Estimates for Public Services 1990 and Public Capital Programme 1990: Motion.

I move:

That Dáil Éireann takes note of the 1990 Estimates for the Public Services (Abridged Version) and of the 1990 Summary Public Capital Programme.

The publication of the 1990 abridged Estimates and Summary Public Capital Programme on 15 November last affords Deputies the opportunity for the third successive year of having an early debate on the Government's spending plans.

In 1987 and 1988 the abridged Estimates volume and Summary Public Capital Programme were published in advance of the resumption of the Dáil for its autumn session. This year publication was slightly later because of the new system for the European Community's Structural Funds. This slightly later publication will not of course, as Deputies will appreciate, have any significant practical consequences. Spending Departments and agencies have ample time in which to plan their 1990 spending programmes within the allocations decided by the Government.

The broad economic strategy of the Government was set out in the Programme for National Recovery in 1987 and in the National Development Plan, and was further articulated in the Programme for Government in the National Interest 1989-1993. That strategy comprises a number of inter-related key elements. The main elements are: the pursuit of budgetary and financial policies designed to progressively reduce the constraint on economic progress imposed by a high level of debt and its associated debt-service cost; the firm linking of the IR£ exchange rate to the European Monetary System; the achievement and maintanance of a low rate of domestic inflation, to the benefit of our international competitiveness; the reform of the taxation system in order to stimulate growth, and to promote employment and equity; and the reorientation of sectoral policies to increase their effectiveness and their contribution to the creation of sustainable employment.

The fundamental objective of our approach is straightforward. It is to achieve strong, but sustainable, economic advance, leading to increased employment and higher real incomes. The strategy is the right one. The evidence of this is already clear. That is why it remains in place and was confirmed as the basis of Government policy in the documents I referred to earlier.

The performance of the economy since 1987 shows the success of the Government's economic and budgetary strategy. Growth, as measured by real GNP, has increased at an annual average rate of almost 3.5 per cent over 1987 and 1988. A growth rate of about 4 per cent is forecast for 1989. This contrasts sharply with complete stagnation from 1982 to 1986.

The volume of manufacturing output grew by 11.5 per cent in 1987, followed by growth of over 12.5 per cent in 1988, and a somewhat similar performance is expected again this year. This is in marked contrast to a growth rate of under 3 per cent in 1986 and an annual average rate of 5.5 per cent for the 1980 to 1985 period. The recovery in manufacturing output is broadly based, with the traditional sectors making a contribution as well as the high technology sectors. Construction output is recovering strongly after a long period of stagnation and decline, and is forecast to grow by over 6 per cent in 1989.

The volume of exports of goods and services grew at an average annual rate of over 11 per cent in 1987 and 1988. Exports are forecast to grow by 12 per cent in 1989. For the first time ever the trade surplus topped IR£2 billion in 1988 and a repeat performance is forecast for this year. Both 1988 and 1989 have been excellent years for tourism, with growth rates of around 13 per cent per annum in real expenditure by foreign tourists.

This year, the current account of the balance of payments will be in surplus for the third consecutive year, a sequence that has not occurred in over 40 years and then only in the unusual years of the Emergency when world trade was disrupted. Over the three year period 1987 to 1989 the surplus is estimated to have averaged over 1.75 per cent of GNP. From 1980 to 1986 the annual deficit in the current account averaged over 8 per cent of GNP. This gives an indication of the magnitude of the recovery.

The recovery is not confined to the manufacturing and exporting sectors. It is also reflected in consumption and investment. Personal consumer expenditure was stagnant for the first half of the eighties. In 1988, it grew by over 3 per cent and is forecast to grow by over 4.75 per cent in 1989. Public Sector consumption, on the national accounts basis, has fallen in real terms since 1987, as part of the process of budgetary correction.

During the recession of the eighties, investment suffered very badly with the volume of fixed investment declining by an average of almost 3 per cent per annum from 1980 to 1986. There is a major boost in investment this year, with a growth rate of over 8 per cent forecast. Investment in building is set to grow by over 6 per cent. Economic recovery and restored business confidence are both combining to stimulate private construction. Machinery and equipment investment, the basis of industrial expansion, is showing accelerated growth, with a volume increase of 3 per cent in 1988 being followed by a forecast increase of about 10 per cent in 1989. Real final domestic demand, which grew by almost 1 per cent in 1988, is projected to grow by 4 per cent this year.

The latest labour force survey indicates that the strong upward trend in private non-farm employment, evident in the previous survey, continued through 1988, although performance on employment overall was dampened by the necessary reductions in the public sector. In the 12 months to April 1989, there was a nett gain of 6,000 jobs in manufacturing. Private services employment again expanded strongly, mirroring the favourable developments in the economy. In 1988 the total number at work is estimated to have been at least 5,000 greater on average than in 1987. In 1989, non-agricultural employment is projected to be up to 13,000 higher, on average, than in 1988, reflecting strong job growth in the private sector. Over the two years, 1988 and 1989, private sector non-agricultural employment is forecast to increase by well over 30,000. This is most encouraging. It reflects the improvement in general economic conditions, the continued growth of exports, the strengthening of consumer spending and investment and the confidence which our policies are creating.

Another very encouraging feature of the employment picture this year is the decline in notified redundancies. For the first ten months of the year they were 41 per cent down on the corresponding period in 1988. Registered unemployment increased rapidly during the early eighties and peaked in 1987, when the annual average for the live register was over 247,000. In 1988, the average annual decline in the live register was 6,000 and an average decline of about 10,000 is forecast for 1989. On a labour force survey basis, unemployment has fallen by an estimated 29,000 between April 1987 and April 1989.

Another outstanding success of our economic strategy has been the moderation in inflation and the associated improvement in competitiveness. Consumer price inflation fell to just over 2 per cent in 1988, the lowest level since 1960. Largely as a result of international pressure on prices, over which we have little control, inflation this year will average about 4 per cent. But our inflation rate will still be below the European Community average and will be well below that of the UK, our main trading partner. Our low inflation rate and the moderate wage increases, that are part of the package agreed between the Government and the social partners, have given a major boost to our international competitiveness. Relative to those EC countries that account for the bulk of our trade, there was a gain in cost competitiveness of almost 3 per cent in 1988 and further gains are expected this year. Improved competitiveness is vital to growth and the expansion of sustainable employment in our economy.

Hourly earnings of manufacturing workers increased by 4? per cent in 1988 and are expected to increase by over 3½ per cent in 1989. When the tax concessions granted in the 1988 and 1989 budgets are taken into account, the real take home pay of workers has increased. This shows the benefits to workers of the Programme for National Recovery.

Irish interest rates have fallen dramatically relative to rates abroad since March 1987. Notwithstanding the interest rate increases this year, caused mainly by higher international rates, the differential between key Irish and UK interest rates has improved by 6.5 percentage points since 31 March 1987. For example, in March 1987 the UK three month interbank rate was over 3¼ per cent below the corresponding Irish rate; the UK rate is now 3¼ per cent above the Irish rate. During this period the differential with German rates has also improved by about 5¾ percentage points.

This dramatic improvement is a reflection of the much better management of the Irish economy during the period. A greatly reduced borrowing requirement, a surplus in the current account of the balance of payments, low inflation and a falling debt-GNP ratio have all combined to create confidence in the value of the Irish pound; confidence is the key requirement for lower interest rates.

The Government's success in managing the economy is also reflected in control of the national debt. In our 1987Programme for National Recovery we set ourselves the target of stabilising the national debt-GNP ratio by 1990. We achieved our target ahead of schedule, with the national debt-GNP ratio by end-1988 showing a marginal reduction on the previous year.

Our medium-term fiscal policy set out in the National Development Plan set a minimum target of reducing the national debt to 120 per cent of GNP by 1993. The emerging end-1989 national debt-GNP ratio is set to produce a very substantial reduction on the end 1988 ratio of 131 per cent. Therefore, we are already well on the way towards achieving our target ratio of 120 per cent of GNP.

We should not let this progress obscure the underlying reality. Our debt remains far too high, and it is out of line with other countries. It is still rising in absolute terms and this is reflected in the cost of servicing it. There can be no questioning the good sense of continuing the emerging downward trend in the debt ratio. This is one of the keys to freeing scarce resources from debt servicing to more productive purposes.

The success of the Government's economic and budgetary strategy in 1987 and 1988, proved that the momentum should be maintained in the 1989 budget. We have shown for once and for all that an increase in investment, growth and jobs can, and does, go hand-in-hand with improvement in the public finances. This year's budget, therefore, provided for a further reduction in Exchequer borrowing requirement at £1,055 million or 5.3 per cent of GNP, compared with the underlying borrowing of 6 per cent of GNP in 1988.

While budgeting for lower borrowing, we were still able to strengthen the emphasis in our strategy on employment and developmental aspects. In particular, the budget made significant further reduction in the burden of personal taxation, so as to improve incentives to work and facilitate further moderation in pay which is essential for job creation; and made an important start, even in advance of the conclusion of EC negotiations, in using the assistance of the enlarged Structural Funds to build up the economy's production potential. A further objective of the budget was to help the position of those on social welfare and low incomes. This we did with the introduction of a major package of welfare measures.

I want to underline the significance also of the reductions in income tax rates which were made in the budget. The reduction in the standard rate from 35 per cent to 32 per cent was the first for 20 years. This was the first step on the road to achieving a standard rate of 25 per cent by 1993. Overall, despite the constraints we face, the income tax reliefs given in the 1988 and 1989 budgets will have a cumulative cost of over £700 million over the period of the Programme for National Recovery—nearly three times the amount promised in the programme. This highlights the seriousness of the Government's commitment to the programme, which has played such a central part in all the progress we are making.

It is now very apparent that the budgetary outturn this year will be much better than was envisaged at budget time. The trends reflected in the mid-September Exchequer returns indicated that the level of borrowing by the Exchequer this year would probably be of the order of 3½ per cent of GNP as against the budget estimate of 5.3 per cent. Developments since then suggest that borrowing could be even lower than this, possibly around 3 per cent of GNP. This will mean that the underlying Exchequer borrowing will have been reduced to less than one quarter of its 1986 level in the course of three years, from £2,100 million in 1986 to a projected outturn of just £600 million this year; a reduction in our borrowing requirement of £1,500 million. This ranks as a truly major turnaround in the public finances and lays an excellent foundation for further progress.

The procedure followed in settling the 1990 Estimates was the same as in the case of the 1988 and 1989 Estimates. The Expenditure Review Committee was reconstituted in the early summer. All Ministers were asked by the Taoiseach to look at ways in which their Departments' spending could be curtailed in 1990. There were discussions between the committee and the secretaries of all Departments, which led to a series of memoranda being put to the Government on which decisions involving substantial savings were taken before the end of July. During October, the Government went through the 1990 spending proposals of Departments in detail.

In settling 1990 expenditure allocations, the Government were determined that the level of expenditure would have to be consistent with continuing downward pressure on the 1990 Exchequer borrowing requirement. There could be no question of undoing the rapid and hard won progress that had been made since 1987. At the same time, however, the Government were conscious of the need to make additional resources available in selected priority areas. Our task was to meet these joint aims.

The Abridged Estimates Volume and Summary Public Capital Programme show that this is exactly what we have accomplished. Exchequer funded net non-capital supply services show an increase of just 0.4 per cent on the 1989 post-budget Estimate, while overall Exchequer funded non-capital and capital spending is up just 1 per cent on the corresponding 1989 figures. This level of increase is considerably below the projected inflation rate for 1990 of about 4 per cent. Within this low level of overall increase we have directed additional resources to the health sector and to the security sector and have modestly boosted the Exchequer funded Public Capital Programme.

Despite this limited increase in Exchequer funded spending as compared with 1989, I am confident that total Exchequer expenditure as a percentage of GNP will continue its downward trend in 1990. In 1986 the ratio of Exchequer expenditure to GNP stood at 53 per cent and it has fallen consistently since then to a budgeted figure of 43.5 per cent for 1989. Based on budgetary developments in 1989, which I have already outlined, the outturn is likely to be somewhat lower still.

The 1990 non-capital allocation for health is almost £98 million higher than the budget provision for 1989. The 1990 allocation includes increases in the allocations to health boards and voluntary hospitals and reflects the 1990 impact of the increased finance provided by the Government this year, and increases in health pay. I want to stress, however, that the increase in spending does not imply any attitude that health spending, or health services, are no longer subject to the same kind of general constraint that applies, and will continue to apply, elsewhere.

Spending on social welfare illustrates the Government's continued commitment to protect and, where possible, improve the position of the under-privileged in society, a commitment which was maintained right through a period of otherwise severe Government expenditure reductions. The Estimate for 1990 provides for the full year cost of £135 million in respect of the extensive improvements in payments introduced in this year's budget. Moreover, in drawing up the Estimate for Social Welfare, no measures have been adopted which will adversely affect entitlement to, or levels of payment in, social welfare schemes.

Some have drawn attention to the fact that the net amount being made available in the Social Welfare Vote for 1990 is some £100 million lower than the post-budget provision for 1989. I want to emphasise that the reduction in the Vote in 1990 over 1989 shown in the Book of Estimates is due mainly to PRSI revenue buoyancy and once-off factors such as the decision of the Government to amalgamate the occupational injuries and the redundancy and employers' insolvency fund with the social insurance fund. In fact, total gross expenditure on social welfare, including that for the social insurance fund, is set to increase in 1990 over the 1989 budget provision, as is shown in table 5 at the start of the Abridged Estimates Volume and this is before making any provision for 1990 budget improvements. The allocation for 1990 does not, of course, as is customary, include any improvements in social welfare rates, which will be a matter for decision in the context of the 1990 budget.

The Government's concern to maintain a high level of security is reflected in the increases we have made in almost all areas of spending under the Justice group of Votes. The provision for the Garda Síochána is up 8 per cent on the 1989 allocation and reflects measures to increase the number of gardaí actually on the beat combating crime. Provision is included for the recruitment of up to 250 clerical staff to reduce the demand on Garda time from civilian type tasks. This will mean that an equivalent number of gardaí will be released for outdoor operational duties.

The Prisons Estimate for 1990 has been increased by 14 per cent. This increase provides, inter alia, for the recruitment of about 200 prison officers so as to allow the full opening of Wheatfield, which will relive some of the present overcrowding in prisons. Allocations for other important areas, such as probation and welfare services, the community service orders scheme and educational services have also been augmented.

The Labour Estimate reflects the Government's strong commitment to job creation and training the unemployed. FÁS and CERT will be able to expand their training activities, which equip the unemployed with necessary skills. Activity on employment schemes which help the unemployed to regain a place in the labour market will also rise.

The FÁS allocation has been framed by the Government in the light of increased ESF resources. It is estimated that total expenditure by FÁS on training and job creation, funded by the Exchequer and the ESF, will rise from around £170 million in 1989 to £185 million in 1990.

The CERT budget has also been increased to allow for expansion of its training programme, which will also receive additional ESF grant aid in 1990, reflecting the rapid growth of the tourism industry. It is estimated that CERT's budget will increase from about £6 million in 1989 to £7.5 million next year. These provisions for CERT and FÁS provide for the measures to enhance job creation announced by the Minister for Labour on 27 September last. The Labour Estimate also provides for increased funding for the industrial restructuring programme and management training support scheme, and for Teamwork, the employment scheme for young people.

In the Education area, the net provision for second and third level education is shown as falling in absolute and percentage terms. This is, of course, a misleading picture of spending in these areas and reflects unusually high ESF receipts expected in 1990. Gross expenditure on second and third level education will increase by 4 per cent and 13 per cent, respectively. This will allow for an overall increase in numbers in the system, particularly at third level by up to 4 per cent. Specific provision has been made in the 1990 Estimates to allow the educational opportunities scheme to be expanded from the present 60 places to 660 places by end 1990. This scheme allows the long-term unemployed to return to full-time education, while retaining their full social welfare entitlements. Other measures reflected in the 1990 provision include the appointment of 30 additional remedial teachers and 95 teachers to posts in disadvantaged schools.

The public capital programme for 1990 shows a rise in expenditure of 19 per cent, the first significant increase since 1982. It reflects a determination on the part of the Government to apply resources to the productive sectors of the economy, the allocations to which have been increased by £269 million, 25 per cent up on the 1989 budget provision.

The Government expect the increased expenditure on the public capital programme to have a significant impact on the creation of jobs particularly in building and construction, where extra expenditure of £94 million, an increase of over 11 per cent, is expected to generate over 2,000 additional new jobs. The main increases come in the roads and sanitary services programmes which are up by a total of £25 million; Agriculture is up by £27 million, a substantial amount of which will go to the farm modernisation scheme; industrial construction which will be up by £20 million; the local authority housing programme which will rise from £39 million to £51 million.

The Government are providing £215.7 million, current and capital, for roads in 1990 compared with £194 million this year. The 1990 allocation is the highest ever made for roads. It will allow further significant progress to be made on the development programme for national roads. Among the major projects in progress are the public section of the Western Parkway, the Navan Road and Bray-Shankill in the greater Dublin area, the Glanmire by-pass and Cork-Mallow Road in Cork and the Athlone by-pass. The Government are providing an extra £17 million for non-national roads. This demonstrates our commitment to improving the quality of county and regional roads which are very important for the development of tourism, industries and forestry as well as meeting the every-day needs of rural communities. The Government provision will be supplemented by any private sector investment in tolled roads.

The Government's concern for an environmentally clean farming sector is reflected in the virtual doubling of the allocation for the farm modernisation scheme, much of which is to be spent on farm anti-pollution grants.

The provision for industry includes funding for factory construction and refurbishment, together with land purchase and sited development to attract private industrial developers, especially in disadvantaged areas of the Dublin region. The acquisition of additional land will meet the shortage of space which would otherwise arise.

While the construction industry is emerging from the recession of the past few years, this expanded investment through the public capital programme will invigorate the revival taking place in building activity and underlines the Government's confidence in the sector.

The commercial semi-State sector is both contributing to and benefiting from the exceptional growth of the economy, and this position is expected to continue during 1990. Overall, the sector is showing increasing levels of profit; likewise, its financial position is strengthening. In 1990 the momentum towards growth will be sustained by a substantial increase in investment This applies not just to the sector in aggregate but to most individual bodies. The provisions in the public capital programme for some companies in particular will show very large increases, notably Aer Lingus, the ICC and the ACC.

Aer Lingus's performance in recent years has been highly commendable, and has put the company in a position to finance both its European fleet replacement programme and major investment in ancillary activities, including an aircraft overhaul facility at Dublin Airport which will create 560 skilled jobs by 1997, over 230 of which will be recruited for the start up in 1991 when construction of the facility is completed. The company expects to spend £189 million on capital expenditure in 1990, as against £90 million in the current year, without recourse to the Exchequer.

The ICC and the ACC aim to lend appreciably more next year than in 1989. This reflects the growing confidence among their clients in the prospects for remunerative investment in the Irish economy. Other State bodies, such as the ESB and Bord Telecom, are entering a period of consolidation after very significant outlays in recent years. Expenditure will continue at a very high level, but has peaked as far as the current investment programmes are concerned. The benefits of these programmes are already on stream.

The EC Structural Funds have played a significant role in helping to finance Government development programmes over the years. They are now playing an even bigger role with the reform and expansion of the funds. The impact of the additional resources have already been seen in 1989 and are evident in the 1990 spending allocations made by the Government.

The Community has now made a commitment of £2,860 million to Ireland over the period 1989-93. In addition to this amount, Ireland will benefit from additional funding through Community initiatives yet to be announced, which should bring the total assistance to over £3 billion.

The Community commitment is set out in a document called the Community support framework, which was adopted recently by the Commission in agreement with the Government. It is the result of lengthy discussion and negotiation with the Commission since the National Development Plan was submitted in March 1989. It sets out both the levels of assistance to be provided and the sectors to which it will be channelled.

The Community support framework will be followed up by a series of operational programmes. These will set out in more detail the particular measures which will be implemented in each sector. They are currently under discussion with the Commission. It is expected that some of them will be finalised shortly, with the remainder being agreed early in the new year. The operational programmes will be published when they have been adopted.

The assistance which will be available to Ireland from the Structural Funds in 1990 is £539 million. In addition, some £18 million of commitments from the Social Fund in 1989 will be carried forward to 1990, giving total assistance of £557 million. This compares with an adjusted 1989 figure of £462 million, an increase of over 20 per cent. The 1989 figure itself showed a significant increase over 1988, when commitments were £361 million. The 1990 figure therefore shows an increase, in nominal terms, of 54 per cent on the pre-1989 position. This is a large increase by any standards.

The House will recall that the 1989 budget made provision for additional expenditure of £75 million in anticipation of the increased Structural Funds. This was devoted to roads, sanitary services, industry, tourism and fishery harbour developments. The 1990 Structural Funds will enable us not only to maintain this higher level of expenditure but to build on it.

The Community assistance available to us in 1990 is, of course, less than we sought under the National Development Plan. The plan was effectively our bid for as high as possible a share of the available resources. Like all the other member states, we bid in the knowledge that we probably would not obtain all we sought. The total of all member states bids added up to well above the amount available. While we would naturally have preferred a higher allocation for Ireland, the allocation made gives us the highest level of assistance per capita of any of the less developed regions.

On a per capita basis, for example, Ireland will get 242 ECUs in 1991 per head of population. This will be substantially above per capita commitments in any of the other less developed regions. Ireland will also get the highest per capita increase in 1992 compared with 1987. Portugal comes next with a payment of 161 ECUs per capita in 1992 and then Greece with 158 ECUs per capita in 1992, giving a clear demonstration of how well we have faired in relation to other regions in the allocation of the Structural Funds.

The National Development Plan made it clear that commitments to spending on structural measures of the nature and scale envisaged in the plan would be dependent on the volume and phasing of the Community aid. The Community support framework scales back the level of expenditure in line with the level of assistance now available. However, in reviewing the expenditure Estimates each year in the light of the budgetary situation, the Government will look at the scope for additional expenditure from domestic resources. This was done in preparing the 1990 Estimates and certain additions were made, including £15 million on county roads, £10 million on sanitary services and £43 million on various human resources measures.

Let me now deal with our economic prospects for the coming year. I am looking to 1990 with considerable optimism. We have restored domestic and international confidence in our ability to bring the economy around, in our ability to overcome the difficulties that had beset it, and in our capacity for economic growth. Irish interest rates now take their cue from European developments; wage and other cost moderation flowing from the consensus approach of the Programme for National Recovery is enabling better international competitiveness; the trend in productive investment, the key to future job opportunity, is solidly upward; and development of key infrastructure, vital to longer-term advance, is in progress, with welcome assistance from the European Community.

Internationally, trade prospects, even if less buoyant than hitherto, offer continuing potential for solid expansion of exports. A period of relative stability in international exchange rates and of low worldwide inflation, combined with anticipated further expansion in world trade, is prompting significant international investment. With an eye to the opportunities of the evolving single market, much of that investment will seek a home within the EC and this is becoming more evident every day with the strongest ever IDA pipeline of projects.

Provided we adhere to the fundamentals of the strategy I have outlined, we stand to benefit from this international outlook, but we should not delude ourselves with the idea that we can have the benefits without adherence to the discipline. In other words, the prospect for exports and output is solidly positive, provided we retain competitiveness on export markets; the atmosphere is right for continuing investment growth, provided we remain disciplined on costs and in the budgetary area; the expectation for international inflation is downward; we will witness a similar trend here, provided we remain sensible in our approach to pay, profit margins and other related developments; the EC assisted programmes of infrastructural improvement will make a major contribution to longer-term capacity for growth, provided we gear ourselves to capitalise on the increased competitive ability these improvements will provide. The prospect is, therefore, for a continuing expansion in output over the period ahead. We can achieve a growth rate of about 3½ per cent in 1990. This, in turn, would create a further significant increase in self-sustaining employment.

In stressing the vital necessity for cost moderation in the interests of competitiveness, growth and jobs, I am not preaching further austerity. The evidence of the past two years is that moderation in nominal incomes can be consistent with advance in real income. The evidence of earlier years is that uncompetitive income increases were accompanied by declining living standards, insecurity of employment and, inevitably, a spate of corporate failures and redundancies. We have secured growth over 1987-89 through moderation. We now have the opportunity to build on that progress. In the interests of those in employment today — and of the unemployed. Those approaching adulthood, and those who have had to opt for a start abroad — we have an obligation to learn from the past that moderation is the key to a better future.

Looking specifically to next year, I have already suggested that a growth rate of about 3½ per cent is within our reach. Consequently, I anticipate a continuation of the trend in private sector job creation of the past two years. This will not be offset by the same degree of public service streamlining as obtained up to now. It will, therefore, mean a significant net increase in total employment. I also anticipate a decline in the level of unemployment — together with a reversal of the trend in emigration.

Equally, taking account of likely world inflation trends, the rate of price increase here can move down towards 3 per cent, year on year, as 1990 progresses. Extending the kind of pay moderation we have been experiencing will underwrite this reduction and underpin our prospects for advance in employment. It will support continuing growth in investment and will enhance the impact of the Structural Funds' programmes on our output and competitive capacity.

However, I want to point, also, towards some of the key implications of the strategy needed to produce these results. It is not enough to say what might be achieved if we act responsibly, without specifying what makes for sensible behaviour, particularly in sectors of the economy which are less exposed to the harsh realities of the international marketplace.

Competitiveness is not about pay moderation alone, nor is it a matter of developments only in those sectors directly involved in export markets. Cost competitiveness reflects both wage and profit trends. Expended profits based on increased volumes of production do not put pressure on prices, but if based on higher margins, they do. There may be opportunity to take greater margins, but there is a trade-off in terms of higher imports and lesser exports. This, in turn, would reduce economic growth and lessen prospects for expanding employment.

Many domestic sectors supply exporters, whether with energy, transport, services or other inputs. Their pricing can significantly affect the sales ability of their exporting customers. Heightened efficiency is needed in all economic sectors, to support the necessary growth in output. Nor is it a matter of costs, only. The total product mix, from innovation in design through quality of production to marketing flair and after-sales service, is involved. Expansion, if not survival, depends on improving all elements of the product mix.

Nor is Irish competitiveness about what happens in the private sector only. Developments in the public sector inevitably impinge on the economy at large. Budgetary and economic policy is now providing lower interest rates, exchange rate stability and the prospect of a moderating tax burden — in particular as the national debt begins to fall as a percentage of GNP. These are of key importance to investment decisions and thus to growth potential. But there can be no guarantee that the climate we have now will inevitably continue. It will not, unless we continue the broad thrust of policy to date. We must, therefore first and foremost, assure still further reductions in the level of Government borrowing; at the same time, make further progress in the direction of taxation reform, towards diminishing disincentive impacts; avoid fuelling inflation; and work towards a new consensus and programme between the Government and the social partners to carry us forward in the early nineties.

Solid foundations for growth and for a substantial increase in employment have been established. Our objective must now be to make the most of the opportunities which are now unfolding and sustain the progress we need over a number of years so that the major problems we still face can be reduced in scope and even eliminated. Everything confirms that we are on the right road. While there may be disagreement on and criticism of detail, the overall strategy is unquestionably correct and has already been vindicated by results.

(Limerick East): On the face of it, the 1990 Book of Estimates looks prudent. The total increase in current expenditure appears to be less than half a percentage point. The increase in capital expenditure is 19 per cent but this increase is not funded by the Exchequer and marks the first input of EC Structural Funds in the capital budget. On closer examination, however, rigorous control of current expenditure is more apparent than real.

This is my first criticism of the 1990 Book of Estimates. What appears to be a modest increase in nominal terms in current expenditure, an increase which was presented as a decrease in real terms by the Minister for Finance, is no such thing when we compare like with like. The increase over the 1989 Pre-Budget Estimates is 1.7 per cent but this figure again disguises the true position. Even a cursory glance at Table 1 of the Book of Estimates shows quite large percentage increases in the main Votes of the main Departments. The Garda, Prison and Courts Votes are increased, for example, by 8 per cent, 14 per cent and 14 per cent, respectively. Roinn na Gaeltachta is increased by 27 per cent, the Department of Industry and Commerce by 7 per cent, Defence by 10 per cent, Foreign Affairs by 16 per cent and Health by 8 per cent. These are increases which are significantly higher than the rate of inflation. These increases seem to be compensated by reductions elsewhere, but again the reductions are more apparent than real, and in the Department of Education, for example, the apparent reductions are made good by the inclusion of EC transfers.

The Social Welfare Vote is reduced by 6 per cent. This does not mean, however, that 6 per cent less will be spent on social welfare. The reduction is explained by the fact that there is a reduction of 52 per cent or £142 million in Subhead E, Payment to the Social Insurance Fund under section 122 (a) of the Social Welfare (Consolidation) Act, 1981.

PRSI contributions are not sufficient to fully fund the social insurance fund. The fund in 1989 had to be topped up by the transfer of £271.6 million from the Exchequer. This year the transfer is £129.5 or £142 million less. This quite properly appears in the Social Welfare Vote as a massive reduction in expenditure. There will, however, be no reduction in expenditure on social welfare in 1990. The £142 million previously provided by the Exchequer will be provided by extra PRSI receipts from buoyancy and by increasing the ceiling for payment on both employers and employees PRSI and by amalgamating the occupational injuries fund and redundancy and employers insolvency fund, with the social insurance fund. The effects of the latter is for 1990 only, the effect of the two former measures is to increase taxation through PRSI contributions.

Therefore, what appears as a huge cut in expenditure in social welfare is more than compensated by an increase in receipts from PRSI and by an amalgamation of the above-mentioned funds Consequently, what appears as a great cut in current expenditure is merely the method of presenting the figures, the effect of which will only be fully apparent when we see the other side of the balance sheet in the new year.

When we take this into account the increase in current expenditure in the 1990 Book of Estimates over the 1989 Book of Estimates is a little over 4 per cent. When social welfare increases in the 1990 budget are added together with an amount for special pay increases in the pipeline, but not yet agreed, and an amount of around £165 million extra on servicing the public debt, the percentage increase in current spending will be, I believe, about 5½ per cent in a full year. This is a significant increase in current expenditure, it is greater than the rate of inflation and it reverses the budgetary trend of recent years.

This brings me to my second criticism of the Book of Estimates. While it will not be necessary to increase borrowing to fund this Book of Estimates, the line is held not by expenditure cuts, not by keeping the lid on public expenditure, but by relying on extra PRSI and tax receipts. Tax revenue has been very buoyant in tax years 1988-89 and 1989-90. The progress which has been made in reducing the Exchequer borrowing requirement, and especially in reducing the current budget deficit, has been due to buoyancy in revenue and PRSI receipts, a buoyancy for both years far in excess of the Estimates of the Department of Finance.

Let us consider the position which would arise if these receipts were less buoyant. The flow of extra tax receipts would ebb and the rocks of undiminished public expenditure would once more appear to endanger our economic future.

I do not agree that the level of public expenditure does not matter provided it is matched by tax receipts. There has been such a concentration on the Exchequer borrowing requirement, the amount necessary to bridge the gap between expenditure and receipts, that there has been little or no debate on the actual levels of public expenditure. There has been a presumption in this House and outside it that all public expenditure is good, that the more that takes place the better. It is almost "a never mind the quality feel the width" attitude. Consequently, even though increases in public expenditure have been controlled over the last six years, there has been little or no attempt to structurally reform public expenditure.

This is my third criticism of the Book of Estimates. There is no structural reform whatsoever. The same health boards with the same management structures are in place, local government spending remains unreformed, all the spending Departments are gearing up their costly programmes and the State agencies are winning back the ground lost to the Department of Finance in recent years. No Minister is proposing the abolition of programmes. Many Ministers are planning to set up new ones. The Minister for Finance will assure us that this will cause no problem because buoyant revenue receipts and EC transfers will not only pay for the increased spending but will enable the Minister to make some tax concessions and announce some slight reduction in the Exchequer borrowing requirement on budget day.

The danger is obvious. If revenue receipts become less buoyant we will return to budgets showing increasing rather than reducing deficits, and all confidence in the economy will be destroyed. The issue of the level of taxation also arises here. Would not the Minister have done better if he used the expected buoyancy in PRSI receipts to reduce the rates of PRSI especially on the lower paid? Would this not have a greater impact on growth and job creation? PRSI is a direct tax on jobs yet the Minister proposes to increase the PRSI ceilings and to use the extra receipts to fund increased public expenditure This is not a very good start to the Government's proposed tax reform programme. As long as we continue to increase the tax burden on jobs economic growth will not be translated into jobs.

There is a certain amount of drift appearing in the Government's attitude to public expenditure. This is, I believe, because the fiscal targets set in 1987 are redundant and those that were set in the Programme for Government in the summer of this year were redundant when they were agreed.

I presume the Minister for Finance is operating to a hidden agenda, that he has set new targets, but these have not been made public. I wish to call on the Minister to set new realistic fiscal targets. I believe the Minister should balance the current budget in 1990 and should budget for an overall surplus in 1991.

Our debt expressed as a percentage of GNP is dangerously high. It is much higher than that of any other EC member state. Budgetary surpluses of 2 per cent over a five year period, against a background of a growing economy, would transform the situation. The Minister should make his position clear at the earliest possible date.

I wish now to turn to the public capital programme for 1990. The first input of increased Structural Funds is included in the programme. There is an apparent increase in expenditure of 19 per cent which is funded, by and large, from non-Exchequer sources.

This allocation for 1990 is £1,657 million, an increase of £265 million. While the overall increase is 19 per cent, non-Exchequer capital spending is up by 32½ per cent, while the Exchequer contribution is estimated to rise by 5½ per cent. This appears consistent with the notion that higher capital spending is being funded by the first input of increased EC funds. This is not anything like the full picture.

The indicative profile of EC transfers, underlying the Estimates provides for an increase of only £59 million as compared with £220 million in the National Development plan. The shortfall is £43 million in the Social Fund; £82 million in the Regional Fund and £36 million in the European Agriculture Guidance and Guarantee Fund. This is very disappointing and the Minister should explain the shortfall.

There is no great boost to capital investment in the programme. Approximately £100 million in the capital spending under tourism and transport relates to airports. Would the Minister confirm that this relates to the replacement of the Aer Lingus fleet and will be financed by borrowing by Aer Lingus?

If this is excluded the rise in productive infrastructural investment is 9 per cent and virtually all of this is being fiananced by the EC. Likewise about £55 million of the £63 million extra provided under the Finance heading is due to increased lending activity by the two State banks, the ACC and the ICC. This will be financed by the companies themselves. Again there is no great impact there. Most of the Agriculture and Food increases is devoted to the Farm Improvement Programme financed in the main by the EC and will, I believe, be expended largely in the provision of anti-pollution grants.

As I said, an increase of £59 million in EC transfers as compared with £220 million in the National Development Plan 1989-1993 is disappointing. It is also very disappointing that the five year capital investment plan is down £969 million on the figures in the plan.

I will now comment briefly on the planned structural development spending for 1989 to 1993, the details of which were announced by the Minister for Finance on Monday last. The EC contribution is £2,860 billion; the public finance requirement is £3,658 billion and the estimate from the private sector is £2,180 billion.

A detailed breakdown of EC aid, by operational programme, is not yet available for the individual years of the plan. Consequently, it is not possible to evaluate the plan by assessing the impact of individual projects.

I want to sound a note of warning. According to NESC in their report, No. 88 which we debated at the start of this Dáil session, the central requirement is that structural policy measures are aimed at removing the constraints on the development of the Irish economy.

I would like to quote the section of the NESC report which follows this and the Minister should reflect on it:

However, in the current situation three new factors must be taken into account: the severe fiscal and economic crises of the 1980s, the completion of the internal market and developments in information technology. When these are taken into account, along with the long term developmental problems, structural policy should, in the council's view, involve a balance between investments in industrial and rural development and investment in infrastructure.

A wide range of infrastructure programmes should be considered, not only transport but also telecommunications, water and drainage, and environmental programmes, particularly the preservation and development of the urban environment.

When the NESC talk of internal transport they say:

The development of transport infrastructure has as much to do with enhancing the internal efficiency of the economy as with reducing the cost of access to foreign markets. For example, some of the strongest economic arguments for road improvement are based on the needs of passenger traffic rather than freight.

When they refer to access transport they say that

In devising measures to reduce the cost of access to foreign markets, a particular effort must be made to identify which elements of cost — infrastructure quality, fuel costs, vehicle costs, insurance costs, operating costs —are responsible for high relative cost of transport. Depending on the outcome of this investigation the reduction in access costs will require either infrastructural investment or other regulatory or economic measures, or some combination of policy approaches.

I do not see where the investigation is going on at the moment. I do not know if the Minister has an investigation in progress, but it seems to me that even the NESC are unsure how money should be spent on improving the transport infrastructure. I will await with interest the Minister's announcement of the profile of the projects being funded by EC funds, part of which he says he will be in a position to announce before Christmas and the remainder early in the new year.

The NESC report issues the following warnings:

In advocating this approach the council stress that the improvement of road transport infrastructure pursued in isolation could do more harm than good — a conclusion confirmed by a recent report to the commission. It is vital that, simultaneously with the improvement in access to foreign markets, the ability of domestic firms, and individuals, to respond to market opportunities is enhanced by industrial and other policies.

The Minister should reflect on the issues raised in that section of the report before he translates into specific projects the global figures in the investment plan he announced last Monday.

At the end of 1993, when the £8.7 billion is spent, the effect of the investment will not be measured by listing the individual projects put in place, but by whether constraints on the development of the Irish economy will have been removed.

There is an attitude in Fianna Fáil, which I am sure the Minister is aware of, which sees the increased Structural Funds as a larger national lottery, to be used and abused in the party interest: money to fund pet projects, money to massage certain interest groups, money to sway the balance in favour of the party in marginal constituencies. If a significant proportion of the increased Structural Funds is spent in this manner it will be unforgiveable.

There is another attitude in both Government parties, which even though it springs from higher motives, is more dangerous than the one to which I have just referred. Many Ministers still believe that almost any public capital investment leads to growth and that the extra demand will stimulate the economy. This attitude was crystallised by Dr. Martin O'Donoghue, who served in Government with many of the present Cabinet, when in quoting Keynes out of context, he claimed that digging holes and filling them again was a valid investment activity, as through the multiplier and accelerator effect the economy would grow. We know where this economic theory took the country, when put into practice by the key economic Ministers of the day, Deputies O'Malley, Colley and O'Donoghue between 1977 and 1981. It has taken the country eight years to recover from this type of demand control investment. I hope that in the expenditure of what the Minister calls the greatest investment programmes ever put in place he will have more interest on the supply side than on the demand side and will not go back to the failed economic theories which still form the basis of the economic beliefs of many of the people who sit beside him in Cabinet.

The quality of the investment undertaken is more important than the amount of money invested. There is huge potential for waste in the spending of £8.7 billion. I will return to this theme at a future date when the Minister informs the House of the allocation for specific projects.

There is no indication in the Book of Estimates that the Minister has a strategy to turn economic growth into jobs, to reduce emigration or to ease the burden of poverty. Fine Gael will oppose these Estimates.

I want to follow on from the point very aptly made by my colleague, Deputy Noonan, when he referred to the potential for waste in the expenditure of such enormous sums of money by the Exchequer. I believe it is time for a new approach in the preparation of Exchequer Estimates. There are two major problems which should be now addressed. The first is the system by which the Estimates are formulated, fought over and ultimately agreed. The second is the manner of presentation which tends to obscure and conceal rather than reveal.

Each year there is an Estimates battle or series of battles between officials of the different Departments and the Department of Finance. This contest can be quite adversarial in nature with the various Departments seeking to justify increases in expenditure and Finance officials trying to restrain increases and to secure cuts. After preliminary rounds the outstanding issues are ultimately resolved at Cabinet.

The problem is that the overall picture is very often lost sight of during the course of these battles which in the main are fought over percentage increases or decreases in various subheads. Insufficient consideration is given at political level to the basic justification for many of these subheads and to the overall balance between funding requirements to support different economic and social objectives.

There are programmes which have outlived their usefulness. There are better and more cost effective ways of achieving some of these objectives. The Minister for Finance combines the role of expenditure watchdog with his other fiscal economic and development functions. Quite simply he does not have time to do both. The solution I believe is to have a Minister for expenditure or a Minister of State with access to the Cabinet to separately provide the political input to expenditure control. Such a Minister would also have a major role in ensuring efficiency and cost effectiveness in Exchequer spending. That kind of change would facilitate the introduction of the central structural reforms mentioned by Deputy Noonan.

The second point concerns the format of the Book of Estimates. This is the result of decades of antiquated tradition whereby sub-heads are retained or included for obscure reasons which are not immediately obvious to the reader. Surely the Book of Estimates should be presented in a fashion which is totally transparent. Furthermore, we should have a procedure whereby the Minister could be questioned on individual items, explanations sought and cost effectiveness queried. This could only be done through an Oireachtas committee. Again our present procedures and committee system are out of date and in need of reform. Possibly the answer is to revise the format of the Book of Estimates to make it more informative and to extend the mandate of the Public Accounts Committee so that a detailed analysis and examination of the Estimates could be undertaken.

The following general observations arise from examination of the Book of Estimates as presented: 1. Tables 4 and 5 in the introduction indicate the continuing low level of expenditure on allegedly important productive sectors with a huge potential for growth. Less than £50 million is spent in total on tourism, fisheries and forestry combined. These total figures are less than either the separate figure for legal services and far less than the annual expenditure on prisons. If compared with the £1.5 billion Estimate for Social Welfare, the figure for Departmental salaries and wages alone in that Department exceeds the combined total. This imbalance, I think, possibly explains why the vast potential which obviously exists in these growth areas of production, tourism, fisheries and forestry, remains untapped.

2. The President's Establishment includes a figure of £15,000 for Centenarians Bounty. This works out at £250 for an estimated 60 citizens expected next year to reach a 100 years of age. Is it not time we were a bit more generous to our senior citizens and increased the bounty to £1,000. On the question of the President's Establishment I note that in the vote for the Office of Public Works there is an estimate for the President's household staff, wages and allowances, of £97,000. Would it not make for clearer accounting to have these figures transferred to the vote for the President's Establishment?

3. The vote for the Houses of the Oireachtas is an indication that we have democracy on the cheap in this country. This vote includes a figure of £4.5 million to cover TDs salaries and allowances. There is also a figure of less than £1 million to cover payments to Senators. When I hear complaints about the cost of the democratic process, I wonder whether these figures are seen in the perspective of a total expenditure of over £8,000 million, but more particularly by way of comparison with the salaries and allowances of the staff of Leinster House, which alone cost nearly £3½ million pounds. A comparative figure of interest is the salary and allowances subhead for the Central Statistics Office which far exceeds the combined figure for the Dáil and the Seanad and totals over £6½ million.

4. The vote of the Department of the Taoiseach includes a figure for information and public relations. I notice separate headings for advertising and publicity in the Industry, Labour and Energy votes. In addition dissemination of information in the Health Estimate merits a separate subhead. The lack of such subheads in the votes for the other Departments would suggest that no money is being spent by any of the other Departments on publicity and information. I am quite sure that this is not correct. Surely if there is full disclosure in some Departments, the same should apply to all.

5. The mysteriously entitled vote No. 7 provides a further example by way of confirmation of the point I make about obscurity and presentation. I am not referring to the omission of the title which I presume was a clerical error. I am referring to the reduction in expenditure under the heading Management of Prize Bonds for which a figure of £1,600,000 was included in 1989. No figure is included in 1990 in vote No. 7, which is the Finance vote and no explanatory note is forthcoming as to the overall effect on the Exchequer of the change made in Prize Bond Management.

6. The £103 million vote for the Office of the Revenue Commissioner includes figures of £2.638 million for law charges and rewards and a further sum of £115,000 for compensation and losses. Under subheads F. and G. no breakdown is given. It might well be said that such a breakdown is included in the revised and more extended Book of Estimates which is published after the budget. In fact, this is not so, as nowhere is there a breakdown for these subheads in the revised Estimates published after the 1989 budget.

7. While I will want to comment briefly on the policy issues in the Justice area, there are two aspects which I want to touch on at this stage. The Garda Síochána vote contains an intriguing subhead, with the heading Aircraft, of £1,000. This would make one wonder whether this is for model airplanes. Similarly the figure for the Land Registry and Registry of Deeds Estimate is misleading at first glance. On face value there is an expenditure of over £9 million proposed. There are no appropriations in aid, yet these registries are self-financing on fees payable which in most years produce a surplus for the Exchequer.

8. There is no increase in the Bord Fáilte subvention, but there is an increase of £1.2 million in the figure for the Department of Tourism and Transport salaries, wages and allowances. Apparently it is not intended to have much constructional work at State Airports or on Regional or Local Airport Development in that only a sum of £1,000 has been allocated under those subheads. A further query arises in relation to financial assistance towards the provision of a ferry service between Cork and Swansea. Even though £1 million was included in the 1989 Estimates, no figure has been included in the 1990 Estimates. What is the explanation for this in the light of latest commitments?

9. The international co-operation vote coupled with the reductions in ODA under the Department of Agriculture vote provide a memorial to our national meanness at Government level. We have now a lot of protestations following the latest publicity in regard to the famine in Ethiopia. We are told that this country will give the lead not just by way of direct support but in securing EC support for the starving in Africa. These protestations ring very hollow indeed in the light of the parsimonious provision in this vote. In many ways this is an indication of the utter hypocrisy of the present Government in relation to the Third World. In 1982 the present Taoiseach did not even appoint a Minister of State to take charge of development co-operation. When I tackled him at that time on the issue he dismissed the need for any such appointment as being "superfluous and supernumerary". Yet at the height of the famine crisis in 1984 he was calling for the appointment of a full Cabinet Minister. As soon as he got back into Government he began cutting the ODA vote so that it has now reached its present disastrous level.

10. The agency payments to Coillte Teoranta for inspections on behalf of the Department of Energy in relation to the private planting scheme need to be reviewed. Coillte Teoranta are now directly in competition with the private sector particularly in the acquisition of land. It is not appropriate that they should be inspecting private purchases to confirm their suitability for planting. A clear conflict of interest arises here. On that point I think there needs to be an investigation of the cost of purchase and planting by Coillte Teoranta itself as opposed to the comparative costs prevailing in the private sector which I understand are very much lower.

Turning to the Estimate for Justice the Minister said in his press release on 16 November that he was acting to ensure the safety and confidence of every citizen be it in his or her home, the work place or on the street. He was going to ensure that this basic right of citizens to go about their lawful business without fear for their person or property would be safeguarded. I wish the Minister luck. I am sure he has the best of intentions. However, I am gravely concerned that he has displayed a lack of foresight and vision in his approach.

Additional resources are needed but these alone will not be sufficient to make serious inroads into the problem of crime in our community. We need a reforming Minister imbued with the vision and zeal necessary to tackle the problem in a comprehensive fashion.

We need a major reform of our criminal law. We need to provide our courts with greater powers to confiscate assets derived from the proceeds of crime, especially in the drugs area. We need to allow courts to order the forfeiture of bail where the criminal commits other offences while on bail. We need a wider system of on the spot fines to free gardaí from wasting their time with minor statutory offences. We need updated legislation to deal with juvenile crime. Essentially we need the establishment of a Criminal Law Reform Commission to research these and other areas and to guide our footsteps on the introduction of legislation which is so necessary.

Perhaps the biggest failure of the Minister has been his narrow approach to prisons and penal reform. He has given no indication whatever that he is prepared to undertake the reforms that are necessary in this area. It is utterly absurd that our prisons should be clogged up with minor offenders at a cost to the taxpayer of £600 per week. Prisons should be for those who commit crimes against the person and major property crimes. The present system leads to overcrowding, early release and prisons being a breeding ground for crime. We have the ludicrous situation of 1,000 committals a year for non-payment of fines and a further 250 committals a year for non-payment of debt. We need a new approach as follows: Heavier and full service of prison sentences for serious crime; the establishment of alternatives to prison for minor offences including the payment of fines by instalments, the attachment of income, confiscation of property, greater use of community service orders, restitution to the victim of the crime and general powers to the courts to require attendance at treatment centres, residence in approved hotels, participation in training programmes and restriction of offenders at specified times to their places of residence; greater priority to and investment in the probation and welfare service and better developed training and treatment facilities within prisons to reduce the rate of return to crime by released prisoners.

With regard to the Garda Síochána, I am glad that the Minister is responding to the demand to release gardaí from office work to perform outdoor crime prevention and detection duties. This is against a background of reduction in Garda strength from 11,396 at the end of 1985 to a projected figure of 10,460 at the end of 1989, a reduction of almost 1,000 over the last three years. I am not sure how well thought out the approach of the Minister is considering that he was unable to give me a reply to a Dáil question yesterday when I asked for a breakdown of the numbers at present employed in the Garda Síochána on clerical and other administrative duties. The purpose of my question was to ascertain how many would be available for front line duty. The reply from the Minister was that this information was not available. This does not indicate much consideration or research on his part before he made the announcement.

There is need for much more thought and action on the part of the Minister from the point of view of increasing the number of uniformed gardaí on operational duty, the extension of the principle of neighbourhood policing, greater use of the Garda training college for in-service courses, changes in the management and structure of the gardaí to include the provision of qualified financial and personnel managers and the provision of adequate resources for the juvenile liaison scheme and its establishment on a statutory basis.

In the short time available to me it is not possible to go into all these issues in detail. It is not possible to go into issues in the civil area or the catastrophic situation in the Land Registry and the need for urgent change there. We need a full debate on the Justice and related Estimates and I will be demanding that when the Estimates come individually for approval before the House. At the moment we are talking in global terms about the Estimates. When we have such a debate the Minister will have a lot to answer unless there is evidence forthcoming of a reforming approach and real determination to tackle the enormous problems of crime in the community.

I call Deputy Taylor.

I will be sharing my time with Deputy Ferris.

I understand that agreement has been reached in this regard. On the other hand I understand from the Chief Whip that he is a little bit unhappy about it. However, if the House agrees, that is all right as far as I am concerned. Is it agreed that Deputy Taylor shares his time with Deputy Ferris? Agreed.

I move amendment No. 1:

To add the following:

"That Dáil Éireann considers that the 1990 Estimates will do nothing to reverse the trend of inequality and disadvantage that has been the consequence of Government policy since 1987. Dáil Éireann considers that improved economic growth must be equitably distributed, must lead to the creation of jobs through the creation and retention of wealth in Ireland, and must be accompanied by social improvements in the areas of health, education, housing and social welfare here at home, and by an improved contribution to the alleviation of famine and poverty in the world around us. Against the background of an improved outlook for the economy, Dáil Éireann considers that the failure of the Government to make additional resources available in the following areas is particularly deplorable, and condemns the Government in respect of:

—Its failure to provide any specific programme to combat the continuing scandal of emigration;

—Its decision to reduce the Capital Allocation for the provision of health facilities by 8.5 per cent in real terms, notwithstanding the increasing and urgent demand for additional hospital wards and beds and notes that such a cut will inevitably delay, for instance, work on the Tallaght Regional Hospital;

—Its failure to provide sufficient current resources in the health allocation to allow for the reopening and adequate staffing of hospital beds and wards, notwithstanding the fact that the use of accident and emergency services as the only means of access to hospital beds for a great many people is leading to a resurgence of long waiting lists for elective treatment in public hospitals;

—Its failure to make any additional allocation available for the development of additional residential, training and employment opportunities for people with a mental handicap, even though it is now reliably estimated that in the Eastern Health Board area alone, for instance, a total of 328 residential places are needed immediately, with a further 567 places needed in the years after 1990;

—Its decision to maintain capital spending on the provision of educational facilities at the same deplorably low level as last year, which was the worst year for capital investment in education in the 1980s;

—Its decision to cut Exchequer current spending on First Level Education by 1 per cent in real terms, and to freeze expenditure on Second Level Education, having regard to the growing level of inequality within our education system, and its decision to use European funding to replace Exchequer expenditure at all levels of our education system;

—Its continuing covert approach to restricting access to Social Welfare programmes, and its lack of adequate funding for programmes whose main aim is to combat poverty;

—Its deplorable decision effectively to force local authorities to finance their housing programmes out of the sale of local authority houses, thereby ensuring that the housing crisis already evident will become worse this year;

—Its scandalous allocation to International Co-Operation, which now represents the smallest proportion of GNP of any year since 1980."

There are a number of policy instruments available to any Government in pursuit of their goals. Whether they be social or economic goals, the Book of Estimates is an important such instrument. In the past, it has been used to signal the Government's intentions under a variety of headings.

Very often, the signals sent out by the Government in the Book of Estimates are oblique and difficult to read. On this occasion, the signals are easy enough. This Government intend to do nothing more than continue their bookkeeping policies of the past. They will be taking no action to halt the flood of emigration in the coming year; they will be ignoring the continuing unacceptable level of unemployment; they will be trying to sweep under the carpet the growing crisis of poverty in our country and they will be taking no action to deal with the many difficult social problems our country faces.

Instead, this Government will carry on with the charade that a climate of confidence, the famous rising tide, will solve all those problems without any direct intervention by the Government, but that approach ignores the reality that good statistical and bookkeeping performance is not enough. It must always be contrasted with the miserable human performance of this Government and their immediate predecessor. The indicators might be right, but unemployment and emigration are still at crisis levels, and poverty is rampant throughout our society.

The growth in Exchequer revenue achieved through the past year reflects increased consumer spending on imported durable goods, especially imported cars. That means essentially that our healthy statistics are a reflection of jobs being created and protected in other countries — but not here in Ireland. The economic growth we are seeing will result, in addition to increased imports, in extra profits for repatriation abroad.

That kind of economic growth is meaningless to all of us. Unless good statistics are accompanied by detailed programmes to end emigration, to reverse the unemployment spiral, and to combat poverty, they will continue to have no impact on the lives of working people.

A great deal of the growth we have already seen and are likely to see is in very restricted areas. There has been substantial growth in multinational profits and in profits in the financial services sector. A great deal of this growth has already drained out of the economy. It is clear from the warnings contained, particularly in the ESRI's recent report, that they fear that a continuation of the policy of wealthy Irish companies of investing the bulk of their profits abroad will deny us the opportunity of benefiting from that growth.

It is also clear that the Government have no coherent industrial policy aimed at translating growth into wealth retained in Ireland, and into jobs for Irish workers. We need radical changes in industrial policy to secure the concept of value-added in the Irish economy and to maximise investment in the Irish economy. One sign that those policies will not be forthcoming from the present Government is their decision to halve the allocation for the National Development Corporation in next year's Estimates.

Without change, our economic growth will continue to have more impact on job creation in America, Japan and Germany than it will here. Of course, growth has been good for some people. In the period when the two largest banks in the country report huge increases in half yearly profits it is surely appropriate to reflect on the way in which they continue to fail to make a social contribution to the economy in which they have thrived. We have already tried to publicise the scandalous range of charges imposed by the commercial banks on individual and business customers. There can be very little justification for these charges, other than the contribution they make to the banks already very large profits. These charges are imposed in the main without customers being made aware of them. Indeed, I imagine most customers would be both astonished and outraged to know what they were being charged for.

The banks waged a substantial and successful campaign earlier this year against a Government proposal to impose a levy on ATM cards. But the banks do not ever tell their customers that they impose a 10p charge themselves on customers every time they use an ATM card. Most customers might be aware that there is a charge for writing cheques, but how many know that the charge is 25p for processing a cheque transaction? Customers might be aware that there is a charge of 18p for each withdrawal they make but how many have ever been told that they are also charged 18p-22p for every lodgment they make?

The newest charge introduced by the banks — a charge on all local authority accounts — is particularly iniquitous given the financial situation in most local authorities. The Labour Party sought recently to get an assurance from the Government that action would be taken to have these charges removed. Although the Government expressed some concern no specific action was promised.

We believe that the Government, in the context of next year's budget should increase the bank levy by an amount at least equivalent to the yield from these charges on local authorities if they have not been removed in the meantime. It seems that that is the only language the banks understand.

Furthermore, we have called on several occasions for the establishment of a commission of inquiry into the regulation of the financial services industry. There are a number of major issues involved here — for instance, the lack of exchange controls and all of the implications that arise from that; the growing practice among fund managers of distributing funds abroad at a time when investment in Ireland is vitally needed; the growing practice among the banks of investing their profits in new acquisitions abroad; issues of "confidentially", hot money, the management of the Stock Exchange and so on.

All of these areas are surrounded by a sort of mystique, and I do not believe that even Governments are fully aware of everything that is going on all the time. I certainly do not believe any Government Minister could put his hand on his heart and say that the financial services industry always operates in the best interests of the country. That is why a full scale inquiry into the area and the way in which it is regulated is urgently needed.

In general terms, the budget and Estimate cuts of the past few years have gone further down the road to creating a two-tier society in Ireland than Mrs. Thatcher has managed to achieve in her ten years in office. In health, education, social welfare, housing and other areas, it is the poorest and the most defenceless sections of our society who have suffered most.

The present Estimates envisage substantial cuts in the allocation for Social Welfare, and for the allocations for second and third level education. The number of houses that will be built this year will go no where towards meeting our housing needs. The money available for road repairs is just about enough to bring one county up to standard. There are a number of other major decisions with which I would disagree — for instance, the proposed rail link to the west side of Dublin, which stops in Clondalkin even though land is available to bring it all the way to Tallaght.

But in many ways, the worst feature of the estimates is that they are just papering over the cracks. They will not undo any of the social and economic damage that has been done in the last three years. The Book of Estimates published last week will not create one extra job to stop our young people emigrating. It will not provide one additional educational opportunity; it will not alleviate in any way the continuing crisis in our health services; it will not build the houses that we need for the thousands of families on local authority waiting lists.

Over the last three years, the Estimates produced, originally by a Fine Gael Government, then by a Fianna Fáil Government, and now by a Fianna Fáil/Progressive Democrat Coalition, have sown the seeds of a divided society in our country, a two-tier society where those with money can have access to the health, shelter and educational infrastructure they need and those without must wait. These Estimates will do nothing to redress that balance.

Figures published in the Book of Estimates illustrate the point. The consumer price index has risen by 9.9 per cent from the end of 1986 to date and, by the end of 1990, will have increased by at least 12 per cent over 1986. That means, even taking the 1990 Estimates into account, spending on economic services generally will have been cut by 20 per cent in real terms by the end of 1990; current spending on infrastructure by 22 per cent; spending on social services by 12 per cent; and spending on security by 12 per cent.

Is it any wonder then that the levels of poverty, emigration, and alienenation within our society have grown?

On the capital side, the principal areas that have been cut are those areas where the EC Structural Fund impact will not apply. In other words, in relation to housing and health facilities, where we have to look after our own needs, our Government have decided that they will not spend the money even though there are adequate resources available.

Our amendment seeks to highlight many of the social problems which this Government choose to ignore and to try to force the Government to begin addressing them. I hope to deal with some of those issues in more detail in the course of these remarks, but if there is one example I would pick above all others to illustrate the mean spirit which motivates this Government, it is the approach to Third World Aid which has been a feature of their budgetary outlook.

The total allocation for International Co-operation was £28.052 million in 1986, having been increased by 23 per cent over 1985. In 1987 it was reduced to £24.902 million and, by the end of 1988, the allocation had fallen to £19.637 million. By the end of this year it is expected that £22.829 million will have been spent. The provision for next year — according to the Book of Estimates — is £24.146 million. If the 1986 Estimate had been increased only in line with the rate of inflation it would now stand at approximately £33.6 million. In real terms, therefore, the amount of money we spend on Third World aid has been cut by about £5.5 million since 1986. As a proportion of current spending next year, this Government will spend 38 pence out of every hundred pounds they allocate on aid to the Third World.

The most recent estimate I have seen of gross national product at current market prices is £18.784 billion — this figure appears in the Statistical Abstract 1989 published by the Central Statistics Office. That means that the proportion of national wealth we will spend on Third World aid next year will have shrunk even further, to 0.13 per cent of GNP. The United Nations target for Third World aid is 0.7 per cent of GNP. We are getting further away from that target, rather than closer, each year. These figures may be difficult to absorb, but, when they are contrasted with the horrific pictures from Ethiopia, we can now see nightly on our televisions when they are contrasted with the incredible generosity of the Irish people whenever they are confronted by tragedy, then they can be seen in their true perspective.

Within the last few days, we have heard a great deal from Government Ministers to the effect that money is not the problem — the problem, we are told, is access to the regions where the aid is urgently needed. There may be an element of truth in this — but there has to be a suspicion that the issue of access is being used as a smokescreen. If it is possible to secure access for £100,000 of aid, it is equally possible to secure access for £250,000 of aid.

This Government have to face the accusation that they simply do not care about the plight of those who are poorest and most defenceless in the world. We have, of course, known for some time that the philosophy which underpins the approach of the last few years cares little about the poor and the defenceless here at home. Nowhere is this better illustrated than in the provision made to bring the basic right of health care to our people.

In their pre-budget submission, published recently and entitled "Must the Poor always wait?", the Conference of Major Religious Superiors pointed out that:

Long waiting lists in public hospitals have become a fact of life for many poor people. The length of aftercare hasshortened dramatically ... resources have not been allocated to build up the services in the local community ... The cutbacks in health were not based on a careful evaluation of the service but rather on ad hoc“blunt instrument” approach. The people who have suffered most are the poor who are sick or elderly.

In each of the years since 1985, the proportion of our national wealth that we are prepared to spend on health care has declined dramatically. We spent £7 out of every £100 of national wealth in 1985, £6.90 in 1986, £6.60 in 1987, £6.30 in 1988 and, by the end of this year, we will have spent — even including this Supplementary Estimate — no more than £5.90. Given the growth in the economy forecast for this year and next, we can safely calculate — after publication of the Book of Estimates today — that the proportion will be reduced still further by the end of 1991, perhaps down as low as £5.60 for every £100 of our national wealth.

I believe that if comparisons were readily available, they would show that, by the end of next year, we will be spending a smaller proportion of our national wealth on health care than any other country in the EC with the possible exception of Portugal, but that is half the picture only. We have one of the highest elderly populations in Europe, one of the highest birth rates, one of the highest incidences of mental handicap. We are rapidly discovering the stress effects of increasing unemployment and emigration. And we have yet to face up to the medical side effects of increasing alienation in our society, including drug and alcohol abuse among our young people, and the fallout of homelessness and other social conditions.

Surely even the Government can see that, in the face of all this, the provision that they are making for health care is totally inadequate and unjust. The money being made available today will do no more than paper over the cracks in the service and must be rejected for these reasons.

People with a mental handicap are often called special. Why? Is it because people with a mental handicap never complain, never protest, never march? Is it because the families of people with a mental handicap are prepared to carry whatever burden the State is unwilling to share? Is it because people with a mental handicap can be safely ignored whenever employment policy is being drawn up? Is it because the families of people with a mental handicap cannot afford to die, because there is no provision for their children — and even find it difficult to emigrate, because there are countries that do not want to let them in?

Everyone involved in the provision of services for people with a mental handicap recognises that a crisis now exists in the range and quality of service on offer to them. This crisis has been brought about by the failure of Government to allocate the necessary financial resources to the services, and for no other reason. As a consequence, people with a mental handicap face — and will continue to face — cutbacks in education and training, open and sheltered workshops, breakaway and crisis intervention facilities and residential centres. They have now been brought to the point where they — the ones who never protest — will be marching on this House next Friday, to demand urgent action, to demand that the needs of people with a mental handicap must become a priority.

The Government must act now, to make available the funding necessary to end their waiting lists. According to the most up to date figures available from the Eastern Health Board, a total of 328 residential places are needed now. In the years after 1990, a further 567 places will be needed. And residential facilities are only a part of the problem. In the areas of training, education, and employment facilities, the crisis is growing. In all of these areas, the rights of people with a mental handicap have taken second place to the needs of Government book-keeping. Even now, when some money is becoming available for health, that money is being spent only in the country's general hospitals.

And what is happening in those same general hospitals? There, too, the waiting lists for elective treatment have continued to grow — to such an extent that people are now forced to use the accident and emergency services as a back door to the beds they need. That is why a crisis has developed in Dublin, with so many beds now being occupied by accident and emergency cases that people who had finally reached the top of the waiting list for elective treatment are now being turned away again.

The Minister for Health appears to be content to turn a blind eye to this growing problem. He has no excuse for doing so. We warned during the election campaign that this would happen—that if money was allocated to accident and emergency services, without an adequate allocation to open the beds and recruit permanent back-up staff, the last situation would be worse than the first. Not for the first time, the present Minister for Health must stand accused of cheeseparing and incompetent planning. It seems that even when he is finally prepared to allocate necessary resources, he cannot avoid making a mess of it.

There are many other issues I could address in terms of the specific items in our amendment. What we have decided is that as many as possible of our spokes-persons will participate in this debate, concentrating on the specific areas of inequality and disadvantage that these Estimates fail to address.

I repeat that the 1990 Book of Estimates illustrates graphically that this Government are imprevious to the increasing level of information and publicity about the level of poverty in our country. This Book of Estimates will not create one extra job to stop our young people from emigrating; it will not provide one additional educational opportunity; it will not alleviate in any way the continuing crisis in our health services; it will not build the houses we need for the thousands of families on local authority waiting lists.

This Government have missed a tremendous opportunity to begin the task of healing the wounds in our society. These Estimates lack compassion and imagination. At a time when resources are available, when it would be possible to address some of our fundamental social and economic problems, it is a tragedy that this Government are not prepared to bother.

The Government place their faith in the private sector to create the jobs so urgently needed. One has to contrast two remarkable positions. The first is the assault by the Minister for Labour, Deputy Bertie Ahern, on the private sector when in a recent speech he lacerated them for failing to meet the needs of the country and failing to provide the employment which is so urgently needed. Then the Minister for Finance released his Structural Funds bonanza and told us that the private sector will make the bulk contribution in job creation and wealth creation in the 1992 period. There is something wrong here. They both cannot be right. If one looks at the projected Structural Funds expenditure for the years 1989-93, we find that the private sector are to put £1,600 million into industry and services. That is the key figure on which the Structural Funds issue is based. We must remember what the Minister for Labour has been saying. He has had to lacerate the private sector for failing to date to provide the jobs we need. Where is the dramatic change to come from which will produce from the same private sector £1,600 million to provide the industry and services we need?

The rest of the Structural Funds are to be used for infrastructural development on roads, railways and so on. It is a wonderful idea to have great roads but what traffic will be using these roads? Will it be vehicles and buses taking people to the emigrant ships? A road in itself is a fine luxury if it fulfils the role of bringing manufactured goods from new factories where jobs have been created for young people. The Minister for Labour has told us that this is not happening and I suppose that it will not happen.

The idea is being put abroad by the Government and by some commentators that this so-called bonanza which is to come from Europe is some kind of free lunch, some kind of gift being offered to the Irish people from the heartland of Europe — they like us so much that they are giving us these funds. That is very far from the truth and the sooner the better we realise it. It is a purported compensation for what we will have to suffer as a result of 1992. The Structural Fund input is the upside but little is being said about the downside. There is a very threatening and worrying downside which we had better think about. We must realise that there is a serious threat to what is left of our indigenous industry. Many jobs in Irish-owned industry will be under severe threat as a result of increased competition in 1992. The distribution sector faces severe threats of cutbacks and job losses. The financial and services sector is under major threat and there are other areas which will be hit very badly. There will be a drain on our resources and on job opportunities. That is the downside of these issues. It is a very serious matter and a very serious threat to us.

To counteract that, the Structural Funds are being made available over a period of years. When you build a road it is not an ongoing thing. The ongoing things are the jobs, factories and so on. Where are the Government's plans to ensure that these things are going to come on the scene at all? It is a bit like a pious platitude for the Minister for Finance to say, as he did when he unveiled details of the Structural Funds, that the private sector is certain to put up the £2.2 billion necessary to bring the force of these Structural Funds into play. In my eye, it is certain to provide it. Ask Deputy Bertie Ahern, Minister for Labour, how certain he is that the private sector is going to provide the money. If it is not provided from the private sector, and it is the private sector that the Government place virtually their total reliance on, the Structural Funds will not roll, the jobs needed, even to counter-balance those that we know will be lost, will not be created and we will be left in a very serious position economically.

We say that the Government have a responsibility to ensure that the job creation from that £2.2 billion is provided. They should take whatever steps are necessary to ensure that those jobs are provided in the public sector, the semi-State sector, the private sector, by joint ventures or whatever. They should not have the pious hope, as Deputy Reynolds does, that they will evolve. If we do not look to the history and the experience of job creation in the private sector, we will deserve what we get. History has shown that the private sector does not meet the employment needs of Irish society and never did. There are many other matters I wish to address but I will give the remainder of the time to my colleague, Deputy Ferris.

I thank Deputy Taylor for sharing his time with me. I will confine my remarks to the area of social welfare because that is my brief in the Labour Party. I am pleased that the Minister for Social Welfare, Deputy Woods, is in the Chamber. The amendment proposed by Deputy Taylor and which I support refers in particular to the continuing covert approach to restricting access to social welfare programmes and the lack of adequate funding for programmes whose main aim is to combat poverty. When these Estimates were published we in the Labour Party discovered that there was a drastic cut of £100 million. This caused us the gravest possible concern. I know that Deputy Noonan of Fine Gael, has said that this does not look as bad as it is because there is an increasing income from PRSI and the Government will be recouping the amount from the social security insurance fund. The reality is that the Government are penalising employers and employees in meeting their responsibility in the area of social welfare payments. This has been confirmed by all independent sources who have published documentation, particularly in the area of social welfare. Almost parallel with the publication of these Estimates a document was published by The Justice Commission of The Conference of Major Religious Superiors. In the area of social welfare they say:

As we have seen already the poverty levels in Ireland are of crisis proportions. Much of this, though not all, is due to the low levels of Social Welfare payments. Originally social welfare payments were not meant to be the permanent source of an individual's income. Rather, they were seen as simply a means of tiding a person over until he/she got another job or recovered from sickness or other temporary setback.

The position has changed drastically with the new reality of permanent unemployment for almost a quarter of a million people.

The commission acknowledge that the Government in recent years have singled out long-term UA recipients and other categories for special attention. They further refer to the substantial increases that were outlined by the Commission on Social Welfare as being necessary. They recommend that a minimum of £60 per week for a single person and £96 a week for a married couple in 1989 terms is considered to be necessary. They strongly urge the Government to be explicit and to provide that money.

In the Labour Party we have also done our own analysis of these figures. We contend that a figure of £106 per week is necessary for a married couple to maintain themselves above the level of poverty. That is the reality. In the Estimates there is a reduction of 1 per cent in old age and contributory pensions. We cannot understand this when there should be an increase in the levels of payments in this area. In the area of child benefit there is an increase of 1 per cent. This is totally out of line with what the Labour Party are advocating. We have a party conference resolution that at least £40 per month is required in the area of child benefit. That has also been referred to by this same commission of religious superiors and we must compliment them. They are an independent body. The Minister has been negative in his response to them. They say: "No matter where one draws the poverty line the risk of poverty rises steadily as the number of children increases". They say that 40 per cent of all children are living in households with incomes below the ESRI level of 60 per cent. That is something that none of us can be proud of. Certainly we in the Labour Party will not make contributions in Estimates debates when this anomaly, particularly in the area of social welfare, is so blatant.

Other documents have been published in July of this year by Tim Callan and Brian Nolan of the Economic and Social Research Institute. They advocate that 60 per cent to 85 per cent of the people who are entitled to social welfare payments are somehow being missed out. They deal specifically with the rate of supplementary welfare allowance which is considered to be the absolute breadline for people who get no other Government support. These payments are discretionary. Some people are refused them, some people are abused for looking for them, some people are just not able to get them and some people get a minimum amount. It is an extraordinary system. The Department of Social Welfare will have to address this anomaly. They will also have to address the anomaly of the £60 which I have referred to earlier.

Some people are precluded from taking up some form of additional work, part-time or otherwise, in the area of social assistance schemes. In regard to the whole concept of means testing, young or unemployed people living at home are all differently means tested. The means test is carried out at the discretion of some officer who makes a decision arbitrarily. Some people have been forced to leave their homes and go into flats in order to prove that they need assistance, because the element of proof is always on the applicant.

There are also cases of widows whose husbands were in receipt of old age pension benefits such as free electricity, free television licence, free telephone rental and free travel. These women are suddenly at a loss, not only of the husband and his income but also of all these additional benefits they had while he was alive. These are the social areas the Minister for Social Welfare should look at in particular. Schemes such as the school books scheme, assistance towards the purchase of uniforms and the free footwear scheme are all administered by discretionary officers but none of them is administered by the Department of Social Welfare, as they should be. We must have all the information made available to us on the number of children in social welfare income families and the needs of those children and families. If we cannot ensure that vouchers, such as those available under the free fuel scheme, are issued to them we are doing an injustice to people who occasionally are incapable of looking for their rights, as referred to in the report issued by Tom Callan and others. Some people are unable to apply for these benefits. No Christmas bonuses are available for those people on the social welfare employment scheme even though their stamp rate, if it can be called that, is similar to that for those receiving unemployment benefit.

The Deputy has three minutes left.

In those three minutes I want to refer to the Social Charter which is now before the Council of Ministers. The Social Charter seems to be confined only to the area of workers, and people on social welfare or unemployment benefit have been removed altogether. The Social Charter states that "Under the rights of the social protection outlined in the October text, all citizens shall have a right to adequate social protection". The text of the Social Charter has been changed to include "every worker". This excludes social welfare recipients. The October text also stated that "persons, especially the elderly, must be able to receive a minimum income modulated or complemented by appropriate social assistance". That terminology has been totally removed with the agreement of all Ministers, so that people in that category are no longer included in the Social Charter.

The proposal in the original text under the heading "Elderly Persons" would have entitled every citizen at retirement, including early retirement, to a minimum income. This provision has been deleted and the present text makes a clear distinction between non-workers and workers who must be able to enjoy resources affording him or her a decent standard of living and includes persons not entitled to a pension. This totally excludes from the Social Charter, to which all of us subscribe, any obligation on the part of the Community or national governments to deal fairly and squarely with people in the social welfare categories. I want to put on the record that Deputy Barry Desmond and the Socialist group, the largest group in the Parliament, will strive to ensure that social welfare recipients will not be forgotten when it comes to approving the final text of the social charter, particularly as it relates to the categories of social welfare recipients whom I represent. I have a responsibility to highlight the deficiencies in these Estimates, the abdication by the Government of their responsibilities in this area and to ensure that these lesser people in our community will be treated with the dignity they deserve.

Before I commence my contribution I want to refer to the Social Charter mentioned by Deputy Ferris. So far as I know, unfortunately the European Parliament will not have a final say as to the shape of the Charter; it is the Council of the Heads of State who will meet in December who will finally decide what its shape will be. The Commission have already prepared and issued their regulations and action programme in relation to the watered down version of the Social Charter. Large sections of the population of the Community, including women, the handicapped, the aged, the unemployed and those in poverty will be excluded from the Social Charter.

In speaking in this debate I want to speak to the amendment which The Workers' Party put down to the Government Estimates. Our amendment reads as follows:

To delete all words after Dáil Éireann and substitute the following:

"noting that the 1990 Estimates for the Public Services and the 1990 Summary Public Capital Programme represents a further 3 per cent cut in Government expenditure in real terms and that the result of this will inevitably mean a further deterioration in a wide range of public services, rejects the Estimates and calls on the Government to redraft them to ensure that the damage done to essential services in recent years is undone and to enable unemployment and emigration to be tackled by stimulating a far more rapid rate of job creation"

When the Estimates for 1989 were published in October 1988 I described them as being "savage in their extent and brutal in their intent". While the Estimates for 1990 are far more complex and subtle, when the public relations packaging is torn aside what can be seen is that there has been no change in economic direction since the general election and that the Fianna Fáil-Progressive Democrat administration intend to continue with the policies of the previous Government which brought record profits and earnings for the few but record unemployment, emigration, poverty and cutbacks for the rest.

The Minister for Finance was quoted as saying of these Estimates that "the days of the major cuts are over" and the Fianna Fáil PR machine has swung into operation to convince the public that happy days are here again. A random glance at some recent newspaper headlines shows just how false a picture this is —"Hospital services in north Dublin in a shambles"; "Children wait 12 months for therapy"; "Services for mentally handicapped adults in crisis"; "Cuts leave remedial teachers out in the cold"; "Health research chairman resigns on cuts"; "Garda complaints board threatens resignation over lack of resources"; "Civil legal aid applicants being turned away"; "300,000 left the country during 1980s"; "Labour force survey shows decline in numbers at work" and "Government attacked over Third World aid".

The fact is that what Fianna Fáil and the Progressive Democrats have been trying to pass off as the end of the cuts is actually a continuation of the cuts, albeit at a lower level than in the past few years. Given that the likely level of inflation next year will be at least 4 per cent, the 1 per cent increase in the overall level of Exchequer-funded expenditure for 1990 represents a further cut of 3 per cent in Government expenditure in real terms. In addition the combined nominal increase in current and capital expenditure of £290 million has to be viewed against total cutbacks over the past two years of almost £800 million. The Minister tried to cover this up by pointing out that some of the expenditure which will not be made by the Government and which is not covered by the Estimates will be covered by Structural Funding. My question in relation to that is: what has happened to the principle of additionality or to the claims by the Government that they would not replace Government expenditure by expenditure of EC Structural Funds?

So far as I can see the Minister is clearly admitting that they are now replacing Government funding of services and programmes from revenue by using EC Structural Funds. That would be fine if we could expect the European Structural Funds and other budget funding from the European Community to continue. The NESC report argued — and I would support them in this — that the European budget should be expanded and there should be budget transfers from the European Community to Ireland and other underdeveloped regions. There is no such policy at present in the European Community. There is no policy of continued transfers from European budgets to Ireland or anywhere else. The only commitment we have is for Structural Funding up to 1993. This business of replacing Government expenditure by European funding is a serious error because it does not guarantee the continuation and expansion of the essential services which the people of this country require.

For the fourth year in succession there has been a significant decrease in current Government expenditure in real terms and the result of this will be that most Government Departments will be left with no alternative but to implement further cutbacks in essential public services.

The policy of cutbacks started under the Fine Gael-Labour coalition but really intensified with the election of Fianna Fáil in 1987. It is time now to stand back and calmly and rationally examine where that policy has taken us. There is no doubt that the economic and fiscal profile of the country has improved on a number of fronts. The Exchequer borrowing requirement is down, receipts from tax and excise duties are buoyant, an apparent increase in GNP is forecast and profits are to continue their dramatic rise.

It was interesting to note in the Minister's speech, the first time I have seen such a statement included in a Government speech delivered in the House, the reference to the fact that competitiveness does not rely entirely on wages and wage restraint and that there was also a need for restraint in profit taking and profit margins. I did not see anything in the Minister's speech which indicated that the Government have a policy to deal with that problem. It is important to note that the GNP forecast — the Minister quoted a figure of 4 per cent and the ESRI figure is about 5 per cent — does not make clear whether the figures are real or whether they take into account the transfer pricing being engaged in by the multi-nationals. We have not been told to what extent such transfer of pricing takes place. There is no doubt that that inflates the volume of apparent economic activity but it does not create any real economic activity.

On the other hand we must consider the repatriation of profits which multi-nationals engage in. I understand that the figures runs to £2,000 million this year alone. Serious questions must be asked about the growth in GNP. The Minister for Finance should clarify if we are talking about real GNP growth or if we are talking about fictional growth which is based, to a large extent, on the manipulations of the multi-national companies.

Of course, most of the factors which have contributed to these improved figures have been external, such as the continuing weakness in the price of oil and other commodities and a steady expansion of world trade, especially among OECD countries. We argued all along that the economy of the country could have been brought to order without the imposition of the appalling cutbacks which have done so much damage in so many areas of Irish life. We advocated an alternative but the Government consistently refused to accept it. It appears that they all continue to refuse to accept it because the Minister in his concluding remarks said that everything confirmed that the country was on the right road. He said that while there may be disagreement on or a criticism of detail the overall strategy was unquestionably correct and had already been vindicated by results. I argue that that is not the case. Indeed, the NESC report, which was debated in the House, questions the strategy of the Government in a number of areas. Our alternative was to increase the wealth and resources of the country by producing more.

In addition, these figures are only part of the picture. The success or failure of a Government's economic policies cannot be measured by these criteria alone. As well as a fiscal audit there is a need for a human and social audit on the impact of Government policies, and judged against these criteria, the policies pursued by Government since 1987 have been disastrous. The legacy of Deputy Haughey's term as Taoiseach has been an accentuation of the economic differences and the division of this country, to a far greater extent than ever before into two economic nations. In one of Deputy Haughey's nations, wealth multiplies as if by magic; in the other the majority of people face a continuous battle to make inadequate ends meet and many survive in a twilight zone of poverty.

One is the nation reflected in the financial pages of the newspapers which each day report even greater profits for private firms. Private profits rose by 42 per cent between 1986 and 1989 — the period when the cutbacks were at the most severe — compared with an increase in wages of 15 per cent in the same period. Early in 1989 it was expected that the Irish stock market would grow in value by 25 per cent during the year; in fact it grew by 31 per cent in the first nine months of this year. Prominent businessmen like Mr. Michael Smurfit and Mr. Tony Ryan earn figures that are incomprehensible to the majority, while the two main banks report profits of almost £200 million for the last six month period — that is a profit of almost £1.5 million for every day on which their doors are open for business.

Deputy Haughey's other nation, the one occupied by the majority, is very different. This is the nation of Health and Education cuts, of high PAYE and low pay, of rising mortgage rates and inadequate social welfare payments, the nation of the dole queue and the emigrant boat. Deputy Haughey's other nation is that so graphically depicted in the ESRI report published in September, which showed that up to 30 per cent of households are living in poverty, many children going without adequate food, evidence of a substantial increase in poverty between 1973 and 1987, and the risk of poverty for children increasing.

The divisions in our society are now so great that it would appear that those whose lives are reflected in the success stories on the business pages could not possibly inhabit the same country as those whose plight was highlighted by the ESRI report. The reality is that there is nothing magical about the prosperity of the few: it is directly linked to the poverty of the many.

What neither Fianna Fáil, nor their right-wing colleagues in the PDs, and Fine Gael, will admit is that the fight against poverty and unemployment cannot be won while the financial barons are allowed to reap uncontrolled profits. True, the conservative parties, nervous at their reduced support in the last election, have begun to talk about reforms here and changes somewhere else. But they will not face up to what is required, which is a radical reform of the tax system to transfer the tax burden in proper proportion to those best in a position to pay; the implementation of a job creation strategy based on direct investment to end the misery of unemployment and emigration; and the introduction of social welfare levels sufficient to allow people to live their lives with some degree of dignity.

The big companies, native and foreign, which are making a "killing" must be forced to keep their side of the bargain set down in the Programme for National Recovery, and invest their profits in genuine programmes for job creation. There is a vast scope for gaining revenue from capital gains taxes on the property speculators who have hit such a rich vein of gold in recent years. Those who own land and resources must be compelled to contribute their share to national revenue. As the tax amnesty proved so conclusively, despite denials by Government spokespersons, there is a financial hoard which must be brought in to lighten the burden on workers and their families, who have become the disinherited second nation of the eighties and who face an equally bleak decade in the nineties, unless there is a change of economic direction.

No area illustrates more the real class interest of all recent Governments than their absolute failure to introduce the sort of fundamental tax reform that the majority of people want. Is it not ironic that within the past few weeks hundreds of thousands of people have been marching for democratic reform in Czechoslovakia and the German Democratic Republic, to the enthusiastic endorsement of conservative politicians in this country? And they are getting their democratic reforms. Ten years ago hundreds of thousands of PAYE workers marched through the streets of Dublin, Waterford, Cork, Galway and other towns and villages, proportionately probably more than those who have been marching in Eastern Europe, yet they are still waiting for serious tax reform.

While there have been some minor changes in the tax system during the past ten years, a number forced on the Government by court action, there has been no fundamental reform. In 1979 PAYE workers paid 87 per cent of all income tax; today they pay even more. Up to 1975 the highest rate of tax, paid by the super-rich was 80 per cent and this has gradually been reduced to 56 per cent. The cost of reducing the 65 per cent top rate to 58 per cent meant that £41 million was returned to the wealthiest taxpayers. Little progress has been made in relation to farmer taxation. Business tax reliefs cost almost £100 million. The real yield from capital taxes is down. VAT has been imposed on fuel, clothing, electricity and footwear. Indeed the Minister of State has now informed us that in order to solve the smog problem they are going to put a tax on coal. This is ridiculous. Service charges which were introduced by the Fine Gael-Labour Administration continue to be applied in many parts of the country.

I spoke earlier about the huge profits being made by the banks. How just, fair or democratic can a society claim to be which allows a bank to pay a tax rate of only 26 per cent on profits of £100 million made over a six month period while a man or woman on the average industrial wage is expected to pay a tax rate of 56 per cent? Perhaps it is time the PAYE workers took to the streets again to force the Government to sit up and take notice.

Neither is there any indication that the Government have learned the lessons of failed policies in the employment area. The amounts of money to be made available to this country under the European Structural Funds have had an impact on these Estimates, especially on the public capital programme, but there is little evidence from the detailed announcement made by the Minister for Finance earlier this week to suggest that the money will be applied in the imaginative way needed to provide the level of development necessary to allow this country to take advantage of the 1992 process.

The job targets under the National Development Plan are derisory. The hoped for level of 35,000 gross new jobs per year — we are talking about gross figures here — is at least 10,000 per annum less than the number required to bring unemployment down to the level of 100,000 by 1995. In addition, we believe the balance between infrastructural projects and industrial development is wrong and that at least 60 per cent of the available money from the Structural Fund should be put directly into job creation.

The reliance to such a major extent on private investment must also place a major question mark over much of what has been proposed in the plan. Irish private enterprise has shown itself to be far more interested in investing its profits outside the country than in creating jobs at home. Irish companies have a far greater tendency to invest their profits abroad than companies in any other country in Europe with the exception of the United Kingdom according to the consultants, KPMG. They spent an estimated £1.1 billion last year buying up foreign acquisitions. Figures for capital outflows for the first six months of this year indicate that they intend to repeat this performance with even more spent on foreign acquisitions this year.

The outflow of profits and dividends from this country in one year will be almost as much as the £2,800 million we are going to get from the EC Structural Fund over the four years of the development plan. The Government have no plans to reduce the amount flowing out of the country. Unless they do so unemployment will continue at an unacceptably high level. In his speech the Minister referred to the boom in the economy and indicated that he thought the Government are on the right road and that this strategy is correct. I would draw his attention again to the NESC report in which they argue that there is need for intervention in two broad areas, first by the Irish Government, in the developmental policies of manufacturing services and agriculture and, second, by the Community at the budgetary level to which I have already referred. As such the report is an indictment of Government policies over the entire period since 1973. Of course, I recognise that we have had governments other than Fianna Fáil Governments since 1973.

It states in relation to industrial policy that the failure of indigenous industry in a free trade environment, heavy job losses in grant-aided projects, a short life cycle in foreign firm 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 when we were apparently doing well in the seventies 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 was 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, which is not adequately brought out in the report, that now there has been an upturn and additional new foreign projects are being established, industrial policy may again be considered successful. However it will not be successful unless indigenous firms are capable of competing internationally.

The warning bell in the Minister's concluding statement is that the lessons of the seventies and eighties are not being learned. Because a boom has appeared on the horizon the policies being implemented by the Government are assumed to be correct, and the structural problems in Irish industry will not be addressed. Because international markets are drawing products out of Ireland and because there appears to be an improvement in the economy, it is assumed that everything is fine, but we cannot guarantee, and we can almost predict that the current boom will not last. These booms are cyclical and in another seven or eight years the economy and industry will still be no better able to cope with a down turn in the world economy. My greatest fear is that the Minister and the Government will ignore the NESC report and the lessons we should learn from the seventies and eighties. The Minister's final statement should warn us all that the Government are complacent about the real problems facing us as we approach 1992.

Despite the recommendations of various reports, including the NESC report, and despite the abject failure of the job creation policies of successive Governments, there appears to be no willingness to make the necessary changes to give so many of our young people hope of something other than unemployment and emigration. The Government have been claiming that the economy has improved beyond recognition. As I have acknowledged, there have been economic improvements in a number of respects. The internal or domestic factors which contributed to this improved picture were achieved through the sacrifices made by the workers and their families. No sacrifices were made by the bankers, stock brokers or industrialists who, as the figures I quoted earlier indicate, continue to make vast profits.

Justice demands that whatever economic flexibility is now open to the Government it should go to the benefit of those who have suffered so much in the past few years — to restore health, education and local government services to an acceptable level, to implement the recommendations of the Commission on Social Welfare and to initiate an immediate job creation programme. There is no evidence in these Estimates that the Government intend to turn in that direction and we will, therefore, be vigorously opposing them.

The 1990 Estimate for the Department of Social Welfare provides for an increase of £57 million in overall expenditure. Gross expenditure for 1990 is estimated at £2,716 million compared with a projected outturn of £2,659 million in 1989. This is the amount required to finance and preserve all existing schemes and services. I must point out to Deputies Taylor and Ferris that all schemes and benefits are being maintained. There may be some changes in the number of claims. For example, in relation to child benefit there has been a small reduction in the number of claimants, but that is the only kind of reduction which will take place. People should try to understand how the Estimates work if they want to make sensible comments on them. I felt the comments made by Deputies Taylor and Ferris were both hypocritical and misleading.

As I say, gross expenditure is estimated at £2,716 million for 1990 and this is the amount required to finance and preserve all existing schemes and services. We are now spending each day on the elderly £2.2 million, the unemployed £1.9 million, family support £1.9 million and sickness £0.9 million.

In accordance with normal practice, the Estimate provides for the carry over cost of increases given in the 1989 budget, some £70 million. It does not include any provision for increases in 1990. These will be provided for in the forthcoming budget. The net Estimate for 1990 to be provided by the general taxpayer is £1,446 million. This is the Exchequer's contribution to the social welfare services and is £100 million lower than the published Estimate for 1989. To understand how this net figure is arrived at one must consider how our welfare sevices are funded.

Total social welfare expenditure comprises insurance based payments, funded from the social insurance fund, and assistance payments which are totally Exchequer funded. The social insurance fund is funded by the Exchequer, employers, employees and now the self-employed. The Abridged Estimates show the Exchequer contribution to the social insurance fund which is 52 per cent lower in 1990 than in 1989. This is because additional non-Exchequer resources are available to the social insurance fund in 1990.

Some public commentators have either misunderstood or misrepresented this net Estimate for Social Welfare. To help clarify the position, I have summarised the main features which contribute to the savings in the following table:

Table 1

£million

Gross projected outturn for 1989

2,659

Gross estimate for 1990

2,716

Less social insurance fund 1990 — non-exchequer element

1,270

Net estimate for 1990 (Exchequer)

1,446

The Estimate represents the cost of providing the existing services in 1990. It takes account of existing payment rates and the projected numbers of recipients on each scheme. The Estimate takes account of savings to the taxpayer of £206 million, partly offset by extra costs of £106 million. This results in a net saving to the taxpayer of £100 million in the cost of providing the existing level of services in 1990. Table 2 sets this out:

Table 2

£million

Savings to Taxpayer

Extra PRSI income (better collection, more at work, higher incomes)

99

Extra savings from measures to con- trol fraud and from reduced expen- diture mainly on unemployment and disability benefit because of lower numbers

55

Transfer of reserves in the occu- pational injury and redundancy funds to the social insurance fund

52

Total

206

Extra Costs

The carry-over full year costs of the increases in the 1989 budget

70

An increase in expenditure on pen- sions due to higher numbers of ben- eficiaries (mainly elderly)

20

Miscellaneous

16

Total

106

Net Saving

100

Government policies are working and the taxpayer is benefiting through a more equitable spread of the social insurance burden and a more efficient use of resources. The self-employed, who made no contribution to the social insurance fund in 1987, will contribute £54 million in 1990, thereby sharing the cost of social insurance with employees and employers.

We have had unprecedented success in tackling fraud and abuse and these savings are continuing. A further £55 million in savings will arise from measures to control fraud and abuse, and from reduced expenditure on unemployment and disability benefit. Another important factor reducing the cost to the Exchequer is the amalgamation of the occupational injury and the redundancy and employers' insolvency funds with the social insurance fund. This will result in a once-off gain of £52 million to the social insurance fund.

I would now like to deal in detail with these changes in the social insurance fund. There is no increase in employee or employer rates of PRSI in these Estimates. The same rates as applied in 1989 will apply in 1990. In line with the normal practice of adjusting the ceiling in tandem with wage increases, the present contribution ceiling for employers of £18,000 will be increased to £18,600. The contribution ceiling for employees and the self-employed will similarly be increased from £16,700 to £17,300. The increase in contribution income is a major element contributing to the reduction in the Exchequer's contribution to social welfare expenditure. I would emphasise, especially having heard speakers this morning, that the social insurance fund confers benefits on workers as a right. I would ask Deputies to keep that in mind. I do not want to do away with those rights to workers and I do not see it as a general tax. This is a benefit paid by workers and employers for their own benefit. That is what the social insurance fund is about.

This increase reflects the sound management and employment policies being pursued by the Government. The additional PRSI income of £99 million arises mainly from greater efficiency in the collection of PRSI, increased contributions from the self-employed — £15 million extra on last year, carryover effects in 1990 of a higher income base in 1989 £18 million, higher earnings by contributors in 1990 — £28 million, an increase in the number of people in insurable employment, £20 million and the increase in income ceilings at £16 million. In this regard, I want to reject the recent absurd implication by the Fine Gael spokesman on Finance that there is a hidden agenda of PRSI rate increases as being completely unfounded. I trust that in setting out the reasons for the substantial increase in social insurance revenue I have made this very clear. There are now more people at work, people in general are receiving higher incomes and the management of the system is more effective. That is what is reflected in the social insurance fund increased revenue. The Government have decided to amalgamate the social insurance fund the occupational injury fund and the redundancy and employers' insolvency fund into an enlarged social insurance fund. The effect will be that from 1990 on, payments previously made out of the occupational injuries fund and the redundancy and employers' insolvency fund will be made out of the social insurance fund. The existing three separate rates of employer contributions to the three funds will be aggregated to form a single contribution rate the same as last year subject to a single ceiling.

The amalgamation will not affect entitlement to benefit under the various schemes involved. It will provide a more co-ordinated and more efficient form of control and accountability, and will draw together all social security payments. It will also simplify and improve the administration. The new consolidated fund will also be more secure. It will put the financing of the two smaller funds on a sounder basis and will do away with the need for the frequent changes in the rate of contribution that have occurred in the past. There is a once-off gain to the Exchequer and, therefore, to the taxpayer in 1990. As part of the amalgamation, the accrued surpluses of £52 million in both the occupational injuries and the redundancy funds will be transferred to the enlarged social insurance fund.

The Irish economy has performed very creditably in the past few years. There is an increase in the numbers at work, and a reduction in the number unemployed, despite curbs on the public sector. The improvement in growth and employment trends has been achieved against a background of major improvement in the public finances and a reduced rate of inflation. A key element has been the progress made in reducing the Exchequer borrowing requirement from nearly 13 per cent of GNP in 1986 to an estimated 3.5 per cent this year.

The progress that the Government have made in terms of economic growth and employment, owes much to firm budgetary discipline and the provisions of the Programme for National Recovery. Our economic objective is to achieve sustainable growth in output and employment. The evidence of the past few years is that this is being achieved. Current estimates indicate a substantial increase in the numbers at work during 1989 and 1990. The ESRI forecast an average increase of 36,000 in non-agricultural employment between 1988 and 1990.

The Irish economy has now the capacity to move into a period of sustained growth and, more important, of enduring gains in employment. Realising this capacity requires a continuing and responsible commitment on the part of all who participate in, and direct, our economic activity.

Under the Programme for National Recovery, the Government are committed to maintaining the overall value of social welfare benefits and, within the resources available, to consider special increases for those on the lowest payments. In the last two years, significant additional resources have been allocated to improve the position of persons at the lower end of the income distribution. Our record to date, is a clear indication of the practical concern we in Fianna Fáil have for people in need. The Programme for National Recovery has been good for the poor. Before the programme the long-term unemployed received increases on average of 3 per cent to 5 per cent per year compared to a cumulative increase of 17 per cent to 24 per cent over the past two years. This represents a significant increase in real terms.

The House will know that the Government have increased this year's Christmas bonus to 70 per cent of the recipients' normal weekly payment. This is 5 per cent more than last year. Almost one million people will benefit from the bonus at a cost to the Exchequer of £24 million. This is an increase of £3 million over last year. The Government recognise the extra financial pressure those dependent on social welfare have to bear coming up to Christmas. The bonus will, for the first time, be paid to widowers and deserted husbands who qualify under the new schemes I introduced last month. Let me give a few examples of how the bonus will help. A couple on contributory old age pension, both aged over 66 will receive a bonus of £71.50 bringing their total payment in the first week in December to £173.70 an increase of £10.00 over last year. A widow on non-contributory pension with three children will receive a bonus of £61.80 bringing her total payment to £150.10 an increase of £8.70 over last year. A married man with three children on long-term unemployment assistance will receive a bonus of £74.90 bringing his total to £181.90 an increase of £18.90 over last year.

The necessary funds are being provided from within my Department's existing allocation. This is yet another tangible benefit from our success in ensuring effective management and control of social welfare expenditure.

I am very pleased to announce to the House that the Government have approved the setting up of a new separate social welfare appeals office.

This new appeals office will be established by legislation in the Social Welfare Bill, 1990, as an executive office of my Department. A headquarters for the new appeals office has already been set aside and arrangements to bring it into operation on an administrative basis will commence next week.

The main features of the new office are: that appeals will be made directly to the social welfare appeals office. At present appeals are made to the Minister for Social Welfare and processed by my Department. Under the new arrangements, appeals will be made direct to the appeals office, which will deal with all aspects of the appeal. This will highlight the independence of the office. The appeals officer will give full details of his reasons in the event of an appeal being refused. One of the main criticisms made of the present system is that claimants do not get adequate information about the reasons their claims are turned down. Considerable progress has been made in recent years, both in relation to initial decisions and to appeals. However, I want to ensure that claimants who have been refused are supplied with as much detailed information as possible. They should also be encouraged to seek any additional information they require as a basis for their appeal.

The appeals officer will, in future, outline as fully as possible his reasons for refusing an appeal. The appeals office will publish an annual report on its activities. The publication of an annual report will emphasise the independent status of the new appeals office and will make an important contribution to the development of public confidence in the new arrangements.

The report will give details of the number of appeals received and decided by category, the outcome of decisions, commentary on trends, the reason for the incidence of certain types of appeals and, where appropriate, policy recommendations. A report on these lines will be useful in monitoring and assessing the effectiveness of the whole decision making process.

Appeals officers and the director and chief appeals officer will be appointed by the Minister for Social Welfare. Individual appeals officers will retain the discretion to decide whether appeals are dealt with summarily or by oral hearing. However, where an appellant is unhappy with a decision not to grant an oral hearing, the director and chief appeals officer will state the reasons for the refusal of the request. In addition, I have decided that both the Minister for Social Welfare and the Director of the Social Welfare service will in future have the power to direct that an oral hearing be allowed in a particular case.

The new appeals office will be a self-contained office headed by a director and chief appeals officer. It will have its own manager and secretarial staff. Its headquarters in D'Olier House will include private rooms for the hearing of appeals.

The current system of appeals has many positive features in relation to simplicity, speed and accessibility, which I have been careful to retain. One such feature is informality, which provides a significant advantage over a more legalistic system in terms of providing the best possible service. These changes will maintain the independence of the appeals system and ensure that it is perceived to be fair and independent. They will also fulfil the undertakings contained in the Programme for National Recovery with the social partners, and in the Programme for Government.

In regard to the bonus for employers who create jobs, another major initiative for which provision is made in the Estimates is the PRSI exemption scheme. Under this scheme employers will be exempted from having to pay the employers' PRSI contribution in the tax year 1990-91 in respect of any new employees they take on between 23 October 1989 and 28 February 1990.

The target for this scheme is 5,000 additional jobs, all of which will be filled by people from the live register. This means a £7 million bonus for these employers from the Government in terms of PRSI contributions foregone. Indeed, if the target is exceeded the bonus will be even greater. There is no limit to the number of additional employees which can be taken on under the scheme.

I would like to see as many employers as possible availing of this significant concession. The economic prospects are good. Next year will be a good year and now is a good time for employers to take on additional workers and avail of this scheme. Already 400 employers have made inquiries and it and I am confident that the scheme will give a major boost to employment creation over the next few months.

In regard to opportunities for unemployed people, I want to ensure that whatever opportunities become available are directed as far as possible towards people who are unemployed. The PRSI exemption scheme achieves this. The Jobsearch Programme which I introduced in 1987 has as its primary purpose to give the long term unemployed better access to State-sponsored training and employment schemes. The programme has had major success in doing this.

This programme will continue next year and special steps will be taken to identify and support those long term unemployed persons who have not, so far, been placed in a scheme or training course under the programme.

Deputies will also be aware of my continuing interest in making the unemployment payments system more flexible and responsive to the needs of those it serves. Initiatives I have introduced in recent years have been primarily aimed at those unemployed persons who want to further their education or take up part time work or voluntary work in their own community. There has been a very positive response to the changes which I have made and I plan to continue this policy in the future.

Within the next few days, I will be introducing new regulations to allow long term unemployed persons participate on a full time basis in second level and equivalent education courses while retaining their unemployment payments.

These opportunities will make second-chance education a real option for unemployed persons who want to improve their employment prospects. The vocational training opportunities scheme is now up and running nationally and will be extended further. The situation as far as third level courses is concerned is somewhat more complex, but I am examining what can be done in this regard, initially on a pilot basis, and will be making an announcement shortly.

The Jobsearch Programme highlighted the need for literacy courses and I am discussing with my colleague, the Minister for Education, what measures can be taken in this regard. I am confident that the new initiatives will greatly assist those people who want to improve their educational attainments with a view to re-entering the jobs market.

One of the most significant recent developments in the social welfare area has been the introduction last month of new social assistance schemes for widowers and deserted husbands with dependent children. They can now qualify for an assistance payment similar to that paid to widows and deserted wives. In practical terms, this means that the payment being made to a man with four dependent children has increased from £82.00 to £101.80 per week, a substantial increase of £20.00 per week.

Almost 900 have applied in the first month for the new schemes.

On the question of sub-contractors, Deputies will be aware that my drive against social welfare fraud and abuse has brought substantial savings to the taxpayer and PRSI worker. Following regulations I introduced last January, employers in construction, contract cleaning, forestry and the security industry have been required to notify my Department of the commencement of employment of all new employees.

These arrangements have proven to be very effective. To date, over 13,000 new employees taken on have been notified to me by employers. A special survey was carried out to check compliance by employers with the new regulations. Irregularities were discovered in almost half of the 792 firms surveyed during the first nine months of this year. My Department are currently considering legal proceedings in respect of a number of these employers.

It is clear that the extensive area of sub-contracting, which is a particular feature of the construction and forestry industries must also be tackled.

There is still a considerable amount of fraud and abuse, expecially in these areas, by unscrupulous employers and sub-contractors. I am determined to stamp out this fraud and ensure that they contribute their fair share to the Social Insurance Fund and share the burden with bona fide employers. I want to inform the House that in the next few days I will be making regulations requiring persons who engage sub-contractors to carry out work in these areas to provide me with details of all such contracts entered into after 1 January 1990. These regulations will also oblige sub-contractors to notify me of any similar arrangements they enter into.

The Government are committed to closer co-operation with voluntary bodies and organisations. The voluntary grants scheme has enabled me to provide assistance to 100 voluntary organisations this year.

Earlier this week, I hosted the second pre-budget forum. The purpose of the forum was to discuss what the priority areas should be in preparing proposals for next year's budget. This year's Forum was very successful and informative. Like last year, I propose to follow it up with a briefing for voluntary organisations on budget day.

We in Ireland are very fortunate to have such an extensive and vibrant social services sector and I want to pay tribute to the many voluntary workers who give so selflessly in serving the community. I know that other European countries are very interested in the quality and extent of these services. I have arranged that during the Irish Presidency of the EC a major conference will be held in Galway in conjunction with the EC Commission on the role of voluntary organisations in the social services area.

The extended scheme of treatment benefits has been operating now for two years and has been very successful. To date over 121,000 spouses, mainly working in the home, have availed of treatment which was not previously available to them.

A total of 219 dentists has signed agreements to operate the extended scheme which includes dependent spouses. The nature of the treatment being provided to dependent spouses underlines how necessary it was to extend dental benefit. The incidence of treatment such as fillings, extractions and dentures far exceeds the norm for insured persons generally. For instance, dentures are being fitted over three times as frequently for spouses. The reality is that Irish mothers have traditionally put their children first to the detriment of their own needs. I would like to thank the dentists who have operated the new scheme.

The new scheme is essential and needs to be further developed. I am, therefore, once again inviting all dentists to fully participate in the extended scheme. I have written to the Irish Dental Association suggesting further talks on how we might achieve this objective. I do not wish to pre-empt the outcome of those talks, but I want to assure the House of my determination to ensure that the extended scheme operates for the benefit of all dependent spouses seeking treatment.

The Estimates for 1990 indicates clearly that our national finances are on the road to recovery. We can look forward to the future with confidence. Our economy is set for sustained growth and increased job creation. Despite the continuing need to control expenditure, we have made sure that special consideration is given to the most vulnerable sections of our society. This is clearly evident in the social welfare area where we have not only maintained the system but have also improved it significantly and at the same time made substantial savings for the taxpayer.

I take this opportunity to welcome at least one section of the Minister's speech, the announcement of the independent appeals board he is setting up. This development has been promised and sought, for some time. However, we are concerned that there is inadequate provision for the board to be seen to be sufficiently independent and we will be pursuing this angle with the Minister in further debate and at Question Time. If the appeals board are to be seen to be independent it is vital that there be some involvement of representatives of the clients, let us say, outside the social welfare system. However, it is a welcome development.

I give the Minister credit for the establishment of the pre-budget forum. It is an excellent idea. However, I urge on him the idea of bringing his Government to a position where in preparation of future programmes for national recovery or national agreements they consider including the unemployed who are such a large group now in our society and who are not represented by any of the groups who form part of that society. The decisions taken there are vital to them, so the pre-budget forum is a small step and there is need to integrate the unemployed much more centrally in decisions about where this society is going and the priorities being established by the social partners. The unemployed will be with us in large numbers for at least two decades and they deserve a more fundamental role in the way the Government consult in preparing plans for the future. I ask the Minister to take that on board with his Government and see if he can give them a more central role than just a reference to them when we are considering social welfare changes in the budget.

As Deputy De Rossa said, the Estimates for this year indicate we are going further down the line. I will not argue with the Minister about his figures. It is a complex presentation with, on the one hand, the Social Insurance Fund and its make-up and buoyancy, but let me take the Minister's figures and work from there. He admits that once again he hopes to make a £50 million saving in social welfare. He has regularly taken great credit for the level of savings which have been made in the Department of Social Welfare of the order of £300 million over the past two years, and he indicates that a further £50 million saving will be made this year. That is taking place when report after report indicates that the level of poverty in our society has never been greater, has increased substantially over the last ten years and at this time is higher than a similar survey indicated ten years ago. It is also indicated that there were particular problems for people with children. Can the Minister rest easy with that equation of substantial savings in social welfare, pleading inadequacy or inability to move quickly towards levels recommended by the commission and increasing evidence of poverty? We cannot do so on this side of the House. We all welcome the elimination of fraud, abuse hurts everybody, especially those who need an adequate social welfare system. The Minister has the wholehearted support of this side of the House in dealing with that problem.

The Minister has presided in the last two years over the dismantling of the social welfare system for many people, women in particular. That was unprecedented in the history of our social welfare system. I refer the Minister to his own book of statistics and in particular to the maternity benefit scheme where, for some extraordinary reason in the figure for 1987-88 — we have not got this year's figures yet — there was a drop of 27 per cent in the number receiving that benefit. I do not accept, and the figures do not suggest that there has been that level of change.

There has been a drop.

There has been a drop but not as big as that. Huge numbers of women have been excluded by much more difficult qualifying conditions, in particular the very large group of part-time workers who were removed from benefit which they had enjoyed for a long time as a result of changes in the budget of almost two years ago.

I have looked through scheme after scheme — the Minister referred to the disability scheme — and the story is the same. This is why the savings are not a cause of euphoria. I ask the Minister to examine them extremely critically because I believe his Department have gone overboard. One of my own party back-benchers writing to me states that it seems to him as if all sections of social welfare were working to instruction to make it as difficult as possible for anybody to obtain any benefit whatsoever.

I deny that categorically now for the record.

The Minister pointed to his success in relation to disability benefit. The correspondent I have referred to pointed in particular to cases which ring a bell with me because I have many of them coming to my clinics. Yes, the medical referee in the Department says they are fit to go back to work. The medical practitioner dealing with the person will not give that person a final certificate because he will not take it on himself to say this person is fit for work. Therefore, the person cannot apply for unemployment assistance as the Department are telling him to do. A large category of people have been excluded in that way.

In the unemployment assistance area throughout the country married women in particular find it extremely difficult to get any kind of benefit unless they come straight from full-time employment because there are so many reasons that can be found to be unavailable for work or not seriously seeking work.

There is a problem for persons who live on farms because virtually by living on a farm and regardless of whether you have any right to the earnings from it you are virtually excluded from any form of assistance. The people involved may be brothers, sisters, aunts or uncles of the owner of the farm.

Deputies have written to me saying young people are being forced out of their homes because while within the home, they will not be sufficiently supported in terms of social welfare. I am very concerned about this trend.

The effort to find areas of savings has a huge downside. I ask the Minister to look very carefully at this aspect particularly in relation to women and young people and to consider adopting the Fine Gael approach in relation to unemployment. I could go on in that vein for a long time but as I am dividing my time with Deputy Mitchell I will cover a number of other points.

I am very concerned about this Estimate. In discussing Social Welfare Estimates we are in a bit of a blind because we cannot see the giveaway side, but in order to rectify the deterioration in the social welfare system over the last two years by way of an overall package, there will have to be substantial transfers in the budget. One area I am concerned about is community development and poverty. In this Estimate the Minister has increased by £100,000 the grant to the Combat Poverty Agency. Within the last two months the Minister and I attended the presentations of the report. He welcomed the report which supported the idea of community development assisting poor communities to help themselves. These voluntary groups looked for a minimum grant of £4 million to commence a community budget fund from which they could allocate moneys, through the Department, as is allowed under the legislation. These groups are seeking in their own way to fight poverty and to solve problems in their own areas.

Throughout the country there are deprived areas and voluntary groups there are making an impact on employment in their area, but we have been able to assist them only with small grants to date. A clear need has been identified for a special fund, and the Minister has acknowledged the need for this fund.

I am glad that the Minister for the Environment, Deputy Flynn, has come into the House. We, on this side of the House, find it incomprehensible that with £8.5 million available for community development — and which, at least in part, could have been used to fund these projects — the Minister for the Environment, Deputy Flynn, refused to set up this fund. He is reported to have said there would be too much hassle. This has never been denied by his Department. There is a group of organisations willing to deal with this. I am very concerned about this matter and will not let go. Having failed to find this fund mentioned in the Estimates, I hope the Minister will not disappoint all those voluntary bodies who are doing such tremendous work and that those with a sense of social justice in his party will see to it that come budget time that error will be rectified and he will honour his commitment to those groups and establish a substantial fund. I regret that time does not allow me to make other points, but we will have other occasions and I will cede my time to Deputy Mitchell.

I would remind Deputy Flaherty that she should have asked for the agreement of the House in that respect.

I wish to share my time with Deputy Mitchell, subject to the agreement of the House.

Acting Chairman

Is that agreed? Agreed.

I thank Deputy Flaherty for sharing her time with me. I read recently that Machiavelli wrote some hundreds of years ago that there is nothing more dangerous than a reformer because he is going to come up against so many self-interests that he will find his life will be made very difficult and, in turn, that will make life difficult for everybody else. We seem to have got to the stage where we have to confront some of these problems which face society and which are having a particularly adverse effect on tourism and transport. I do not think it is an exaggeration to say that in some areas, this country might well be renamed the Rip-off Republic because there are within the areas of tourism and transport what appear to be smooth cartel operations ensuring that expensive services and products are made available to the public here in a way that would not be tolerated anywhere else and which can hardly be justified.

In the few minutes available to me I would like to look at two particular areas. In the area of tourism we are heading for the £2 pint in the Dublin region at a time when pubs are seling for £1 million plus. The reason they are selling for that sort of money is that they can get a return on their investment; in other words; it is attractive. It is unacceptable that tourists should be subjected to that outrageous price structure or that the citizens of the State who take a drink should be subjected to it on a regular basis. If a man paid £2 for a pint and asked for a half pint, he is very unlikely to get it for £1; the likelihood is that the publican will want £1.20. This is another outrageous abuse which cannot be justified and which tourists cannot believe is tolerated. In Northern Ireland, Britain or any other country, if you pay £2 for a pint, you will pay £1 for a half-pint, if you pay £1.50 for a pint, you will pay 75p for a half pint, but not in the Republic of Ireland. This is an outrageous abuse. It is time we looked at this whole operation, particularly in the Dublin region, because there appear to be reasonable grounds to suspect that some type of cartel arrangement is operating to allow publicans to push up the prices in unison and to charge those prices.

If the Minister is not prepared to take into account the general public or the visitor — the tourist — what about the ordinary Joe Soap on a very small income who has only the odd pint to enjoy and who cannot afford the many luxuries which many of us can afford, even in terms of food. This practice is grossly unacceptable and it is time that the Restrictive Practices Commission were asked to look at it.

In relation to transport costs, 125,000 units or containers go northwards across the Border every day. They are collected as far south as Cork, brought across the Border and exported through Warrenpoint, Larne, or Belfast Dock to Britain, and they can go as far south as London more cheaply than they can go through the southern corridor or through Dublin Port. This is outrageous. The operators can save up to £200 per container. Why is that? It is because our port costs are outrageously high and need to be examined, and because our on-sea costs compared with Northern Ireland — even though we are crossing the same Irish Sea and going to the same or adjacent ports — are substantially higher. It means that people who see opportunities for markets in Britain do not take advantage of them because export costs are so high and their pricing structure would be all wrong. That, in turn, means that potential employment is lost. Again, there are reasonable grounds to suspect that a cartel is operating on the Irish Sea and that the price structure is controlled by a small number of people, because of the difference in price structures between the Republic and Northern Ireland. It is time this was taken on board. It is grossly unacceptable that 125,000 units, containers, having been collected in Cork by Northern Ireland carriers can go through Larne, Warrenpoint or Belfast Dock and as far south as London more profitably than by using a port in the Republic.

The second element is the cost to the hauliers — petrol, diesel, tax, insurance and duty, etc. all of which are substantially higher here. By 1992 there will have to be a certain modification. There is some suggestion that we may look for a derogation. There can be no question of looking for a derogation if the principle of cabotage is ceded. That will mean that the Northern Ireland carrier not only can collect in the South and take delivery in the North, as he is doing at present, but he will be able to collect in the South and deliver in the South; in other words he could collect in Cork and deliver in Dublin having purchased his vehicle in Northern Ireland, thereby annihiliating the industry here. We have no choice but to reform the cost of vehicles for hauliers in the Republic.

There are two other points I wish to put on the record. First, given the high cost of petrol in the Republic there is justification for the introduction of duty free petrol stations at ports and airports. One might think it surprising that I should suggest airports, but cars can be hired at airports. Consideration should be given to the introduction of duty-free petrol at ports. It is possible that that could be managed by Aer Rianta who already have an arrangement with Aeroflot where they barter fuel for services. That, too, could be extended.

Recently in Japan — where the people are avid television watchers — a programme depicted Ireland as a place where everybody goes around in bare feet on Lough Derg and that this was typical. It showed an aerial view of Dublin and the rest of the programme concentrated on Northern Ireland. This programme was from a country which is out to double the number of its tourists going abroad at the same time that we are seeking to double the number coming here. Japan is seeking to do that under pressure from the international community because they are such a large creditor nation. What is their primary concern? It is the safety of their visitors going abroad because they are not used to travelling, on average they take about six days holiday in the year. Then, on television, they found this country represented by bomb throwing, religious maniacs who have little or nothing to contribute to a cultured society. I understand that the Irish Embassy sought — and I understand got — an apology for the programme which was shown not long ago.

However, that is not good enough. The Minister, if necessary, should seek to make a special provision in the Estimate to encourage a proper balanced programme to be made because there is an enormous market of 100 million people in Japan who are anxious to double their numbers going abroad. It is offensive and totally unacceptable that such programmes should be made.

Japanese people, when travelling abroad, are told to be careful about where they travel and they are fearful of coming to Ireland because of the sort of things depicted on Japanese television. Indeed, I was told by a man who wanted to learn English here that he was advised to go to Britain because it was not safe in Ireland.

We must get our act together in relation to attacks on tourists and the question of representing this country abroad as a place in which it is safe to travel. It is particularly important to represent that view in Japan. I urge the Minister for Tourism and Transport to take a personal interest in this matter so that we can reverse the outrageous view abroad because of that unbalanced programme.

Is áthas liom an deis seo a thógáil chun labhairt ar na Meastacháin Choimrithe don bhliain seo chugainn. Taispeánann na Meastacháin go mbeimíd ag coimeád smacht ar chaiteachas an Stáit. Ag an am céanna, beidh níos mó airgid ar fáil le haghaidh seirbhísí atá ana-thábhachtach don fhorbairt agus don fhostaíocht.

I am happy to contribute to this debate, because the 1990 abridged Estimates and summary Public Capital Programme represents a continuation of the successful and prudent management of the public finances begun in 1987. They also show that we have reached the stage where we can build on our achievements over the past few years so as to further improve the economy and reduce unemployment.

While there is always a degree of uncertainty when it comes to forecasting future economic trends, there is now a well-founded consensus among economic forecasters that the major economic indicators will move further in the right direction in the period to 1993.

I am particularly happy to note that the employment position in the country is improving — albeit not as fast as I and the Government would like. The major objective of the Programme for National Recovery is to get the country onto a path of sustained long term growth, with a view to increasing the number of people at work. I note the forecast in the ESRI quarterly commentary that, despite the recent labour force survey, employment is now growing strongly and will rise by 30,000 over the two year period 1989 and 1990. This is a very heartening trend, which has been nurtured by the wise and careful management of the public finances, and which is being continued in the 1990 Estimates.

There are some danger signs — such as the levels of inflation and interest rates, external influences, etc. — which make it more important that both the private and public sectors maintain a balanced as well as a forward-looking approach in the immediate future.

Next year is the second year of the National Development plan. The Government will be utilising the additional resources being made available by the EC in the form of Structural Funds to enable the country to prepare for 1992. The availability of these funds will help to improve our agricultural, industrial, tourist and construction industries as the Single Market becomes a reality. My Department will be responsible for expenditure of £546 million — 19 per cent — of the £2.86 billion referred to in the Community Support Framework. This expenditure will be incurred on road improvements and sanitary and other local services.

Before turning to deal with some of the major specific issues arising on my Department's 1990 Estimates, I would like to make some general points. First, the reduction of some £18 million in the 1990 Estimates for my Department compared with the 1989 Vote is due to the fact that local authorities will use £45 million of accumulated capital receipts from tenant purchase schemes for their local authority housing programmes. When account is taken of this £45 million, the 1990 figures show an increase of about £27 million or 5 per cent over the comparable 1989 figures.

Secondly, the capital allocation for my Department next year includes significant increases on major specific programmes. It means that overall local authority housing programme will be up £12 million or 31 per cent, that road grants will be up £20.5 million or 12 per cent, that sanitary services will be up £5 million or 8 per cent, that smoke control grants will be up £2 million or 200 per cent, and that voluntary housing grants will be up £2.3 million or 42 per cent. All in all, increased capital spending represents about 1,000 new jobs in direct construction work next year.

I am very pleased to report that 1989 marks a watershed for the construction industry and that the upswing in construction activity that has emerged this year will continue into the nineties. The present buoyancy in the construction industry is the fruit of our economic policies since 1987. These policies are the primary factor in the resurgence being enjoyed by the construction industry today..

My Department's original estimate of a 6 per cent output increase this year has been revised upwards to about 10 per cent. By any standards this is a major increase which will foster confidence, increased employment and further investment. Indeed, in 1989 we expect a rise in direct construction employment of the order of 4,000. This is the type of positive response the Government would like to see reflected more widely throughout the economy, building on the favourable conditions for growth created by Government action.

Next year, independent forecasters expect a further increase in output in the construction industry of up to 10 per cent. I have no reason to argue with this forecast, given the present economic trends and the underlying confidence in the sector.

Next year's Public Capital Programme expenditure on construction activity will rise to £920 million, an increase of 11 per cent on the 1989 budget provision figure. The main increases in the Public Capital Programme, from which the construction industry will benefit next year are: local authority major capital works, which I have already referred to, up nearly £42 million; agriculture up by £26 million, of which a substantial amount will go to the farm modernisation scheme; industrial construction which will increase by £20 million and tourism which will increase by £14 million.

One area where the resurgence in the building industry is clearly visible is the urban renewal sector. The importance of maintaining and enhancing the central areas of our towns and cities is now universally accepted. A major Government objective is the creation of an environment conducive to renewal of inner urban areas which had fallen victim to decay.

The Government's economic policies, combined with the attractive tax incentive scheme, have succeeded in levering private sector investment in run-down urban areas. To date, redevelopment work to a total of some £270 million is anticipated, with £24 million representing work completed, £108 million work in progress, and, £138 million work at planning stage.

The Estimates provide a further £2 million next year for urban renewal grants in respect of improvement works complementing private sector development which has already taken place in designated areas and maintaining the momentum for further development.

I will make an announcement shortly on further designated areas in eight provincial towns and a number of new extensions of existing designated areas.

When the Derelict Sites Bill, 1989, is enacted, we should quickly see the beginning of a significant and sustained improvement in run-down urban areas.

The State proposes to spend almost £900 million on road improvements in the period 1989 to 1993. This will be topped up with private investment in tolled roads. Under the Community support framework, the EC Commission have agreed to provide £451 million in EC grants for roads in this period. Road expenditure is now being included, with rail and access transport, in a single operational programme designed to offset the effects of Ireland's peripheral location. The programme is being drafted in consultation with the EC Commission and the details will be published soon. The Estimates provide £184.5 million for improvement works on national and non-national roads in 1990. This is an increase of £20.5 million or 12½ per cent on this year's expenditure. The grant for road maintenance is £31.2 million, which is an increase of 4 per cent over the 1989 allocation.

County and regional roads are important for all aspects of rural development, including tourism, industry, agriculture and forestry. Increasingly heavy traffic loads have taken their toll on the standard of these roads. For these reasons, provision was made in this year's budget to start a special three year programme of £150 million for the improvement and maintenance of regional and county roads. While a good start has been made, I am satisfied that the programme should be stepped up further in 1990 so that the condition of these roads can be improved more quickly. The total amount being provided in State grants for the improvement and maintenance of non-national roads in 1990 has, therefore, been increased to £78.5 million, this compares with £61.1 million in 1989 and £46.5 million in 1988. In addition to bringing about improvements in these roads, the additional funds will provide an estimated extra 450 jobs next year.

Last week, I notified county councils of their grant allocations for county and regional roads in order to give them as much time as possible to plan their expanded work programmes. I will advise all the authorities of their remaining allocations as early as possible.

We can look forward to further substantial progress in 1990 on the sanitary services programme. The provision of £67.5 million represents an increase of 8 per cent over 1989 in the level of resources being devoted to the development of public water supply and sewerage facilities across the country. As well as allowing work to continue on schemes already in progress, this provision will enable me to release a large number of new schemes. Indeed, only yesterday I approved 21 water supply and sewerage schemes to go to construction in 1990 with a total estimated cost of over £27 million.

The additional funding will be welcomed by those involved in the construction and related industries. It will generate an estimated 90 additional jobs in direct employment as well as spin-off jobs in the supply sectors. Over the five year period, 1989-93, sanitary services capital investment will be supported by EC Structural Funds. The details of an operational programme, which will set out the development strategy for the period, will be published shortly.

The Government, at my initiative have agreed to an allocation of £51 million for the local authority housing programme in 1990. There is an important change in the sourcing of funds for the programme. As I mentioned earlier, I have decided that, for next year, the capital portion of the proceeds of local authority sales schemes will fund expenditure of £45 million on new construction and remedial works and that this will be supplemented by an Exchequer grant of £6 million. As part of the new arrangement, expenditure by local authorities on house purchase and improvement loans will be financed by the Housing Finance Agency.

As a result of the increased allocation, I intend to allocate £23 million next year for the construction of new local authority housing. This allocation is an increase of over 50 per cent on the 1989 provision of £21 million. The increased provision for 1990, the first such increase since 1984, will enable an expanded programme to be undertaken, which should yield about 1,200 completions next year.

I intend to allocate £15 million next year for the refurbishment, upgrading and provision of basic sanitary facilities in existing local authority dwellings. Remedial work is under way in about 75 low cost and pre-1940 run-down urban housing estates. The 1990 allocation will ensure that progress will continue to be made in this important area.

In relation to the rate support grant, the House will note that the Government, at my request, have agreed to an increase of £6 million to £166.75 million for 1990 — the first increase for a number of years. Local authorities have been notified of their rate support grants for 1990 and in every case it has been increased by at least 3.5 per cent. This increase will be welcomed by the authorities as they prepare and adopt their estimates of expenditure for 1990.

The rate support grant had to be scaled back in the last couple of years in line with the general entrenchment of public expenditure, forcing local authorities to seek out economics and better management in all their services. However, the increase next year in the allocation for major capital works, in particular for county and regional roads, will be of considerable assistance to local authorities in the provision of services to the public. The authorities have had to exercise even greater degrees of budgetary discipline in trying to ensure that current spending is matched by realised income. As a result, the upward rise in local authority deficits has been halted. As a consequence, the burden of interest charges being paid to the banks may have been reduced somewhat.

I am very concerned that this has coincided with proposals by two of the major banks to levy bank charges on local authorities. It is well known that local authorities are good bank customers both in their own right and through the large spin-off business they bring. I regard proposals to levy bank charges on them as unjustifiable and lacking in appreciation of the long standing special relationship that has existed between banks and local authorities. The prospect of local authorities now being expected by the banks to contribute to what, in effect, would be increased banking profits is unacceptable and the banks concerned should take account of this. Hard pressed local authorities should not be forced by the two largest associated banks to pay somewhere between £1 million and £2 million in charges considering the difficult financial circumstances of the local authorities. This demand can only put further pressure on hard pressed services. A significant percentage of local authority revenue comes from general taxpayers. Local authorities and hard pressed taxpayers should not be asked to contribute further to increasing bank profits.

The environment is now an everyday topic of conversation. This is a very welcome development, one which I have encouraged over the past few years. Everywhere one hears mention, with some trepidation, of ozone holes, greenhouse effect, global warming, toxic wastes, pesticide residues, extinct species, acid rain and many others. Yes, there is cause for concern on issues such as these and it is time for the international community to get its act together. These problem areas are signals to be developed world that it is time to take stock of the damage that has occurred, mostly in this century. The last decade of the century must see a new beginning in the drive to protect the global ecosystems upon which we all depend.

While the problem I just mentioned are of general international origin, we, on this island, cannot sit back and do nothing. We do not contribute on a large scale to global problems but we have our own self-inflicted problems. We must intensify our efforts to tackle them so that the country's image of a clean environment is maintained. I do not have time today to develop fully the action being taken by my Department at national and international levels to cope with environmental problems. We have increased both the scope and the pace of activity very considerably while, at the same time, endeavouring to approach the solution of these problems, in a balanced way. To take one example, there is no reason industry and the environment cannot co-exist for each other's benefit. We need industry. We need to protect the quality of our environment. With the co-operation of all concerned and the right structures in place, we can create employment and maintain a good environment.

I have included a token provision of £500,000 for the proposed Environmental Protection Agency at this stage. This will be reviewed when decisions are taken on the structure and functions of the agency. In addition, I envisage that there will be transfers to the agency of resources from other areas for which provision is made in the overall Estimates under discussion.

The agency will be an important element in this Government's programme to increase jobs through economic development while ensuring that environmental resources are protected and improved. It will be an independent body. I want to see it have effective powers of action in matters of licensing, control and monitoring of development likely to cause major threats to the environment. It will also provide back-up advice and support on environmental matters to the local authorities.

The agency will be the national focal point for the European Environment Agency on which there was political agreement at the Environment Council meeting in Brussels last Tuesday. Following consideration by the European Parliament, I expect that the regulation establishing the agency will be formally adopted next March during Ireland's Presidency of the European Communities.

The estimates provide for an increase in environment-related expenditure next year. There is an increase from £1 million to £3 million for grants in the smoke control areas in Dublin. I have provided a further £2 million for urban renewal grants and £0.5 million for beach improvement works. These latter works were well received by local authorities and the public this year and next year's provision will allow further improvement works to be carried out, which will assist the tourist industry and provide local employment.

The natural environment is affected by nearly every activity and, likewise, expenditure on most local authority works has implications for the environment, for example, sanitary services and road expenditure. In addition, there are many cases of environmental improvements which can be made at little or no cost by each individual. For instance, if more people become more litter conscious, there would be an immediate positive environmental impact throughout the country. Another area which I have been encouraging is recycling. This is a cost-effective way for the individual to contribute and help to create local employment as well as environmental gains. I am pleased to be able to provide £250,000 again next year to promote waste recycling. I was encouraged by the response from the general public, community groups and various business interests to the 1989 programme. I envisage a similar programme of assistance in 1990, with grants of up to £50,000, or 75 per cent of the costs involved, in the provision of facilities for the recycling of paper, cans, glass and plastic.

Ba mhaith liom mo bhuíochas a chur in iúl duit, a Leas-Cheann Comhairle as ucht an deis atá tugtha domsa an Meastachán seo a chur os comhair na Dála.

Tá fáilte romhat. I acknowledge the consideration of Deputy Shatter who did not cry halt a minute ago.

We are always willing to give the Minister any leeway he requires. Since the formation of this Government and during the lifetime of the preceding Government the Minister and his junior Minister have been strong on environmental rhetoric but weak on environment action. On occasion we confuse rhetoric with action and sometimes confuse the general public into believing, by the speechifying which takes place, that things are being done while in fact they have not been properly dealt with.

The Minister makes reference to the allocation to tackle the smog problem in Dublin. The reality is that the Minister's smog programme is a shambles. Virtually nothing was done from last winter to this winter, with the result that during the past ten days Dubliners have again been choking on smog. Nothing the Minister has said today has indicated that things will be any different next winter. Currently we have a scheme of conversion grants which applies to three parts of Ballyfermot but not to the rest of the county or city of Dublin. There is little point in the Department of the Environment wasting money distributing "smogbuster" leaflets encouraging people to use fuels other than bituminous coal when very many people within the city and county of Dublin cannot afford to use any other sort of fuel and do not have the means to convert from the ordinary open coal fire to a different type of heating system. I reiterate the need to extend the conversion grants system immediately to apply to the entire county and city of Dublin in all those areas which have experienced smog above EC limits. This country is again to be reported to the European Commission for breaching these smog limits. I call on the Minister to extend the conversion grants system. I also call on the Minister for Social Welfare to provide special fuel vouchers to allow those who do not have the financial means to get more expensive types of fuel such as coalite which can be smogreducing.

There is a need to amend the Air Pollution Act. Over 12 months ago I invited the Minister to introduce amendments but he has not accepted that invitation. We are now told by the Minister of State at the Department of the Environment that she is looking into the question of what amendments are necessary. In the meantime Dublin Corporation and Dublin County Council are trying to get additional smoke control area orders made, while Coal Distributors Limited are lodging objections to every application made to the Department for such orders. These objections have no environmental validity and place at risk the health of people in Dublin. A message should go out from this House that Coal Distributors Limited have been given every opportunity at previous oral hearings to have their objections considered to the making of smoke control area order and that they are now acting in a manner contrary to the health of the people of Dublin by delaying, under the defective air pollution legislation, the possibility of bringing into force further smoke control area orders and by delaying the application of conversion grants to parts of Dublin where people want to convert to alternative heating systems. The time has come to call a halt.

I appreciate that CDL may wish to protect their business base, but it has gone beyond that. The continuous lodging of spurious objections to the making of smoke control area orders should no longer be tolerated by the Government or by the people living in Dublin. The Minister should bring forward amendments to the Air Pollution Act to prevent any individual group setting out, to protect their own vested interests, to sabotage the application of air pollution legislation. To date the Minister has not indicated that he is willing seriously to tackle this problem. Despite all the rhetoric from the Minister and the Minister of State nothing is happening.

The smog problem is just one problem which has not been tackled. We have heard much rhetoric about river pollution. What is the reality? A total of 107 fish kills occurred in our rivers in the first nine months of this year. The Department of the Marine have estimated that 35,000 fish have died as a result. How can we talk about concern for the environment when the Minister at the Department of the Marine could confirm during Question Time yesterday that 35,000 fish have died as a result of 107 separate fish kills in our lakes and rivers in the first nine months of this year? There has been an increase of more than 100 per cent in the number of fish kills in those nine months as against the totality of last year. I do not see how the Minister can regard himself as acting to protect the environment. The reality behind the rhetoric is stark. We have major problems of air and river pollution.

What is the position with regard to sea pollution? Ministers occasionally fire a shot across the bows of the British Government over Sellafield. This is nothing more than a political diversionary tactic to avoid public discussion and understanding of the manner in which we in this country are polluting the Irish Sea and the manner in which the Government intend to continue to pollute the Irish Sea. Deputy Molloy, in answer to Dáil questions recently, exposed the shallowness of the Government's approach to the Sellafield issue when he made it quite clear that the Government intend to take no action of any nature whatsoever against the British Government with regard to Sellafield.

What is the reality of the position? The reality is that we on this island continue to dump sewage waste into the Irish Sea and we intend to continue to do so. The Minister is announcing various sewerage schemes but the reality is that none of these schemes provide for tertiary treatment plants to treat sewage in the way it should be treated to avoid its dumping into the Irish Sea, which has serious long-term pollution implications. Where are the proposals for tertiary treatment plants? Why were they not contained in the application made to Brussels for Structural Funds? Only when we produce that type of policy can we be taken seriously in our commitment and our desire to resolve the problems of the Irish Sea. There has been much hot air up to now and we are not taking the measures that are necessary in this area.

In regard to motor vehicle pollution, there was a ministerial campaign for lead-free petrol and we are now told there has been a substantial increase in the take up of lead-free petrol. The reality is that the overwhelming majority of motorists are still using leaded petrol. Fine Gael last year called on the Minister to reduce the price of lead-free petrol to charge it at 20p below the price of ordinary leaded petrol. As a result of pressure put on the previous Government by Fine Gael, the price of lead-free petrol was reduced by 5p in the last budget. I am renewing that call and asking that a specific initiative be taken in the next budget to reduce lead-free petrol so that it is charged at the pumps at 20p below the price of leaded petrol. We will then find that the overwhelming majority of motorists are prepared to buy lead-free petrol, and that will make a major contribution to tackling some of our problems of air pollution.

We have called on the Minister in the past, and I again call on him, to provide some incentive to people who drive motor vehicles that cannot take lead-free petrol to carry out the conversion works that are necessary so that they can take lead-free petrol and the emissions from motor vehicles will be reduced. The EC will require that all new motor vehicles from January 1993 have catalytic converters to reduce emissions from cars. What are we doing to encourage people who now have cars on the road to fit catalytic converters? That is an expensive operation — it can cost between £400 to £500 per car to fit this device. In other European countries such as Germany incentives have been put in place to protect the environment and to encourage the motorists to fit catalytic converters. Relief from motor tax is given to motorists who are willing to go to that expense. Provisions should be made in the coming budget to give relief from motor tax to motorists to encourage them to have the necessary works carried out to vehicles that are currently on the road to have catalytic convertors fitted. Environmental rhetoric will not do that; specific action is necessary.

The Minister, in his speech, referred to the concern about wildlife and extinct species. Here we have a Government, full of environmental rhetoric, who under the extraordinary, outrageous and scandalous decision only a short few weeks ago regarding what they describe as a cull of white-fronted geese who fly to this country to spend the winter in Wexford. Ten thousand such geese fly hundreds of thousands of miles every autumn to this country but what have the Government done? Contrary to the views expressed by the Wildlife Conservancy and by wildlife experts worldwide, they have issued licences for the shooting of white-fronted geese. That is an extraordinary decision from a Government full of environmental rhetoric, but no more extraordinary than the decision made by the Minister of State at the Department of the Taoiseach earlier this year to license again otter hunting in the Munster region. It was only due to the lack of rain and the rivers being lower than usual, and after a public outcry, that otter hunting was temporarily suspended during a portion of the summer months. The Government have no credibility to the environmental rhetoric that we hear so readily and that is a regular feature of newsprint from ministerial speeches. The rhetoric has to be tested against the action taken.

The Minister did not noticeably address one very major issue that has given rise to substantial local government expenditure during 1989 and which will possibly give rise to further and greater local government expenditure in 1990. Nothing has been said about the planning compensation scandal. Dublin county council, in the spring of this year, paid out approximately £2 million to a development company that failed to get planning permission that they should never have been entitled to get, and for reasons that were perfectly correct and valid. There was a Planning Compensation Bill before this House 12 months ago. That was a grossly defective Bill, a Bill that I described at the time as a speculators charter rather than a protection for the community. Since November 1988 that Bill has gone to ground. We were promised after the last election that the Bill would be brought back into this House with a whole series of necessary amendments to protect local authorities against unjustified compensation claims but it has not been brought back to the House, it will not be in the House this side of Christmans and it appears quite clear that it is very unlikely that it will be enacted into law before the summer recess next year.

While that Bill languishes, while the Minister fails to process it, there are mounting compensation claims in various local authorities. Speculators, who in my view have no merit as a result of the Grange Developments case, now see the whole area of compensation as being a very fertile are to get hardpressed local authority moneys, moneys coming directly from the taxpayer, paid out to them. There is no reference to that in the Minister's speech. I would have thought the £2 million paid out by Dublin County Council might have got some special mention or that some assurance might have been given that no local authority would again have to pay out moneys of that nature. The Minister's lethargy on this issue is resulting in a fundamental undermining of our planning process and in a lack of confidence in the ability of local authorities to protect areas zoned for amenity or agriculture. The general public know now that if a developer seeks planning permission in those areas, many local authorities, under the threat of a compensation claim, will capitulate. To save paying out money, they will allow serious damage to be done to the environment. How can this Government claim to have the interests of the environment at heart?

The Government's record in other areas is equally appalling. On a regular basis Deputies for over 12 months, have been asking the Government on the Order of Business when they are going to give legislative effect to the environmental impact assessment directive, a fundamentally important directive. It is not good enough for the Minister, in his speech, to say that industry and the environment should not have competing aims, that they should be compatible. Of course they should but they will only be compatible and the environment will only be protected when we have in place the necessary protections. One of those protections designated by the European Community is the requirement that we have domestic legislation in relation to environmental impact assessments. That legislation is still not in place and there is no excuse, a year and a half later, why it is still not in place. It should have been in place since July, 1988.

With regard to the Minister's reference to the environmental protection agency, it was Fine Gael who originated the proposal that there was a need for an environmental protection agency. We sold this proposal to the Progressive Democrats who subsequently sold it to the Government as part of the Government package. It became clear in October of this year that whereas Government Ministers were again engaging in rhetoric about the need for an agency there was little prospect of such an agency being given a statutory establishment during the course of this year and the possibility of it being established next year looks ever-increasingly remote. We have a Private Members' Bill before the House to establish an environmental protection agency.

It is very interesting to note that in making references to the agency the Minister has confirmed that the Government have still not worked out what specific functions the agency should have or exactly how the agency should be structured. The Minister said he had made a token provision for the agency and this will be reviewed when decisions are taken on the "structures and functions of the agency". He then went on to muse about some of the functions the agency might or might not have. What is interesting about the Minister's musings is that it appears many of the functions he believes such an agency should have are the functions given to them by the Fine Gael Environmental Protection Agency Bill.

If the Government cannot produce their own Bill this year I call on them to support on Second Stage the Fine Gael Bill and prove they are serious about this issue. The allocation of £500,000 is derisory and indicates the Government are not serious about the setting up of an environmental protection agency. I hope I can be proved wrong by the Government supporting the Fine Gael measure when it comes before the House. Ministerial rhetoric about the environment and the political brass neck exhibited by the Minister, with all due respect to him, last week in lauding the fact that we have a green environment will not convince the European Commission or Ministers in Europe to site the European environmental protection agency in this country unless we resolve all of the problems I have listed and we have our own domestic agency.

It is very difficult in the context of this debate to cover all areas but there is another area on which I want to sound a warning to the Government. The Minister referred to the position of the economy and all of the good works which are going to be carried out next year. The one thing the Minister did not advert to is that there has been a substantial increase in the rate of inflation and building societies have been substantially increasing mortgage interest payments during the course of the past four months. I want to warn the Government not to reduce the mortage interest allowance in the budget. I want the Minister, or one of his colleagues, during the course of the debate to give a commitment that not only will the mortgage interest taxation allowance not be reduced in the budget but that it will be fully restored to the position that pertained prior to 1987. It was reduced by a Government on the back of a belief that mortgage interest rates were going down and would stay down. It is now clear that not only are mortgage interest rates not going down but that they have substantially increased on two occasions during the last four months. I predict that it is likely they will increase again early next year. In that context the Government should restore fully the mortgage interest allowance so that hardpressed home owners will not find themselves in serious financial difficulties as we enter 1990.

The most significant feature of the overall Estimates for 1990 is the clear signal which they give of the Government's intention to maintain a disciplined approach to the management of our public finances. This is essential. The experience of the past two to three years demonstrates clearly that the control of public expenditure is a necessary and essential condition for the achievement of economic growth and employment creation in this country. There are some who would advocate that the need for the type of financial discipline pursued successfully over the past two to three years does not now exist to be the same extent as previously. Let me draw the attention of such advocates to some of the realities.

At December last, the total level of national debt amounted to over £24 billion. By the end of this year it will have increased further to perhaps £25 billion or over £7,000 for every man, woman and child in the country. Exchequer debt last year was almost one-third higher than our total national output and while some progress on this unsustainable burden will be made this year because of improved economic growth, the level of Exchequer debt is still likely to remain 20 to 25 per cent above GNP. The servicing of this debt will drain over £2 billion from the Exchequer this year alone — or over a quarter of the total tax revenue estimated in this year's budget. While we have succeeded in reversing the charge towards economic self-destruction on which we were previously embarked, the progress achieved could very easily be set back by any loosening of the discipline applied to the public finances over the past two to three years. In formulating the 1990 Estimates, the Government have maintained a responsible and disciplined approach to the public finances — an approach that will pay further dividends in terms of economic growth and employment creation.

The Programme for Government establishes job creation as the major priority of the new Government — a recognition of the critical importance of employment as a major instrument in tackling the tragedy of poverty which is too pervasive in our country and in providing a new generation of young people now leaving our education system with a level of skills and qualifications never before achieved, with opportunities to have a good life in their own country.

My Department and their agencies have a critical role to play in this area and the 1990 Estimates reflect this fact. The Estimates show an increase of 7 per cent in the allocation to my Department. In many cases, the increases are substantially higher, particularly in those areas which will have a major impact on employment creation.

The objectives set in formulating the Estimates were: to stimulate the growth needed to further reduce unemployment and to help create the conditions which will enable Irish business to compete successfully in the EC under the impact of the Single Market programme. The overall estimate set also took account of the need to contribute further to improving the public finances, which the experience of recent years shows clearly is essential to assist in the promotion of investment, with its consequent positive effect on employment.

The specific objective in the industrial policy area is the creation of 20,000 extra manufacturing jobs per year on average over 1989 to 1993, and to continue to contribute strongly to further employment creation in the services sector through the multiplier effect.

The objective of 20,000 extra manufacturing jobs per year is amnitious when compared with the average annual level of new job creation of a little over 17,000 per year in the period 1981 to 1988. Nevertheless the target is attainable and the increased allocations which have been provided to the industrial promotion agencies will enable them to achieve their contribution towards meeting this objective.

This is a particularly buoyant period for Irish industry with levels of output growth and employment creation not seen for well over a decade. Manufacturing output increased by an average of 12 per cent in each of the last two years and is projected to maintain its strong performance into 1990. Industrial exports are continuing to do well with the performance becoming more broadly based with a resumption of growth in many traditional sectors. Our overall cost competitiveness has improved significantly, particularly as regards public utility costs, while the current growth in investment is evidence of the greatly improved level of business confidence.

In the year to April last the preliminary Labour Force Survey results show an increase of 6,000 in manufacturing employment and the ESRI projects that further improvements in employment creation in industry will occur in 1990. This is a dramatic turn around from a situation in the early eighties where manufacturing employment was dropping by 4,000 each year.

The State agencies are continuing to play a valuable role in employment creation. The agencies already have in place an elaborate and wide-ranging set of schemes and programmes to encourage industrial development and to address perceived weaknesses in business functions. These measures are constantly being refined and this process will continue. Better value for money is being obtained through linking the payment of incentives to actual job creation and other targets, introducing greater repayability and reducing grant levels. The second of my Department's triennial reviews of industrial performance is being undertaken at present and is due to be published early next year. Detailed submissions have already been received from a number of organisations and a major employment study of the attitudes of Irish industrialists has been commissioned.

Debate adjourned.