the basis for future action. Let us take the agricultural sector. The NESC has identified four key issues.
First, the CAP has failed to address the issue of low farm incomes. In fact it exacerbates regional inequalities through the distribution of price support mechanisms. Seventy five per cent of CAP subsidies go to 25 per cent of the top farmers.
Secondly, the lack of a land policy effectively means that the fundamental problems confronting land structure — farm size and fragmentation, age, education, under-utilisation and land neglect — are not confronted.
Thirdly, seasonality of supply — arising out of the operation of the CAP, out of date practices by traditional farming, and lack of investment in farm modernisation — continues to inhibit the development of the food industry.
Lastly, the massive concentration of the food industry on a global scale means that our food sector is ripe for multinational takeovers and buy-outs. Ireland will be reduced to being a supplier of raw material to non-Irish processers, who will then export the wealth out of the economy.
Any future agricultural strategy must address these issues on the national level. We need a strong land authority and land policy to intervene in the land market to ensure the twin goals of maximum productivity from the land and the largest number of people working on the land. We need to campaign for Community policies that will re-direct CAP subsidies away from ranchers and large farmers and into direct income and structural support for progressive family farms. We must also ensure that we do not end up with the situation that subsidies to Irish agriculture are reduced in exchange for a temporary increase in regional funds which will melt away once the Single Market has been fully established.
We need substantial investment in farm technology and modernisation, as well as education and advisory services to overcome the problems of seasonality. We need to establish a strong public enterprise presence in the food industry, through new enterprise developments, expansion of the Irish Sugar Company, and joint ventures with Irish private firms. This would safeguard the ability of the Irish economy to retain the wealth created through exploitation of our native resources.
These are just some of the steps we can take at the national level to ensure that our agriculture sector and food industry can survive European integration. At the Community level economic and monetary union is not and should not be the priority in EC policy. The immediate priority is to establish a real strategy for convergence and regional control.
First, Ireland should propose the establishment of a democratic planning framework at the regional level. This would allow weaker economies to supervise corporate activity and ensure that the distribution of enterprise location, investment, research and design functions, marketing and distribution is done in everyone's interest, and not just in the interest of a few shareholders and directors.
Secondly, the tax treatment of companies must be harmonised to end the debilitating competition, usually among the weaker economies, over tax relief incentives. A minimum 15 per cent tax on all corporate profits throughout Europe would limit the ability of multi-nationals to manipulate and play off one country against another.
Thirdly, a significant portion of the investment portfolios of financial institutions — banks, building societies, insurance companies and pensions funds — should be directed into an industrial investment bank which could then be redistributed at low interest to new economic projects in weaker economies.
Fourth, if economic and social cohesion is to have any meaning then a massive transfer of wealth should be effected from the richer to the poorer nations-regions. I would propose that I per cent of the gross domestic product of all nations should be levied by the Community and redistributed to weaker economies to supplement industrial, infrastructure and labour policy.
Lastly, the Social Charter must be implemented. Workers' access to corporate information, participation in management decisions, protection for part-time workers, must become a reality if the principles of equality and participation are to override the market imperatives of European integration.
These proposals do not constitute a total solution to the problems of inequality, but they would begin to counter the concentration of power and resources into the richer nations, and bring economic decisions under some political, democratic accountability. The issue of convergence must take priority over proposals for economic and monetary union. Indeed, advance on economic and monetary union must be conditional on the implementation of a profound structural reform that can create convergence and cohesion. It is only through radical structural reform that we can begin to address the issues raised by the NESC report, but subsequently abandoned in their welfarist proposals for an economic and monetary union.
In speaking on this very valuable and timely report from the NESC and on the subject with which it deals, I want to address three issues: (1) the effects of the completion of the internal market on Irish business and on our economy and the Government's efforts to promote the necessary preparation for the single market; (2) the strategic approach that guides the Government's approach to the common policies of the Community, to Ireland's place in it and to its future development; and (3) arrangements for the co-ordination of Ireland's position and policy in the Community.
However, let me first note that the report under discussion responds to the specific terms of reference set by the Government in areas which are germane to the NESC's general remit. As such it does not deal with wider political, institutional or cultural aspects of Community membership. This does not mean that the Government lack interest in these domains. On the contrary, they are of intense interest to us — and many of them are closely related to aspects dealt with in the NESC report. Indeed, a nation's approach to these domains must be informed by its concrete economic and social interests and concerns — not exclusively but certainly substantially. The NESC, in line with their functions and the request submitted to them, have concentrated on a range of issues in the economic and social sphere. I shall largely do the same and while my remarks on the future shape and nature of the Community may beg institutional and political questions, I shall not be able to deal with these today and indeed it would probably be somewhat premature to attempt to do so.
Last year, the Government launched their EUROPEN Campaign to promote both awareness of the Community's programme to create a single market by 31 December 1992 and, of course, the preparation necessary to seize the opportunities and to minimise the risks posed by what is a major change in the economic environment, especially when account is taken of the changes in business behaviour to which it has led internationally. The campaign started with an initial phase of Ministerial speeches, seminars, advertising and information leaflets on the various parts of the single market programme and other initiatives focused on sensitising economic operators to the importance and major implications of 1992 and to the need to take full account of it in their business planning. This aspect of the campaign was deliberately front-loaded.
This year saw a change of direction in the campaign, with the emphasis more on the necessary preparation at sector and firm levels. This is, of course, primarily a task for economic operators themselves but the Government have sought to assist the process in every way possible and appropriate. This is being done primarily through the particular Departments and State bodies responsible for the various sectors and functional aspects, such as standards, export and domestic marketing and so on. These are working with industry and sectoral bodies and with individual firms on planning for new conditions already taking shape.
At the central level, we have sustained the flow of information on the adoption of directives and on other significant developments affecting the internal market, through the publication, in co-operation with the Irish Business Bureau in Brussels, of a monthly Europen News in Business and Finance and Irish Business magazines, thus reaching up to 21,000 people concerned with business. This is a cost effective method of sustaining awareness and conveying information to the business community and the feedback, both to the Irish Business Bureau and to the European Bureau in the Department has been positive. The other central activities have aimed to give support to the work of preparation at sectoral and firm levels.
The main initiative here has been a series of sectoral studies, now almost ready for publication. It had emerged from discussions with a number of Departments, sectoral organisations and representative groups that there was a need for studies that would examine in some depth the implications of the single European market for certain sectors likely to be significantly affected. It was agreed that such sectoral analyses should examine the scope of Community legislation on the single market for the sector concerned and assess how this will impact upon it having regard to the markets on which it is dependent and its competitive position. The results, it was felt, would be useful for strategic planning at the level of individual firms but would also be of value in such areas as training and industrial and sectoral support and development programmes.
In proceeding with the studies it was recognised that the responsibility for responding to change and the implications of the single market ultimately rests with the sectors and industrial firms concerned. Nevertheless, it was accepted that, very probably, such analyses would not always be made and was certainly beyond the scope of many individual firms, especially small and medium-sized enterprises. It was, therefore, felt appropriate that the Europen campaign should assist in providing targeted information on what impact the Community's programme will have on particular sectors. The aim was not, however, to obtain very detailed studies but rather to have the issues brought to attention without undue delay in a medium degree of detail with the purpose of alerting firms in the various sectors to the issues of greatest concern to themselves.
Studies have been undertaken for ten important sectors of industry or the economy at large. The authors are distinguished economists with an extensive knowledge of the sectors and issues concerned. The ten sectors selected are the food processing industry; electronic, electrical and instrument engineering; metals and mechanical engineering; distribution; textiles/clothing/footwear; transport; tourism; chemicals/pharmaceuticals/healthcare; financial services; and construction industry.
Drafts of most of the studies have been received and discussed with the consultants and it is intended to publish them progressively over the final two months of this year. I do not wish unduly to preempt the studies and the position and assessment is, of course, different for each sector but on balance, there seems to be a certain degree of cautious optimism about the impact of the single market on Irish industry. The authors of the studies also point to the importance for firms to be conscious of the indirect effects of the internal market on their operations. Economies of scale, the need to keep abreast of technical and structural changes in their respective industries are of equal importance in assessing the impact of the single market on their firms.
Most of the authors of the sectoral studies stress the importance of informed and well-planned preparation in order to take full advantage of the opportunities of the single market. The studies also recognise that, because the economy has been open and because we have scarcely any non-tariff barriers in operation in our domestic market, a large part of Irish industry has already had to adapt to maintain its competitive position. Considerable emphasis is placed on the overriding need for management to keep abreast of technical and structural changes in whatever industry it is involved in, and to monitor the evolving needs to their customers in particular.
This ties in with the conclusion reached by the NESC in their very valuable analysis of the effects of the single market on various sectors of the economy. They concluded — and this also comes out, as I have indicated, from the Europen sectoral studies — that the direction and size of the direct and indirect effect of market completion depend on very specific characteristics of industries, products and firms. The NESC assessment, again in agreement with the Europen studies, is that the direct effects of the specific single market measures are likely to be positive for most, but not all, parts of manufacturing industry in Ireland. They say — and I believe that this is of tremendous importance — that the indirect effects will be more substantial than the direct effects. We are already seeing these effects in the marked intensification of merger and take-over activity, especially across national frontiers, in the Community, a process from which, as we have seen, Ireland is by no means immune. This is but the more visible evidence of an entire process of industry and market restructuring to adapt to the new dimension of the single market which, of course, is also making economic a whole new wave of technical innovation.
The NESC note that these indirect effects can, in certain circumstances, pose threats wherever manufacturing in Ireland is vulnerable to competition based on scale economies or to intensified competition based on innovation. They conclude that the net effect on manufacturing in Ireland will depend on the success with which the beneficial direct effects are turned into dynamic gains based on new or enhanced competitive advantages. The Council make specific recommendations, including action to make scale an even more important focus of industrial policy, to inject an innovation orientation into that policy and to upgrade management development. These are matters with which other Ministers will be dealing but it is worth underlining the NESC point that even where economies of scale are not significant, the strategy of being more innovative than larger competitors, while viable, is highly demanding.
It is appropriate that I refer here to the third main initiative taken centrally under the Europen campaign this year. This was a major survey carried out by Irish Marketing Surveys in May-June last, based on a representative sample of 414 telephone interviews with chief executives and senior managers in manufacturing and service companies and the professional services. The respondents came from wholly-owned Irish companies as well as subsidiaries of foreign and multinational companies and results were computed for eight broad sectors, a number of which coincide with those now the subject of sectoral studies. The results, which were made public at the time, showed that the Europen campaign had achieved satisfactory penetration in raising awareness of the single market.
They also showed a significant but still insufficient improvement in respect of planning and preparation for the single market as compared with an earlier survey for the Marketing Institute of Ireland in October 1988, when the Government campaign was only getting into its intensive phase. In the more recent survey, 15 per cent of companies had already carried out a formal assessment of the implications of the single market for their company and 28 per cent said they were planning to do so. Together these amounted to 43 per cent of respondents. This contrasted with the finding the previous October that over three-quarters of firms were making no attempt to assess the implications for them.
As I say, even the more recent figures fall short of what is needed. Moreover wholly owned Irish firms produced a low figure — 35 per cent, in contrast to the 59 per cent of multinational firms. This worrying contrast also emerged in response to a question as to whether someone within the company had been given specific responsibiluty for evaluating and co-ordinating the company's response to the single market programme. Of all firms interviewed, 30 per cent had done so but this dropped to 19 per cent among Irish-owned firms and was highest among multinational firms — 56 per cent. While I was happy to note the improvements effected by the Europen campaign, the results are far from affording any grounds for complacency. Even when one allows for the relatively small extent to which many firms will be affected, it is clear that a major task of preparation remains for Irish business and for the Government agencies assisting it.
The survey also yielded responses to such other questions as what type of market situations firms perceived themselves as being in, the kind of strategies they had adopted or intended in order to ensure that their business can obtain the best results from the single market, their competence in Community languages and what kinds of information and advice the Government should be providing. The results have been supplied to the various public agencies and industry bodies as an aid in planning their programmes. The most frequently cited need was for more specific information for different industries and sectors and, as I have outlined, the Europen campaign is responding to this.
The work undertaken under the aegis of the Europen campaign serves to reinforce the message emerging from the NESC report — that the single market calls for a substantial and well thought out response here in Ireland from the corporate sector and in terms of public policy. The Taoiseach has broadly sketched the Government's response while other Ministers, who are speaking over these two days, will deal with issues falling within their areas of responsibility.
NESC is a little unkind in the implication that the policy of successive Governments towards the Community and its development has lacked a common guiding thread. I would suggest that on the general thrust and spirit of Irish policy, there has been a consistent thread that I would characterise as "communautaire" or "conditionally intergrationist". Put more directly, we have been supportive of progressively closer integration within the Community provided it is on a basis that ensures that the benefits of integration will be fairly shared and will extend to all regions of the Community. This is, of course, the strategic approach recommended by NESC and as indicated in the statement issued on the publication of the report, the Government agree with this. We had no difficulty doing so, precisely because this has been our strategic approach. That approach has guided our attitude to the completion to the internal market, to the elaboration to its social dimension, to development of the Community's environmental and research and development policies, to its response to the concerns of the EFTA countries and to the economic needs of Poland and Hungary. Our approach is, as set out in the Programme for National Recovery, one of the fullest participation by Ireland in every facet of Community activity. Ireland will not be a barrier to further integration in the Community but we insist that it be a Community that cherishes all its citizens equally and that fully discharges the Treaty obligations to promote the achievement of greater economic and social cohesion by reducing regional disparities. We want no two speed or two tier process in Community integration.
Let me return to the Treaty obligations on economic and social cohesion. Over the past two years, attention has concentrated overwhelmingly, both in Ireland and at Community level, on the doubling and reform of the Structural Funds. There may be a certain tendency in the Community to think that this disposes of responsibilities in regard to cohesion, but, of course, as the Taoiseach has recalled, there is also an obligation, under Article 130B of the Treaty, inserted by the Single European Act, to take account of the cohesion dimension in the implementation of the other common policies and of the internal market. There has been some trend in recent years towards the differentation of common policies to cater for particular features of the less developed member states but we are far from seeing a fully purposeful and systematic application of Article 130B. We need this at the stage when the Commission is formulating proposals for Community policies. This is a subject we have been studying and which we will be pursuing with the Commission and with other member states.
The NESC report has brought out that it would be wrong to expect that the play of market forces will, left to itself, bring about regional convergence. They underline the need for stronger measures of positive integration in the Community. They also emphasise that the social dimension of the internal market is an important aspect of this positive integration. It seems to me that if we are for economic and social cohesion, we have to be for a worthwhile and balanced social dimension. Ireland fully suported the conclusions of the European Council meetings in Rhodes and Madrid which put the matter well, saying that, respectively,
Completion of the Single Market cannot be regarded as an end in itself; it pursues a much wider objective, namely to ensure the maximum wellbeing of all, in line with the tradition of social progress which is part of Europe's history. This tradition of social progress should be a guarantee that all citizens, whatever their occupation, will have effective access to the direct benefits expected from the Single Market as a factor of economic growth and as the most effective means of combating unemployment
and
in the construction of the Single European Market, social aspects should be given the same importance as economic aspects and should accordingly be developed in a balanced fashion.
In discussions with our French friends, we have indicated that we support the broad thrust of their Presidency programme in this area. Too often, the social dimension is spoken of as if it were liability, purely a factor increasing costs. I believe that it is more productive to look upon it as an investment in human resources, in social harmony, both basic conditions for successful economic policies and development. We share this French approach of accentuating the positive, while not overlooking possible problems. For us, the social priority is employment. We have stressed this crucial aspect in the past and will continue to do so. We welcome the French proposal to initiate regular ministerial discussions on the subject and, as the succeeding Presidency, will certainly support continuation of this useful initiative. But much more is required and this brings us back to the role and responsibility of the Community in the future, the need for greater positive integration and the whole question of assignment of policy functions, all of them matters dealt with persuasively by the NESC in their analysis of the requirements for stable integration and, specifically, for a stable and durable economic and monetary union.
There have been a lot of references in recent Community discussion to the principle of subsidiarity, according to which, as defined in the report of the Delors Committee on Economic and Monetary Union, the functions of higher levels of Government should be as limited as possible and should be subsidiary to those lower levels. That report said that adherence to this principle would be an essential element in defining the appropriate balance of powers within the Community in an economic and monetary union. As specifically noted by the NESC the Delors Committee report says:
Thus, the attribution of competence to the Community would have to be confined specifically to those areas in which collective decision making was necessary. All policy functions which could be carried out at national (and regional and local) levels without adverse repercussions on the cohesion and functioning of the economic and monetary union would remain within the competence of the member countries.
As the NESC report says, Ireland need have no difficulty with this as a principle. We certainly do not support any excessive centralisation of powers or functions in the Community. We espouse a Community in which, as President Delors said in his speech in Bruges last week, diversity and pluralism are upheld. We agree with him that integration in Europe, a Community of ancient nations, has to be a sui generis process. We agree with the Commission President that we should add to Jean Monnet's aim of uniting peoples, the parallel aim of bringing together the nations.
The Taoiseach specifically supported the invocation of the principle of subsidiarity in the conclusions of the Madrid European Council on the social dimension of the internal market but, as the NESC rightly point out, the issue is the application of the principle. It would appear from other references in President Delors' speech and, indeed, from the report of the Delors Committee, that there is a tendency to apply the principle so as unduly to restrict the areas in which the Community and its institutions would have competence and responsibility. It is to be welcomed that the President now sees a Community budget rising to 5 per cent of Community GDP but other references appear to leave to the exclusive competence and responsibility of the member states a number of policy areas where we would feel, with the NESC, that the Community should have a parallel involvement.
The NESC report rightly points out that there are economies of scale, externalities and spillovers attaching to the provision of certain public activities which provide reasons for the fact that these activities might be assigned to a higher level of government. Examples might be, respectively, air traffic control, environmental regulation and education provision. They note that an additional criterion is political homogeneity or the feeling of belonging to the same political grouping and sharing the same interests and destiny. It would be foolish to suggest that the commonality of identity and interests between people from different member states is yet anywhere as strong as that which exists among the peoples of the individual member states, but I note that, again in his Bruges speech, President Delors looked to every European having the feeling of belonging to a Community which would, in some sense, be his or her second motherland.
I share this vision but if it is to happen, it will be necessary that the Community, as I have said, cherish each of its citizens equally. Certainly, the member states have, as also recognised in Article 130 B of the Treaty, their own responsibilites for their development and for the welfare of their citizens but, with increasing integration, it will also be necessary to give fuller practical expression to the Community's obligations under that Article. Here it is relevant to recall that, as NESC point out, the theory of fiscal federalism strongly suggests that the redistribution and stabilisation functions should be carried out at the highest level.
They reminded us that in their report, commissioned by President Delors himself, the Padoa-Schioppa Group expressed the view that "greater Community involvement in stabilisation and redistribution policies is the indispensable complement of the ambitious project of complementing the internal market". It might be felt that in current circumstances it would be unrealistic to envisage that the Community should exercise these functions. The situation should be different in an economic and monetary union but, even there, it is scarcely realistic or even perhaps desirable, to contemplate the Community exercising exclusive responsibility in such areas as social security or regional policy.
I mentioned fiscal federalism a moment ago and in his Bruges speech President Delors spoke of the merits of the federal approach to the further development of the Community. If we look at models such as the Federal Republic of Germany or the United States, we see that a prominent feature of such federal unions is the concurrent exercise of competences in various fields. I do not necessarily suggest that the future Community has to be a federation or that we should slavishly follow any particular federal model but there is nothing, I suggest, against taking from them the elements that are appropriate to the Community's unique circumstances. One can imagine a situation in which major parts of the responsibility for decision making in regard to such areas as educational provision or unemployment compensation remain with the member states but, where this is paralleled by an active Community role in ensuring minimum standards of provision and welfare, including through financial support in areas such as these, which go beyond the boundaries of what is covered by the Structural Funds at present.
This implies a larger Community budget. Whether 5 per cent of Community GDP is enough is perhaps a question for another day. The important point of principle is that the NESC are right that application of the Delors Committee's own criterion in regard to the cohesion and functioning of an EMU suggests that the Community will need to exercise a competence, concurrent with the continuing competence of the member states, in a wider and deeper range of policy areas than is, apparently, being contemplated in certain quarters. By reference to Articles 130 A and 130 B of the Treaty, the effectiveness of the functioning of the EMU must be judged by, inter alia, the effect on economic and social cohesion; and if real convergence of the different economies is retarded rather than advanced by EMU, the cohesion and stability of the union will, sooner or later, be adversely affected. The Community must have the policy competences and financial resources required in order effectively to promote such convergence.
Some commentators on the NESC report have picked up its own comments on the question of the degree of political homogeneity needed before there can be agreement to assign policy functions to the Community level and especially to expand Community budgetary support into fresh fields, extending beyond those concerned with structural development of the component economies. These commentators have suggested that this degree of political homogeneity is unlikely to emerge in the Community in the near future and that consequently the NESC analysis and prescriptions on European integration provide little basis for practical policy purposes. It is certainly well that we should be under no illusions as to the extent of the task of persuasion that lies before us but as the NESC itself points out, the degree of political homogeneity changes and develops over time and, as experience shows, sometimes in discrete leaps. This is certainly borne out by the experience of recent years.
I disagree with NESC that Irish Governments have tended to see cohesion as a purely economic phenomenon. I come back here to what I said earlier about our embracing a consistently communautaire thrust in our broad strategic approach. This is exemplified by our generally positive approach to fresh steps in integration such as the EMS and the Single European Act, which had much more than an economic significance, in our understanding for the concerns and interests of other member states — whether it is Iberian accession or German concerns about developments in Eastern and Central Europe — in our constructive participation in European political co-operation and in our respect for Community law which provides an essential underpinning for Community legitimacy.
In the light of the unprecedented changes occurring all around us, particularly in Eastern Europe, we should not be too pessimistic about the prospects for further significant steps forward in the readiness of Europeans to identify with and accept an enhanced role for a Community that is so clearly a factor for progress in the world and is on the move. There is no future in trying to hold back the tide or in standing aside from a process that has such momentum. Even if our ambitions in regard to the assignment of policy competences or the strengthening of the Community budget are less than fully realised, the strategic approach I have outlined will provide the best political context for making the maximum achievable progress at any particular time, thus providing successive staging points from which we can aim at further progress.
I referred earlier to our respect for Community law. A Commission communication of 7 September expressed concern that only seven of the legal Acts adopted up to now with a view to creating the single market had been given legal effect in all twelve member states. After referring to those member states with the greatest backlog, the Commission referred to "the smaller but equally worrying backlog on the part of Greece, Italy, Belgium and Ireland". As I pointed out earlier this month, this comment is not supported by the correct data for Ireland. The Commission indicated that Ireland had, on the reference date in question, implemented 46 of the directives studied for which the implementation date had passed. In fact, at that time, Ireland had implemented 51. Out of the 63 studied, two are not applicable to Ireland. Thus Ireland had implemented 51 out of 61 directives applicable to it — 83.6 per cent. On this criterion of percentage of applicable directives implemented in national legislation, this record was second to France and ahead of the UK and Denmark, two member states often singled out as particularly conscientious in transposing Community law into national law.
We are in arrears on only ten directives. This is due to the accelerated pace of decisions by the Council, combined with reductions in the public service. In the face of these factors, we need to take specific steps to maintain and even further improve on a record that is already good and, under the aegis of the co-ordinating committee I chair, consideration is being given as to how best to do this.
With this committee, the Europen Bureau and the regular meetings of the Committee of Ministers and Departmental Secretaries chaired by the Taoiseach, our co-ordination arrangements have been considerably strengthened as compared with most of the period reviewed by the NESC. The arrangements are working well but we are now considering how they can be specially enhanced to ensure optimum effectiveness in conducting our forthcoming Presidency of the Council of Ministers. In regard to the domestic policy response, we have, in addition, the Central Review Committee under the Programme for National Recovery and we have reactivated the Sectoral Development Committee. These arrangements bring together those with executive responsibility in and under the Government and the representatives of economic operators and are proving quite satisfactory.
However, this is not to exclude the valuable role that is open to Members of this House and of Seanad Éireann through the Oireachtas Joint Committee on the Secondary Legislation of the European Community. Last year the Taoiseach indicated that we saw this important committee playing a complementary role in the campaign to promote awareness and preparation for the single market. There were some queries as to what was meant by this. What we envisage here is primarily the committee's discharge of their classical role of assessing and reporting on draft Community legislation which is what the completion of the internal market is all about. I believe that with a constructive approach a way can be found to ensure that the committee's reports lead more often to debates in the House. I look forward to a constructive relationship with a reconstituted committee.
Finally, let me say that the Government are giving the most serious attention to the NESC report. I believe it constitutes one of the most significant Irish contributions for a long time to European debate on the future of the Community. Already it has provided a basis for a debate in various fora on the position and future of Ireland in the Community, a debate I hope will continue and which I shall follow with interest. It is, I believe, only fitting that this new session of the Dáil should commence with this important discussion. I look forward to studying the various contributions from the different sides of the House.
Before the Minister of State leaves the House I want to compliment her on her responsible role in the area we are at present debating and on her equally responsible role in co-ordinating women's affairs within the Government.
With your agreement, a Cheann Comhairle, and that of the House I will split my time with Deputy Austin Currie.
I am sure that meets with the approval of the House.
I want to afford Deputy Currie as much time as possible as this will be his first very welcome contribution in this House.
As the Minister of State has already said, there are certain aspects only of the NESC report and indeed the whole question of harmonisation and integration within the Community with which we can deal within the time allocated for this debate. I welcome this NESC report and the fact that it has been taken so seriously by the Government and various political parties in this House, as I am sure is the case with all interested agencies outside this House. I welcome the fact also that the Taoiseach said yesterday that he had circulated the report widely, particularly at European level. It was a realistic appraisal of not just the problems but the advantages we will have from 1992 onwards if we prepare in time.
In relation to integrating the European Community I have been struck again and again by what President Delors said about the cohesion and solidarity of the European Community. In a speech in Strasbourg on 17 January 1989 President Delors emphasised that the Commission had already started work on a charter of fundamental social rights to give concrete form and life to the European model of society.
I welcome the Government's acceptance of the Social Charter this week and I also hope there will be a positive implementation of it by the other states as well. The Taoiseach said that this is not just about economic and monetary integration but also about social integration at European level. The Minister of State, Deputy Máire Geoghegan-Quinn, said we must have a much wider objective to ensure the maximum wellbeing of all, in line with the tradition of social progress which is part of Europe's history. The Minister of State also said that in the construction of the single European market, social aspects should be given the same importance as economic aspects and should accordingly be developed in a balanced fashion.
I agree with NESC where they say that Irish Governments have tended to see cohesion as a purely economic phenomenon. Up to now we in Ireland have not recognised the social cohesion that must be as important as the economic cohesion. In relation to the policy issues and the implications for such policy issues in the social dimension, NESC point out that equality is not just about geographical regional equality but about equality of citizenship for all of our citizens. I applaud the European Community for its outright acceptance of the fact that we do not have equality of citizenship at the moment. Were it not for the European equality directives, particularly those relating to equality in employment for women, we would not be as far forward in this country in our struggle towards equality. With our galvanised and positive approach towards Europe in 1992 I hope we will not be seen to be lacklustre and slow in fulfilling the directives in the social areas. Deputy Geoghegan-Quinn said we were only ten directives behind at this stage but I would remind the House that the directives which we are slowest to implement relate to equality for women. We have only to go back to the debacle relating to our attempts to get a derogation on equal pay and to remember the successive Governments who failed to make the necessary arrangements to introduce equal treatment in social security for men and women in this country to realise how we have fallen down. Going towards 1992 we should progress more rapidly in accepting and positively implementing these directives. Deputy Geoghegan-Quinn said in her speech that sometimes it could be said that the social dimension is spoken of as if it were a liability. In this country and in this House that is usually the way the social dimension is looked at.
The whole point of European integration and harmonisation has been to give a sense of wellbeing, equality and total acceptance to all citizens of Europe. All of our directives and arrangements, both formal and informal, must be directed towards that end, otherwise this NESC report and 1992 will be a sham.
I would ask the Government if they are setting up an all-party forum to deal with these issues. I and others will demand that this suggestion be given consideration. The NESC report highlights the fact that in Ireland we could incur disproportionately high costs in conforming to Community initiatives particularly with regard to bringing women into the mainstream of employment and social life in this country. NESC say in their report that:
For example, Ireland at present has virtually no direct public provision and management of child day care, in contrast to many other EC countries, and the social security/parental leave regime in Ireland is less comprehensive. A valid case can therefore be made that countries such as Ireland with less developed, more vulnerable economies, which are attempting to accelerate the development of the social framework of the labour market, should do so with some Community financial support.
It is up to the Ministers at every European forum to consistently and insistently make that point. There is a spirit of goodwill and when 52 per cent of the population of Europe are composed of women, we are not talking about marginal or minority interest but about majority interests. Because women are not equally represented, we will demand solid reporting from all our Ministers that at every meeting from now until 1992, the case for women is well put.
What will happen at European level should be advanced at national level. The NESC report also poses a challenge for us in Ireland. They say in their report:
In the light of the repeated commitment of the EC Commission to pursue the question of women's participation in the labour force, the important issues for Ireland are to determine what particular policies are now most likely to be effective and what policies will require, or justify, European financial support.
When we are talking about Structural Funds and the extra funds we will get as a peripheral country, not just geographically but economically and socially, those funds must be seriously looked at and channelled into raising conditions and support systems that we have not got to the extent that they are present in other European countries. I would like to write into the record that from a statistical point of view this is a real problem for us. There is a very high level of participation of married women in the workforce at European level whereas in Ireland only 21 per cent of married women work outside the home. That represents only 13 per cent of the total workforce. Statistics for other European countries show that 80 per cent of mothers with one child work outside the home. The figure for France is 64 per cent. That is so far ahead of this country that we have to give serious consideration to the reasons. For instance, in Denmark 44 per cent of the child care services offered to mothers with children up to two years of age are Government supported but in Ireland the figure is less than 1 per cent. I do not think any group in this country could put forward a stronger case than the one being put forward on behalf of women.
As regards the whole area of training, women come out at the bottom of the pile. In 1988 less than 1 per cent of apprentices in FÁS training centres throughout the country were women. At European level there has been positive action in this area that would leave most of the Members of this House breathless. I have great difficulty in even getting these people to accept the significance of that much less accept the introduction of such training. This is the first of many debates we will have on this matter between now and 1992. Now is the time when our case must be made. The Structural Funds must be divided on such a basis as to ensure equality for our most vulnerable, most marginalised and least equal citizens. That is what the Structural Funds are about.
I would like to think that the members of Government, and indeed any others who have an input at European level, will make that case again and again so that we will reach the stage that has been foreseen by the architects of Europe and that we positively endorse it, that is — and I will end with a quote again from Jacques Delors — that our foremost concern with regard to the future of Europe is to champion the renewed flowering of democracy, to champion human rights and pluralism. If we achieve that we will have what we can call a house of Europe where we do not have special rooms designated to the servants or the lower paid. A Europe less than that would be one we would be ashamed of and I know none of us in this House would like that.
With very great pleasure I now call on Deputy Austin Currie to address the House especially as this, I understand, is his maiden speech. Gura fada buan tú in ár measc, a Theachta.
Thank you for your kind introduction. I also thank Deputy Barnes for sharing her time with me so equitably. I welcome this detailed report of 550 pages. It is impossible, of course, to cover everything in the time available to me so I will concentrate on four or five issues. I agree with whoever said that anything worth saying should be said in less than 20 minutes. I am not sure what that same person would have had to say about 15 minutes but here goes.
I share the disappointment expressed by everyone about the lack of convergence which is so obvious in the report. I am, of course, a strong supporter of the ideal of European integration that has been central to peace in Europe since the end of the last World War and central also possibly to peace in the world. Of course I am inspired by the vision of Monnet and Schuman but that vision has to be translated into reality and I am afraid the reading of this report would lead one to have suspicions that that is not happening.
Progress has not been good enough. There is divergence rather than convergence. The difference between the rich and poor areas of Europe, as the report indicates, is increasing rather than diminishing. To come down to brass tacks, it is the difference between rich and poor in the community. I would suggest that it is not really necessary for us in this country to read the report, or to read other reports, to recognise that the rich are getting richer and the poor are getting poorer. We only have to look around this State, around Dublin, including areas of my own constituency, to recognise that truth. My fear is that in a comparatively short period of time when these things start to happen, words like "alienation" and "cynicism" may become much more important and much more influential in this community as indeed they have in another community not too far from here.
The 1988 report of the Combat Poverty Agency comments on the last major research study by the ERSI which showed that 34 per cent or one in three people are surviving on an income of less than £48 per week for a single person and that 23 per cent or one in four people are on an income of less than £40 per week. As a newcomer to the political scene here, I find those figures surprising and appalling.
There is more to that in terms of child and family poverty. As the report points out, the increase in the number of children being brought up in poverty since the early eighties is significant, all the more so in view of the decline in the birth rate since 1980, which might have been expected to reduce the prevalence of child poverty. There are children in over six out of every ten households below the poverty line, according to the recent ESRI research. It is especially noteworthy that the risk of poverty increases as the number of children in a household increases and the risk of poverty is between two and three times as great for households with children as for those without children. That would appear to be a factual assessment of the situation and I find it appalling. It is something which all of us must view with great concern and bear in mind when we are considering the future.
This is not just an Irish problem. As the report makes clear, poverty in Europe has increased during the eighties. The number of people living in poverty in Europe is now 44 million plus. Yesterday the Taoiseach was asked about his Government's plans for the Presidency of the European Community next year and he was reluctant to establish particular guidelines on the basis that the French Presidency is still in existence. I would like to make a suggestion to the Taoiseach and to the Government that in our Presidency from January next year the Government should put tremendous emphasis on the third anti-poverty programme which is due for establishment during the Irish Presidency. As one who was involved in a very small way with the creation and implementation of the second anti-poverty programme, I would suggest very strongly to the Government that this is something they might do. It is something that can motivate us all. Here is something that could give the necessary amount of idealism to our involvement in Europe. Here is something that could put a stamp on our contribution during our Presidency of the Community which, while helping Europe, will also help our own country.
The great majority of people in this country, whether they are on the poverty line or among the affluent section of the community, are committed to and believe in social justice, and wish to see a situation in this State where there is equal opportunity for all. It is also important that during the Irish Presidency we go full steam ahead with the social dimension of the Single European Act. I believe the report entitled "Social Dimension of the Internal Market, which was produced in September 1988 as a working paper says it all. With reference to the social dimension of the internal market it says:
The Single Market would be pointless if the standard of living and of social protection attained by the average European were called into question. Indeed, its justification in economic and political terms is to be found in increased social progress and in the advantages which it offers to all citizens of the Community.
I do not think the social dimension, or indeed the internal market, means very much unless the social dimension is implemented in the way suggested. I suggest very strongly to the incoming Presidency of the Community that they take that as a starting point. This is linked to the point I made earlier in relation to the contribution which the Government could make to the elimination of poverty in this country and in Europe.
There are a number of other points I would like to make under that heading but time restricts me from so doing. Let me say that they relate, first, to the protection of the environment and, second, to educational opportunities. I think the Ireland of the near future, as well as the Europe of the future, is going to require greater emphasis on both aspects.
I do not intend to be a one issue politican, even though the peaceful resolution of the Northern problem is, in my opinion, the greatest priority facing us, North and South. I owe it to my constituents in Dublin West to deal with the problems directly facing them in their day to day existence, but, of course, some of those problems relate to the Northern problem. For example, law and order in Dublin West and other inner city areas would be less of a problem if more gardaí were available and did not have to help provide security on the Border. More money would be available to tackle the problems of areas like Dublin West if the taxpayer did not have to pay what amounts to, on average, a greater amount per head towards security than does the average British taxpayer. The problem of unemployment in Dublin West might be lessened if the American industrialists who are thinking of setting up in the Republic of Ireland, when they turn on their televisions and see the awful events occurring in Belfast and elsewhere, could differentiate between Northern Ireland and the Republic. Then there might be a better chance of attracting industry to Dublin West and other areas.
There is a very strong relationship referred to in this NESC report and an obvious case to be made for the closest possible co-operation between the Republic and Northern Ireland, between the Government in the Republic and the Northern Ireland Office, because if there is no convergence in the Republic's position in Europe as a whole, then that is even more the case in Northern Ireland.
I hesitate to interrupt the Deputy, especially on his maiden speech, but I am obliged to advise him that some three minutes remain of the time allotted to him.
In the three minutes left to me, I will make one or two further points directed at the Government on the co-operation that is possible. I regret that there were no joint cross-Border proposals in the recent application for Structural Funds. If such a joint application had been made, the Governments would have been knocking on an open door and would have been welcomed in Brussels. Even at this late stage I believe that position can be rectified. The Commission has retained power to allocate part of the overall Structural Funds for special Community projects. This Government and the Northern Ireland Office should get together and make joint proposals to the Commission. I believe that such proposals would be welcome in Dublin and additional money from the Social Fund would be made available not just for areas contiguous to the Border but on an all-Ireland basis. This work can be done through the Anglo-Irish Intergovernmental Conference. I will concentrate on one final point.
May I advise the Deputy that the Minister for Tourism and Transport who is happily with us in the House has been magnanimous enough to suggest giving you some of his time.
I would be happy to do that if the Deputy wishes to continue for a further five to ten minutes.
I thank the Minister very sincerely. This is in line with what I know of him. Nevertheless I will try to bring my remarks to a conclusion as quickly as possible.
What I have suggested here is another way in which there can be fruitful co-operation on this island on a joint approach to Brussels for additional money for cross-Border purposes. I would like to refer specifically to that part of this island which requires major attention, that is, those counties both north and south of the Border, which have traditionally been deprived of their hinterland, which have suffered from the troubles of the past 20 years and which have suffered the image for example of south Armagh on one side as being bandit country and Dundalk on the other as being some form of El Paso. They have also suffered from the differing economic and fiscal policies pursued by the two Governments. Over the years when Derry, Strabane, Enniskillen and Newry were up, then Donegal, Monaghan, Castleblayney and Dundalk were down and vice versa. I hope this will come to an end.
The only people who have gained over the years from this difference of economic and fiscal policy between North and South have been the smugglers. I have a lot of time for the old decent smuggler who operated on the Border. In terms of their entrepreneurial instincts they were the archetypal entrepreneurs. If the initiative displayed by the smugglers over the years had been displayed by business and manufacturing interests here this would probably be the most prosperous country in Europe and possibly in the world. Unfortunately there is a different type of smuggler about now connected to the paramilitaries, sinister people.
The test of the Single European Act, of the success of 1992, of the success of harmonisation and of the free movement of goods, services, capital and people, is the extent to which after 1992 smugglers will be out of business. That will be one of the real tests. That means there has to be harmonisation. There cannot be variation on either side of the Border which would enable the smugglers to continue to make a living. We have to decide what percentage is necessary to put those people out of business. As we know, smuggling affects not only the Border counties but people on the whole island.
In conclusion let me say that apart from the economic consequences, in terms of political implications if the Irish Border remains the only part of Europe with customs posts, that will have major political implications. If this State, with its national aim of reunification, were to be responsible for preserving the Border as anything but a political boundary, that would be a major political statement too.
I hope I have indicated in a positive way some of the lessons which can be learned from the NESC report and ways in which the Government can contribute and even give the lead in holding the presidency of the Community next year. Thank you for your patience.
Let me start by congratulating Deputy Austin Currie on his excellent maiden speech to this House. I am sure I speak for the whole House when I say that his very fine, thoughtful speech augurs well for his time in this House. While he is new to this House I know that nevertheless he is a very experienced public representative and I have no doubt that this Dáil will be far better for the presence of Deputy Currie and for his very thoughtful remarks which we heard here today. A maiden speech is always an important, almost historic occasion in this House. I can say honestly from what I have heard from Deputy Currie today that he will be an excellent addition to debate and discussion in this House, and I wish him well during his time here.
I would like first of all to join with other Members of this House in commending the members and staff of the NESC for their excellent report on Ireland in the European Community.
The report provides a comprehensive analysis of Ireland's performance since we joined the European Community back in 1973 and clearly identifies the challenges which this country has to face up to in competing in a unified European market. Above all, for me it highlights the difficult choices and hard decisions that still have to be taken in the process of integrating and participating more fully in the EC. In this regard, the NESC maintains a fine tradition of providing consistent and sound advice to Government on national economic and social policies. In particular, it maintains a consistency with a statement it made nearly fifteen years ago that a small economy such as Ireland cannot escape the economic effects of international developments. As NESC put it —"It is not possible to stop the world and let Ireland off". How right they are.
The current report provides a series of considered and practical recommendations of the action that is required to prepare Ireland to play a full and effective role in the European market place of the future.
The report is timely. It comes when we are beginning to seriously focus on 1992 and what we have to do to prepare for it. Work has been going on for many years but now as the magic figure of 1990 appears it is necessary to seriously prepare for 1992. The run up has commenced in a serious way. The NESC report could not have come at a better time because we are now mentally attuned to concentrate on it in a real way.
As the European Community moves towards the completion of the single internal market we in Ireland have to continue to develop innovative policies to offset the many disadvantages associated with our peripheral location and other unique structural characteristics of our economy. At the same time we have to strengthen the competitiveness of our economy and further develop the key sectors where we have the products to compete effectively in international markets. With increased mobility of goods, labour, investment and financial capital, all of our policies and activities need to be considered in a new light. Changes which increase the exposure of our economy to external forces must be met headon by measures which increase the internal efficiency of the Irish economy. This will call for change and adaptation in all segments of our economy.
The central thrust of the NESC report is to highlight the fact that we now need to adopt a more explicit, coherent and fully articulated European policy or strategy. Following detailed analysis of the relative merits of different levels of economic integration, NESC has unanimously concluded that Ireland's interest lies in advanced economic integration and a monetary union. It advocates that we should support the concept of a Community which will have sufficient resources and policies to create a genuine economic union and manage a unified European economy.
I would like to point out to the House that while the Government would not necessarily accept each and every finding and recommendation in the 574 page NESC report, we accept its central thrust. In particular, we agree with NESC's argument that Ireland's best interests are likely to be served by the fullest measure of economic integration provided that this is accompanied by the necessary measures to strengthen cohesion. Side by side with economic integration we have to ensure that the Community — and the Taoiseach and Ministers insist on always putting this view forward, as do most Members of the House — take Ireland's peripheral location into account in a substantial way while we progress with economic integration. For us the two are inextricably linked.
The report is clearly concerned that if sufficient measures are not envisaged by the EC to correct regional imbalances, the prospects of establishing economic and monetary union on an unacceptable basis will be put seriously at risk. The Single European Act recognised the need for more active cohesion policies in the European Community, and the European Council has already taken decisions on the reform and expansion of the Structural Funds as one of the steps towards that cohesion. The decisions included a doubling of the funds' contribution to the less developed regions by 1992 and an overall substantial increase, a doubling, by 1993, together with a special effort to be undertaken for the least prosperous regions, including Ireland.
I would like to join with the rest of my colleagues in Government in pointing out that in our view Ireland has done extremely well in the share-out of the Structural Funds. In a bargaining situation nobody gets all they ask for. If they did they would have to ask whether they went into it in a negotiating position in the first place, but all things considered Ireland has done extremely well from the Strutural Funds.
It must be recognised, however, that the EC Structural Funds are but one of the instruments for promoting economic cohesion. As provided in Article 130 of the EC Treaty, the conduct of all member states' economic policies and the implementation of the common policies must also take into account the objectives of strengthening economic and social cohesion and reducing regional disparities. It was for this reason that the National Development Plan 1989-1993, submitted to the EC Commission last March placed the measures to be aided by the Structural Funds in a broader socioeconomic context.
The reduction of regional disparities which has been Community policy for some time past assumes greater urgency as the Community moves towards the completion of the single internal market. The NESC have concluded that the long run benefits of market completion are likely to be distributed unevenly, with the greatest benefits accruing to regions in which large scale industries and highly innovative sectors are more prevalent.
The completion of the internal market of itself should not be expected to narrow the income disparities between regions in the EC, let alone bring about full convergence. This is a fundamental conclusion which underpins the entire NESC report. It is a conclusion which the Government had also reached and which was a major influence in preparing the National Development Plan. The plan was designed to prepare the Irish economy as a whole to compete in the single internal market. To that purpose, the measures in the plan are directed at remedying disadvantages associated with peripheral location and other structural characteristics, at strengthening the competitiveness of the economy and further developing those key sectors where we can compete internationally.
As the House is aware, broad agreement has now been reached between the Government and the EC Commission on the Community support framework for Ireland. This is the framework in which the greatly increased structural funding for Ireland will be invested up to 1993. Within this framework a series of operational programmes on agreed areas are being discussed with the European Commission. Tourism and transport, for which I have specific responsibility, are included among the agreed headings. These two sectors have a crucial role to play in strengthening the productive capacity of the economy because of their sheer size and scale, their pervasive nature and their important and crucial linkages to other sectors in the economy.
I would like first to outline for the House my views on the major problems facing the transport sector and what we intend to do about them. In the EC context, completing the internal market is very important to transport because I do not believe you can have a genuine 1992-type internal market without a fully integrated transport policy within that Community. The very essence of an internal market is that one can move around it whether by air, rail, road or sea in a free and easy and as standardised or similar fashion as possible. It is that particular philosophy I will be trying to pursue during my chairmanship of the Transport Council of Ministers during our Presidency of the EC. I will be trying to bring about a genuine internal market in transport in the Community.
As the NESC point out in their report, there are undoubtedly gaps in Ireland's infrastructure and systems which are the proper subject of structural policy investments. The quality of transport infrastructure influences not only, perhaps not even mainly, the cost of access to foreign markets, but also the internal efficiency of the economy in both traded and non-traded sectors — a point which is forcibly made in the NESC report.
There is no doubt that Ireland suffers from major cost disadvantages vis-à-vis other EC member states. These disadvantages are due to two factors. First, our peripheral and island location, with a consequent heavier reliance on air and sea access transport services and, second, the fact that the quality of our internal transport network does not match that of our partners in the Community. It is hardly surprising, therefore, that transport costs for Irish exporters to Europe are still unfortunately approximately twice those incurred by Community countries trading with one another on the European mainland. It is important to realise that as an island nation, getting on and off our island safely, efficiently and economically must be a major priority in the months and years ahead.
Following the opening of the Channel Tunnel in 1993, Ireland will be the only EC member state without a land link to the Community mainland. For that reason we have advanced the case that investment in our air and sea links is equivalent to investment by mainland Community countries in cross-border road and rail links to other member states. Accordingly, the transport measures in the National Development Plan submitted to Brussels were oriented towards the development of an adequate internal transport structure which is fully integrated with improved access transport services.
Good roads, it goes without saying, are crucial in servicing the other sectors of the economy. As the NESC put it in an earlier report in 1981, there are "very strong reasons for improving the Irish road system which does lag behind that of broadly comparable nations". My colleague, the Minister for the Environment, will no doubt give the House specific details of our policies and proposals for the development of our roads.
I will now outline some key considerations for the areas of transport for which I have responsibility. First, I will refer to airports. Existing airport capacity is reaching a limit because of a dramatic increase in travel to and from Britain and mainland Europe on foot of radical Government initiatives in relation to access air fares into Ireland. As a result of the increase in traffic numbers there is now an urgent need for an accelerated capital investment programme at the State airports.
Major elements of the programme of investment at the State airports which we are currently finalising include: a major extension of the passenger terminal facilities at Dublin airport, together with new car parking facilities; extension and upgrading of the passenger terminal facilities at Shannon and Cork airports; extension and upgrading of runways, taxiways, aprons and other airside facilities at the three State airports; modernisation and upgrading of navigational aids at the three State airports.
We also have ambitious plans for the development of our regional airports. I regard the development of the regional airports as an essential feature in a properly integrated transport network for the promotion of tourism and business access. The regional airports have a crucial role to play in reducing Ireland's peripherality in the context of the completion of the internal market. Recently I had occasion to visit a number of them. I am more concerned than ever that further improvements in regional airports are both warranted and essential. This is particularly important if rural areas of the country are to be linked satisfactorily and efficiently with both Dublin and the rest of Europe directly. During my visit to the regional airports at Waterford, Farranfore, Galway and Connaught I assured the respective airport boards and the regional tourism organisations that the Government were committed to making substantial investment in the regional airport network commencing next year. I also emphasised that the Government would look with particular favour on airport projects that involved local private financial investment.
It is important that the private sector look to the regional airport structure as an important area in which they should consider investing further. During this round of visits to the regional airports, I have told them I would be particularly interested in working to develop the airports in conjunction with further private investment in the airports themselves to the extent that the regional airports can come forward with exciting plans involving some private investment, we will not be found wanting in supporting the development of regional airports. Already a major development programme launched by the Government last year, involving total expenditure of £5 million, is now complete. This, together with the Government's policy on air fares and intense competition has already facilitated the development of a wide range of services at the regional airports. Indeed I know the House will be pleased to know that traffic is booming through these regional airports. Four hundred thousand people are now passing through that network and I am told by the airports that a substantial increase in passenger traffic at these airports can be expected in the years ahead. A very important and central development in the context of preparing Ireland for 1992 is the full development of these regional airports and ensuring they receive every support possible.
The NESC commented on the efficiency of Irish ports and they noted the significant portion of Irish freight trade going through Northern Ireland. The NESC report went on to argue that Ireland's access ports must have the capacity to handle freight and passenger movements both efficiently and competitively. We have specific plans to ensure that they will have this capacity, details of which the Minister for the Marine can deal with.
The development of adequate sea and air access freight facilities is an essential prerequisite for this economy if it is to maximise the export growth which we need to underpin sustainable economic development and job creation. In mainland European terms investment in such facilities is equivalent in nature to investment in cross-Border road and rail links to other member states. That is the comparison we would make here. The main policy priority will be to improve transit times and reduce access costs to Europe. We are currently arranging, in conjunction with the European Commission, to have feasibility studies undertaken to determine the optimal organisational and commercial structures for such sea and air freight services, having regard in particular to their commercial viability. Account will have to be taken in these studies of the report's recommendation that our transport policy must encompass not only investment in transport infrastructure but also the efficient management of major transport facilities.
I should also point out that improved air services can only be optimised if air traffic delays are reduced. In my role as current President of Eurocontrol, the European air traffic control organisation, I have been pressing my fellow Ministers for Transport in Europe to devise a long-term strategy for integrating European air traffic control systems. It is imperative that we have a long term strategy to complement the action taken by European Governments in the past year. That action has been on short and medium term measures which have been needed to reduce air traffic delays this year, as it were. The longer-term measures are equally important, and more important in many ways.
While something has been achieved — including the publication of Europe's Common Medium Term Plan for harmonising air traffic control systems and the preparation of a detailed plan for a Centralised Air Traffic Management Unit, which is being implemented on a phased basis already — much more is required if long term solutions to air traffic delays at a European level are to be achieved.
As regards Ireland's contribution to the solution of air traffic problems in Europe, action is being taken on two main fronts, which I announced during the summer. First, we are investing £30 million in new communications, navigation and landing aids and radar systems. Secondly, we are training new personnel for the air traffic control services and the Department of Tourism and Transport are consulting with the relevant trade unions — under Labour Court mediation — on addressing the long-term personnel and structural issues of Irish air traffic control.
Let me just say to the House that on completion next year of this £30 million investment in technology at State airports they will be as good as, if not better than, most international airports in regard to air traffic control equipment. It has become very important that we complete this programme, particularly at Dublin Airport, which will be coming fully on stream perhaps in January or, at the latest, February of next year. When that equipment is fully switched on we will have the finest air traffic control equipment and this should go on a long way towards reducing air traffic delays which again do not affect holidaymakers only; it is something which will be essential to the business life of the only island nation in the new internal market of 1992. This is why sorting out this area is very important.
In the context of rail and bus transport, it is proposed to develop the mainline rail network through improvements in existing stations, expenditure on the network to facilitate more container traffic and renewal and completion of the rail signalling programme. Plans are also being prepared for the introduction of new diesel commuter services on existing rail lines in Dublin. It is also proposed to invest in the introduction of improved local and provincial bus services.
Before leaving the transport area I want to say to the House that during our Presidency from January to June next year apart from trying to alleviate air traffic control difficulties — Ireland cannot alleviate those on its own, it is a European problem; Europe has many more control points and air traffic centres throughout it compared to similar sized areas in, for example, the United States which would have far fewer traffic areas to deal with — the Government will be pushing strongly ahead with the second package of airline liberalisation to ensure greater competition and an opening-up of markets in the airline business throughout Europe. It is still somewhat sad and hard to grasp why, in trying to build a 1992 internal marketplace, the airline industry throughout Europe are still hidebound by tradition, old fashioned agreements and substantial bureaucracy. If this continues and we are unable to make progress in this area during our six months of the Presidency it will be a pity because as I said earlier the essence of building an internal market is that one can move around it, particularly in the air, freely, openly and without all of these restrictions which bedevil European airline transport at present. That will be a major priority of the Government in chairing the Transport Council during the first six months of 1990.
I referred earlier in my speech to the Government's strategy of developing key sectors of our economy where we can compete effectively in international markets. Tourism is one such sector. The Government's decision to identify the tourism sector for special development has been wholeheartedly endorsed by the European Commission who see it as a major axis for economic development and employment creation.
As the House knows, we are currently finalising with the Commission an Operational Programme for Tourism in Ireland which will fully articulate our proposals for the development of this sector.
The House knows, of course, that the tourist industry worldwide is now arguably the fastest growing industry there is. It is growing at something of the order of 5 to 7 per cent worldwide. In Ireland we are trying to perform something of an economic miracle in this regard, and thank God we are succeeding so far. Tourism here is growing at the rate of 15 per cent per annum which is three times the rate of growth of world tourism. Granted we are starting from a smaller base but it is a credit to those involved in the tourist industry that they have managed to achieve this growth. I should tell the House that we are still on target to meet that 15 per cent growth this year but we are talking about making 15 per cent on 15 per cent over a four to five year period. That is a very ambitious target but so far we are on target — this target was set by my predecessor Deputy Wilson — to double the number of visitors coming to this island between 1987 and 1992. We are something like half way through that now and we are on target to meet that figure, so it is very important we continue with that programme.
The primary objectives of our tourism policy are to harness our natural advantages, to increase the capacity of the sector, to strengthen its competitiveness and to market it more effectively abroad.
The core strategy for the development of tourism over the next few years will be significant capital investment in the Irish tourism product. That capital investment will be complemented by a specially designed marketing scheme to capitalise on new amenities provided as a result of this investment. In the light of the constraint which budgetary imbalances impose on the Government's ability to finance this investment, the Structural Funds' moneys allocated to tourism will be used to a greater extent to lever out the maximum amount of private sector investment in amenities for which there is an international demand. My approach to dealing with the Structural Funds allocated to tourism will be to use what is available to attract the maximum amount of compatible private investment to more than match what the State can provide. The best use for the Structural Funds in the tourism area is to use them to prime the private investor and to lever out the maximum amount of private investment.
There is a need for a more integrated approach to tourism at Community level. This is a matter we will be raising during our Presidency. There must also be a greater tourism input by the Commission in the formulation of policies in other areas within its competence. During our Presidency we will be laying substantial emphasis on the air liberalisation package and trying to get a more integrated approach to tourism at European level. This is sadly lacking at present.
As I have outlined to the House, we have very specific development plans for the transport and tourism sectors. My colleagues in Government have throughout this debate given considerable details as they affect their own areas of responsibility.
In addition to macro-economic or sectoral development policies, a crucial requirement for success in the single internal market is, as the NESC have noted, the maintenance of a domestic economic environment conducive to growth and competitive enterprise. This requires that we continue the sound macro-economic management in which we have been engaged. The creation of the correct economic environment needs to take on a new meaning in the completed internal market. It is very important that in keeping our eye on the 1992 marketplace we do not take our eye off the ball at home. There is a need to continue discipline and order in our own public finances and in the management of our economic affairs.
The run up to 1992 will be very exciting in the areas of transport and tourism. I see it as a time of investment and opportunity, not as a time of difficulty but as a time when Ireland's transport and tourism policies will come of age in the new markets of Europe. I am fully confident that our tourism industry and our transport sector will be as good as, if not better than, those of any of our partners by the magic date of 1992.
Deputy Alan Dukes.
May I ask the indulgence of Deputy Dukes?
Yes, I am a most indulgent person.
I have waited all day to make an intervention in this debate.
That would not qualify you to interrupt. You are rising, I presume, on a point of order?
That is correct. I am asking if you will give me some guidance, in the light of the fact that I have waited all day to make a contribution to this debate, as to whether you are likely to call me?
I can only indicate what the arrangements are. The debate swings from Government to Opposition sides. The nature of the situation is that Fine Gael, in deference to the numbers they have, apart from other considerations, would be entitled to two speakers. Deputy Alan Dukes is their second speaker offering. He is now in possession and is at liberty to speak for the remaining time between now and 6.30 p.m.
I think you are saying that except in the unlikely event of Deputy Dukes not using his time I will not be called.
That would be a reasonable deduction. If Deputy Dukes concludes before 6.30 p.m. I will be happy to call you. I will be calling the Minister at 6.30 p.m.
That is a very unsatisfactory deduction.
The series of statements we have been having would not have taken place without the insistence of my party. I am bound to point out to the House that the same was true of an earlier debate on the Cecchini report, the analysis carried out for the EC Commission into the advantages of greater European integration. The signs are that without Fine Gael pressure this Coalition Government, just like its Fianna Fáil predecessor, would wish to avoid fundamental and searching debate on these issues which are vital for our future.
This two day series of statements can be nothing more than the beginning of a process of detailed political analysis and unless the Taoiseach changes his view on consultation in this House that will be a stormy process. I put the Government on notice that my party will want to have each stage of this negotiation fully debated in this House because of the crucial importance of this European endeavour to the wellbeing of our people. It is absurd for the Taoiseach to pretend as he did yesterday that the Oireachtas Joint Committee on the Secondary Legislation of the European Community, important though that committee is, can provide an adequate forum for parliamentary debate on European integration. I would strongly urge the Taoiseach and the Government to reconsider the proposal made yesterday by my colleague, Deputy Michael Noonan, for a special committee to deal with these issues. They will not be dealt with properly in the Oireachtas Joint Committee on the Secondary Legislation of the European Community. That is not their job.
I most warmly congratulate the NESC on this report. It is a work of major proportions and of great importance, although perhaps we would not all agree with everything that is in it by way of recommendations and conclusions. There is no doubt that its production is a signal service to us in this House and to everybody else who has responsibilities for and an interest in these issues.
The Taoiseach said yesterday of that report that it can give the European Commission, to whom he has sent it, a keen insight into the concerns and goals which determine Ireland's negotiating position within the European Council in the run up to 1992 and beyond. That is true, but not only the European Commission can benefit in that way. The Taoiseach and his Government might benefit and it seems, indeed, that they need to. Nothing the Taoiseach or any member of the Government has so far said about the report or the issues it examines gives me any confidence that they have any sense of direction or purpose about what they should be doing on the wide range of important issues involved. The Taoiseach had no policies to offer, no strategy to propose. The same can fairly be said of the Ministers who have intervened in this debate. The Minister for Tourism and Transport and the Minister for Agriculture and Food both talked about areas where in all conscience, as they themselves have pointed out, greater European intergration should give us room for growth, but they have no strategies to propose, no prescriptions to lay down and no answers to the questons raised in this report.
The only guideline the Taoiseach had to offer was the very tentative statement in relation to agricultural policy that "the Government will seek to influence the evolution of Community policy along the lines recommended by the NESC". He went a little further and said that the Government are in agreement with the basic thrust of the report. That is not enough.
That just is not enough. We are now approaching the end of October 1989 and we have been talking about 1992 for two years, if not longer. We have had the Europen campaign and we have had debates in the House going back over two years but we still find that when a major report of this kind is brought forward — it was done very carefully and, clearly, with a great deal of consultation — the Government are still not putting before the House even the outlines of what they plan to do in order to adapt the Irish economy to what is going to happen over those years or to shape what is going to happen over those years to suit the needs of the Irish economy.
The Taoiseach had something else to say, that continued progress must not be put at risk by abandoning the consensus that has worked so well. That is a most admirable sentiment but it is a bit ironic when we think that the Taoiseach had to put his party, and his partners in Government, through the humiliation of losing 12 Dáil seats between them before he came to that understanding. The Taoiseach should know by now that he can expect a constructive approach in this House if he and his colleagues approach this openly and with a proper appreciation of the role of the House, and if they put aside the arrogance which they have displayed in abundance in the House over the last two days on other items of business.
The Government do not have much to say about the issues or the approaches we should adopt to the questions outlined in the NESC report. Let us look at what we need. What we need to do has been very cogently expressed in the three fundamental conclusions set out on page 534 of the NESC report. I should add that the Taoiseach and the Ministers who spoke in the debate have not referred in any way, good, bad or indifferent, to any of those conclusions or said what they think about any one of them. The first of the three fundamental conclusions in the NESC report is as follows:
(1) Economic integration in the narrow sense — the removal of tariff and non-tariff barriers — will not serve to reduce regional disparities and may unleash forces which tend to reinforce existing advantages and disadvantages.
We would all agree with that. That is the type of suggestion that an eminent official in our system, the Governor of the Central Bank, had in mind some time ago when he said that we did not want the process of integration to turn Ireland into the Appalachia of the European Community. We want to avoid that. Indeed, that danger has been very much in the minds of my colleagues and myself since the late sixties when we first began to debate and prepare for membership of the European Community. It has taken quite a long time to bring the Community to the point where it now has a clear and determined policy that it must avoid these effects. In fact, it was the Liam Cosgrave Government of 1973 to 1977 which participated in the development of the first European Regional Development Fund although it was not part of the Treaty at the time. It was Deputy Garret FitzGerald's Government that assisted in and helped to shape the Single European Act which, for the first time in the history of the Community, wrote an obligation to take these factors into account into the Treaty basis of the Community. The conclusion I have quoted from the NESC report is a very pertinent one but little has been said about it in the series of statements by the Government.
The second NESC fundamental conclusion was:
(2) The European Community has developed in an unbalanced manner: the considerable degree of negative integration has not been balanced by sufficient measures of positive integration. This inhibits both the achievement of genuine economic integration and of regional convergence.
That is fair comment and it is something that should give us food for thought when we look at how the Community is going to develop from here. The Taoiseach referred in passing to the need to ensure that we have mechanisms in the Community that will offset the natural centralising tendencies in an economic union.
He referred briefly to the McDougall report of 1977 which put forward the proposition that the European Community's budget could never be an effective redistributive mechanism unless it was covering between 5 and 7 per cent of the Community's gross domestic product. I remember that particularly well because at the time that report was published I was working in the Commission and I had an opportunity to see at first hand in both the Commission and the Council the approach that was being adopted to that proposal. I can say without exaggeration that among all the interest groups represented at European Community level at the time, industry, trade and agriculture, there was a clear and ready acceptance of the logic of that statement.
However, at the time very few Governments of the member states would have adopted that view. Things have not changed a lot. Today I would suspect that the United Kingdom Government would not be at all happy to accept that proposal. I suspect that the Government of the Federal Republic of Germany would be very unhappy with a proposal of that kind and I doubt whether the Government of The Netherlands would go that far. Of course, we can write the rest of the script. An Irish Government in their proper senses should be an advocate of that approach. The Italian, Spanish, Portuguese and Greek Governments equally should be advocates of an approach like that. I do not know what position the Danish Government would take on such a proposal; they tend to be rather difficult to fathom from time to time because, although it is a small country and a little peripheral, it is so near a big country that perhaps it does not make an awful lot of difference.
Certainly, there is a valid point of view in that proposal and it is one which underlines a great deal of what the NESC has said and a good deal of what the Commission, and President Delors, are trying to bring about. What does that mean? My colleague Deputy Noonan pointed out yesterday that we have to look at the implications for the way we do our business of many of the things we would wish to see done in the European Community.
The Community's budget today accounts for a little more than 1 per cent of Community GDP. To make it an effective method of distributing growth around the Community we would have to multiply its volume by about four. It does not sound an awful lot to say that you have to get 5 per cent or 7 per cent of Community GDP into the Community budget but when you think that it has to be multiplied by four you can see that there is the beginning of a major political argument there. That has some implications for us. Firstly, would we accept, as a natural corollary of this if proportions were to remain about the same, that our contribution to the Community budget should be multiplied by about four? Would we accept the diplomatic effort required of us to get other member states to do that? Would we accept handing over that amount of responsibility for what are, after all, national taxpayers' funds to the European Parliament?
My belief is that we should be prepared to do that but I have not seen any indication over the last couple of days, or even going back further, that the Government have any understanding that that is what is involved if we want to make the process of European integration give us the result that we need. Unless and until this Government wake up to that fact I have not a great deal of confidence, I am sad to say, that we are going to see a concerted, well informed and collective Irish approach to the decisions that are going to have to be made by the Council of Ministers and the European Council over the next couple of years.
The third fundamental conclusion in the NESC report is that Ireland's strategic approach to the EC shall be based on the objective of creating a genuine European economic and monetary union that would have the characteristics to suit Ireland's social and economic needs and aspirations. I agree with that. There is no arguing whatsoever with it but we have not had either yesterday or today from this Government an indication of any such approach. There has been nothing like a systematic review or even an outline review of the kind of things we need to do in that regard.
It might help if we could express the objective in a simpler way. I put it like this: Ireland's interests will be best served by developing the Community so as to maximise its ability to produce wealth. We must ensure then that the distribution of wealth within the Community is consistent with the commitments in the Single European Act to economic and social cohesion. We must ensure that the Community as an entity gives due weight to its responsibilities to the rest of the world and to the Third World in particular. Finally, we must ensure that our institutional framework, political, economic and administrative, is adapted to the objectives we set.
Let us have a look at what is going on and see whether it is in any way in accordance with that criteria. I am looking at what the Government are saying and doing. Let us look at the area of tax harmonisation, surely an essential part of the development of an economic and monetary union. The Taoiseach claimed yesterday that the Government had adopted what he called a "prudent and responsible approach to adjustment of our own tax system to Community developments". I challenge anybody on the Government benches to identify for me any single move made by this Government or by the last Government since March 1987 that does anything to adjust our tax system to Community development. Have they reduced the rate of VAT? No. Have they brought any excise duty down near the rates of excise duty in any other member state? No. What have they done? They have increased the gap between levels of excise duty and VAT in this country and those in the other Community member states.
The Taoiseach's statement that policy has been prudent and responsible would be laughable if it were not made seriously in our Parliament. That was not a prudent policy. It has been a supine policy. The Government have just plainly lain down on the job and done nothing. That policy could be called responsible only to the extent that its supine nature has been responsible for bringing about some of the very difficulties the Taoiseach outlined yesterday when he talked about a shift in the Commission's proposals between August 1987 and the early part of this year which has made the whole thing much more difficult, as he rightly says. However, a large part of the blame has to be laid at the door of the previous Government here and of other governments in the member states who did nothing to bring about the realisation of the objectives set out by the Commission in 1987, objectives which, although they had their difficulties and their warts, were moving in the right direction for us. It was a system that was going to make sure that the Community operated as a Community to bring about tax harmonisation and that we did not fall into the trap which the Community is in danger of falling into now of giving in to the Lawson-Thatcher-German doctrine of saying we are going to let market forces harmonise taxes and the devil take the hindmost. This Government have conspired in allowing that to come about, and the Taoiseach has the brazen effrontery to come in here and call the Government policy on tax harmonisation prudent and responsible. All we had was silence punctuated only by the occasional moaning of the then Minister for Finance, now Commissioner MacSharry, and the occasional very opaque statement by the current Minister for Finance or the Taoiseach saying that any move of that kind would cost the Exchequer here £600 million a year, as if the whole thing were going to happen overnight in one leap. Quite properly, no other member state, no responsible member of the Commission would take that seriously as a contribution to bringing about tax harmonisation in the EC, a tax harmonisation that we need perhaps even more urgently than is the case of any other member state in the Community because no other member state has a land frontier with a neighbour where the differences between tax levels are as large as they are between ourselves and Northern Ireland.
I listened to my colleague, Deputy Austin Currie, who made a very weighty maiden speech here this afternoon, and I must say I shivered a bit when I heard Deputy Currie say he had a certain regard for the old style smugglers. Of course he was talking about the old style, but that whole business exists only because we have those tax differences. I and many of my colleagues know that in the 30 miles and even more away from the Border — the Minister sitting over there should know as well as the rest of us — business has been devastated by the difference in tax.
I have the distinction — I consider it a distinction — of having moved in one substantial area to reduce those differences and it worked. Yes, we lost revenue for the first 18 months, of course we did. There was no way of avoiding that, but after a while revenue began to come back because we began to get the volume of sales back here. The same logic applies to overall tax harmonisation especially if it is done on a phased basis.
The Deputy put up to take down. He raised VAT.
I will bring the Minister to Dundalk, Carrickmacross and Castleblayney——
The Deputy would not have to.
——and I will bring along also my colleagues, Deputy McGahon, Deputy Bill Cotter and Deputy Andrew Boylan. We will educate the Minister and he will admit finally the kind of thing his colleague, the current Minister for Agriculture, God help us, used to do when he was Opposition spokesman on Finance. He used to go up to Carrickarnan, stand in the middle of the road in the rain and get himself photographed by RTE while saying he was worried about these tax differences. What has he or anybody else over there done since they came into power in February 1987?
The Deputy upped it to take it down——
Not one single move has been made. They are conspiring to help the smugglers.
——like the Duke of York.
They had in their grasp an EC proposal that was going to help us deal with that and they just dropped the ball.
A Deputy
You are a partitionist party.
We look at what is required in relation to agriculture. We had a very brief intervention here this afternoon from the Minister for Agriculture and Food who seems to suffer from jetlag even when he goes no further than Luxembourg, but we have what the Taoiseach said yesterday about agriculture. He said, and there is a little plug in here, "We are fortunate that the brief of the Commissioner for Agriculture now extends to responsibility for rural development." If it is the same kind of responsibility that we have in taxation policy then the Lord save us all. The Taoiseach thinks this signal a recognition on the part of the Commission of the importance of rural development and that this will be of positive significance for us in the future.
The Taoiseach said also: "I agree with the NESC that Ireland should be to the fore in promoting constructive developments in this area." What constructive development have the Irish Government or our current Minister for Agriculture proposed in Brussels to deal with the many problems facing Irish agriculture, the effects on Irish agriculture of the alignment of Community prices to world prices, or the effects on Irish agriculture of an emerging agreement fuelled and driven by the US, the most protectionist economy in the world, to get rid of all export subsidies? Those effects are going to be dramatic. As far as I can determine, and I keep in fairly close contact with my friends in the Commission — and they are many I am glad to say — the sum total of what the Irish Government and the Minister for Agriculture have proposed in order to meet those problems is nil. It is a problem that the last Governemnt and this Government have. They react. They wait for somebody else to propose something. They do not come forward themselves with any proposals. That is dangerous. Not only is it dangerous, but it is pure folly in the situation that is facing us.
I will tell the Deputy in a few minutes whether it is folly.
They are losing the opportunity for this country to benefit from a movement that may be slow and may be difficult but, mark my words, a Leas-Cheann Comhairle, a movement in Europe that is inevitable. It is unstoppable. It may take longer than many people think. It will certainly take longer than I would like to see, but it is unstoppable, and we are not going to serve the Irish people by adopting the purely passive reactive approach that is being set out by this Government and that has been clearly demonstrated yesterday and today in the comments they have made on the issues raised here.
Tá an t-am istigh.
Let me make one final point.
There will be another "Dear Ray" letter no doubt; it could get me out of trouble again.
Deputy Noonan, please do not interrupt.
Deputy Noonan's interruptions in circumstances like these are always of the most constructive kind.
Disruptive.
There is just one little glimmer in the 29 pages of the Taoiseach's script of yesterday that indicates that perhaps there might be an opening over there. He said and I quote:
We wish to ensure that, as endorsed in Madrid, only those tasks that can be better achieved at Community level will be subject to Community regulation, with other tasks left to national legislation and collective bargaining;
That is the one part of the Taoiseach's speech of yesterday that I liked because it encapsulates something which is dear to my heart, and I know it is particularly dear to my colleague Deputy John Bruton. It expresses what we call the principle of subsidiarity which I am happy to tell you, a Leas-Cheann Comhairle, is one of the key principles of the Christian Democrat Movement and one which, if followed, even belatedly now by this Government, will help us to guide the integration of the European Community in a way that would be of benefit to our people and to the rest of the people of the European Community but, as I said, yesterday and today can be only the beginning of this House's consideration of these issues. We will have to come back on issue after issue, on topic after topic, to dabate these matters and we had better see at least the beginning of some understanding on the Government side of what their role in the whole process should be.
I would like to say at the outset that it is to be regretted that the analysis in the NESC report has tended to be regarded, in some quarters at least, as calling into question the wisdom of joining the EC. It should, of course, properly be seen as much as an assessment of the way we, all of us, responded to the challenges that membership posed, and especially the performance of domestic economic policy, as it is an appraisal of the impact on the economy of our membership of the EC. With this knowledge, we will be better placed to deal with the fundamental changes which are envisaged for the Community. Moreover, it will assist in ensuring that our own actions and those of the Community will lead to further cohesion and the type of economic development which will benefit all members, both big and small.
It is, you will realise by now, impossible to segregate the effects of EC membership in itself from the changes which were taking place in the world generally in the period of our membership. It is also impossible to look at our own behaviour and policies in isolation during this period. There is no doubt that EC membership created pressure for structural change. It is clear also that this country, like any other for that matter, is not immune to outside influences.
As an open economy we must be adaptable. I cannot stress this enough. This means that we must recognise that our own economic destiny is determined by our capacity and willingness to deal effectively with the changes which are taking place in the global economy. We must be open to change, change in new technologies, to new work practices and to new management techniques. Rather than seeing these as difficulties, we should actively seek to identify the best of these and apply them for ourselves. Our aim should be to protect what is vital, to preserve what is unique and to retain what is worth while. To seek to prevent all change is neither socially desirable nor economically justifiable. We must simply aim to recognise the trade-offs and to get the balance right.
Success depends, not only on a favourable external environment, but also on correct domestic macro-economic policies. We now know that expansionary fiscal policies, especially when they are financed by massive external borrowing, do not work. While they may give a temporary boost to demand and employment, they lead to balance of payments deficits, put upward pressure on interest rates, create domestic inflationary pressure and, eventually, force higher taxes upon us. In the final analysis, such policies crowd out private investment, undermine competitiveness and price away jobs. Whatever short-term gain that is obtained in terms of employment and demand is undoubtedly quickly lost. This is a scenario we were all too familiar with up to the mid-eighties.
Indeed, it was only after the budgetary problems were seriously tackled that confidence began to be restored in this economy. In turn, as interest rates began to fall, inflation reached a 30-year low, and international competitiveness began to improve. Employment then started to expand and unemployment to fall. As we all know, this process has gathered momentum in 1988 and 1989. Our growth rate has exceeded the EC average since 1987 while our EBR has been reduced from almost 13 per cent of GNP in 1986 to about 3½ per cent this year. Employment in the private sector, the main vehicle for sustainable jobs, has shown strong growth of between 30,000 and 40,000 in the past two years.
Since joining the EC we have learnt very useful but at times costly lessons about how we, as an open economy, should conduct macro-economic policy. We are now seeing positive results from the application of these lessons during the past few years.
We know that the key to economic success in a small open economy such as ours is competitiveness and flexibility. Again I cannot stress this sufficiently. If we are competitive, others will want to buy our goods and Ireland will be an attractive location for investment. In this way we sustain the productive cycle which generates further increases in output and more jobs. The Government have a very important role to play in fostering competitiveness, but they cannot do what is necessary by themselves. The response of other sectoral interests is also essential to improving our competitiveness. Wage moderation is vital in this regard.
We all know of the invaluable contribution which the national understanding, between the Government and the social partners, has made to our economic recovery. The recommendations of the NESC report "Strategy for Development" were incorporated into the Programme for National Recovery and thus underpinned the successful macro-economic policies being pursued by Government. These policies are not the offspring of any ideology, rather they are based on practical necessity and have the full support of the social partners.
I welcome the NESC's view that in order to maintain an environment conducive to growth the consensus embodied in the national understanding must be continued and deepened. The NESC's view that a domestic environment which encourages growth and enterprise is a significant requirement for success in the completed market is one that few will dissent from. It is clear that this requires responsible Government, which can demonstrably provide the type of sound macro-economic management that has been pursued over the past few years. The Government's response to the challenges posed by 1992 is crucial because of the bearing it has on the response of the social partners.
Changes which increase the exposure of the economy to external forces must be accompanied by measures which increase the internal efficiency of the Irish economy. This can be done most effectively through co-operation, and so a most important aspect of strengthening the economic environment is the continuation of the current consensus which exists between the social partners and Government.
The real message from the figures released yesterday by the Central Statistics Office has been lost on some of the participants in today's debate. That message is that our economy now has a job creating potential of which few thought it capable. Over the two years to April last it delivered a net increase in sustainable jobs of at least 30,000, that is 15,000 per year.
I thought there were fewer jobs.
If the Deputy listens he will recognise the truth of what I am saying. The manufacturing sector, which had been widely written off as a source of employment growth, moreover, provided 6,000 of these extra jobs. The indicators available for the period since last April, in fact, show that employment is still rising strongly. There were 2,000 more at work in manufacturing in June than in March. Employment in the building industry, that time-honoured barometer of the domestic economy, is also on the up-an-up. The larger firms, which is all that the recent statistics cover, have some 2,500 more workers now than a year ago. Job loss has been the bane of our employment performance in the eighties, and the sharp fall in its incidence this year — down 40 per cent in the first nine months — is especially welcome. This indeed proves, if proof were needed, that conditions are now more favourable to employment in all sectors than they have been for many years.
This remarkable turnaround in the underlying employment situation is due, without question, to the courageous decisions taken in March 1987 and followed up since, in the face of criticism from the benches opposite. We never made any secret of the fact that if this economy was to be enabled to grow the disastrous budgetary situation had to be remedied, and that this inevitably meant fewer jobs in the public service. We took no satisfaction in what had to be done, but we knew it was essential if there was ever to be growth in the number of self-sustaining jobs. The experience of the early eighties, when the issue was avoided and an effort was made to save jobs in the public sector, at the cost of incurring insupportable debts and levying heavier taxes with which Deputy Bruton is familiar, shows that this is not the way to increase employment. The gain of 10,000 in total employment over the past two years may be modest but it is a dramatic improvement on the drop in the number at work over the preceding seven years: 76,000, or an annual fall of 11,000.
The growth in self-sustaining jobs in the private sector is a clear vindication of the Government's economic strategy, and of the responsible attitude of our partners in the Programme for National Recovery. It shows, whatever the critics may say, that the renewal of economic growth on a sustainable basis is yielding the employment benefits we expected. There is no denying the enormity of the challenge we all face, given the scale of the inflow of new job-seekers.
This year's prospective growth rate of 4 per cent will ensure that the number at work rises further from last April's level. I am confident that, with the continuing upswing in the private sector, and the impact of the necessary cutbacks in public employment diminishing, the net employment situation will improve progressively over the coming years.
The continuation of the current macro-economic strategy is a necessary condition for growth and employment, particularly as we approach 1992 and the completion of the internal market. There is, of course, a danger that the benefits of internal market completion will be distributed unevenly, with the greatest benefits accruing to regions in which industries with economies of scale and highly innovative industries predominate. The main benefits may flow to the centre, with the weaker and peripheral sectors losing out. The NESC report argues that the structural funds, as currently constituted, will not be sufficient to create convergence, let alone establish equality, in regional economic structures and incomes. The Government share that view. However, the increased level of funding available from the Structural Funds will, of course, make a significant contribution to our economic development.
On 20 September last the Commission of the European Communities allocated a total of 36.2 billion ECU to the Objective I Regions of the European Community. Ireland's share of this initial allocation amounts to £2.86 billion. An allocation of a proportionate amount from the reserve retained by the Commission for Community initiatives will give Ireland an amount in excess of £3 billion which would be consistent with a doubling of our EC commitments by 1993.
The allocation made to Ireland will represent a major boost for our economic development prospects. Discussions on the completion of the Community Support Framework for Ireland are now virtually concluded and formal approval by the Commission is expected shortly. The Community Support Framework will be published after it has been approved by the Commission. Discussions on the operational programmes are now taking place between the European Commission and the various Government Departments.
Deputy Taylor referred to a lack of Community involvement. The Government have also been anxious to ensure that sub-regional representatives be given a real role in overseeing the implementation of the plan and supporting programmes. This is essential if progress in meeting our economic development needs, as outlined in the plan, is to be achieved in a balanced way. In the negotiations with the EC Commission on drawing up the Community Support Framework, to govern disbursements from the Structural Funds over the period to 1993, considerable attention has been given to devising appropriate monitoring arrangements.
The Government considered that the sub-regional and advisory working groups should be maintained and should have a role in monitoring the implementation of the plan and programmes. The Commission shared this view and I am pleased to say that the monitoring arrangements envisaged in the Community Support Framework include provision for sub-regional review committees comprising the existing advisory and working groups. These sub-regional review committees will meet on a regular basis to consider reports detailing progress to date and measures proposed in or significantly affecting the subregion concerned. The sub-regional review committees may convey views on any aspect of implementation of the plan and programmes to an overall review committee which will include representatives of the Commission, and which will be responsible for overseeing the implemetation of the Community Support Framework. My Department will be responsible for ensuring that the sub-regional review committees are kept informed.
I believe these arrangements meet the requirement for a genuine involvement at sub-regional level in monitoring the implementation of measures under the Structural Funds. They will guarantee representatives of the sub-regions up-to-date information on a regular basis, regular contact with the Government Departments and State agencies responsible for implementation of measures, and access to the Commission, through the Commission's involvement in the monitoring committees, should the need arise.
The NESC report presents a coherent and well thought-out strategy for the development of a Community which, even now, is slowly but surely advancing towards full economic and monetary union. In addressing this issue, the report is challenging, even radical. The approach it advocates is founded upon the premise that a successful EMU requires Community wide intervention mechanisms and, in particular, a much greater role than exists at present for the Community budget.
From our point of view the report was most timely. It offers a useful adjunct to the Delors report on economic and monetary union in the European Community. Indeed, in many ways it goes well beyond the confines of that report. In this debate tonight, however, I should like to concentrate on the ground common to both reports.
The two reports are united on one crucial matter, viz. that EMU will not be successful unless based on and accompanied by greater economic cohesion. To this end, the Delors report clearly recognises that Community policies in the regional and structural field are necessary in order to promote an optimum allocation of resources and to spread welfare gains throughout the Community. This is a clear recognition that people matter in the Community, not just statistics. The importance of this awareness in the Delors report should not be underestimated. The members of the committee which produced the document came from widely differing backgrounds and philosophies and the fact that the report was agreed unanimously gives it an added strength and significance.
They were all central bankers.
I am surprised the Deputy thinks that there was not a total commitment to economic and social cohesion.
The Minister said that the members of the committee which produced the document came from widely differing backgrounds but they were all bankers.
The analysis of the fundamental requirements of economic and monetary integration which is put forward in the NESC report is very useful and will provide a valuable input to our overall negotiating position. However, we need to remember that the Delors report is likely to be the reference framework within which the Community debate on EMU will be established at the outset. We shall endeavour to expand that framework, but that can only be attempted if we provide a solid basis for our future work.
Much has happened at Community level since the Delors report was published last April. The European Council meeting in Madrid last June acknowledged the report as a good basis for further work and determined that the first stage of EMU would begin on July 1990. Work on that first stage, which primarily involves closer co-operation in the economic and monetary areas, is already well advanced. Indeed, decisions in the relevant areas are close to being finalised. Regarding the latter stages of EMU, a high-level group composed of representatives from Finance and Foreign Affairs Ministries is at present considering the main issues which will need to be addressed in the context of the intergovernmental conference which will eventually meet to consider the Treaty changes required in the final stages of EMU. Ireland is participating actively within this group and, indeed, within all the relevant fora.
When the NESC report was published, there seemed to be a suggestion among commentators that Ireland, until then, did not really have a strategy directed towards the wider goal of European economic and monetary integration. Looking through the debate I note that Deputy Bruton and Deputy Noonan, among others, echoed this view. That, of course, is and was absurd. We have had a clear position on the matter all along based on a vision that saw the benefits for the Community as a whole but was equally alert to the dangers for the poorer regions. Our response to the Delors report has been very positive and rooted in the two balances outlined in that report, namely, the need for balance between developments in the economic and monetary spheres, and the need for an effective policy to promote balanced development throughout the Community.
The requirements of pragmatism and parallelism in the policy approach to EMU are vital. That is why we have cautioned against too rapid an advance in either the monetary or economic area at the expense of the other. This caution derives not from any lack of support for the concept of union but from our firm belief that any move into the relatively unknown must be made with due care and circumspection and with an eye to the balances essential to the process. Detailed preparatory work, which inevitably takes time, is required if the union is to be well constructed and built on secure foundations. If this course is not followed, the danger of failure would be greater as would the risk to the advances already made by the Community.
Our support for closer economic and monetary integration is at once principled and pragmatic. There will be gains but there will also be losses. Our concern is to maximise the former and to minimise the latter. We are deeply aware of the problems which our peripheral status may pose for us in a more integrated Community. For this reason, we have stressed, and will continue to stress, the need to promote measures which are designed to strengthen economic and social cohesion within the Community. In making this emphasis, we are not isolated. We have the support of the Treaty itself as amended by the Single European Act. Our concerns in this are not, however, narrow and sectional. The welfare of the Community as a whole — and I mean the European Community — demands that all its constituent parts experience broadly similar standards of living and enjoy, to the full, the benefits which will spring from closer integration. Thus convergence of levels of development is as essential to the durability and sustainability of EMU as convergence of budgetary balances, inflationary trends, levels of indebtedness, etc.
In raising our voice in favour of EMU in the various Community fora, it is important that we demonstrate our support for the ideal itself. We must not give the impression that we favour it only in so far as we see it as a source of additional transfer payments. That would be counterproductive and, indeed, would do less than justice to our actual position.
The Taoiseach and the Minister of State for European Affairs have already referred to the Government's support for the development of the EC budget. The Government concur with this NESC view that the EC budget should be developed, concomitant with the extension of Community policies. Not all of our partners in the European Community share that view. Our task in the years ahead must be to convince them of the correctness of our approach.
Would the Minister be prepared to go ahead without Britain? Would he go ahead with EMU without Britain?
We have not arrived at that stage.
We should hear the Minister out without interruption.
That is the key question which remains to be answered. What is the point in having a debate unless one can get an answer?
Let us hear the Minister out without interruption.
Contrary to what Deputy Noonan suggested, we are participating in stage one, in case Deputy Bruton is not aware of that fact.
I am well aware; I have read the decision in the communiqué. I know all that.
The Deputy wants to get to stage three before finishing stage one.
They have agreed at the Intergovernmental Conference.
That is right.
I wish the Government luck.
The Deputy might well wish us luck instead of trying to undermine us every way he can.
Contrary to what Deputy Noonan suggested in this debate, the stance taken by the Government on indirect tax harmonisation — perhaps Deputy Bruton agrees with us; I do not know whether that is the case — has been coherent and consistent. We have participated positively in all the discussions and have demonstrated throughout our willingness to work towards a position that would accord with the needs of the internal market while safeguarding our vital budgetary and economic interests. It is noteworthy that, while Deputy Noonan had much to say on this topic, he was short of views or advice as to how Ireland's problems on harmonisation might be overcome. In fact, his comments displayed a total lack of understanding of the process of negotiation under way and of the Government's responsibility to protect the economic and financial interests of this country.
Some would have had us endorse and implement the earlier Commission's VAT and excise proposals from the word go, even though it was abundantly clear that no other member state was prepared to jump in at the deep end in this way — as many Opposition Deputies had suggested — and that these proposals did not in fact constitute a viable basis for a Community agreement. Would that not have been a terribly foolish thing to have done, jump in at the start without anybody else, and then find that those proposals were not acceptable to other member states?
The Government will have to do something along those lines. They might as well face up to that fact.
If we took Deputy Bruton's advice I know where we would end up.
They do not know where they are going. They are consistently evading the challenge.
The validity of our approach is borne out by the basic rethink which has taken place in the Commission itself this year which has already resulted in new and quite different VAT proposals being put on the table. New proposals on excise are expected to emerge shortly. Therefore, it will be clearly seen that we have half the picture only. Yet Deputy Bruton wants us to jump in.
We are all going in the same direction and the Minister knows which direction that is.
Deputy Bruton has had his say. The Minister should be allowed continue without interruption.
In these circumstances it would have been nothing short of folly for us to have implemented the earlier proposals when so much is at stake for this country. In the same way we must not plump unilaterally for the package now being put forward. Decisions to be taken in this area could have a crucial bearing on our scope over the medium term, to continue our programme of reducing borrowing and debt while, at the same time, achieving our objectives for lower rates of personal taxation. Unlike NESC, Deputy Noonan fails to make the crucial connections between tax harmonisation and these other policy objectives. He has not even considered the implications of the savings tax and its present position in Brussels. He left it aside and forgot about it.
He could not deal with everything within a very short space of time.
It is crucial that we negotiate at all times so as to best protect vital national interests while moving towards 1992. As usual, Fine Gael have all the answers outside of Government but never have any when in Government. This is typical of what we have always heard from them. They were in office for four and a half years and had no answers to the problems but, when outside, have the answers to all.
The Minister has none of the answers at present to any of the key questions about 1992; that remains the case despite this debate.
Please, Deputy.
We come now to the sums involved which are very large indeed. On quite realistic assumptions my Department calculate that the revenue loss for Ireland in the latest proposals could be of the order of £600 million annually. That is on the basis that, under the Commission's revised approach — and in the absence of frontier controls — we would have little alternative but to approximate our VAT and excise rates very closely with those obtaining in the United Kingdom if we were not to suffer a major distortion of trade. The NESC report is in agreement with that analysis. While the figure of £600 million is different from earlier estimates prepared by my Department there is in fact no inconsistency between the two forecasts. The earlier forecast was based on different assumptions that derived from the 1987 Commission proposals. The Deputy can figure that one out; I stress the 1987 proposals, not the latest ones. That is where the Deputy is getting the two different figures and two different sets of proposals. Of course, as a former Minister for Finance, Deputy Bruton should know well that the Department do not produce fancy figures.
All I know is that the Government have two different figures about this and cannot explain the difference.
Two different figures derived from two different sets of proposals, one set in 1987 and the other recently. If the Deputy cannot understand that I am sorry for his troubles.
The Government will have to harmonise anyway one way or the other. They are merely putting it off.
The £600 million figure is consistent with the new approach in the latest Commission proposals.
Deputy Bruton should recognise that that figure represents approximately 3 per cent of our GNP and should not be brushed aside as he would like to do. Clearly, of course, precise costings cannot be finalised until the Commission has brought forward its new proposals on excise rates which are expected shortly.
The Commission's new approach is intended to give flexibility, by setting only minimum rates of VAT and excise, so that member states could select the rates they want. However, the reality is more complicated. A member state could suffer huge trade and budgetary losses, with severe damage to its economy, if its rates were kept significantly above those of neighbouring countries and, at the same time, its border controls were removed completely for commercial trade and purchases by private individuals. Some way has to be found to avoid such budgetary losses. Either the proposals must be modified or other measures must be built into them to help countries such as Ireland. While the problem is most severe in our case, due to the land frontier with the UK, some other countries have similar problems. Indeed as I said at my most recent meeting of ECOFIN, if we had nothing but water between us and the UK, perhaps it would be quite easy to solve a lot of the problems we are now encountering.
In the ongoing negotiations we are actively seeking solutions that will allow the objectives of the internal market to be achieved without imposing such damage on our economy. Our clear preference would be if the package could be modified so as to enable us to approximate our rates with those in the UK. There must be a fair distribution of the burden of adjustment between the various countries. Some member states, and indeed Deputy Bruton and Deputy Noonan seem to concur with this, suggest that all the adjustments must be from those with the high rates down to whatever might suit other members.
I hesitate to interrupt the Minister, but the time devoted to this debate is now exhausted. The time has come to deal with Private Members' Business.
We want to bring this situation around as quickly as possible in order that all of us, Government and business firms included, will have a firm basis for planning for the completion of the internal market.
Debate adjourned.