Deputy Proinsias De Rossa is in possession. The Deputy has his full quota of time available to him which is 45 minutes.
National Economic and Social Council Report No. 88: Statements (Resumed).
The first thing which needs to be said in relation to the European Community is that the current theoretical underpinnings of the single market being proposed by the 12 member states is that if countries combine to form a free trade area they can have a higher level of economic progress because all obstacles to free trade from tariff barriers right through to State purchasing policies will be removed, leading to so-called distortions in the market being eliminated. This it is claimed leads to a market where so-called perfect competition exists and so all firms are free to compete equally and the most efficient, those with the lowest prices and best quality, will win out. In addition economic integration stresses economic gains which come from economies of scale because of cost reduction and the rapid rate of technical change. That is the theory.
The United States, Italy and Germany only achieved political unions in the 19th Century and each of these had a developed north and under-developed south. Economic unification led to the acceleration of the economic development of the already developed areas and indicates that the naive belief in benevolent workings of the so-called invisible hand is misplaced. It is only with active interventionist economic and social policies that the disparities between the poorer regions and countries in Europe, specifically the south of Europe and Ireland, can be rectified. It is in this context that the NESC report is important because the NESC effectively shreds the theory I have just mentioned and points out that, in fact, the open market on its own will create and increase divergences between the regions and will not close the divergences.
The report on Ireland and the European Community produced by the NESC is an exceptionally important one, and indeed is a valuable document. Unfortunately all recent Governments seem to have operated a rule of thumb which says that the better the report the less chance there is of it being implemented. On that basis I would suspect that there is, unfortunately, very little prospect of the more important recommendations in this report being acted upon.
This report is not just a thorough assessment of the country's prospects in the post-1922 period; it is also one of the most comprehensive reviews of our economic and industrial performance since we entered the European Community in 1973. It is, in fact, a damning indictment of the inept policies of successive Governments since then, especially in regard to industrial policy, and makes many logical recommendations for policy initiatives in this area.
It should bring a dose of reality into the debate about 1992. It shows clearly that while 1992 will bring certain opportunities for Ireland it will also bring many threats. It shows that unless we take certain crucial decisions at national level the problems of 1992 will be far greater and the benefits far less than the Government have led the public to understand so far.
For the majority of Irish people the European Community has not delivered in the way we were given to understand during the debate on our application for membership. The lavish promises of improved living standards and extra jobs have been largely undelivered primarily because neither Fianna Fáil nor Coalition Governments pursued the policies at national level which were essential to maximise the opportunities presented by European Community membership. When we joined the European Community in 1972 our income per head was 61.8 per cent of the Community average. today it is virtually the same at 62.3 per cent. Unemployment was at 80,000 in 1972 with no emigration. Now unemployment is almost three times that level with emigration running close to 50,000. If this disappointing performance is not to be repeated in open market conditions after 1992, then the crucial recommendations in this report must be taken on board and acted upon. There are seven key conclusions and recommendations in the report which The Workers' Party consider to be crucial.
These are, first, that true integration involves a lot more than simply removing trade barriers — negative integration — and must include the establishment of various common policies and agreements over many areas of economic and social life. Negative integration of itself will not bring convergence of income but will in fact increase divergence between the regions and in relation to income.
The second point is the failure of indigenous industrialisation which is one of the major structural weaknesses in the Irish economy, according to the NESC report. Third, there must be a far more active interventionist industrial policy by the Government. The scale of firms must be a far more important concern of industrial policy and there must be far greater emphasis on specialisation and innovation based on indigenous resources.
Fourth, the completion of the internal market will not on its own narrow the income disparities between regions in the EC and the Structural Funds as currently constituted will not be sufficient to create convergence, let alone establish equality in regional economic structures and income. Fifth, the CAP has been used as an excuse for failure to develop separate and different national agricultural and food processing policies and there is a need for what the report describes as a "national agricultural programme". In this specific regard it is regrettable that the Taoiseach, both in his address to the Irish Council for the European Movement about ten days ago and in his speech yesterday, indicated that it is not the intention of this Government to introduce any national programmes to deal with agriculture. He has stated quite clearly that he regards the development of our agriculture as a direct responsibility of the European Community. The sixth point refers to the major weakness of our tax system as the narrowness of the tax base and the related high income tax rates. The seventh point is that the Community must have an active social policy.
Some of the report's most valuable conclusions and recommendations are in the area of industrial policy and many of them are similar to the findings of the largely ignored Telesis report which was published almost ten years ago. The NESC report is just the latest in a series of similar documents which have pointed to the total failure of native Irish industry to compete successfully in international markets. Generally speaking, the successes in terms of international trade performance have been the foreign firms based in Ireland and the failures have been the Irish firms. There has been what the report describes as "almost continuous output and employment decline in along list of exposed industries and their replacement by foreign firms in a narrow range of manufacturing activities".
The report shows that multinationals have not and are not going to establish in this country labour intensive, high added value type manufacturing projects. It also points out that the hoped for linkages between multinationals and indigenous Irish firms have not generally materialised. The report points to the necessity of developing large scale indigenous firms and emphasises the potential of economies of scale which only large firms can provide. It effectively demolishes the "small is beautiful" philosophy so beloved of many Fianna Fáil Ministers and disposes of the myth that the unemployment problem can be solved if enough people start making chocolates or biscuits in their garages or mending bicycles in their back garden.
The authors are quite rightly critical of the inappropriate industrial and development policies pursued by successive Governments since we entered the EC. They were too short term orientated and ignored some fundamental problems. Their task, among other things, the report says on page 216, "should have been to foster activities in which Ireland could develop a genuine, sustainable and indeed renewable competitive advantage".
The report argues effectively for an extremely active interventionist industrial policy in each of three areas: in relation to the size disadvantage of Irish firms, to improve the innovational orientation of indigenous firms and to monitor and, where appropriate, prevent the take-over of indigenous firms by foreign firms. The degree of intervention by the State envisaged in the report is much greater than that operated by either Fianna Fáil or Coalition Governments. Indeed, it is a weakness of the report that it fails to emphasise that despite the NESC's call in a number of previous reports for a more active industrial development policy, Governments and the IDA have been, to say the least, very slow to pursue such policies.
My understanding is that the Commission have indicated that they are quite happy to see member states whose average income is 75 per cent or less than the average European income introduce specific measures to assist industrialisation and the development of the economy. This Government and previous Governments have shown a marked reluctance to take these kinds of initiatives.
There are two broad areas in which state intervention is called for in this report. The first is by the Irish Government in developmental policies of manufacturing, services and agriculture. The second is by the Community at budgetary level. As such the report is an indictment of Government policies over the entire period since 1973.
First it says in relation to industrial policy that the failure of indigenous industry in a free trade environment, heavy job losses in grant aided projects, a life cycle in foreign firms involvement and profit repatriation made themselves felt increasingly over time, but in a way which was not essentially different in the boom years of the seventies or the slack years of the eighties. What this boils down to is that even while we have apparently been doing well, indigenous industry was not, and industrial growth was based almost entirely on foreign direct investment. This dependence on foreign direct investment is not sustainable over the long term, and the dangers of reliance on foreign firms were revealed in the early eighties when even employment in foreign firms was insufficient to keep up with the decline. There is a warning in this that is not adequately brought out, that now there has again been an upturn and additional new foreign projects are being established, industrial policy may again be considered successful. It will, however, not be successful unless it develops indigenous firms capable of competing internationally.
That is perhaps one of the most important points in this report. It is easy to say we had a boom in the seventies and a decline in the eighties and that the decline was due to external factors, which by and large it was, but that kind of simplistic analysis does not address the underlying failure of indigenous industry to develop. The probability is that the boom and bloom which is being talked about now may well create an air of satisfaction that things are on the up and up, but unless the underlying structural problems in relation to developing indigenous industry are dealt with, we will enter another period in recession in a few years' time, we will not have dealt with the underlying structural failures and therefore, will have no capacity to deal with the recession which is inevitable in the cyclical way that capitalism operates.
The appropriate industrial development policies may actually contravene EC regulations. This is not mentioned in the report. The Commission have said they will not object to such policies for regions where the standards of living are less than 75 per cent of the EC average and Ireland is clearly in this category. Why then are Fianna Fáil so reluctant. The simple answer is that they are ideologically opposed to such intervention.
In other words, we have a great deal of freedom to initiate national development policies, and although, for example, through the IDA, we have implemented some, we have not gone nearly far enough. One area where policy initiatives are needed is the question of multinationals and their failure to develop linkages with indigenous firms and to use Irish inputs. There is a need for a carrot and stick approach. Government policy to date has been all carrot and no stick. Why not, for instance, let the level of grants payable to a multinational, or even the tax it pays on its earnings, be determined by the extent of the Irish inputs it uses.
That probably would be contrary to the Treaty.
I have already made the point that in many respects the European Commission have indicated that they are prepared to turn a blind eye to measures taken by national governments to develop their infrastructural and industrial bases——
Surely, not by means of discrimination?
Proinsias de Rossa
——where the income per head or per proportion of GDP is less than 75 per cent of the average EC level. As I have pointed out we are at about 63 per cent and there is room to manoeuvre.
Not by discriminatory purchasing practices or discriminatory grant practices in regard to purchases.
That is a debatable point. The question is whether we can afford not to take this kind of action in order to ensure that we develop a strong indigenous based Irish industry. It is a question of whether we throw our arms open and say, "take me".
But it has to be done within the rules laid down in the Treaty and I am sure the Deputy will agree with that.
To the extent that it is possible to define them as neatly as the Deputy is suggesting. I should like to refer to the degree to which multinationals are repatriating their profits. I understand that this year alone their repatriated profits will be in the region of £2.5 billion. That represents a massive outflow of capital from the State. It is estimated that that figure will rise in the next few years to something like £4 billion. I do not think the country can sustain such an outflow of capital. The Government must see how they can deal with this matter. I recognise the difficulties in dealing with multinationals and how footloose they can be. That is why it is important that we have, in tandem with dealing with the outflow of their repatriated profits, a method of coping with their linkages to Irish firms. Clearly, if they are tied into the Irish economy to a greater extent the possibility of them pulling out overnight is reduced. However, the country cannot afford the massive outflow of wealth which takes place annually and looks like growing to a greater extent. The Government should address those fundamental points as a matter of urgency.
The NESC state that at Community level redistributive policies are called for. It is not clear that this is likely to occur, even with a great deal of pressure being applied on the Community by Ireland and other peripheral economies. But if we are to emphasise the need for policy at Community level, and if it is clear that industrial policies are necessary for the development of industrial and other economic activity at the periphery, then why should we not also emphasise the need for a common Community industrial policy or strategy which would assist underdeveloped regions to attract investment and avoid cut-throat competition between them for job creation projects which can occur when development agencies, such as the IDA, are chasing multinational companies.
The conclusions of the report that the doubling of the EC Structural Funds will not narrow the gap in living standards between the richer and poorer regions is ominous, especially in view of the fact that the Government did not even get the amount they sought under their National Development Programme. The whole process was handled very poorly by the Government, but the reality now is that there is unlikely to be any increase in the structural money allocated to us. Against this background the question of how the money is now to be spent becomes even more crucial.
We welcome the warning in the report on the dangers of over-concentration of infrastructural development. The Workers' Party also emphasised this point in our submission to Government prior to the publication of the National Development Plan. Infrastructural projects do, of course, develop the country's potential for investment and provide short term employment, but with unemployment running at more than 220,000 and emigration at almost 50,000 per annum, the number one priority must be industrial development which will create permanent, sustainable employment.
We believe that at least 60 per cent of available Structural Funds should be invested directly to create jobs, and given the appalling record highlighted by the NESC of the private sector, semi-State companies should be entitled to a significant proportion of this money. Certainly the priority in Dublin is manufacturing jobs and not motorways, but the Government seem determined to give us more motorway madness and do little about the jobs. It is something of a joke that on the one hand Dublin has been designated European Cultural Capital for 1991, while EC Structural Funds will be used to tear the heart out of Dublin with the completion of the inner tangent Ring Road associated with the Eastern by-pass.
We welcome the support expressed in the report for a Community social policy, but unless the proposed EC Social Charter is binding on member states it will not afford adequate protection for workers in the open market conditions after 1992. The economic aspects of the internal market will be binding on member states and it is essential that the social aspects should be similarly binding. The Irish Government should press for a commitment to this effect at the meeting of the Heads of Government in Strasbourg in December.
In the introduction to the Social Charter there is reference to social development and social cohesion having the same importance as economic and monetary union but the Charter does not proceed to give it the same binding effectiveness as the proposals in relation to economic and monetary union. The Charter should set a high level of minimum rights, including a commitment to the right to work, which was not included in the official draft. We cannot accept the creation of an internal market which will produce even greater profits for the multinationals but tolerate a huge level of unemployment, diminish the social rights of workers and create even wider income gaps within different regions of the Community.
It is important to bear in mind that the almost inevitable outcome of competition whether in national economies or in the wider European context is to put pressure on the conditions of work. Indeed, the higher the levels of unemployment the greater the pressure is. The net effect of the integration of the European market would be to put pressure on conditions. Far from arguing for the harmonisation upwards of social conditions in the least developed regions, and of certain sectors of the developed regions, we may be faced with a battle to maintain the conditions which have been established in the more developed regions unless we have a binding social charter.
It is clear from comments made on Friday last that the Federation of Irish Employers will join with employer organisations and right wing forces in other member states in an attempt to block the implementation of the charter. For this reason it must be made binding. The Taoiseach said yesterday that he accepted the charter in principle, but spoke of the need to have regard to cost competitiveness. This is an extraordinary statement and is indicative of this Government's half-hearted approach to the charter. We were told on the one hand that the purpose of the integrated market, of doing away with tariff barriers and harmonising taxation and so on, was to create a level field for companies to compete. How can you create a level field for companies to compete if you have in one part of the EC wage levels and conditions which encourage companies to move to that area at the expense of areas which have established a higher level of income or a higher standard of safety and health at work? It is nonsense to talk about bearing in mind the competitiveness of the industry and at the same time talk about creating equal conditions for industry to compete.
I read recently in The Guardian about a contract which has been granted to a company I think from Portugal — I am not sure of the exact details. In any event, the effect is that a company from outside Britain tendered for a street cleaning contract in a town in Britain and got it because they had the lowest tender. The reason they had the lowest tender was that wage rates and conditions which would apply to the workers in this contract are way below the wage and conditions of work which would apply in Britain itself. That is not fair competition and it is using workers and their conditions as a battering ram to improve profits for specific companies.
The social charter must first be binding, but it is essential that where public procurement contracts are being made and applied there will be a clause in those contracts that the wage rates and conditions applicable to the employees who may be brought into a country from outside the country where the contract is to be implemented must be the same as the wage rates and conditions of the workers in that country. We cannot have a situation where wages and conditions are used as an element in the battle between companies across Europe for dominance in the EC.
While Fianna Fáil want to appear to be more progressive than Mrs. Thatcher and the various employer bodies, the Government are taking the same reactionary line. As far back as July 1988 the present Minister for Tourism and Transport, Deputy Seamus Brennan, made it quite clear that the Government were totally opposed, for instance, to giving workers the right to elect directors to the boards of private companies. If we are serious about having a social dimension in Europe and about having a Europe for all the people of Europe, a Europe which will have the support of the citizens of Europe, we cannot give all the rights to capital and restrict the rights of people who work for capital.
The Workers' Party have made it clear that we will co-operate with the EC trade union movement and other political parties and the citizens of all member states to ensure that 1992 is about social progress as well as economic integration. We are well aware that the social charter is a small part of the solution to our social and economic ills but any failure to strengthen it and implement it fully will worsen the position of weaker social groups within the Community, especially in Ireland.
I want to refer to a number of aspects of the social charter which need to be dealt with and strengthened. For instance, the charter should as a general principle set a high minimum level of social rights at Community level and this should be done without prejudice to the standards or the collective conventions which are more favourable to workers already acquired or to be acquired in each member state and it should include the right to work. It should include also a commitment to a Community programme to combat unemployment, for instance, the implementation of a growth strategy. In none of the sections of this charter is the word growth even referred to. It just does not exist.
The guaranteed implementation of the right to vocational training has to be included, as must ongoing training, retraining for both wage earners and the unemployed, and the right to have knowledge acquired earlier recognised in determining remuneration. Standards must be set that would prevent or limit the trend to make employment more insecure. I have just given an example of the kind of thing I am talking about. We must also ensure through the social charter that flexible work and part-time work are not used as a means of undermining secure employment. There must be guaranteed freedom of movement of workers from any member state and the right to equal treatment with nationals of the host country. There must be a ban on wage and other types of discrimination. For instance, it should be borne in mind that Articles 5 and 6 of the charter make it quite possible that there will be discrimination on the basis of wages. I quote Article 5:
The working conditions as well as social protection shall be guaranteed to all Community workers engaged in non-temporary gainful employment in a Member State other than their country of origin in particular when awarding public works contracts on terms identical to those enjoyed by workers of the host country.
In other words, contractors getting a contract and using temporary employees can do anything they like with them. They can give them any conditions they like. They can treat them any way they like. That is not a satisfactory section of the social charter. Article 6 is something similar.
Therefore, this social charter has to have a binding nature and should include a guarantee of equal treatment and nondiscrimination towards non-EC nationals. There has to be progressive harmonisation in the social security system. There has to be a maximum on the number of hours worked per week, ensuring there is real progress towards satisfying the claim of 35 hours per week while respecting the economic differences between the States. There has to be recognition of a fair wage level according to the principle of equal work for equal pay and a guarantee of the actual payment of this wage. I cannot remember the precise section of the charter which refers to the payment of wages being guaranteed, unless this is precluded by national legislation. In effect, it ensures that if a State has legislation which precludes people from getting wages under certain conditions, the EC will stand back from that and will not attempt to impose the EC's will on it.
There has to be an improvement in the standards aimed at guaranteeing the rights of workers in the case of individual or collective lay-offs, bankruptcies and restructuring. There has to be the creation of material conditions for the equality of men and women. I am talking here specifically of child care facilities, equipment and so forth. There has to be a ban in the Community on child labour and labour by adolescents and the elimination of any national provision which is covered in paragraph 2.26 of the draft charter. There has to be a guarantee of compulsory schooling. Section 26 of the charter enables countries to avoid that where they do not already provide it. There has to be a guarantee of the right to health and safety in the workplace and the corresponding modification of relevant directives recently adopted by the council. There is no recognition in the charter at present of the right to join a trade union or to carry out union activities at the place of work or, indeed, the guaranteed protection of union representatives. There has to be the recognition and guarantee of the right to collective action including strikes without, as is done at present in the charter, legitimising the position where some states deny the right to strike to some of its workers. There has to be the definition of a judicial Community framework ensuring information, consultation and full participation of workers and their representatives in the company for which they work. There has to be the introduction of standards guaranteeing the respect of social rights in all Community directives, for example, on public works.
At the initiative of the group of which I am a member in the European Parliament — the Left Unity Group — the Parliament recently requested the Commission to include in future a description of the social and regional impacts of all new directives. There has to be the introduction of a clause prohibiting social dumping, to which I referred earlier; this European jargon refers to the pulling out of companies from Ireland, Portugal, Greece, Britain or wherever, in order to move to a more salubrious climate in terms of wages and conditions.
The social charter should also include a binding commitment to fight racism in the Community and all forms of discrimination linked to racism. To give the charter a binding effect I would argue that the social dimension must be included in the inter-Governmental conference on economic and monetary union. The European Council in Strasbourg must commit itself to applying the charter in a binding way especially providing for judicial means of ensuring that it can be challenged if companies in member states flout the charter. There is a whole range of things which should be included in the charter. For the Taoiseach to stand up in this House and say: "We support the charter in principle but it must have regard to cost competitiveness" effectivley gives him a backdoor through which he can escape from the kind of obligations which should be in the charter — and which need to be in the charter — if we are seriously talking about social cohesion as well as about economic cohesion and the integration of the market.
As I said earlier, the NESC report is an excellent one. Unfortunately, the likelihood is that it will probably be largely ignored in its main recommendations. It is important that we grasp the nettle, that we challenge many of the things which are being done at European level in relation to the integration of the market, not as a means of blocking the integration of the market because as the NESC report states it is important that the market is opened up and that we are involved in it, we must ensure that it happens in a way that does not result in the denuding of this country of its people, of destroying whatever manufacturing industrial infrastructure we have already developed. It is important to bear in mind one of the most crucial findings of the report, that is, that we should not take a simplistic view of the period 1973-79 and say that worked successfully because jobs increased, that the years 1980-86 were bad because jobs did not increase and that therefore, we must assume that because the underlying trend according to the Government is that jobs will increase everything is fine and we have no need to tackle the basic structural problems which face Irish industry. It is important that we do not take that simplistic view. It is important that we take on board the recommendations of the NESC report and seriously set about creating the linkages between the multinationals and the Irish companies that exist here, or which may be established here, and that we ensure that Irish companies which have the capacity to grow and innovate are assisted even if, as Deputy Bruton said, it may be in breach of EC regulations. I believe we have the freedom to do that and we must utilise whatever such freedom we have. It is important also that we tackle in a serious way the question of the repatriation of multinational profits. I am not talking about doing this in a way that would drive the multinationals out of this country — I am talking about ensuring that they stay — but that the benefit of the £2.5 billion which could be used here is not lost to us.
The NESC report on Ireland in the European Community is a sobering but useful document. The basic thrust of the report in so far as it deals with the future is that our destiny is in our own hands. It calls into question the optimistic forecasts of overall employment growth contained in the Cecchini report. It disputes Cecchini's conclusion that the smaller member states would benefit disproportionately from European integration. It also indicates that European integration on its own will not lead to a narrowing of the income disparities between the richer and poorer peripheral countries. Indeed, NESC conclude that the Structural Funds in themselves will not be sufficient to create convergence in regional income. After all these approach less that 0.5 per cent of Community GDP.
The analysis outlines what we in Ireland must do in order to improve our living standards and catch up with other member states. The lessons apply not just at national level but also to the formidable challenges for industry and particularly for services.
The NESC approach to the challenges facing us is a comprehensive one. In particular its urging of a radical, forceful and ambitious policy of integration, merits study. In the debate today, however, I would like to concentrate on the aspects of the report which are closest to my own areas of responsibility as Minister for Labour. These areas relate to the social dimension of the Community including employment and unemployment, free movement of workers, harmonisation of labour standards, the Social Charter, Training and the European Social Fund.
In relation to the economic situation and outlook first I would like to set the economic scene. Even the most casual observer would not fail to notice the air of confidence and new found optimism. This confidence is founded on the economic policies pursued over the last three years. Order has been restored to public finances. Indeed the Exchequer borrowing requirement for this year should be less than 4 per cent of GNP. At the same time the economy has entered a period of rapid growth. Some commentators are forecasting a growth rate of 5.75 per cent for this year, and expect it to continue into 1990 and beyond. Export volume is always a good indicator of growth. In the first five months of this year the volume of exports was up by an estimated 17 per cent year-on-year.
Membership of the European Community has had a large impact on this growth. Ireland's export dependency on the United Kingdom market has contracted from 61 per cent in 1972 to 35 per cent in 1988. Conversely our market in the Community, excluding the UK, increased from over 17 per cent to 35 per cent over the same period. Furthermore, we are now members of the European Monetary System. The current sterling crisis and credit squeeze in the UK is, therefore, having a much lesser impact than it would have had 15 years ago.
However, as pointed out in the NESC report, Ireland has not done as well as it might have from membership of the EC. All of the blame cannot be laid at Europe's door. For example, domestic economic policy did not take sufficient account of the de facto interdependence of Ireland and other EC economies and too often short-term goals were given precedence over long-term national and Community priorities. These lessons have now been learned. While some of the decisions taken may have been unpopular, these decisions have clearly provided the foundation for the growth now being experienced.
Against this background NESC identified two prime requirements for Ireland with regard to EC membership. They are: (i) a clear national strategy for European integration which will provide a guide to external negotiations and domestic decision making; and (ii) continued consensus among the social partners, both at the national level and at the level of the firm, to ensure a swift and flexible response that is conducive to the objectives of fuller employment, higher living standards and a better social framework. The Council believes that if these requirements are met, as I am confident they will, then Ireland will maximise the development opportunities afforded by the current phase of European integration.
The social dimension of the single market is a major concern to me. The idea of the social dimension to European Community policy is not a recent development. As the NESC point out in their report, it represents a continuation of the social policy contained in the Treaty of Rome. Central to that policy is the promotion of improved working conditions and living standards for workers and the harmonisation of these conditions and standards between the member states. Under the Treaty, the Commission was given the task of developing close co-operation between the member states in the social field, with a particular focus on employment, safety and health, training, social security and workers' rights.
The social dimension is difficult to define — a fact which is recognised by the NESC in the report. It is also true that it is not a static concept; it is open to development. We may, however, at this stage, identify six major elements. These are: employment and unemployment; free movement of workers; harmonisation of worker protection; the social dialogue between management and workers and the establishment of a charter of workers' rights and improved vocational training opportunities.
The development of these elements will proceed on a continuous basis, parallel with the economic steps being taken towards the single market. Because of the potential changes envisaged in the single market, economic, financial, commercial and fiscal measures need to be matched or paralleled by social policy measures.
The growth in the economy mentioned earlier is beginning to have an effect on the number of unemployed. Unemployment has declined steadily on a year-on-year basis for the past two years and the September 1989 level is the lowest unemployment rate since November 1984. Job losses as measured by redundancies are down 40 per cent on last year. Commentators have forecast further job increases in the coming years.
Access to a job which is satisfactory and fulfilling to the individual, and which provides a standard of remuneration which will give that person a reasonable standard of living, is a basic social objective. That will remain the cornerstone of my efforts within the Social Affairs Council and particularly in my period of office as President of the Council of Social Affairs Ministers in the first six months of next year.
I intend, during Ireland's Presidency, to continue to press hard for further initiatives aimed at combating unemployment, with particular stress on long-term unemployment. I made this point strongly in my discussions last Friday with Commissioner Papandreou on the programme for the Irish Presidency. Measures to help the long-term unemployed will be central to the Irish Presidency programme on social affairs.
It is not, of course, enough that Labour and Social Affairs Ministers should strive to pursue measures designed to promote employment. It is my view, and the view of the Government, that action to increase job opportunities should permeate all aspects of Community policy. An obvious area which can have a direct impact on employment is that of economic policy.
The Taoiseach and all my colleagues in Government are determined to keep employment to the forefront of all Community discussions. We will make no apology for using any opportunities offered by the forthcoming Irish Presidency to further that objective.
The free movement of workers within the Community is already a fact of life. We must, therefore, see how best we can maximise the benefits. It is Government policy that no one should feel they have been forced to emigrate. The main thrust of Government action is to create an environment conducive to economic development and in that way, increase the level of employment available here.
However, many of our citizens will still emigrate for a variety of reasons. I have directed FÁS to develop their services for persons wishing to seek employment elsewhere in the EC and in particular to develop bilateral arrangements with the employment services of the main receiving member states.
At the same time, I have instructed FÁS to pursue a policy of discouraging unplanned or impulsive emigration. Their emphasis is to help the vulnerable and unskilled to improve their educational qualifications and raise their skills levels before seeking work abroad. FÁS are developing their advice and information service accordingly.
The EC has spearheaded many developments in worker protection. Occupational safety and health is one area in which the impact of Community policy on developments in this country is very evident. Irish law in this whole sphere was limited to protection of physical working conditions in industrial-type establishments. The Safety, Health and Welfare at Work Act, 1989, now gives substantially extended protection to the entire workforce. This is a development parallel to, and clearly influenced by, initiatives at Community level.
The emphasis on occupational safety and health is an important part of the Community's policy of ensuring social cohesion through development of the social dimension of the internal market. A fundamental element of this policy is to ensure that disparities in levels of worker protection among member states are removed in order to avoid the risk of exploitation by multinational or national companies.
I have not lost sight of the fact, however, that special consideration must be given to small and medium-size undertakings to ensure that they are not overburdened with requirements that would place them at a disadvantage to their larger competitors. This is an issue which I have been pressing at European level.
In this regard, Deputy De Rossa made useful points, with which I do not disagree, in regard to social dialogue. However, my argument in relation to small and medium-size companies is that if they were to adopt the full rigours of, say, German legislation in all its aspects over a short period it would probably create more unemployment. I am not saying that these standards should not be accepted but it should be over a period and the first steps in the area of safety and health will be covered by the new Act and Authority which will be effective from 1 November. If all the regulations and directives at present applying in Germany were adopted straightaway by our workforce it would create genuine fears — not just for the employers — but for the workers. We must get the balance right and have the necessary protection for the workers but not put too many burdens on employers all at once which would create huge problems for them because so much of our industrial base is small and medium-size companies which could very quickly be wiped out.
I am not arguing for an overnight levelling up of all social security, protection and so on but where a German company comes to Ireland to fulfil a contract they should pay the rates and observe the conditions which apply here and when an Irish company goes to Germany to fulfil a contract they should pay the rates and provide the conditions which are applicable in Germany so that the workforce in Germany, Ireland or any other country do not find themselves competing with conditions which are lower in other states as a result of the social charter or the integration of the market.
I take the Deputy's point. Equally I would ask him to accept that one of the arguments advanced in the social charter is not that confined merely to the United Kingdom's principled objections to part of the charter. Rather is it the German objections that anybody in the Community should not be obliged to adhere to their high standards. In that respect I say the best of luck to them; I do not argue against that contention. However, to expect our industrial base, our small and medium-sized companies to attain that level within a very short period would create enormous difficulties.
It is my opinion that the effect would be the reverse, that there would be downward pressures on conditions even in places like Germany where conditions are very high.
We had better hear the Minister out.
It is an interesting monologue.
Yes, it is very interesting and the Chair has facilitated this discussion.
It proves the case that we should have a committee look at this report.
We cannot permit a Committee Stage debate prematurely.
I should like to refer briefly to another area of worker protection, that for part time workers. I share the concern expressed by Deputies that the exclusion of part timers from the benefits of a wide range of protective measures must be remedied. On the basis of consultations with the social partners, Deputies will be glad to know that I am now finalising proposals for legislation which will offer a much greater degree of protection to part timers. I hope to have a Bill ready for introduction to the Oireachtas next year.
On the social dialogue the importance of maintaining good relations between employers and unions has been recognised both in the Single European Act and the draft social charter where it is stated that European level dialogue will be developed. I have always encouraged participation and consultation at all levels. I have no doubt that the development of a closer working relationship between employers and workers at European level, leading to a better understanding of each other's positions, will be of value and benefit at national level also. Indeed, the Programme for National Recovery has already demonstrated the value of involvement at national level.
We are going through a time of rapid change involving increased internationalisation of trade, a more competitive environment and new technologies. In such a situation, firms can forget their greatest asset, namely their workforce. The key factor in the achievement of success is the quality of the workforce. Management should, therefore, recognise that above and beyond finances, production and so on, what counts is people. They must put into practice appropriate systems to get the best from their employees.
The EC gives recognition to the need to have an enlightened attitude towards employees and encourages the development of a sound working relationship through the provision of information in the establishment of consultative and participative arrangements. While the exact form of these arrangements is to be decided, it is accepted that they should reflect the different practices and systems in existence in member states.
Deputies will be aware that the draft Community Charter of Fundamental Social Rights has now assumed considerable political momentum as a major Community issue. The French Presidency is most anxious that the matter should be settled at the European Council in Strasbourg. Opinions are divided, with one member state implacably opposed to the Commission's idea of a charter and, at the other extreme, others who demand concrete, far-reaching, legally binding minimum standards. The Government have given their full support at the European Council at Madrid to the conclusion that the same importance should be given to social aspects as to economic aspects and that they should be developed in a balanced manner. This support is entirely in keeping with the co-operation which exists in this country between Government and social partners.
We have been able to give that support because of the affirmation in the Presidency conclusions that job development and creation must be given top priority in the achievement of the internal market. This remains the highest priority in our domestic policy. The impact on employment will be high among the criteria which we will use in the further development of the social dimension. The Government have also supported the development of the charter as part of the social dimension. We can agree to a charter specifying commitments provided that they do not bear too heavily on small business.
In this context, as the Taoiseach reported to this House following the European Council of Madrid, apart from the employment impact of the various measures, we assign particular importance to the principle of subsidiarity, providing clear and balanced responses to the question of what is appropriate for national legislation or collective bargaining and what is appropriate for Community action. Many spheres of social and labour policy are better if left to the local or national level, unless there are convincing arguments for Community action. Such studies as have been presented to the Council testify to the diversity of practices and institutions. In these matters due weight must be given to national practice and traditions. We are pleased at the emphasis which is being given to subsidiarity in the ongoing discussions of the draft charter in the Council's working group.
We will be seeking sufficient flexibility in the text to ensure that convergence of trends and social policies in an upward and progressive direction will be at a reasonable pace which will not inhibit other aspects of cohesion.
As is evident, the social dimension is continuing to evolve. It will include, refine and develop policies for the improvement of living and working conditions, training and retraining, employment equality and issues concerning worker participation and information.
We must, however, be conscious of the need to maintain a balance here between what is desirable and what is realistic, between what we would like and what we can afford. I am taking an active and constructive approach to this issue. I propose to continue to work hard to achieve positive and beneficial progress during my period as President of the Social Affairs Council.
I propose to turn now to the European Social Fund. This Community instrument is specifically designed to support employment/labour market measures, particularly training opportunities.
Article 123 of the Roman Treaty puts the objective and role of the European Social Fund in a clear context. The Article says:
In order to improve employment opportunities for workers in the common market and to contribute thereby to raising the standard of living, a European Social Fund is hereby established. It shall have the task of rendering the employment of workers easier and of increasing their geographical and occupational mobility within the Community.
We attach particular importance to the European Social Fund not only because of its benefit to this country but because of its targeting towards employment promotion and help to the individual to take advantage of employment opportunities. The primary role of the fund has been to support vocational training measures but it also assists other employment related measures.
Ireland was fortunate in that the first real expansion of the European Social Fund coincided with our accession to the European Community in 1973. Before that, the European Social Fund had a small budget which operated almost automatically to return to member states what they had contributed to it, the system of "fair return". In the early seventies the European Social Fund became for the first time a dynamic instrument of Community labour market policy. Over the years it has grown in size and in influence. This country was able to take good advantage of this development. Indeed, it has been said in Brussels that the results of the European Social Fund can be seen more clearly in Ireland than in any other member state. This is because we have made maximum use of opportunities which the fund presented.
A feature of the European Social Fund is that over the years it has developed a very strong regional emphasis, with certain percentages of the fund reserved specifically for the less advanced Community regions. Higher fund intervention rates are set for those regions. A regional bias has influenced the guidelines under which the fund has operated. Ireland has been to the forefront in promoting the regional priorities of the fund as an essential demonstration of Community solidarity. The recent review of all the funds incorporates, of course, very specific provisions in favour of the least developed Community regions. Ireland argued strongly for this in the course of the fund negotiations.
I myself was very much involved in the discussions with the Commission regarding the level of Structural Fund assistance that will be available to Ireland in the period up to 1993. These discussions were difficult. Unlike 1973 when we entered the Community, we are now in competition with Spain, Portugal, Greece as well as the less-developed areas of France, Italy and Northern Ireland for the finite Community assistance available. Despite the difficulties, the final outcome of the discussions are regarded as an exceptional success for Ireland by foreign commentators. Criticism has been confined to some ill-informed domestic scources only.
The new arrangements for the Structural Funds provide a guarantee of increased resources from the funds for the less developed Community regions, including Ireland. The Government have decided that the largest percentage increase in Ireland's share of the Community funds should be allocated to the ERDF with the specific objective of stimulating job creation through infrastructural and other investment. Nevertheless, training is recognised as a central element of national development. We have received £1,035 million since we joined the Community in 1973. Over the next few years we expect to receive a further £900 million. Next year alone we should get some £220 million, a rise of £50 million on 1989. Funds will also be available from the Regional Fund for expanding and improving our vocational training infrastructure.
I turn now to the specific question of human resource development in the future. This is vital to the Community's future prosperity. In addition, it plays a crucial role in facilitating structural adjustment. A greater emphasis on vocational and in-service training will make it easier for the unemployed to enter working life and the employed to meet structural changes.
The development of this country's human resources has been a central element in our national development programme since the mid-sixties. Over the period the quality of the Irish workforce has improved. The labour force has become more skilled and highly qualified and, in general, skills shortages have been avoided. The quality of our workforce is highly regarded by employers abroad but we need to retain the maximum benefit from the heavy investment we have made in education. To prevent skills shortages emerging, we need to keep our highly qualified and skilled labour. Irish employers must not be slow to offer these graduates good opportunities here. There is no reason Irish development should lag behind the countries of mainland Europe or be restricted by a lack of highly qualified manpower. This is a particular challenge facing Irish managers.
I would like here to mention specifically the area of management training. Following detailed analysis, the advisory committee on management training outlined the factors that will affect the role and response of the manager in the future. NESC also recognise the importance of management training. They endorse the recommendation of the advisory committee that both business and Government increase their commitment to management training. However, I must stress again that the primary responsibility for management development, as other training, rests with individual employers in the public and private sectors.
We must be aware of the danger of failure to develop. Despite undoubted progress, there are still basic weaknesses in our workforce. Not least of these is the failure of Irish companies to provide enough training and development for their employees. Data available from the 1985 Labour Force Survey shows that only 6.5 per cent of all employees had received education or training in the four weeks prior to interview. The corresponding figure for Britain is 10.4 per cent. This is particularly worrying given the small scale of Irish industry and Cecchini's conclusions that most small companies lack the skills and qualifications needed by the single market.
The State is playing its part in providing manpower opportunities for the priority groups. Early unqualified school leavers now benefit from the Youthreach programme introduced jointly with my colleague the Minister for Education. Older longterm unemployed benefit, through the Jobsearch programme, from advice and referral to an appropriate programme. A network of some 20 FÁS training centres has been set up nationally to provide essential skills development to underpin economic progress. CERT's services are a necessary element in achieving the Government's targets for the tourism industry. In this, the contribution of the ESF has been crucial. Quite frankly, given the difficulties of the Irish budgetary situation, we could not have done what we did without the ESF.
The extra assistance we will receive from the ESF will allow us to expand existing courses and mount new courses in the education and training sectors. Our approach will be a balanced one between improving the skills of the workforce, helping the less advantaged who leave school without qualifications and assisting the long-term unemployed. We will continue to provide a package of measures combining training, aids to recruitment and temporary employment.
Our situation on the geographical periphery of the Community will always involve costs for our enterprises above those of most other Community countries. This places a greater need on us to develop those areas and key sectors where we could have a comparative advantage. Our workforce is such an area.
This places crucial importance on both the social dimensions as a whole and the development of our human resources. I am satisfied that both current directions in the EC and the level of assistance from the ESF will enable us to achieve our aim of increasing employment, raising living and working standards and improving our social framework.
I was the first Member of this House to call for a debate here on this NESC report. I am very glad we are having a debate but I am sorry the debate is attended by so few Members of the House. That is in the nature of the type and series of monologues that constitute debate in this House. The boring character of this discussion this morning results from the format of the discussion and Fine Gael are absolutely right to look for a committee of this House to look at this massive report. The Government's rejection of that proposal is foolish and this debate, however welcome, is no substitute for a chapter by chapter analysis by all Members of this House of what the NESC report seeks. That is what Fine Gael suggested when last year they proposed an economic accord for 1992 involving all the parties.
In the Dáil yesterday the Taoiseach said he supported the economic and monetary union of Europe. The Taoiseach supported a large scale increase in the Community budget from 1.2 per cent of GDP to about 5 to 7 per cent of GDP. Support for economic and monetary union means that many Irish economic decisions now taken in this House or in Merrion Steet will be transferred to Europe. It means that the entire Irish annual budget will have to be drawn up within an agreed macro-economic framework laid down in Brussels and will be subject to binding procedures and rules. It will also mean that Ireland will gradually lose the freedom to pursue independent budgetary and monetary policies in many areas. For example, the freedom to adjust our currency within the EMS would quickly disappear. The eventual disappearance under European monetary union of exchange rates for individual countries and national current account balances would deprive policymakers of important indicators of what might be going wrong at a national level in the European economy.
Will economic and monetary union work? There are two big question marks hanging over it. Not until July 1990 will restrictions on capital movements in Europe be abolished. Will the existing EMS be able to withstand the unpredictable pressures that might arise through instantaneous computer-aided transfers of money from one European currency to another after July 1990? Will the other states in Europe be prepared to proceed to economic and monetary union without Britain? It is clear the present British Government regard EMU as an unwarranted diminution of British sovereignty.
It would appear that the Taoiseach has no such reservations about the diminution of Irish sovereignty involved in EMU. Is the Taoiseach prepared to go ahead without Britain? If he is not, and if his other European colleagues are not prepared to do so, EMU will be yet another political aspiration intoned gravely on ceremonious occasions but without conviction. It will become the European equivalent of the twin national aims, useful at Bodenstown but not elsewhere.
It is worth remembering that European heads of state first declared their intention to create a monetary union in Europe as far back as 1969. Has the Taoiseach embraced economic and monetary union out of a conviction that it is the right policy for Europe or simply because he believes it will never happen and he would like to gain some Brownie points by genuflecting to it as an aspiration?
Economic and monetary union would certainly be a most radical departure for Ireland. It is interesting that it is the Taoiseach who embraced it so positively yesterday. Has the Taoiseach thought it out fully? Certainly his attitude has changed dramatically in the past three years. I will illustrate how much the Taoiseach's attitude to matters European has changed by quoting what Deputy Haughey said in this House on 9 December 1986 in the debate on the Single European Act. He expressed serious worry about the Single European Act proposal for the greater use of qualified majority voting in the Council of Ministers, because, and I quote, "we will not be able to defend our interests from as strong a base as we now do". He also said on that occasion that the new co-operation procedure with the European Parliament would "diminish our position". He said that the small number of our MEPs would militate against their having any influence in what he described as "a consumer interest Parliament". He was worried about the delegation of extra powers on agriculture by the Council of Ministers to the Commission which he said would "be hardly to our advantage". He even went so far as to demand, in column 1933 of the Official Report of that date, that the then Government "should have used this opportunity to conduct a fundamental renegotiation of our position within the Community. They have not done so, preferring apparently as much for personal kudos as anything else to posture as good Europeans...". Who is posturing now? Was the Taoiseach posturing yesterday?
Deputy Haughey, now Taoiseach, then went on to worry about how Ireland's reputation in Africa, Asia and South America would be adversely affected by "our membership of the new Community that will emerge if and when this Single Act is ratified by all the member states". He claimed that "Other small European countries who are not members, like Sweden, Norway, Austria ...have fared far better and survived the ravages of the world recession with much less damage than the member states of the Community". That was what he said three years ago, yet yesterday he was prepared to hand over macro-economic policy making for this State, lock, stock and barrel, to the same Community.
The Taoiseach should, in view of this divergence in his opinions within such a short space of time, spell out in clear language what economic and monetary union means for the role and functions of Dáil Éireann. Will it require a further series of constitutional amendments and referenda, and what attitude will Fianna Fáil take to those constitutional amendments and referenda? Will it be an attitude similar to the one they took in regard to the Single European Act when they were in Opposition?
Let me make myself clear. I am in favour of economic and monetary union in Europe, but before we proceed with it we should have a clear understanding of what it means. Ireland has, for example, proclaimed a policy of military neutrality. Military neutrality is only possible if it is backed by strategic independence in economic terms, in terms of available stocks of goods, etc. in the event of a disruption of traffic.
It has been argued that the policy of self-sufficiency pursued by Mr. de Valera in the thirties was a necessary prerequisite for military neutrality in the last war. Yet economic and monetary union embraced by the Taoiseach yesterday is the precise opposite of self-sufficiency. Has the Taoiseach worked out the political implications of economic union which he embraced so enthusiastically yesterday? Indeed, it would be fair to say that on economic and monetary union the Taoiseach embraced the conclusions of the NESC report with almost touching ardour, but other aspects of the report seem to have passed clear over his head.
He seems to have ignored altogether the devastating criticisms in the report of Irish industrial and agricultural policy. The NESC report rejects the industrial policy which the Government are now using, and use in this plan, to obtain the private component as a counterpart to EC aid. All the figures in that plan would fall flat on their face were it not for the inclusion of private money in IDA grant aided projects. Indeed, the Government have only enabled themselves to achieve their financial targets in their national development plan by including large sums of private sector money bought with IDA grants. Without this artificial use of private counterpart money for IDA grants, the financial targets in the plan would fall apart. Yet this is the very policy of IDA grant-giving that is rejected by the NESC in the report we are discussing today.
The NESC say bluntly that "grants towards capital costs of location in designated areas has come under considerable criticism". They also say that "research on the economic impact of grant-aided plant investments has demonstrated that they have not greatly stimulated industrialisation". Yet this is exactly the policy that the Government are using to underpin their national development plan.
The Taoiseach even boasted in his speech yesterday of some of the branch plant investments, namely Intel and Motorola, and of a growing interest by Japanese companies. In other words, he was boasting about the continued implementation of a policy which had been condemned by the NESC. Has he read the report? All he could say about domestic industry was to refer back to the national linkage programme which I started some six years ago when Minister for Industry and Commerce. Fianna Fáil and the Progressive Democrats seem to have no ideas of their own on policy to develop Irish-owned firms as recommended by the NESC when the only reference to a specific policy that the Taoiseach could make was one initiated by me some very considerable time ago.
I also believe that the Taoiseach and officialdom generally in Ireland are criminally complacent about the threats to the Common Agricultural Policy in Europe at the moment. This policy is being progressively scaled down as part of a policy to strengthen the Community budget and concede to international pressures in the current round of trade negotiations, the Uruguay round.
The current crisis in cattle prices is due in no small measure to the progressive and long planned cut in export refunds. This is going to continue and it is very dangerous for Ireland. By far the most vital policy for Ireland is the Common Agricultural Policy. Table 5.8 of the NESC report showed that Ireland has received 73.6 per cent, three-quarters, of all the money it has got from the EC since 1973 through the price guarantee mechanisms of the Common Agricultural Policy, and those are currently being undermined as we can see in the marts of Ireland today.
Our vulnerability as a nation lies in the fact that Ireland is one of the few countries in Europe that gets more than it loses from the Common Agricultural Policy. The International Monetary Fund recently analysed the welfare effects of the Common Agricultural Policy, taking into account on the one hand benefits to farmers as against on the other hand costs to consumers and taxpayers. It showed that Ireland was gaining a net $546 million a year from the Common Agricultural Policy, but it also showed on the other hand that the Community as a whole was losing $15,388 million a year, half of which was being lost by Germany. In other words, Germany was losing about £14 for every £1 that Ireland gained. Only the Netherlands and Denmark were net gainers from the Common Agricultural Policy along with Ireland, and Ireland was by far the biggest proportionate gainer. Yet in all the debate about the Structural Funds and the money we are going to get from Brussels, not a word is being said about the potential losses that will possibly come on a much greater scale from the apparent policy of dismantling the Common Agricultural Policy. Against that background the threats to the Common Agricultural Policy in the current GATT talks must be taken seriously but they have not been addressed by the Taoiseach in this debate. Our promised gains from the Structural Funds must be set against the potential losses on the Common Agricultural Policy. This may be a taboo subject but it must be faced. Farmers would not be the only losers in that scenario; those employed in our food industries would also see many of their jobs put at risk.
This is a political House and we should consider the political practicality of some of the NESC recommendations. They argue strongly that Ireland should push for a full economic and monetary union both to generate money to compensate poorer and peripheral regions and to ensure that Europe as a whole enjoys rapid, non-inflationary growth. The European Commission has been proposing economic co-ordination of this type for some time. It made a detailed proposal for a co-operative growth strategy in 1985. This involved a package of wage restraint and fiscal expansion. This co-operative growth strategy bore a strong resemblance to the now abandoned Keynesian policies pursued by various Governments prior to the 1973 oil shock. Does a sufficient common interest or understanding of common interest exist between British trade unionists, Spanish farmers and German taxpayers for such a sophisticated European policy, advocated yesterday by the Taoiseach, to work in practice?
As the NESC point out, it will require a very high level of "political homogeneity". Therefore the NESC conclude that it is not realistic to see cohesion, as the Government seem to do, as a purely economic phenomenon, economic and monetary union is a political matter. If we want to build a sense of European common political unity the only way this can be done is through the adoption of a Europe wide constitution, adopted by way of a referendum held simultaneously in all member states. That is precisely the approach that has been advocated by the Christian Democrats in the draft European constitution they tabled in the European Parliament in recent weeks. It is an approach I strongly urge on the Government as it would create a means of giving political flesh to the theoretical concepts of economic and monetary union which will not survive in real life without a political vindication of that kind.
As far as Irish domestic policy is concerned, the NESC report tells a very sad tale. They have over the years analysed and re-analysed our problems but very little has happened. Our tax structure, our housing, our industrial and land use policies are all seen in this report as unsuitable. Indeed they have been unsuitable for quite some time, but in practice policy makers have been very reluctant to do anything about the NESC recommendations made over the years. In a way this is quite surprising when we recall that the NESC is a widely representative body.
Why have politicians and civil servants not acted on the, apparently, so sensible advice being offered by the NESC? I would suggest, four reasons NESC reports are left languishing unimplemented on the shelves of Government Departments. First, NESC recommendations are too generalised, too vague. Second, the NESC contains no politicians. Therefore there is nobody with elective responsibility to implement their recommendations so that the practical difficulties of implementation are frequently just brushed aside and the buck passed. Third, we have too many State bodies which diffuse and dilute responsibility for action on any recommendations made. Finally, we have a national characteristic, not foreign to this House either, of enjoying analysis and discussion but disliking causing offence by making decisions.
To deal with each of those four points the NESC should, in the first place, and as the Law Reform Commission do, produce draft legislation setting out how to achieve some of the objectives they desire. This would certainly be appropriate in regard to their recommendations on subjects such as housing and industrial policy. It is only when we get down to the level of drafting the changes that have to be made in the law that real problems are confronted or even identified. Second, I believe that politicians of all parties should be involved in the deliberations of the NESC and I suggest this can be done through a national forum on 1992 or a special committee on this report, whichever approach is preferable.
Fianna Fáil have argued against this Fine Gael proposal because they see it as the Opposition trying to perform the role of Government —"pretension" I suppose is a word they might apply to it. I disagree with that criticism. Consensus, if we really mean consensus — occasionally we hear a lot from the Government benches about consensus when it suits them, when they want to wrap a protective cloak around themselves to shrug off criticism — must include everybody, particularly Opposition politicians because they have considerable negative power, they may not have positive power but they do have considerable negative power, to mobilise public opinion against particular proposals. The experience of the 1981-86 period illustrates this quite well, when everything was opposed by the then Opposition.
I believe that in that environment of confrontation which the Government create by refusing to accept an offer of consensus from us in the form of an all-party committee on 1992 there is a real risk that political timidity on the Government benches will lead to the indefinite postponement of hard decisions on a whole range of issues dealt with in the NESC report. Indeed these are the very matters which were listed by Fine Gael in the terms of reference for a proposed national forum on 1992. Why are the Government not prepared to take this on?
I would say, furthermore, that inertia in Ireland, and the reason therefore for our failure in Europe, is not confined either to the political arena. There is paralysis in public administration. Why did we have to wait 15 years for an outside body, such as the NESC, to marshal all the strategic arguments about the theory of economic integration and Ireland's position in Europe? Surely, this is exactly the type of analysis which should be done on a routine basis by the Civil Service? This has not happened because the available talent in the Civil Service is dispersed too thinly through too many Departments, agencies, councils and institutions of all kinds. We have a system of administration that would do justice to the United States in terms of its complexity, but we do not have the same volume of talent that they have in the United States. As a result, talented people are in positions where they cannot co-operate with one another. Consequently, we waste efforts in interdepartmental rivalries rather than concentrating our talents. It is no wonder good ideas get lost in the Irish system of public administration.
If we are serious about our preparations for 1992 a Government reorganisation Act is needed to amalgamate Departments and agencies, reduce the number of grades in the Civil Service and improve public service morale by giving rewards as the White Paper on the public service recommended for excellent service by particular public servants. We are a small country and we need to use the talents in our public administration more effectively. We will not be able to respond to the challenge posed in the NESC report unless the Civil Service is reformed and talent used more efficiently. We cannot afford to waste it in the way the present administrative system does.
Finally, we must recognise that hard political decisions will offend some people. This cannot be avoided but once a decision is taken it is often accepted quite quickly unless, and this is where the Government are wrong in refusing to accept an inter-party committee on 1992, the Opposition come along and promise that if elected, they will reverse that decision. Then, the decisions are never accepted. This is why I believe the Government are making a serious mistake in their unwillingness to accept a Fine Gael proposal for a national forum or committee, or whatever one wants to call it, on 1992. Perhaps I would be speaking to more receptive ears when speaking to the Minister who is present in the House, the Leader of the Progressive Democrats. Perhaps he will be able to use his very considerable influence to get a change of view in the Government's own interest on this subject. If we want to guarantee that we do not respond to the challenges of 1992 then on all accounts we should go straight back to the adversarial politics which dogged the progress of this country from 1973 right up to 1986.
Every aspect of Irish life will be in competition with other aspects in Europe. One area which will be particularly in competition is our education system. There is a general view in this country that our education system is the best in Europe and that is a proposition beyond question. I would have to tell the House that that is not the result of research. A recent study was carried out by the educational testing services of the IAEP which is an international body specialising in international testing. They tested the ability areas in science of 13 year olds in a range of areas. The list includes British Colombia, Korea, UK, Quebec, Ontario, New Brunswick, Spain, United States and so on. There were three categories: those who scored well, those who scored in the middle, and those who scored badly in terms of ability in science. Irish-13-year-olds came out in the latter group, scoring least well in terms of ability in science. As everybody knows, science is what drives economic growth, and if our school children are performing badly in terms of scientific ability then that is a serious challenge for the long-term growth of Ireland towards 1992 and beyond. That is something the Government should look at in the context of 1992. In particular they should be looking for European Funds to assist them in dealing with the problem.
There is a provision whereby the EC will give assistance towards education in the secondary sector — not in the primary sector — where it is being devoted to vocational training. I believe that creates an unnecessary bias in our system. If EC money is available only for vocational training in the education system at second level and none at primary level that means the Irish Government would have an incentive to put more money into vocational training at secondary level and to ignore both conventional secondary education, which would include science because it is not a strictly vocational subject, and ignore primary education. I believe the European Community should aid education in general in category one regions right across the board and should not introduce an artificial bias of the kind introduced by this half-baked directive that they produced to try to meet Irish demands.
There are a few other issues that should be referred to and that the Government should deal with in this debate. The council of the NESC said that Irish agricultural policy should give priority to effective land use rather than maintaining the maximum number of holdings. The Government did not say whether they agreed with that proposition. If they do agree with it it means that the number of farmers in the country would be radically reduced. The Government, given that it was an important recommendation of the NESC, should reply to it.
The NESC further said that the direct income aids should be paid by the State to farmers and that this
should give the State as the agent of society at large a say in the use of the land which is occupied by those in receipt of income support. To exercise this say the State will clearly need a well formulated land use policy as advocated above'.
What does that mean? Does it mean that civil servants are going to tell farmers how they should use their land? If it does, it is a very radical departure from existing practise. Do civil servants or experts in Teagasc actually know better than the average Irish farmer how he should use his land? Have we that degree of confidence in the ability of our civil servants and our State bodies to make those decisions? If not, is it wise to give them that power? It is important that that aspect of the NESC report should be addressed head on.
Another matter the Government have failed to deal with is the recommendation by the council that domestic tax reform should concentrate on shifting the burden of taxation away from mobile factors such as labour to immobile factors such as property. Does the Government agree or disagree or do they just not know in regard to that recommendation? If we are having a debate on the subject, the Government should state their position. I would like to know what is the Government's position on that. The only thing the Taoiseach had to say on the subject was to make a sort of sideways attack on the Opposition spokesman on Finance in regard to this issue, but he made no attempt to declare what was his own view on tax reform. I am sure it would be interesting to many, perhaps even to the Minister in the House, to know what the Government's attitude is to this shift in policy. If he does know perhaps he will tell us and if he tells us perhaps he will distinguish between that and the policy of his own party which I think is a policy that is a good deal more straightforward in this matter than what we can glean of the Government's policies from their statement so far.
I could spend a lot of time responding to Deputy Bruton but perhaps I would not get through all I am supposed to say if I do.
There are a few points I would like briefly to advert to. One is the reference to the reasons for the present difficulties in regard to cattle prices. I think the Deputy may well be right, and where I think the contrast between the reality which he has spoken about and all the rude things I am reading in the papers these days might well be highlighted——
A cut of the equivalent of 8p a pound in the export refunds has obviously affected the price of cattle.
Deputy Bruton made a strong plea for the reform of the public service here on lines that I have talked about myself quite frequently for quite a number of years. I think he is absolutely right. We have a huge talent which is underutilised. Many years ago I identified a major part of our difficulty as the jurisdictional disputes that go on between different Departments and agencies in this country and which are fought out with such incredible vigour to the detriment of the real tasks that should concern us. We have talent dispersed widely throughout the service and the various agencies which, if it were brought together, would be hugely beneficial. I certainly agree with the concern expressed by Deputy Bruton because I think that our public administration in this country is surely at least as important as any of the other major resources which we discuss at great length and sometimes with great passion but we hardly ever discuss the public service here and certainly do not discuss it in terms of what it can, could and should achieve if it were given the opportunity to do it.
The NESC have played an influential role in Ireland in recent times in addressing important and complex economic and social issues. Their work on industrial policy in the early 1980s was instrumental in challenging conventional wisdom on the subject. Their more recent "Strategy for Development 1986-1990" underpinned the national consensus to tackle our economic difficulties and led to the successful negotiation of the Programme for National Recovery. We now have the benefit of the Council's authoritative assessment of EC membership. The importance of the report lies in identifying the key issues which arise for Ireland from the process of economic integration within the European Community. It sets out a thought-provoking agenda for this and future Governments.
Ireland has long been a committed member of the European Community but the pace of economic development and integration within Europe was stagnant up to the mid 1980s. This was in marked contrast to the performance of the other two major economic power blocs, the United States and Japan. Recent years have seen a dramatic turnaround within the EC, due to the dynamic of the Single European Act, the steps to complete the single market and the wider movement towards European economic integration.
NESC take the view that Ireland's strategic approach within the EC should be the objective of creating a European economic and monetary union based upon a substantial Community budgetary mechanism which would help to maintain macro-economic balance and achieve economic convergence. I believe that the emphasis on economic convergence — or cohesion as it is now widely known — is correct. It is a sobering reality that after more than 15 years of full EC membership, there has been no convergence towards average EC income levels which stand in Ireland at some 60 per cent of the Community figure. Moreover the enhanced Structural Funds — although significant in absolute terms — are equivalent to less than one half of one per cent of Community GDP.
To deepen European union and support advanced economic integration, the Community must develop policies far broader than the Structural Funds and the creation of the single market. Macro-economic policies must be co-ordinated in order to take the necessary positive steps to lift the performance of peripheral regions such as Ireland. The larger and more powerful Community member states have a common interest with us in this area as their own future prospects are critically dependent on the emergence of a strong and unified Community of Europe if they and we are to compete successfully with the US and Japan in market and technological terms.
I believe that we have matured as an economy in recent years and this has been attributable in no small way to the discipline of EMS membership and the associated imperative of adopting sound economic policies. Notwithstanding our serious problems in regard to unemployment and involuntary emigration, our overall economic performance is improving and our future prospects are good. Can we not realistically aspire to an even better economic and social performance as part of a process of European economic and monetary union? I believe that we can, and for that reason it is important that the current debate on EMU within the Community is not bogged down by taking a strictly monetary-related view rather than considering the wider economic benefits that may arise.
As I have already said, the pace of development within the Community is quickening. The programme for the realisation of the internal market is already half completed and the momentum to achieve the target date of 1992 has increased. Over 50 per cent of the 279 specific proposals involved have so far been adopted. Progress has been satisfactory so far in capital liberalisation, standards, deregulation of air transport and road haulage, recognition of higher educational diplomas and company law. Progress has been slower in the areas of frontier formalities, animal and plant health, free movement of people, intellectual property and particularly, in tax harmonisation.
Ireland's Presidency of the European Community in the first six months of next year will present us with the opportunity to give an added impetus to the internal market process. But several sensitive areas have yet to be settled. As a result our Presidency of the Community in 1990 may prove both for Ireland and for Europe to be the most important of our Presidencies. Our task in heading the Community will not be easy but our approach will be positive and I am confident that we will make good progress.
One of the most sensitive sectors is tax harmonisation. We have, of course, legitimate concerns about the impact of proposed harmonisation of VAT and excise rates on the flow of Exchequer revenues and this rightly has been at the forefront of our position in Community negotiations. We need at all times, however, to strike a balance between the Exchequer interest and possible wider economic benefits. The Commission's new approach to this dossier which incorporates the prospect of greater flexibility in setting tax rates reinforces the need for us to move in a phased and orderly way towards a harmonisation with UK rates as part of an overall harmonisation process.
In regard to personal taxation, the current phase of European integration greatly increases the urgency of reforming our domestic tax system. Otherwise, our skilled workers will increasingly move to what we call lower tax regions but which really are normal tax regions, as labour mobility increases after 1992. This is one of the reasons my own party placed such emphasis on this matter in the four year programme for Government and that we are jointly agreed with Fianna Fáil on a programme of pro-jobs tax reform leading to a 25 per cent standard tax rate and a single higher tax rate by 1993.
Negotiations on Ireland's contribution under the enhanced Structural Funds have been virtually completed and, on balance, constitute a satisfactory outcome for the country.
The Community support of over £3 billion which we will eventually secure places Ireland, from an EC point of view, on top of the recipient list. The Structural Fund spending per capita proposed for Ireland is the highest of all the priority regions in Europe and provides an irrefutable answer to criticisms of the final package negotiated. The National Development Plan strikes a good balance between infrastructural and developmental expenditure and I am confident that the money will be effectively used to further national objectives. For example, the National Operational Programme for Industrial Development, for which my Department are responsible, envisages a marked increase in investment in marketing and technology, in line with broadly accepted priorities for future industrial development. However, we must continually strive to ensure that the policies and programmes put in place are the most appropriate to Ireland's developmental needs and that they are not driven, as has too often been the case in the past, simply by the availability of EC support.
In so far as the regional dimension to the Structural Funds is concerned, the Government are committed to maintaining an ongoing link with the regional groups already established and they will have a role in monitoring the implementation of the operational programmes and advising and commenting on them. On a broader level, my own party believe that if in the future, we wish to have a more enlightened attitude towards planning at a subnational level, we need to have fewer regions, better structures and firmer goals to make the process of regionalisation more effective. Equally it will become desirable in the future for the regions in this country to develop stronger powers of initiating proposals.
Should they have power of taxation?
It does not follow. They do not need it, any more than some of the most successful regions in the Community have any specific power of taxation at the moment.
In regard to industrial policy, the NESC report concludes that Ireland has since 1973 specialised out of the industrial sectors where the larger indigenous producers were previously found, into a narrower range of overseas dominated sectors. At the same time much of the employment growth in manufacturing was in small scale activities; this runs against the general trend of concentration in larger units which usually follows integration. NESC believe 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. It points out that Ireland is not such a region. Consequently NESC recommend that scale and innovation should be important elements in Ireland's industrial policy. The council stresses also the overriding importance of maintaining a favourable overall economic environment and its pivotal role in promoting industrial growth, investment and employment.
While I would agree broadly with the NESC analysis, I think it is important to record the significant improvement in industrial performance which has taken place over the past two and a half years. Annual industrial output levels have been growing at a rate of 12 per cent. Industrial exports continue to do well and there is evidence that they are more broadly based at sectoral level. Profits are recovering within industry and the CII estimates that investment in equipment could grow by up to 20 per cent in 1989. Direct employment in industry is growing for the first time since 1980 and, according to the ESRI medium-term review, will accelerate over the next five years. This is confirmed by yesterday's figures from the CSO Labour Force Survey preliminary results for April 1989.
We have made considerable progress in improving industrial competitiveness as well, through controlling costs generally and, in particular, in reducing inflation, interest rates and charges by the major public utilities. In regard to pay, the consensus in the Programme for National Recovery is of paramount importance and has brought real benefits to all sections of society, including workers, employers, the unemployed and those on social welfare. The advent of 1992 should, in general, enhance this favourable environment through cost reductions arising from the dismantling of trade barriers, improvements in our transport infrastructure and more open public procurement.
While I accept the overriding priority to build up our own indigenous industry, I believe that our overseas owned manufacturing sector is now a vital and permanent part of our economy, directly employing over 80,000 people and spending a total of over £3 billion in 1988 in the Irish economy. The overseas sector has brought improved management practice and skills to Ireland and has introduced us to new technologies. The advent of 1992 is opening up new opportunities for overseas investment in Ireland as EFTA, US, Japanese and other Far-Eastern firms are positioning themselves for the reality of the Single European Market. I believe that we are particularly well placed to capture a disproportionate share of that mobile investment as is evidenced by major recent project announcements such as Intel and Motorola from the US and Brother and Fujitsu Isotec from Japan.
What is important to grasp is that the direct State support provided to encourage such overseas investment is critically appraised on a cost-benefit basis and in terms of jobs actually delivered on the ground. Moreover, safeguards are now included in virtually all grant agreements which protect the State's interest in the event of closure or failure to deliver the promised performance.
Such State support is not at the expense of support for the development of the indigenous sector. This is a popular misconception. Already the State industrial promotion agencies have a range of schemes and programmes to assist Irish firms to meet the essential requirements for international growth that is excellence in marketing, management, product development and technology. Such schemes are constantly being changed and adapted in the light of policy developments. If we have failed in the process of "indigenous industrialisation" as NESC puts it — and I would agree that our performance leaves much to be desired — I doubt if it has been for a lack of agencies, programmes and State supports and, in fact, au contraire is the fourth.
I agree with NESC that scale is an important issue for Irish-owned industry but the appropriate policy response will need to vary from case to case and from sector to sector. In the case of the food sector, for example, economies of scale in the marketing and production areas are clearly of vital importance. The Irish dairy and beef industry is changing dramatically in anticipation of European needs through mergers and acquisition within Ireland and worldwide. Some progress has been made in the pigmeat sector as well where, as a result of restructuring, the scale of operation is now much larger than before.
While many other Irish companies are small by European standards, I believe that they can nonetheless prosper in an enlarged Europe through achieving excellence in products, services or particular market niches. Our efforts in the context of industrial policy will be geared towards encouraging indigenous companies to think in strategic terms with the aim of increasing export sales to build up to large companies generating sufficient cash to invest in new product development and innovation. Agencies and programmes will be directed towards that goal. Another way to successfully tackle scale is for firms to put in place partnerships with other European companies involving sub-contracting, licensing, technology acquisition, joint ventures or outright acquisition.
NESC take the view that there is a strong case for attempting to inject an innovation orientation into Irish industrial policy. This view is based on the well documented lack of innovation in firms located in peripheral regions of the Community and on the growing Community interest in research and technology.
It is no coincidence that these two factors are spoken of together. Innovation, after all, can be defined quite simply, as a firm's ability to design, develop and manufacture the right product at the right price. The vast majority of new products today are themselves high-tech in nature. Without a well developed technology base, innovation in industry is almost impossible. The Government have already taken significant steps to address the technological needs and shortcomings of Irish firms through the science and technology development programme operated by my Department. This programme contains initiatives to develop specific technologies to the marketplace in university-industry centres and to transfer those technologies through joint projects, technology audits and placement schemes.
The report also points out that management have a crucial role to play in identifying the opportunities for innovation and concludes that industrial policy should, therefore, take steps to enhance management ability in firms. The company development programme which is operated on an interagency basis is one important initiative to develop the strategic management capability of medium-size Irish firms. A scheme of management development supports is available also.
I have said earlier that under the national operational programme for industrial development, considerable emphasis is being placed on developing the management, marketing, and technological capability of firms.
Taken together these measures form the basis of an innovation-orientated industrial policy recommended in the report. We will continue to build on what we have done to date. Ultimately however the innovation process is two-sided. Before determining his capacity to satisfy the opportunities, the entrepreneur must first identify the market opening. While the State can play an important role in the downstream aspects of the innovation process, the first steps are very much the province of the individual.
In this regard, the open, outward looking environment, which will be fostered by the completion of the internal market should act as a stimulus to innovation in the peripheral countries. The various industrial policy measures which we have put in place and which will be strengthened under the enhanced Structural Funds will provide strong support for those who have the willingness and ability to exploit them.
Central to the Government's strategy for developing the indigenous sector is the creation of a strong marketing capability within Irish industry. The focus is to prepare industry for the competitive single market by closing the gap that exists between Irish firms and other Community firms in terms of marketing skills, information and organisation.
Does the Minister believe all this stuff?
Yes. The structure of indigenous Irish industry puts it at a severe disadvantage. For example, nearly two out of every three Irish internationally trading firms employ fewer than 50 people, while only 6 per cent of such firms employ more than 300 people. In addition, the Irish indigenous sector is relatively new to international trading with about 50 per cent of firms having commenced exporting only since 1980. The picture of disadvantage facing Irish SMEs is reinforced by figures showing small firms having a lower percentage of full-time sales-marketing executives overseas and being less likely to be involved in product development than larger firms. For reasons of history, proximity, language and culture, the UK has been the major target of Irish firms. However, even there very few Irish manufacturing companies have established a sales or distribution office. In the rest of continental Europe, our absence is even more pronounced. This lack of overseas representation severely limits the capacity of firms to participate fully in international markets and to grasp opportunities when they arise.
We cannot afford to continue to ignore the reality of the commercial environment in which we find ourselves. The opportunities of the internal market must be exploited to the full and we will only be capable of doing this if each individual firm adopts a market-led approach to its development. This requires detailed planning and research into the market; its requirements, its trends, the competition and the firm's own capabilities.
The Government recognise the major task which firms must face. However, the performance of our indigenous industry in international export markets over the last two years gives some reason for confidence in our capacity to meet the challenge.
In the National Development Plan, a series of support measures were outlined with the objective of helping Irish SMEs to increase their export performance from £2.5 billion in 1988 to £4.5 billion by the mid-nineties. This target forms part of the wider objective of doubling Ireland's share of imports by other EC countries from 1.2 per cent in 1988 to 2.4 per cent by the mid-nineties. In order to help industry to achieve those targets, it is intended to substantially increase the State's input into the marketing development area both domestically and overseas. Already, in 1989, additional funding was provided to CTT to introduce a new regional marketing-international linkage programme. Under this programme selected regions in Europe which are displaying exceptional growth potential are being targeted with the objective of identifying suitable opportunities for Irish firms. The thrust of the action is general business development covering the full range of possibilities from the sale of existing Irish products, through reciprocal marketing and distribution arrangements, to joint projects in the region selected or in third markets. Areas already targeted are Catalonia and Milan-Turin and these will be followed by other selected regions.
The removal of barriers to trade in the run-in to the single market is accelerating the pace at which businesses are restructuring in the Community with the object of enhancing their international competitiveness. Such concentration of industrial and economic power has, on the one hand, beneficial effects, for example greater efficiencies resulting from economies of scale. On the other hand, greater concentration of economic power reduces the number of players in the market place, and increases the possibility for monopolistic and collusive behaviour with detrimental effects on the consumer.
NESC have stressed the need for a close relationship between mergers policy and industrial policy. The issue is whether Irish owned companies developed from start up over a period can make the fundamental leap in scale necessary and, if not, whether they should be taken over. It is a fair question as to whether more could be done to maintain indigenous control of such companies, but it is unrealistic to insist that a change of ownership should never occur. There will certainly be cases where new external ownership will bring additional resources or new market opportunities to a company whose development would otherwise be constrained.
Until now the EC Commission has rarely applied its powers under Articles 85 and 86 of the Rome Treaty in mergers. This is principally because of the absence of clear guidelines. Against this background and the fact that merger control has gained increasing prominence in the context of the Single Market, extensive discussions have been held over the past 15 months by the EC Council on the Commission's proposal for the control of mergers and take-overs. This proposal provides for a regime whereby all mergers and take-overs having a significant effect on intra-Community trade, are appraised by the Commission with a view to establishing whether they are compatible with the Common Market.
A welcome consensus is now emerging among the member states on the need to reach early agreement on this regulation. Businesses generally need legal security as the number of cross-border mergers increase, and it is now accepted that this can only be achieved through the creation of a Community-wide legal framework.
For consumers the effect of the regulation may not be felt immediately, but because it is aimed at preserving and strengthening competition in the rapidly evolving European Internal Market, it shall and must operate in their favour in the longer term, and particularly in a situation where a single company or a small number of companies have market dominance.
New legislation in the area of competition policy is necessary to bring about conditions which will enable market forces to promote efficiency and pass the benefits on to the consumer. The Programme for Government recognises this and contains a commitment that the required legislation will be brought forward. The existence of restrictive practices and anti-competitive conduct in many sectors of industry, trade and professional services impose heavy and unsustainable cost burdens on the economy.
A major defect in current legislation is that there is no general prohibition on anti-competitive practices. At my request, the Fair Trade Commission are urgently looking at how provisions on a general prohibition system, similar to those of Articles 85 and 86 of the Rome Treaty, should be incorporated into Irish legislation. In parallel my Department are working on the preparation of the necessary implementing legislation.
It is not a question of considering whether we should go this route but rather how. Those sectors of the Irish economy which are involved in trade within the Community, as distinct from purely domestic trade, are already affected by Articles 85 and 86. There is no good reason to shelter the other parts of the economy from this discipline. Competition is a spur to efficiency and its absence is detrimental to economic development.
I believe that NESC have done us a great service in producing their most recent report. I have no doubt that it will continue to provoke widespread debate on the key issues which it raises but, more importantly, I believe that it will inform future policy developments. For my own part, I am arranging for the key industrial policy issues to be fully examined in the context of my Department's Triennial Review of Industrial Performance which is due for publication early next year. In Ireland, there has been far too much emphasis on squeezing funds out of Europe, something at which we have been particularly successful. What we need much more is to focus on our long-term requirements within Europe and to develop the policies necessary to be at the forefront of the exciting and profound changes which are currently taking place.
The NESC report did not have the opportunity of considering what effect the profound changes now happily occurring in Eastern Europe might have on the future development of the Community of Twelve. I personally hope that, notwithstanding their significance, they will not divert the existing Community from the path on which we are now set. It is in the interests of those in Eastern Europe whom we wish to encourage that the existing Community should become more cohesive and more united. It is from that position of strength that we can best help and nurture newly emerging democracies in the eastern part of Europe. After all, that is the fundamental purpose of the Community; its economic development is simply the best and most effective means to that end.
I avail of this opportunity to congratulate Deputy O'Malley on his appointment as Minister for Industry and Commerce. It is the first time we have been face to face in the Chamber.
Thank you.
I wish the Minister well in the tasks ahead of him. I, like Deputy O'Malley, have just taken over as spokesman on Industry and Commerce. It is very evident that there is need for dramatic change in this country if we are to tackle the main problems facing us, particularly in the area of unemployment. The National Economic and Social Council should be congratulated in laying out the stark reality of the choices which face us for the future. Whilst the group who put together this report are not elected public representatives, they represent various facets of Irish life. The question always raised in relation to such reports is "what are the politicians going to do about it?" I sincerely hope our discussions here will be only the beginning of a process of teasing out the challenges which face us in this report.
We have to decide what type of society we want, what type of role we intend playing in the future in the greater European Community and whether we are to adopt the begging bowl attitude all our lives or a positive approach in terms of recognising that this market of over 300 million people affords us a tremendous opportunity if we are prepared to grasp it. Basically this is the challenge we face.
We have grown up as a republic used to doing things our own way, going about things in a very casual way on many occasions and treating our agricultural industry very often as a sort of hobby, a form of existence for a family, without getting down to developing a strong agricultural industry. The choices facing the Irish farmer in this report are quite enormous. Are we prepared to allow the State to intervene and tell people how to use their land in the future, paying the farmer a form of basic income to subsidise his income from agriculture? These sorts of challenges go beyond making speeches about what is contained in this report.
We had a report not long ago represented by the Commission on Taxation. The commission suggested ways and means of changing our tax structures. However, when those suggestions are highlighted by commentators the standard political response is, "we cannot make one change; we need to reform the whole system". Since I was first elected to this House I have been asking when it is proposed to reform the entire tax structure. What is the point in commissioning such reports if we are not prepared to make changes so that the benefits can be passed on to the people we represent?
When the NESC report was published Fine Gael, in their response, suggested that the Government establish a national forum for 1992. That proposal was made in good faith and it was an indication that we recognise that we can block changes proposed by the Government by drumming up opposition to them. That is a problem that Governments have had to face for many years. When in Government we had to listen to criticism from the Opposition about measures we took to improve the overall scene. The Opposition did not accept that there was a need to cut public expenditure and the main party in Opposition told the public that there was no need for the cuts. They accused us of pursuing Thatcherite policies and of ignoring the plight of many people. We were told that we were more interested in balancing books than in looking after people.
We are all aware of how difficult it was to get the public to accept that there was a need to cut public expenditure. It was not until 1987, when we were in Opposition and when there was a form of consensus between the Government and the main Opposition party for two years, that the community accepted the need for change. I challenge any Member to deny that the improvements that have taken place in the economy could not have taken place without consensus politics. Those who are honest will admit that. I accept that the Government from 1987 to 1989 had the difficult task of implementing harsh decisions.
I accept that under our structures the Government are the only people who can implement policy changes, but they need help. The challenges facing us cannot be met by the Government on their own. It is for that reason that Fine Gael have suggested the setting up of a national forum for 1992. It should consist of representatives of all political parties, of industry, the trade union movement and the farming community, the sectors that will be involved in implementing the changes that are necessary if we are to compete with others in the European market. We will have to make every effort to create employment, to keep our young people at home and become a real player on the European scene.
Are the Government prepared to face that challenge? The debate yesterday and today will be rendered irrelevant if the Government do not take action in regard to the NESC proposals. It is not true to say that the Opposition are interfering in the work of the Government. It was a load of nonsense to make that suggestion. We have all been tripping around for the last 15 years doing things in a haphazard manner and not having a proper approach to industrial development, our social policy and our agricultural industry. The NESC report shows that in the last 15 years we have stood still. The report highlights the value of the CAP but that is under threat. What in God's name have we done with all the money that came to us through the CAP in the last 15 years? Can we point to where that money has been invested? Can we say that as a result of the CAP we have made many changes in the agricultural industry? Can we point to job opportunities for our school leavers and graduates as a result of that policy? In fact, nobody knows where the money has gone to. There is no doubt that we received a lot of money but there has not been a dramatic improvement in that industry. Unemployment continues to rise and emigration is at a disgraceful level. As politicians we have failed miserably to give the proper leadership and encourage the creation of jobs. We have failed to build up a society that we can all be proud of.
I switched on my television by accident last night and watched the BBC News-night programme. I watched an interesting report on a famous photographer who spent many years in Vietnam during the war. That person, who has returned to London, said he was upset to see the big increase in the number of people sleeping in doorways or in broken down warehouses in the back streets of London. He was prompted to ask, "What sort of a society are we living in". He has used his tremendous skill as a photographer to highlight the failure of modern society to provide every human being with a decent standard of living. He presented a wonderful series of photographs which were a true illustration of life in London for thousands of people. Unfortunately, a high percentage of those people come from Ireland.
That programme prompted me to ask, "What in God's name are we about? Do we want a society where a few will have plenty but many will not have anything"? It is time that politicians realised what their job is. We may argue with each other, as is the way in any democracy, but we have an obligation to agree on certain basic principles one of which should be that every human being brought into the world should start with an equal chance. Every child should have an opportunity to get a decent standard of education. All our people should have an opportunity to make use of the skills and talents they were blessed with and helped by our education system, they should be able to obtain gainful employment. I accept that some people have more ability than others, that some have a talent to create wealth and that, unfortunately, some people for various reasons will not be as successful as others. However, there are basic principles that all political parties can share, but there are still basic principles that every human being is entitled to some sort of decent standard of living and the chance to use his or her talents and not spend life walking the streets in a degrading situation of being unemployed for the past six years with no prospects for the future.
In order to pursue the sort of challenges this report contains we must start with ourselves and have the structures that will enable proper debate to take place as to whether we want to face up to these challenges and decide what type of society we want and what structural changes are needed to bring it about. Of course, if you have such a forum there will be differences of opinion between perhaps The Workers' Party, the Labour Party, Fine Gael, Fianna Fáil, the PDs and Independents. There are differences of opinion, but if we could even agree on some basic principles that would be a beginning. The system we are trying to operate at the moment is not capable of bringing about the changes required here to allow legislation to be brought in and passed quickly. Changes should be made efficiently and effectively so that we do not have to wait two or three years for legislation to come into the House.
We must change from the way we are more concerned about who spends the Structural Funds than how they are spent; the great debate is who should spend them, not how they should be spent. Of course, we all like to get our hands on money and deliver good news, but from this report it is quite evident that some of the proposals we have are totally contradictory to what is in the report. Here we are setting out looking for Structural Funds to spend in areas where the NESC are telling us that is not the way we should be spending them at all. We are insisting that money is going to be spent and they are telling us in this report for God's sake not to do it that way. The debate has been about who is going to spend the money.
I would like to touch on the blockages in relation to employment. Again, the figures are all available in the report and I will not waste the time of the House by quoting them. They are all there for everybody who has an interest in this report. The report has identified serious structural deficiencies in order to bring about certain changes that are required if we are serious about looking for full employment for our people.
I am sure the public are blue in the face listening to politicians talking about the need for tax reform and are wondering when we are going to do something about it. I speak here as somebody who is in business and employs people and I can speak as someone who once was in receipt of a PAYE salary. I know what is happening out there in the marketplace. As long as we have the taxation system we have we just will not get the extra productivity, commitment and enthusiasm for the deveopment required at this point in our history. If you talk to any employed person and ask if he will work overtime and whether he is prepared to come in on Saturday and work hard and help us achieve our targets, perhaps he will do it for a short while but when he gets his pay packet and looks at the net take-home pay he will say to himself that he has wasted his time, he spent his Saturday away from his family, worked six days a week and he will not do it any more. That is the simple language spoken in the marketplace. People just will not produce and expand as long as that situation remains.
If we are talking about looking ahead and thinking about competition in Europe, part of our problem is that instead of looking for ways of producing more, working harder and getting a fair reward for effort, we are now talking about reducing the working week. That is the latest. Then we look at the Far East and ask how they are doing it. They are doing it because they set about, through their proper structures, to develop their economy and give people rewards for what they do. People in the Far East do not work five days a week; they work five and a half days a week. They do not get four or six weeks holidays; they get two weeks holidays. I am not saying we should all revert to two weeks holidays. Like anybody else, I enjoy my holidays, but we are trying to produce a standard of living and to compete on industrial terms with these countries which have a different system, a different method of reward and a different approach to life. Then we wonder why we cannot export our goods to these countries, why we cannot avail of their markets and why our country is being flooded with their imports. You do not need to be an economic genius to work it out. The basic cost of the product is far less there than it is here, and we are consistently going on the line of less work, more pay, slow to change, afraid to tackle the reality of tax reform and to face up to it.
We on this side of the House in all good faith on numerous occasions said to the Government of 1987-89, "If you want to set up an all-party committee to examine tax reform Fine Gael will be the first people in there to participate". The response was, "No, that is the business of Government; we are interfering". What did Government do since 1987 to date? Precisely nothing in relation to tax reform. Next year we will be facing into the local elections. The NESC report states clearly that we need a property tax. I do not know whether property tax is the real answer, but that is what they are saying and this is the report we are debating. The Minister, Deputy O'Kennedy, would appear to be the next speaker. Since they have rejected the offer of the Opposition Party to participate in an all-party committee to deal with tax reform and our suggestion for a national forum for 1992 and they regard our suggestions as an interference in Government, and in view of the fact that they are now accepting total responsibility themselves, perhaps they will tell us whether they are going to introduce a property tax. What proposals have we for reductions or a reform of the taxation system? It is grand to be able to say we will bring down income tax next year but bringing down income tax next year is not the real answer to this problem. It is not a question of whether you pay tax at 56, 54, 35 or 33 per cent, it is a question of recognising effort, of having a structure which provides that if you do that extra bit our taxation system will not take as much from you, because it is a bonus structure or a profit-sharing structure, as if you were just getting an increase in salary.
We could start in our own commercial State bodies with this one. There is no reason on this earth why BTE, the ESB, Telefís Éireann or any of the commercial State bodies should not have profit-sharing and bonus schemes introduced for employees provided those State bodies achieve certain targets. There is no reason those bodies could not produce a tremendous amount of wealth for this country. They have the personnel, the skills and the professionalism available in industry. We have engineers who today are working in one of the largest multinational telecommunications companies in the world and where did they come from? The engineers, the people chiefly who brought about that situation of that company, are ex-P and T engineers, ex-employees of the State. These people go to private industry and build it up. They are working for multinationals but, unfortunately, all the profits go out of this country. Why can we not have the same in BTE and the ESB? Why must we wait until they go to one of the multinationals before they can use their real talents? Their ability and talents are recognised there and it is our system that prevents those talents from flourishing.
Debate adjourned.
Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.
I wish to raise on the Adjournment the confusion in the operation of the higher education grants scheme as it affects students attending the University of Limerick. These students are required to produce letters of grant approval from the county council to register in the college on Friday of this week but these letters have not been issued by at least one county council in the region.
I will be in touch with the Deputy concerning that matter. It is unusual to raise matters at the commencement of Question Time. I would much prefer if Deputies wishing to raise matters would wait until the conclusion of Question Time.