Financial Resolutions 1990. - Financial Resolution No. 9: General (Resumed). – Dáil Éireann (26th Dáil) – Thursday, 15 Feb 1990

Financial Resolutions 1990. - Financial Resolution No. 9: General (Resumed).

Debate resumed on the following motion:

That it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision in connection with finance.

——(The Taoiseach.)

Mr. Dempsey

Prior to this budget, in common with practically every other Deputy, I received a huge number of prebudget submissions from groups representing every strata and every interest in society. I am sure the Minister for Finance received ten times as many written submissions and God knows how many deputations prior to the budget. These submissions, because they came from such a wide variety of groups and interests, were often contradictory and conflicting as each group tried to better its own lot, if not at the expense of others then certainly at the expense of the taxpayer. One would need the wisdom of Solomon and the produce of his fabled mines to meet all these varying demands. Although in many respects the submissions were conflicting, they had in common that by responding fully to them the Minister would be put in a position where the cost to the taxpayer would be billions.

When one considers the general welcome with which the budget was received, it is clear that the Minister listened very carefully to all the submissions and while he might not have the riches I referred to at his disposal, he at least seems to have been endowed with much of Solomon's wisdom. The fact that he got the mix right in the budget is verified by the fact that there was a general and widespread welcome for it from a huge variety of interests. Even some Members of the Opposition in the course of this debate welcomed the general thrust of the budget and the efforts the Minister is making to ensure that all sectors benefit from the improvements in the economy during the past year and will continue to do so.

The main Opposition criticism is that the budget gave too little to too many. Deputy Noonan described it as a confetti budget. I think he meant it in a derogatory manner but it was a tribute to the Minister's ability to consider all the conflicting demands and come up with a budget that was fair to everybody. It is very easy to take up an extreme position in respect of any number of good causes and argue that this or that should have been done, but what Deputy would argue against the desirability of giving a single unemployed person £60 or £70 per week as a basic payment? Who would argue against giving the elderly complete tax exemption on private sector pensions or argue against a family on social welfare or low pay getting more help and assistance? Who would argue against providing a free medical service to everybody or against giving employers financial incentives to employ more people? I do not think anybody in this House would argue against any of those desirable aims.

Everyone in this House, despite what the public sometimes seems to think, would argue the case for improved benefits and living conditions for the poor in our society. No one member of any group or party can claim a monopoly of concern for the disadvantaged. If it has taught us anything, the history of the last 20 years has taught us that given half a chance politicians will dish out goodies and spend money freely. While some people might question their motives, their willingness to spend is never in question.

Unfortunately, we have also learned that we can get nothing for nothing and somebody has to pay for it in the end. The average householder saved £150 a year on average in rates since they were abolished in 1977 but they paid for it in increased VAT and personal taxation. The few hundred pounds that was saved for a few years because of the abolition of car tax has been well and truly paid for by heavier taxes both direct and indirect. The biggest price paid for the spending that occurred from the 1970s up until 1987 has been paid in terms of human hardship created by huge unemployment and emigration problems. These problems did not occur as a result of the policy of the previous Government or this Government but as a result of the policies pursued from the mid-seventies up until 1987.

The task facing this Government is to try to undo the damage done during that time. It cannot be done overnight. It must be part of a gradual process, such as the process we have pursued since 1987. Any sudden knee jerk reaction will only make problems worse. We must continue to try to eliminate borrowing, reduce taxation and provide for the disadvantaged people in our community. We must also maintain the confidence of the business community in our ability to take the necessary decisions to ensure continued economic growth. We must do all of these things at the same time. We have to try to keep a balance. We could solve an individual problem by concentrating fully on it but that could lead to major problems in other areas. If the Minister in his budget reduced income tax to 25 per cent and 48 per cent he would not have been criticised in the House and he would have been praised by the general public who would have thought it a great move. However, the extra income which the taxpayers would have got could have led to major overheating in the economy and caused further problems for everyone. The same could apply to other problems if they were tackled on an individual basis. The budget deals with the problems in a balanced way and we must continue the policy outlined by the Minister. We have to resist the encouragement from members of the Opposition and others to start spending more and more money.

I was surprised that before the budget a number of Fine Gael spokespersons, who have always claimed to be whiter than white in terms of a fiscal rectitude policy, were encouraging the Minister to spend more and more money. The Fine Gael Party alleged that they were the first party to adopt fiscal rectitude and that they always put the interests of the country first in financial terms. Before the budget they were suggesting that the Minister had £400 million extra to spend although that was not so. Fine Gael have claimed all along that they have been the virtuous people when it comes to fiscal rectitude but the record as far back as 1973 will show clearly that they were never the party with a commitment to balancing the books. They advocated deficit budgeting and started that policy which caused so many of our problems. In the early eighties they started a propaganda war in relation to this and they portrayed themselves as the knights in shining armour and fiscal rectitude was their slogan. In fact, the rot that started in this economy started in the first Coalition era. All the propaganda we had from the last Coalition could not change facts. The Coalition Government, in office between 1973 and 1977, started us on a downward slope that could not be arrested by Fianna Fáil or the Coalition of the eighties.

The problem was not tackled until 1987 when Fianna Fáil took the necessary steps. In 1972 the current budget deficit was £5 million or 0.3 per cent of GNP and our foreign debt was £126 million. By 1977, when Fine Gael and Labour left office, the deficit had jumped by 2,000 per cent to 6.9 per cent of GNP, and the foreign debt had increased by 825 per cent to almost £1.1 billion. Apart from that spending and the deficit budgeting, the major effect of this policy was to condition people to accept the idea of foreign borrowing to finance current spending. The activity between 1973 and 1977 also led to a huge increase in the Exchequer borrowing requirement from 5.8 per cent to a high of 16 per cent in 1975.

Why was that done? In the 1973 election Fine Gael and Labour made a series of extravagant promises to the electorate. They called it a 15 point plan which included proposals to do away with estate duties, VAT on food and the phasing out of rates and so on. As a result of that and subsequent budgets, the Minister for Finance, Deputy Richie Ryan, took a huge amount of public odium and earned the nickname "Red Richie" for his troubles as Minister for Finance. Was he the real culprit? He was not, the culprit was Deputy Garret FitzGerald who was the chief economic spokesman for Fine Gael in the 1973 election.

Deputy FitzGerald had a pivotal role for Fine Gael in economic matters. Even after he was appointed Minister for Foreign Affairs he enjoyed a powerful position within Fine Gael and the Government on ecomomic matters. Although he was Minister for Foreign Affairs he had his own private economic adviser for his input to Cabinet discussions on the economy, a very unusual move. The evidence is there to show that he was one of the strongest supporters of current budget deficits and of the heavy recourse to foreign borrowing. In 1974 the Central Bank warned:

Those interests who, in an unqualified way, advocated expansion of public expenditure, foreign borrowing and bank credit in the immediate interest of economic growth and employment would do well to keep in mind that an expansionary policy can lead only to disaster if it is pursued to the point of accelerating the relative increase in domestic costs and prices by unduly straining productive capacity, of which skilled labour is an important element, and if it requires an inordinate volume of external indebtedness to finance it.

However, Deputy FitzGerald persisted in his support for this disastrous policy. In the budget debate on 4 April 1974, probably in answer to the criticism of the Central Bank, he said:

A suggestion has been made that the budget in some way is irresponsible, that the size of the deficit cannot be justified and that it will create dangers of some kind for the country.

He went on to criticise Fianna Fáil's attachment to fiscal rectitude and the science of economics. He said:

Nobody need be surprised that that is the policy of the party opposite because, in the years in which they were in Government, they regularly, on every occasion, pursued this particular policy. They balanced their budget with as much concern for arithmetic precision as if each one of them was Mr. Gladstone incarnate. Never did they allow economics to creep into the budget; their budgets were book-keeping exercises carefully balanced.

Deputy FitzGerald then went on to claim support from all the expert agencies for his view. He concluded:

What we had to do this year was plan for a bigger deficit than we planned for last year. Last year's planned deficit would be too small in the current year, it was necessary to go for something larger and this is what we did.

However, one expert agency — the Central Bank — was far from happy with Deputy FitzGerald's remarks or the policies of the then Deputy Richie Ryan, Minister for Finance. They expressed very grave reservations about the Government's budgetary strategy. I again quote from their report:

Given our relatively high propensity to import comsumer goods out of additional income it is probable that much of the stimulus expected to result from the heavy borrowing —— much of it external —— will go to increase consumer imports rather than to promote investment and economic growth.... The bank is unhappy about the pursuit of expansion on the necessary unsustainable basis of a relatively rapid price inflation and a widening gap in external payments requiring heavy borrowing to finance it.

The result of the 1974 budget was that the deficit soared to £92 million, foreign debt doubled to £312 million, inflation rose to 17 per cent and unemployment rose from 68,000 81,000. Deputy FitzGerald did not seem to learn anything from that because the 1975 budget continued the disastrous policies. In fairness, Deputy Richie Ryan, the then Minister for Finance, hinted at a certain amount of unease about the deficit and indicated that he would bring it into line over several years but that it could not be done immediately. Deputy FitzGerald did not see it that way and in a budget debate on 4 February 1975 he said:

We had the foresight to see that it would be necessary for us to have a fairly expansionist budget to maintain the momentum of our economy. If anything, we underdid it. If anything, it should have been more expansionist than it was in 1973. The current deficit, plus the capital expenditure to maintain economic growth, involves overall a very large deficit of the order of £250 million to be financed by external borrowing. Again, in a normal year, this amount of residual borrowing could not be justified but in this year it is justified and it is essential. It will make it easier for us to borrow the sums we need, vast sums by the standards of a small country.... With hindsight one could say that the budget could have been somewhat more expansionist. The same could be said of 1974. I am afraid the Opposition have got everything so much upside down that all their criticisms have been directed in the wrong direction. Instead of encouraging this Government to be a little bolder and a little more expansionist on those occasions, all the criticisms were the other way. All the criticisms were: "You are going too far too fast, you are expanding the economy too rapidly, you are spending too much money, you will overheat the economy".

I do not think that Deputy FitzGerald and the then Minister for Finance needed any encouragement at that stage, it was as well that somebody was crying halt.

By mid-1975 inflation was 24.5 per cent and the Central Bank were openly critical of the policies being pursued. At the end of that term of Government our foreign debt was £1.1 billion, the national debt was £4.2 billion and unemployment had increased from 66,560 to 106,469. The cost of servicing the national debt trebled during that period. When you put that in the context of the fact that they were the first four years in which we were in the EC and that there were transfers of approximately £550 million from the EC, it underlines the totally irresponsible attitude adopted at that stage. In the period immediately afterwards, when Fianna Fáil came to power in 1977, it was not possible to cut off that expenditure completely and immediately. We were then saddled with the increasing debt and borrowing over the next few years. The next worst year after the 1977-81 period for financial borrowing was 1981. Deputy FitzGerald was in power for half that year. I read comments which Deputy Bruton made during the period of the second Coalition Government, the one from 1983 to 1987. He said the reason the national debt doubled from £12 billion to £25 billion was that they were busy paying off the foreign debt which Fianna Fáil raised in the period 1977-81. That is total nonsense and I would have expected something better from someone of Deputy Bruton's stature considering that he was a former Minister for Finance. Maybe he thinks the people are complete fools.

I comment on that period of Government because it is very difficult at times on this side of the House to listen to people on the Opposition benches talking about the irresponsibility of Fianna Fáil and that they were the cause of everything during the period 1977-81.

One of the important features of the budget is the attempt by the Minister to spread the tax base not just to relieve the PAYE sector from the burden of taxation but to increase the levels of taxation from the capital and corporate sectors. Deputy Mac Giolla made the point that the PAYE sector carry everybody on their backs. While I do not disagree that the PAYE sector carry a huge burden of taxation it should be pointed out that since 1987 Fianna Fáil have managed to change the burden around. In 1986-87 the average PAYE taxpayer was paying £2,690 in tax while the business, professional and self-employed sector, including farmers, were paying £2,970. In 1988, excluding the amnesty figure of between £500 million and £600 million, the comparative figures were £2,942 for PAYE sector and £3,225 for the business, professional and self-employed community. Between 1987 and 1989 capital taxes almost doubled at a time when inflation averaged 3 per cent. During the 1982 to 1986 period capital taxes increased by only £13 million, from £21 million to £34 million, at a time when inflation averaged about 7 per cent.

One of the major points that should be highlighted about the budget is that it has addressed our social problems and come to the aid of the disadvantaged in our society. The package of improvements in the social welfare provisions will be welcomed by all, irrespective of their political affiliations. Some people will argue that the Minister did not give them enough but some significant improvements have been made. The weekly social welfare payments will be increased by a minimum of 5 per cent and the child benefit will be increased by the same amount. However, the important thing to stress is that the social welfare improvements are being targeted at those who need them the most. There have been increases ranging from 10 per cent to 12 per cent for specific groups. That is a good policy and one that should be pursued.

I should like to refer to the services for the mentally handicapped, a topic that has received a certain amount of attention in recent months. I am pleased with the provision made for the mentally handicapped by the Minister for Health. In 1990 approximately £140 million will be spent on services for mentally handicapped. Of that figure £76 million will be paid over to the major voluntary agencies. That will allow for 11,000 mentally handicapped people to receive the appropriate services. I welcome the provisions that have been made in my own health board area. I understand that 30 extra day places and five residential places have been made available, one speech therapist appointed and that there is a proposal to complete and maintain the computerised register of mentally handicapped for the north-east. Those moves are welcome and are an indication that the Government are moving in the right direction.

Mr. Nealon

The budget amounted to an opportunity missed. The Minister for Finance went a bit of the road with everybody but, whether through lack of courage, imagination or because of some conflict between the Coalition partners, he failed in what should have been the main thrust of the first budget of the nineties. There is nothing in it that will impact on the major problems of unemployment and emigration. There is nothing in it to ease the health crisis or to head off what the experts believe is an impending crisis in agriculture. There was not even a recognition that the clouds are gathering for the farmers. There was so little of any import in the budget that Deputy Dempsey of Fianna Fáil had to devote virtually all his contribution to his interpretion of the budgets of the seventies.

Our economic spokespersons have dealt with the major features of the budget and I propose to deal with a matter of major concern over the years to Sligo. I am referring to the wholesale destruction along our coastal areas by successive storms and the failure of the Government in the budget, and of the previous Fianna Fáil Administration in three budgets, to provide a single penny to alleviate those problems. The Minister was able to provide £1.5 million in the budget for the east and south coast that only suffered a fraction of the damage Sligo has suffered in recent years, but particularly in recent months. I accept that what he gave to the east and the south is only a pittance and will not be sufficient to meet the cost of the damage — I am sure Deputy Roche will agree with that statement. However, the pittance that was given went to the east and south and did not go to the west.

The coastline of Sligo has been ruined in many places from Enniscrone in the west to Carrowhubbock, Lacken, Pullyheeney, to Easkey, and on the northern side of the county at Strandhill, Rosses Point, Streedagh, where the ships of the Spanish Armada met their destiny many centuries ago, Ballyconnell, Raghley, Knocklong, Cloonagh, Mullaghmore and Cliffoney. The breakwaters that existed there, the coastal protection walls built many years ago, and the protective bent grass set with a view to countering erosion, have been flattened and swept away. One can see the remains of those walls scattered through fields that were used for grazing cattle and sheep. The result is that even a moderate storm, particularly if it comes from the north-west like the storm last weekend, causes regular and major flooding. Last week I saw a 20 acre field, owned by the Browne family of Pullyheeney, once the best grazing land in the area, now trap water. At a later stage people may be able to fish there but as far as the family are concerned it will be of no use to them for grazing. The access road to Pullyheeney pier has disappeared, buried beneath tons of stones, rubble and sand swept in from the sea. That pier catered for about 15 boats during the fishing season but there is not a proper access road for those fishermen now. Over a wide area coast defences have gone and the sea has clear entry to land that was dry, fertile and safe only a few years ago.

There is nothing happening to curtail the damage. Raghley in north Sligo, an area which was once a peninsula, is now and island save for an endangered road passage of about 20 to 30 feet. On the seafront at Strandhill the protective areas have been ripped up and the pier at Mullaghmore also has been damaged to such an extent that unless action is taken it will disintegrate with the passage of time. As Deputies will know, this is one of the most beautiful harbours in the country and now it is in danger of disintegrating because of lack of action and because of not taking some preventive measures. Unfortunately the prospect of emergency aid from the Government now seems a forlorn one, and it is particularly forlorn when one is talking about the west coast.

The Government may well point to the 1963 coastal protection Act which enables the county council to take action, but where will Sligo County Council, or any other county council throughout the country, get £1.5 million, £10 million or even £1 million to do a temporary patch-up job? Under this protection Act the county council must provide at least half of the necessary funds. What is the position with the farmers who have lost large tracks of land and who have seen the disappearance of more of their land every time the wind blows from the north-west? I am glad the Minister of State at the Department of Agriculture and Food, Deputy Walsh, is here because the only friend that farmers affected by coastal erosion previously had was the former Minister for Agriculture, Deputy Deasy. During his term he made it possible to get dry land reclamation for them with the result that the farmers were, in fact, able to clean the stones off some of their fields and get some grant. It was using the existing machinery and I think it is something the Minister should have a look at, not just in this coastal area but in other coastal areas where stones have been swept in in enormous quantities. We are not talking about isolated stones — as the Minister is aware — but fields covered completely with them. The previous Minister for Agriculture, Deputy Deasy, made it possible to get dry land reclamation with the result that farmers were able to get reasonable grants on those occasions.

Sadly, I must say, if we were on the east coast and suffered the same damage someone might listen to us. The Minister provided for Wicklow and Wexford. I accept, and I am sure Deputy Roche will agree with me, that much more is needed. On this occasion I am pointing out — and availing of the budget debate — the damage that has been done in Sligo. We are not talking about once-off flooding but the damage caused to coastal protection, to the breakwaters and to the walls there. We are talking about permanent damage getting worse every time the wind blows up. We want action. While I have pleaded the special case of the west, as befits a Dáil Deputy from Sligo-Leitrim, the fact is that around our shores we have a disaster in the form of coastal damage, coastal erosion and nothing is being done about it. I think I am correct in saying that coastal erosion would have qualified for Structural Funds. I believe the Government was urged to include coastal erosion in the Structural Funds by, amongst other people, many of their own Deputies. I believe that by deliberate decision they decided to omit this. I can only describe this as a monumental aberration. This is the kind of decision that strains credulity and it further debases, if that is possible, the decision making process that finally led to our submission on the Structural Funds. As of now the Government are on their own and——

Mr. Roche

On a point of order, it does not qualify for Structural Funds. A number of us went to Brussels to find that out.

Mr. Nealon

——must face the consequences. I would like to repeat that I have made investigations and I understand that coastal protection would qualify for Structural Funds. I understand that the Government had included it at one stage and deliberately omitted it from the application for Structural Funds. One way or another, the Government are now on their own and they must take some action and provide the necessary funds. There is no point in putting their heads in the sand along with everything else strewn there following the storms.

The 1966 coastal protection Act must be amended or revised. At present it is in a shambles. Twenty-five sections have to be waded through in order to get something done. I believe it could take as long as three years, even if money was there, to get action under the coastal protection Act. The OPW, who have responsibility for funding as far as coastal protection is concerned, have not, over many years, received any financing from budgets or from the Exchequer to carry out any decent work in this respect. The local councils could act under the coastal protection Act but they do not have the finances to do so. It is a problem that is not going away. It is a problem that gets worse daily. This is all around the coastal area and it is not in the Longford constituency of the Minister for Finance. I am sure he is aware of what is happening and, if not, I would be very pleased to invite him along to Sligo to see for himself the ravages that have taken place there.

The amount of money offered for our present difficulties, our coastal problems and river flooding from the EC is in excess of £100,000 and is tantamount to a total dismissal of any bill we have. It certainly would not meet the laundry bill arising out of the recent flooding. The idea of the Government setting up an action committee is well interpreted. The classic formula for inaction is to set up a committee and wait until the floods have subsided and perhaps the protests will have subsided also. Action is needed immediately on both coastal erosion and river flooding.

Since 1956 I have been attending budget day in this House in one capacity or another. Not until this year did I see agriculture dismissed in a couple of mean paragraphs. Even when the Minister of the day had little, or maybe nothing at all, to offer to the farmers at least he recognised the primary place of agriculture in our economic life and as the primary industry of the country, but not the Minister for Finance, Deputy Reynolds. He chose to ignore farming at the very time when farming is in dire trouble when it appears that all sectors of farming — perhaps for the first time — are encountering difficulties. When we have conditions that brought farmers onto the streets on Tuesday last, the Minister for Finance, Deputy Reynolds, chooses not to do anything for farmers except make some progress towards VAT adjustments which had been promised as a total one-off job by Deputy MacSharry — now Commissioner MacSharry — for the 1987 budget.

The Minister of State at the Department of Agriculture and Food, Deputy Walsh, who is carrying on these negotiations at present, may say we are now involved in price negotiations in Brussels. What are these price negotiations on? As far as I can figure they are price negotiations on a pay freeze which, in fact, with 4 per cent inflation means a deterioration of 4 per cent in the income of farmers, but the Minister of State was able to tell us — and will correct me if it is wrong — that we will be able to live with a pay freeze. If the Minister who is presiding at the Council of Ministers says we are able to live with a pay freeze — if those are the vibes coming from Agriculture House — is it any wonder then that the Minister for Finance could dismiss the industry entirely in the budget? Can we expect to get any more from Brussels if the President of the Council, the Minister of State, says we can live with a pay freeze?

All sectors of farming are in trouble. Many parts of the Minister's constituency are not much different from mine. Although they may not be classified as disadvantaged as some of the areas in mine are, I know the Minister will agree with me when I say that the small man in the disadvantaged areas is the one who is in real trouble. Having survived over the years he is now in danger of going under. We must look for increased payments through increased headages of one classification or another to improve the farm family income.

I do not anticipate that this can come now. We are getting something like £90 million over a number of years and this will have to be distributed over an expanded area as the Minister is looking for an expansion of the disadvantaged areas. I wish the Minister luck in this and I am sure my colleague, Deputy Sheehan, will be the first to congratulate him if he succeeds in bringing in expanded areas, particularly in Cork south-west and other parts of the country. The fact remains, however, that this area will have to be catered for from the headage money that has been made available. With the type of money that is available now I cannot see how the Minister will be able to increase headage in any substantial way, and this needs to be done to enable the small man to remain on the land. We are certainly not going to get that doubling of the headage which we heard so much about from all the election platforms throughout the length and breath of Sligo and Leitrim during the last election campaign.

We need proper management of the EC beef market. There were many factors operating last year and many farmers lost money rather than making money in the beef market; but there is a worsening seasonality problem and winter beef producers must, therefore, receive direct income aid to meet their higher production costs. The most satisfactory way this could be done would be through a special higher beef premium payment during the first six months of the year.

Again, after many successful years, the sheep farmers are in difficulty. I have no doubt that the Minister will seek to make special provisions for them so that they can sustain the growth that took place in this area and avail of the potential that is still there.

In regard to dairying we are now told of a likely decrease of 10p, perhaps as much as 15p, per gallon which will create further difficulties, especially for the man with the small quota. What we seem to have now is a pay freeze which the Minister says he can live with. Whatever about the future of pay negotiations in Brussels, what we have got from the Minister for Finance is not even empty words, but empty hands.

Jobs and emigration have not been tackled in the budget in a manner that I would have liked. These are areas of major concern. Deputies opposite will argue that the knock on effect of the budget will automatically rise that tide. I hope it will, but there is not the major thrust there that we had expected in the — for a change — favourable financial situation.

This budget went a little way along the road with everyone. There is no denying that. It has been scientifically surveyed in the polls that it went down as a relatively popular budget. Why would it not? It gave a little bit, and for the first time in many years did not take anything. It is one thing being a popular budget but is it a correct budget for the country at this time? It would be my opinion, and the opinion of my party, that it is not.

Acting Chairman (Mr. M. Barrett)

I am calling Deputy Dick Roche.

Mr. Deenihan

I was under the impression that Fine Gael would have two speakers at this stage.

Acting Chairman

No. It goes from the Opposition back to the Government side. The Deputy will be called after Deputy Roche. If the Deputy had asked to share time with Deputy Nealon perhaps I could call him, but the procedure is that once the Opposition spokesperson sits down the next speaker is called from the Government side.

Mr. Roche

I believe there is no time sharing on the budget debate.

Mr. Nealon

I would certainly be delighted to facilitate Deputy Deenihan but he usually has so much to say that I would not be able to cater for him in my time. I am told by the Ceann Comhairle, however, that when there is no time limit on the overall debate, one cannot share time.

Mr. Roche

I am sure, if the Deputy bears with me, there will be plenty in what I have to say, particularly in the area of coastal erosion, that will strike a chord with him and with Deputy Nealon.

I listened to Deputy Nealon and I do not disagree with many of his sentiments about coastal erosion. I first commenced issuing statements on coastal erosion as far back as 1984. I wonder does Deputy Nealon remember what was the catalyst that made me so vocal on coastal erosion in 1984. The issue was that Deputy Alan Dukes, who was then Minister for Finance, decided to cancel all coastal erosion projects, not just those in Bray, Arklow and Wexford but also the planning of coastal erosion projects in Sligo. I would advise the House — I am sure Deputy Nealon's memory is slightly deficient on this — that they should check the record on coastal erosion which was treated in Building on Reality. I will also be dealing with the issue of coastal funds from the EC because the reality is that it is not available. In addition I would just correct a small error in Deputy Nealon's contribution in that OPW is no longer responsible. I think Deputy Nealon is a little bit disingenuous when he relates damage in the most recent budget to the flooding because, as we all know, the budget was passed before the February flooding. Later in my contribution, I will contrast the very swift action that this Government have taken on the issue of coastal flooding and the total inaction of Fine Gael in 1986.

First I want to return to a topic that was dealt with by my colleague, Deputy Dempsey, in such an excellent way, the mismanagement of the economy in the seventies. Revisionism is one side of the coin that has been introduced into the historical aspects of budget speeches by Fine Gael. We stand on the threshold of a new decade and it is opportune for us to cast our minds back to see where we made mistakes and work out how to improve performance in the future.

The eighties have not been favourable for this country. The first three quarters of the decade can at best be portrayed as a period of lost opportunity. Throughout the seventies, starting from 1973, this country became hooked on the opium of deficit budgeting. None of the major parties is entirely blameless in this matter. By the start of the eighties the alarm bells were already ringing. The debt and the cost of its servicing were being recognised as a major milestone around the economic neck of each and every person in this country.

By 1985 the cost of servicing our debt exceeded all the receipts from PAYE. Every single penny paid by the PAYE sector during that year went to service our debt. During the four years they were in Government Deputy Dukes and Deputy Bruton borrowed more money than all of the Ministers for Finance before them had together. That is some record by Deputy Dukes and Deputy Bruton who are always criticising the level of borrowing in the late seventies. As I have said in this House time and time again, no major party can walk away from the problems of debt and I have never suggested that other than that is the truth. The truth is that the Fine Gael Party who were in power between 1973-77 got us hooked on that opium and during the eighties, even when they had recognised that that was a dangerous road to go, they continued on that path of debt.

In spite of the fact that Fine Gael entered the decade with a promise to reduce the standard rates of tax to 25 per cent the opposite happened. Our debt was not the only thing that grew when Ireland's economic wellbeing was entrusted to Fine Gael; taxation also grew. It is worth reminding ourselves that the increase in total tax planned by the Fine Gael Minister for Finance in 1986 was three times as high as the level of economic growth forcasted. It is also worth reminding ourselves that in spite of promises, during their stewardship of the economy the level of uncollected taxes grew dramatically to the point where the unjust penal rates of personal taxation, particularly on the PAYE sector, were compounded by the injustice to the same PAYE payers of wholesale and uncontrolled tax evasion. The failure to collect outstanding taxes and the reversal of solemn undertakings to reduce our debt and income tax were compounded by the failure of successive Fine Gael Governments to tackle the reform of the tax system.

It is worth putting on the record one of the initiatives taken by Fine Gael when they were in Government. I want to refer to the farm tax or land tax which enshrined in law the bad concept that one sector of the economy should be taxed in a different way to another sector. The principle that all should be taxed equally before the law was set aside by this particular odious form of taxation. That was bad enough but the reality which emerged was much worse. Whereas the Fine Gael Minister for Finance had calculated a gross yield from the land tax of £5 million during the balance of 1986, the actual amount collected in that year was £400,000, a derisory amount which was not even sufficient to pay the cost of collecting the tax. Two basic principles of taxation were fractured by that approach to taxation. In a sense, the Government of 1982-87 would have been forgiven for running up the national debt by 100 per cent — I could have forgiven them for jacking up personal taxation and even for allowing public expenditure to burgeon — if they had done something positive with the money but they did not. In the economic circumstances of the time one would have expected at least an offsetting set of benefits in terms of employment creation, improvements in social equity and better health and social services generally, but we did not get those. We got all the disadvantages of a Government who were hooked on the easy path of borrowing and none of the benefits. Deputy Dempsey referred to the position in the seventies and it is worth reminding ourselves of the position when the Coalition were in power during the eighties. In November 1982 unemployment stood at 170,000 and rose to well over 250,000 in January 1987. That is some record for a Government who not alone doubled our national debt in four years but increased unemployment at the most rapid rate ever. Unemployment was not the only thing that went up; personal taxes, unemployment, emigration, our national debt and public expenditure went up. We got all of the disadvantages of mismanagement but none of the benefits.

As we all know there was a huge increase in capital outflows at that time and there was a black hole of an unprecedented scale. Not alone did interest rates grow but more importantly they outstripped the rates in our competitor countries. At one stage Irish industry and Irish home buyers faced interest rates which were 4 percentage points above those in Britain. When we hear Fine Gael spokespersons talking about interest rates it is worth reminding ourselves that while that party were in office interest rates here were higher than they are now, they were higher than in Britain and, while rates have risen in recent time, they are still below the levels reached during the Coalition's period in office, and are significantly below British interest rates.

In addition, we did not see any of the social benefits one might expect from a Government hooked on spending; unemployment rose, emigration restarted and the increases in social welfare benefits given in the last two Fine Gael budgets were below the then rate of inflation. Fine Gael and Labour now feign a concern about our health services but debts were allowed to accumulate when they were in office to a point where in 1986-87 a financial crisis loomed in every health board, these same boards which are now the cause of much theatrical behaviour by those on the Fine Gael benches.

The budget of 1987 was the first decisive step towards restoring order in the balance of the nation's finances. It was the first step on a long ladder towards economic recovery. Courageous decisions were taken in 1987 and 1988 and they have been continued in this budget. We are now beginning to see the benefits of the decisions taken by Fianna Fáil since they took over stewardship of the economy in 1987. The Exchequer borrowing requirement has been reduced from 13 per cent of GNP to below 3 per cent of GNP. The debt-equity ratio was stabilised last year and for the first time, that ratio will significantly fall this year. Our public finances which were out of control between 1983 and 1987 have been firmly reined in.

It is worth reminding ourselves that when Deputy Alan Dukes and Deputy John Bruton were Ministers for Finance we had the worst growth rate in the OECD. I am not personally attacking Deputies like Deputy Deenihan who had no part in the mismanagement at that time, but I cannot understand how Deputies on the far side can come in here and have the brass neck to suggest to the Irish people and this House that they have the answers now when they so manifestly failed when they were in office. They cannot blame the Labour Party for this mismanagement either because Fine Gael were the senior Coalition partners and if they did not like what the Labour Party preached they did not necessarily go down that road.

There was some interesting revisionism in The Irish Times recently on behalf of a former Deputy, Mr. John Kelly, who at least stepped aside from Government for a period during that time. If his party did not like what they were being told they should not, as he suggested, have allowed the tail to wag the economic dog.

In each year since 1987 when Fianna Fáil returned to office, we have had growth and we have now one of the highest levels of growth in Europe. Investment which was zero or negative between 1982 and 1987 has recommenced and all the signs for 1989 and 1990 are of strong growth, particularly in investment. The building and construction industry, always a prime indicator, is now beginning to show signs of a very worth-while revival. Our inflation rate, a little higher than we would like it to be at present, is still four or four and a half percentage points below the British rate. Our rate is well below the EC average and significantly below the level which obtained in the first half of the eighties. That is the record of the last three years. It is a fine record of which I am very proud. The most important of all these signs is the one which shows that the unemployment problem is now being turned around. The most significant figure is the one for the net increase in employment, which is up from 10,000 in 1987. The Government's positive approach to the problem of ever-expanding public sector spending was to trim the surplus fat which existed in the public sector. That trimming exercise has now finished. Twenty thousand workers have been removed from the public sector payroll and this has lightened the burden on the taxpayer. We will all reap the benefits of this move.

On taxation, there have been major achievements. The introduction of the amnesty was one of the high points of the second half of the decade. Of more long term significance was the introduction, after years of talking, of self-assessment. Equally important in the long term is the Government's success in establishing the principle that everyone should pay tax on the same basis, that is, tax on income. Real improvements in the rates of personal taxation have been achieved. Success in economic revival is not measured in terms of statistics alone, it is seen every day in our towns and villages. For example, Bray in County Wicklow, represents a case in point.

In the early eighties the town was devastated but now, despite the disastrous news that Nixdorf is about to close, it is beginning to show all the signs of a turn around. Employment has increased and we are seeing the building of factories. The Government have designated the town, and County Wicklow as a whole, for the highest rate of industrial grant. The Industrial Development Authority are now building advance plants and during the past 12 months three factories have been located in the town. Over the same period employment in the manufacturing sector in Bray alone rose by in excess of 200. If we move down the coast a little to the village of Kilcoole we will see the positive results of Government action in that the Jurong plant which has long being idle is now the subject of discussion with a multinational company and a major Irish corporation. The aim is to open a new, exciting venture.

In north-east Wicklow the positive impact of Government policy is making itself visible. The JCBs are rolling again in projects like the Bray-Shankill by-pass, a long-awaited project. This afternoon the Minister for the Environment, Deputy Flynn, will visit the Bray sewerage scheme which is costing £16 million. He will also officially open the Fáilte Park project. This is a very fine project and should be the model for every local authority in the country. Record sums have been made available for house refurbishment schemes since 1987. About £2.25 million has been invested in the Old Court Estate in Bray, in contrast with the figure of £250,000 when two Cabinet Ministers represented the area.

The fact is whether we talk about north Wicklow, County Wicklow as a whole, or the country, there is a palpable sense of confidence. That is why the antics of Fine Gael at present should be condemned. They have tried to ride on the back of each and every crisis and disaster which has visited this country. Let me point to the latest antics of Deputy Dukes and his party members in relation to recent flooding and the coastal erosion scheme. In the budget the Minister for Finance, and I thank him for it, provided £950,000 for the replacement of coastal protection works at the north beach in Arklow. These were very badly damaged, with 900 metres of costal protection works being washed away in the storms of mid-December. Deputies opposite might try to portray it as being otherwise but there is no doubt that Arklow was worst hit in the storms of mid-December. Damage has been caused in other areas since. For example, there was damage caused in Bray but I do not think anyone should or could reasonably argue that Arklow did not deserve the money it got.

I was very pleased to see the Minister grant Bray £860,000 for the Dargle flood relief scheme. I thank him for this. In recent days the Leader of Fine Gael; has become hyperactive on the matter of storm relief. His hypocricy in this matter is stunning. There was serious flooding in Bray in 1986 at a time when the Coalition were in power. A bevy of Ministers, like clucking hens, visited the town. The local authorities were given the go-ahead to carry out certain limited emergency works, as they were in the recent past. In due course, derisory sums from EC funds were distributed to householders via the health boards.

At that time the local authorities in County Wicklow, the local flood relief committee and every responsible group and public representative in the town of Bray, called for remedial capital works on the Dargle. After the floods had subsided the people of Little Bray had to live not only with the trauma of flooded homes but with the ever-present threat of repeated flooding. One of the major employers in the area, Universal Lithographic, was on the point of being wiped out by the Dargle because the flood walls had been washed away during the hurricane in August 1986.

What did Deputy Dukes do at that time? He did nothing. Deputy Dukes and his Cabinet colleagues two of whom represented County Wicklow, refused to provide funds for emergency works at Universal Lithographic and to sanction phase one of the Dargle flood relief scheme. They also refused to allow the long-term planning of the so-called "hundred year" Dargle phase two relief scheme to go ahead. That was the Coalition Government's response to the disastrous flooding which occurred during August 1986. They refused to move in the area I represent and the area I am most familiar with. They refused to provide any assistance to Wicklow County Council, or the Urban District Council in Bray, to remedy what everybody recognised as a potentially life threatening and disastrous problem.

The people of Bray had to wait until Fianna Fáil returned to office in 1987 before the council were given the funds to carry out the emergency work needed at Universal Lithographic, thereby securing employment in one of the most important employers in the town. They also had to wait until 1987 to get the green light from the Minister for the Environment, Deputy Flynn, for planning and tenders to be sought for phase one of the Dargle flood relief scheme. The same Minister provided £860,000 in the week prior to the budget to allow the scheme go ahead, the tender for which will shortly be signed by Bray Urban District Council. I understand that the contractors expect to commence work on that scheme within the next four to five weeks.

In January, the local authority were authorised by the Minister to commence planning on phase two of the scheme, and they have now submitted the draft plans to the Department of the Environment. I have been in contact with the Minister on this matter and I am confident that this scheme will be funded by Fianna Fáil in Government.

The people of Bray know that all the talk in the world will not keep flood waters from their doors. They know only too well that talk is cheap and that all they ever get from Fine Gael is talk. Those unfortunate people who are being plagued by flood waters up and down the country at this time should not be taken in by false Fine Gael promises. In places like Bray, Kilcoole, Arklow, along the Wexford and Waterford coastline and places to the far west, such as the Sligo coastline which was referred to by Deputy Nealon in his contribution, vital coastal erosion schemes were carried out in the early eighties. It is absolutely vital that such works be carried out. I agree with Deputy Nealon when he says that derisory sums were provided by successive Governments during the years. The true nature of the problem has not been understood by the central authorities.

Coastal erosion works are of vital importance. The people of Wicklow have reason to be cynical about Deputy Alan Dukes's current miserable effort to make political capital from natural disaster. It was Deputy Dukes who in 1984 scuppered all coastal erosion schemes. All programmes were cancelled by the policy document Building on Reality that was published while he was in office in the Department of Finance. It was Deputy Dukes who not only scrubbed all schemes but also all planning work. The ultimate cynicism of this was witnessed by the people of Bray. We were No. 1 at that time for a coastal erosion scheme. Deputy — now Senator — Avril Doyle moved into office in OPW and she had made a promise to the people of her constituency. She elevated Rosslare, on the basis of political expediency, to No. 1 priority. I can hardly say I blame her for that, but it does not matter a damn if you are No. 1 or No. 2 priority on a list where the Government have made the conscious decision that they are not going to provide any funds. That is political cynicism of a high order. I hope Deputies from Sligo and Wexford will remind their constituents — as I am doing in Wicklow — about who cancelled the coastal erosion projects.

I agree with people who say the existing scheme for coastal erosion prevention, the 1963 Act, is legislation which should be struck from the Statute Book. It is clear that that Act does not work. As Deputy Nealon said, 25 steps have to be gone through before a coastal erosion project takes place. It is not particularly novel for somebody to point this out. For example, in Bray for the last ten years Fianna Fáil councillors, led by Councillor Michael Ledwidge, pointed out that that Act does not work. It is interesting and intriguing for us in north Wicklow that we went on deputations to successive Fine Gael Ministers suggesting that that Act should be struck down. Where was Deputy Nealon then? After all, he had some small part to play in Government in 1984. What did he say about the floods on his own coastline when his own Minister for Finance scrubbed all coastal protection schemes? Where were the Fine Gael Deputies who signed a motion in this House? They were all in this House at that time and they did nothing. They said nothing. They let the coastal erosion projects be scuppered by Deputy Alan Dukes. They were as mute as the three monkeys.

Deputy Dukes, in his trip around the coast, was wise to avoid Bray. We are very familiar with the gulf between Fine Gael policies, particularly on issues like natural disasters, and Fine Gael's delivery. We are all too familiar with the part Deputy Alan Dukes played in the destruction of coastal erosion projects, and we will not forget it. The people of Bray did not forget it in the last two elections and I am certain they will be reminded in any elections that come up.

In the current flood problem Fine Gael have attempted to capitalise on a disaster. We know they will talk but if they were in power they would not act. So it has been with health, taxation and economic recovery. The records speak for themselves. It should not be necessary for me to come into this House and remind people of the records. They failed miserably to manage the economy, to bring justice in the taxation system, even to sustain social benefits while they were in office. They have failed on each and every occasion that they have turned their hand to any aspect of Government. That is why their party are destined to spend so much of their time in Opposition. There is an old story that the truth will only get its boots on and by that time the lie is half way around the world. People will believe Deputy Dukes when he speaks about what he would do if he was in office, but anybody gullible enough to so do should have a close look at his record.

The budget we have before us is a further step on the road to economic recovery. The Minister for Finance has to be complimented by this House on the budget. As Deputy Nealon reminded us, the budget has given a great deal to a great many people. In half an hour it is not possible to cover all the benefits of the budget but we have seen the benefit of Fianna Fáil's economic stewardship for the last three years. I am sure we will enjoy the benefits of Fianna Fáil's economic stewardship for the decade ahead.

Mr. Deenihan

I would like to have heard a real, true and honest analysis of the budget proposals from Deputy Roche rather than a critical analysis of the performance of the 1983-87 Coalition. I would not mind if Deputy Roche had acknowledged some of their successes, because they had many successes. Deputy Roche should know full well that the present improvement in the building and construction industry derives from schemes such as the business expansion scheme and the urban renewal programme introduced by that Government but he could not find it in his heart to acknowledge one single thing that the Coalition did or succeeded in.

Mr. Roche

The building and construction industry lost 120,000 jobs.

Mr. Deenihan

As a sportsman I always acknowledged good players in the opposing team, but I regret that, Deputy Roche's attitude is so cynical in this House. He is a man who I would say has a great future in politics but obviously he is trying to impress people within his own party and the general public rather than being honest. I had no intention of coming in here and making political points. There were a few issues I wanted to raise in my capacity as spokesperson for youth and sport, nevertheless I could not let this opportunity go of reminding Deputy Roche and his Fianna Fáil colleagues of the successes of that Coalition.

Deputy Roche obviously is not a sportsman. The Fine Gael and Labour Coalition Government initiated rates and tax concessions in designated areas which are now the location of so much construction and development. The Custom House Dock site and inner city renewal programmes in places like Dublin, Cork, Limerick, Galway and Waterford and in my own constituency, in Tralee, come under this scheme. We introduced this very innovative scheme, we initiated the legislation and set it in motion for this Government to reap the benefits. I do not mind as long as the people reap the benefits. The Deputy does not have it in his heart to acknowledge that it was the Fine Gael and Labour Coalition Government who introduced this legislation.

The Fine Gael and Labour Government also approved the national roads plan in 1984 and provided the resources for the many major roads which have been constructed or are still under construction. Fianna Fáil reduced the amount of money allocated to roads every year except this year. I welcome the increased allocation this year, and it is about time. The Fine Gael and Labour Coalition were also responsible for increased air competition with resulting lower air fares. Without taking from the great performance of the former Commissioner, Mr. Peter Sutherland in Brussels it was the Coalition Government, of which he was a member — the Attorney General — which commenced the competition air travel by licensing Avair in 1983 and then subsequently licensing Ryanair. That is why we have more tourists coming here and why we have seen the development of regional airports such as Farranfore airport, County Kerry, and the attempts to provide another airport in County Galway. There is a competition in the air, where previously there was none.

Mr. Roche

What about Knock?

Mr. Deenihan

That is why tourism is booming.

The Fine Gael and Labour Government brought discipline and good business sense to the State sector in 1983 by setting out clearly the criteria to justify State investment. This has played a significant part in reducing our borrowing requirement. The Fine Gael and Labour Government eliminated housing waiting lists, partly by the construction of sufficient houses but also by a very favourable grant scheme which enabled local authority tenants to hand back their houses — which, in turn, were allocated to people in greater need — and then purchase private houses. This saved the Exchequer tens of millions of pounds and solved the housing crisis. At present there are long waiting lists in every city and county and the Government are doing very little to redress the problem. At local elections, the Government will see the results of their housing policy. In 1988 the Government introduced the tenant purchase scheme, which I admit was ingenuous, but the Government are dependent on the revenue that accrues from that scheme to build the local authority houses in the country. That simply will not happen. There are people with families in County Kerry living in deplorable conditions in mobile homes, in isolated and remote areas who are not being housed and if the present arrangement continues they have no prospect of being housed for three or four years. This is a major indictment of the Government's housing policy.

The Deputy also spoke about the amount of money ploughed into house improvements but he did not acknowledge that this very good scheme was initiated by the previous Government.

Mr. Roche

Is the Deputy suggesting they were involved in a conspiracy?

During that time Fianna Fáil fought every cut every inch of the way with total irresponsibility. I was a Member of the Seanad during that time and often came into this House and saw people bleeding on the Opposition benches. Representatives from the building construction industry were entertained here by a member of the current Fianna Fáil Front Bench. The Coalition Government were accused of totally neglecting that industry, but at the same time we introduced the best grants in history to help them. We introduced the business expansion scheme and the urban renewal programme. Since then there has been no real programme for the building industry. I acknowledge that they have been assisted by the fall in interest rates but that advantage will be offset by the recent increases. Had Fianna Fáil acted responsibly in Opposition in keeping with the national interest, the economic recovery would have come much earlier and would now be much more advanced. Fianna Fáil deserve some credit for their conversion. They are a totally different party from the one I saw when I was outside politics or the party who were in Opposition.

Fine Gael see income tax and PRSI reductions as a key to future job creation. They also see a Government reluctant to shift the burden from income taxpayers because they fear the odium attached to imposing alternative taxes would put them at a disadvantage compared to the Opposition. An all-party committee would save them from this dilemma, yet they reject it. Here, as elsewhere and in relation to the Tallaght strategy, responsible Opposition from Fine Gael has met with little or no meaningful response from Fianna Fáil, Deputy Roche or his ilk. All I ask of Deputy Roche in his future analysis is that he should reflect the true facts, all the facts and nothing but the facts.

I thank the Minister of State present for listening to me without interruption and not using the boot boy tactics which are becoming common in this House. As spokesperson for youth and sport I would refer specifically to the crisis in youth services. The position with regard to funding has become almost ludicrous. Whole sections of the youth service are in danger of closure due to the non-announcement of financial allocations. The youth service is an integral part of our educational system but it fails to receive due recognition from the Government and is dependent for funding on the whims of scratch card buyers. There are 16 youth information centres around the country which are in danger of being closed. They provide necessary information for young people which our education system fails to give them. They provide such services as career guidance, advice on employment, leisure, travel, rights and entitlements. They are also giving young people assistance with personal problems such as drugs, single parenthood and so on. They are the only institutions helping to prevent unplanned emigration. Young people who intend to emigrate will get proper advice there. A scheme was initiated by the Minister for Labour through FÁS but it is out of the reach of many young people who may have to travel up to 80 miles to a FÁS office. They are relying instead on the services provided by the local youth information office.

I appeal to the Government to announce their intentions regarding future policy on these centres. It is customary at this time of the year to announce some of the budget for youth services. Usually in January 25 per cent of the funding is provided but to date there has been no announcement by the Government. This is either through the failure by the Government or the spokesperson on youth to provide the necessary funding. The Minister might ask the Government, or the person in charge of this very important area, to announce youth funding immediately.

The National Youth Council of Ireland will be forced to put about 500 youth workers on protective notice if funding is not provided. I have received this information directly from the council. These young people who are helping others with employment problems will soon be unemployed themselves because of the Government's indifference to their cause.

I welcome the new school clothing allowance announced by the Minister. This is a move in the right direction. I hope the amount decided will be adequate and that subsequently it will be linked to the cost of living increase.

I also welcome the money provided to facilitate universities in increasing their student intake over the next three to four years. This however does not really tackle the main problems of those from lower income groups who qualify in academic terms but who cannot afford to take up places. A genuine attempt to bring equity into the education system would have examined the possibility of improving the grant system. It is acknowledged that the present grants system does not provide sufficient financial resources for children from the lower income groups to attend universities. Recent surveys have shown that participation in third level education by lower income groups is falling. I appeal to the Government to look at the grants system rather than providing places, otherwise we will only provide more places for the people who can afford them and that is not equitable.

While the increase in the capitation grants for primary and secondary schools looks good on paper any real benefit will be lost through the increase in VAT on electricity and telephone costs at all schools. In relation to primary and secondary schools, the Minister for Education could at this stage allay the fears of many teachers by declaring her intentions on the pupil-teacher ratio. The Minister would make a popular decision if she at this stage decided to announce that for next September the pupil-teacher ratio would be improved.

I am disappointed that Deputy Roche is not here as he referred to land tax and the fact that farmers should be taxed the same as everybody else. I agree that farmers should pay their fair share. Deputy Roche is obviously not too familiar with farming in rural Ireland.

Acting Chairman

The Deputy has three minutes left.

Mr. Deenihan

Deputy Roche should know that many dairy farmers are at a total disadvantage in the tax system and that a land tax would be far more equitable in their circumstances. I would like the Minister for Finance to clarify his intentions under the business expansion scheme before April. If the Minister waits until the publication of the Finance Bill it will be too late. Sums of £40 million to £150 million of investment is being held up in tourism and there are doubts about the future of the scheme.

Wholesalers and retailers in the electrical trade should get a rebate for the loss of excise on existing stock caused by the reduction in excise. Wholesalers and retailers with large stocks of televisions will be at a major loss because of the decrease in excise duty on these. An allowance should be made for those people.

In view of the impending rise in mortgage interest I appeal to the Minister to restore mortgage interest relief in full. Rates have gone from 8½ per cent to 12½ per cent in the last year. They are now higher than they were in 1986.

In relation to the extension of the disadvantaged areas the £19 million available from Structural Funds from 1989 to 1993 is less than £4 million per year and will do little, when one looks at the proposed expansion and change in the income limit of those people who qualify.

I welcome some aspects of this budget but it goes nowhere towards creating a society that is not divided. It does not prevent the evolution of a two-tiered vocational education and health system. I would like the Government to address these important issues.

Mr. Hyland

I am glad of the opportunity to make a brief contribution to the debate. Since the Minister presented the budget much has been said and written. There have been varying interpretations and analyses of the economic philosophy of the budget most of which were objective and reasonable. We had the predictable political opposition in the House some of which was extremely negative, but most, in fairness, contained a reasonable if veiled acknowledgment that the course being pursued by the Government was the only reasonable course open to the Minister if he and the Department were to adhere to the Programme for National Recovery which commenced three years ago and which has and will continue to achieve its economic and social objectives.

The budget was balanced, not so much in the mathematical sense but in dealing in a careful, measured way with the need for social reform. The Minister acknowledged the need to provide for the weaker sections of the community and he did that within the framework of our overall economic objectives of achieving maximum economic growth which is the only long-term solution to our many problems most of which are related to unemployment and to our unusual population structure of old and very young people depending on a limited productive workforce.

It is fair to compliment the Minister on his acknowledgment of the need to provide for minimum living standards for those who cannot provide for themselves. The Minister has done that as generously as possible within the financial constraints within which he has to operate. State support for our social programmes is not as generous as we would like it to be. We want to see all our people especially our socially deprived people with a level of living standard to which they are entitled. We want to see an end to homelessness and see our people enjoy a higher standard of health care. Any politicians or Government worthy of the name will want to achieve all of these things.

Sometimes when I hear the demands and criticisms from Opposition Deputies I know that they in their hearts know that there are limitions to the extent that funding can be made available for social reform. They are right to highlight the need for reform as indeed are the many other social groups outside of the House who have made positive pre-budget submissions in relation to their interests. I have no doubt that all of those submissions are taken into consideration by the Minister in putting together his budget proposals. As far as the present Minister is concerned most Members of the House would agree that he is an understanding, caring and concerned man who is very much a part of the people, who is capable of identifying with their problems. He must learn from past experience not only in Ireland but in other European countries.

While we might wish it to be otherwise, the harsh economic reality of Government and economic management is that you can only have, by way of living standards, what you can pay for through production. The fallacy of borrowing to sustain living standards has been a significant factor in our economic decline in the past decade. The unacceptably high tax rates are directly related to the imbalance between those who are fortunate to have jobs and those who have to be supported because they cannot find work. Both of these factors are directly related to the success or failures of earlier administrations in bringing forward programmes for economic growth and adhering to them.

I admit that some earlier administrations, including Fianna Fáil administrations, were guilty in this area but one must also acknowledge that the last Fine Gael-Labour Coalition Government, as recently as three years ago, allowed the national debt to double during their four and a half years in office, which brought this country to the verge of economic disaster. Those four and a half years were crucial and our failure to tackle the problem at that time contributed in no small way to the harshness of the policies which this and the previous Fianna Fáil Government had to pursue.

Last week this House witnessed the spectacle of a no confidence motion in the Minister for Health. Perhaps if the movers of that motion had been more attentive to their national duties when in Government it might not have been necessary for the Minister to take the necessary and stringent measures in recent years. I wonder what the situation would have been like today if the Government had not changed at that time. What kind of health services would we now have? Would we be in control of our own destiny?

One of the most encouraging developments in recent years has been the capacity of governments to deal with the kind of economic disaster to which I referred and, through good planning and positive political control, to succeed in reversing the economic decline which, of course, is also the source of our social decline and to do it in a way which has made our economy one of the most attractive in Europe. All that was achieved in three years. Our success in this area has been acknowledged, not only nationally, but at international level. Those who cast doubts on the ability of politicians to tackle the country's problems should take encouragement and heart from what has been achieved in this House in such a short period.

The Budget Statement which we are debating today, the credibility and soundness of the economic philosophy which it contains, and the positive indicators in the Taoiseach's contribution to the budget debate, must surely stimulate and generate a renewed confidence in ourselves and in our ability to shape our destiny in future. With the challenge of a new Europe there is no other road open to us. We have now clearly demonstrated our capacity for survival and reform. We must build on that solid foundation and we must ensure that the sacrifices our people made have not been in vain but used in a manner which will bring about improved conditions and jobs, particularly for those who made the greatest sacrifices. I agree that the lower paid and poorer sectors of the community, despite the best efforts of the Government, bore the brunt of the action necessary to bring about economic reform.

There can be no doubt that Ireland has benefited considerably from membership of the European Community. We are — and are seen to be — positive subscribers to the concept of European unity and integration. We welcome developments in Eastern Europe and look forward in the long-term to the total integration of our European neighbours. As a member of the Council of Europe, with my other colleagues, I welcome recent developments and look forward to the development of the democratic process in countries where the system has not operated up to now. We are pleased to pave the way for such developments by granting observer status to some of these countries as they have fought for their independence and freedom from dictatorial regimes.

In the past this country benefited from EC transitional funds. With hindsight, I am not sure if we maximised the full potential of that funding for the purpose of economic development. Again with the benefit of hindsight, I urge the Minister and the Government to closely monitor the expenditure of a generous £3 billion Structural Fund allocation to this country. We must ensure that it is all used in a manner which will enable us to retain our competitiveness and capacity for exports, the only sound basis to deal with the greatest problem of all, that of job creation. Despite criticism from the Opposition and other Deputies the allocation is regarded at international level as extremely generous and one which will be of tremendous benefit to us in our programme for economic development. This is our last chance as, very soon, we will be the offshore island of Europe. However, even this obvious disadvantage can be capitalised on, particularly in the area of tourist development. I am very pleased that the Government have now firmly targeted tourism development as an essential part of our programme for economic development.

To succeed, this programme will need not only the backing and support of all the sectors involved in tourism, hotels, guesthouses and farmhouse accommodation, but we will also need to be alert to the need to improve the overall environment. The visual impact of our countryside is an important element in attracting tourists and, more important, to ensure that they will return to our country. The last ten years have seen a significant improvement in the environmental development of our towns and villages. In complimenting the many voluntary committees involved I should like to impress on the Minister the value and return to the State of development grants channelled through these voluntary committees. These committees should be continued as a back-up to community contributions and voluntary labour. Their efforts have resulted in a total transformation of the countryside. The promotion and development of high-class farm holiday schemes is now more significant than ever. Properly done, they could provide a worthwhile supplement to declining farm incomes, particularly in the small farming units.

I should like to acknowledge the success of our Minister in resolving the angling dispute which went on for far too long. It had a detrimental effect on our tourist industry and I am sure all Members of the House are unanimous in welcoming its resolution.

Acting Chairman (Mr. Sherlock)

The Deputy is straying from the budget debate.

Mr. Hyland

With respect, I do not think so.

Acting Chairman

I allowed you a little latitude.

Mr. Hyland

Very well, I will get back on the track. I know that national budgets are not as relevant to the agricultural industry as they were before our entry to the European Community. Nonetheless, the creation and maintenance of a satisfactory economic environment is fundamental to the development of the agricultural industry. I should like to compliment the Minister and the Government on their efforts to control inflation and bring down interest rates. I should like to urge the Minister, and his Minister of State, Deputy Walsh, not to deviate from the path of fiscal rectitude they embarked on three years ago. The Minister of State is recognised nationally as being totally committed to the development of the agricultural industry.

Despite our success in creating a favourable economic environment for the agricultural industry, that industry, outside of dairying, is fast approaching a crisis. The current decline, if not the elimination of profits in beef production, is just one example of what is happening. Farmers, others engaged in the agricultural industry and the economy generally, are facing serious problems. Unless something is done urgently we will not have a beef industry. I do not have to remind the House of the disastrous consequences not only for farmers but for the nation generally if that happens. There is an urgency to co-ordinate our approach to agricultural production and marketing. The seasonality of supply, contributing as it does to peaks and valleys in production, is having a detrimental effect on the profitability of some products, particularly beef. The Government should be able to deal with that problem.

A major factor in the viability of agricultural production, particularly for market vulnerable products such as meat, is our success in selling our products abroad. One must acknowledge the success of CBF who have responded in a responsible way to the challenge issued by the House to maximise our market potential for the beef industry. In the last 12 months, for example, they were responsible through good marketing, for the export of £1.5 billion of beef and meat products. They achieved that success on a shoestring budget of somewhere in the region of £600,000. It should be remembered that three-quarters of that sum was put up by the agricultural industry.

Given the challenge of dealing with such an important aspect of national development and the fact that they have been given responsibility for pig marketing, there is an urgent need for the Government to increase their contribution to CBF to enable them to carry out an important task for the nation. The future of the agricultural industry will depend very much on our capacity to sell our products abroad.

The amount of money advanced to CBF is inadequate to enable that organisation to carry out their operations. For example, one should compare that sum with the funding made available for a similar operation to CTT. That organisation receives in the region of £30 million annually. I am sure the House will agree that there is a need, in view of the importance of agricultural exports, for the Government to increase their contribution to CBF. I appeal to the Minister of State to do what he can before the House passes the Finance Bill to rectify that imbalance.

One of the big problems facing the agricultural industry is its limited scope for expansion. Quotas and restrictions are making it extremely difficult for our farm enterprises to expand in any way and it is disappointing that we are not making progress in these areas. Therein lies the greatest challenge to the viability and the future of Irish agriculture. It is because of the importance of agriculture to our economy, because of its role even in its present depressed condition in relation to employment, because of our commitment to the development of tourism and to a green environment and because of our lack of success so far in attracting industries compatible with those objectives, that we need an action programme on the future development of the industry.

It is hardly necessary to remind the Minister that, apart from the crisis in the beef sector, profit margins in regard to cereals have diminished and that large grain growers are now liquidating their investment in plant and machinery. In the long term that will have an undermining effect on the viability of the cereal industry. I do not have time in this debate to address the many problems facing the agricultural industry. However, I must put a question to the Minister in relation to our position on the GATT talks, the current round of which ends in November. The decisions arising from the GATT negotiations will have serious consequences for the future development of the industry. We need to be clear and objective in our preparations for those talks.

I should like to thank the Minister for his acknowledgement of the importance of agricultural education. He has recognised education as an important element in the development of modern agriculture. His decision to meet the full cost of residential courses is welcome and I have no doubt that in the long term it will repay the investment involved. The Minister also addressed himself to the problem of farm inheritance and transfer. His decision to increase capital acquisition tax thresholds is welcome although, in the light of current land valuations and stock values, he should look again at the possibility of increasing that threshold from £156,000.

Mr. Shatter

On a point of order — and I should like to apologise to Deputy Hyland — I should like permission to raise a very urgent matter on the Adjournment. I should like to raise on the Adjournment the plight of a young child born in January 1989 one of whose kidneys is about to fail and who has not been offered a hospital bed in Temple Street Hospital. That child has had two different dates set for the carrying out of urgent surgery both of which dates have been cancelled. I am now advised that the child's life could be put at serious risk.

Acting Chairman

The Ceann Comhairle will communicate with the Deputy.

Mr. Hyland

The Minister's decision to index the threshold to inflation is a practical and positive move and one which has been welcomed by the industry. In real terms, the high investment, in terms ofland, plant and capital, bears no resemblance to the potential of that investment to generate profit. It is that potential that should be the real basis for the assessment of capital acquisition tax.

I have expressed the view on many occasions in the past that government at European level should be flexible enough to take into consideration the structural disadvantages of member states and should make provision in policies for compensation or allow adjustments to allow for those disadvantaged. I am aware that structural and other funding is made available for this purpose and while it is of considerable benefit it does not fully address the problem as far as Ireland is concerned. We do not have a very broad industrial base and we now have an attractive economy for investment which, hopefully, will lead to industrial development. Nonetheless it is difficult to see any substantial industrial development in the short term. On the other hand, we have a modern and progressive agricultural industry capable, given the opportunity, of rapid and substantial further development. However, it is prevented from doing so because of quotas and other restrictions. The spirit of the Treaty of Rome should take into consideration the structural anomalies that exist between member states. Unless the scope for expansion is restored Irish agriculture will fast head into a cul-de-sac and a state of stagnation which will have devastating effects not only for the industry but for the economy.

Reference was made in the Minister's speech, and in the Taoiseach's contribution, to Ireland's application for extension of the disadvantaged areas. I should like to compliment the Minister on his efforts to bring the proposed application to finality and very much in line with the guidelines which he set, admittedly one month behind the original schedule. The political criticism about delay comes badly from a party who, in Government, submitted a bogus application just one week before a general election which was returned weeks later because it was not based on factual information.

The reality at present is that we have completed one of the most exhaustive and extensive investigation of townlands in Ireland in relation to their eligibility for qualification. We have, in fact, surveyed 4.5 million acres, 20,000 townlands in 22 counties. I have checked with the Minister and with his office in relation to the timescale involved in finalising that submission and I am happy to be able to inform the House that every possible effort is being made to have the submission completed and submitted to Brussels within a couple of months. That is not very far behind the original schedule which the Minister set. Bearing in mind the number of acres and townlands involved, he has done an extremely good job. We look forward to a successful conclusion of that application when it is finally submitted to Brussels. I would ask the Minister to do all in his power to have the application completed and submitted to Brussels and, more importantly, to ensure that funding is made available for payment of headage and other grants in the current year.

Unfortunately I do not have sufficient time to deal with the many other aspects of national development to which I should like to refer but I want to make a brief reference in relation to health. I acknowledge the Minister's proposal in the budget to increase funding in the current year by £130 million. With the level of funding in real terms now restored to 1986 levels, and taking into consideration the drop in inflation, and because of the efficiencies, through Government action over the past three years, it should be possible to provide for our people a high level of hospital and health care. I welcome the additional funding and would ask the Minister to ensure that the additional funds are allocated to areas of highest priority. There are many areas within the service where improvements are necessary and this fact has been acknowledged by both the Minister and, indeed, the Taoiseach when he addressed this House.

The Midland Health Board, which is the health board on which I am, have done a good job in minimising the effects of expenditure cuts on the delivery of health care in the midland region. While there has been the closure of some hospital wards they have, however, succeeded in averting hospital closures which have been a feature in other health board areas. We have, of course, our problems, particularly in relation to the waiting list. I hope that the Minister's commitment to the improvement of health services will see some progress on the resolution of these problems during 1990.

The staffing level in some of our hospitals is very unsatisfactory. Were it not for the dedication and commitment of our nurses the situation would be far worse. There is a need for increased staff in most hospitals. I acknowledge the fact that the Minister for Health has given a commitment to increase the staffing levels at Portlaoise General Hospital in the near future. I have been in contact with the Minister for Health on a number of occasions in relation to the need to increase the staffing levels in our hospitals in the Midland Health Board area and particularly in Portlaoise. I acknowledge today my gratitude to him for communicating with the Midland Health Board where, I understand, two additional nurses will be provided in the near future.

I welcome the trend to have as many patients as possible cared for in the community. I welcome in particular the Minister's provision for the funding of people who are caring for patients in their homes, patients who, in normal circumstances, would be hospitalised. This is a positive move and one which will be greatly appreciated not only by the carers of these patients but also, by the patients themselves.

I regret I do not have sufficient time to deal with many more aspects of one of the most positive budget contributions ever to come before this House. It makes positive plans for future development and growth. It makes positive plans in relation to the greatest problem of all, that of unemployment. At the end of the day I know the Minister has the full backing of the people of Ireland in relation to the objectives he is endeavourng to achieve.

Dr. G. FitzGerald

After almost a decade during which the need to bring the public finances under control was so urgent very little effective political choice was left to Governments in relation to financial matters, we are now again at a stage where some financial leeway exists and a certain range of choices is, therefore, open to politicians. These basic financial choices which have to be made lie between four main areas: the reduction of debt, improvement of public services, redistribution of resources and reduction in taxation. Of course, all these choices have to be made at any given time within the context of decisions as to the overall appropriateness in economic terms of expansionist or restrictive policies. The need to maintain the economy on a sustainable growth path within any given international context, will necessarily have a major bearing on the choices to be made at any moment between financial restraint, which will facilitate debt reduction, and a more expansionist approach that will open up the other three options.

In economic terms, I would judge that this year's budget has erred somewhat on the expansionist side given the current growth rate of domestic consumption, the likely impact on investment of the injection of EC Structural Funds and the uncertainty of the international economic situation arising from events in Eastern Europe and specifically in Germany. It might have been wiser to have had a slightly more cautious budget in terms of tax reductions. This, however, is a matter of judgment; I am not suggesting the budget is, in economic terms, gravely imprudent, and it is, of course, possible that its balance will be justified by events.

I propose, therefore, to direct my remarks not so much to an economic criticism of the budget as to an analysis of the political choices involved in it and, most specifically, to the longer term considerations that, in my view, should influence this and future budgets in the years ahead.

With regard to debt reduction the objective of eliminating fresh borrowing is now in sight. The work done by successive Governments between 1981 and 1987 has borne fruit. The Government that I led brought the borrowing level down from a figure of 22.5 per cent of GNP which faced us for 1982, when we came into office in mid-1981, to 12 per cent when we left office six years later. This was achieved in adverse international conditions, especially towards the end of the period. The Government that succeeded us achieved a similar 10 point reduction in the rate of borrowing as a proportion of GNP, but, under more favourable conditions, and, it must be said also, with more drastic pruning of spending in 1987-88. They achieved this further improvement on this basis, in three years rather than six years.

As a result of the herculean efforts made between 1981 and 1988, at the cost of a severe and prolonged deflation of the economy with all the adverse consequences that this entailed, the crisis created by the 45 per cent volume increase in public spending between 1977 and 1981 had been brought under control and the reduction in inflation from 21 per cent to 3 per cent achieved between 1982 and 1986 has been largely maintained during the past four years.

I believe that subject to a major external economic crisis — which no one can provide against — it is within our power in the years ahead to balance our budgets without further significant borrowing while maintaining a growth rate of around 4.5 per cent and an inflation rate of around 3.5 per cent. If these three objectives were attained then arithmetically the ratio of debt to GNP would fall from 125 per cent of GNP in 1989 to 78 per cent of GNP in 1995.

The Dáil should consider, first, whether it is reasonable to operate on these three assumptions I have predicated and, to the extent that they may be regarded as reasonable, the Dáil should, I believe, take a view on whether this reduction in the debt-GNP ratio would be sufficiently rapid. My own feeling is that in present international circumstances it would be wise to be somewhat more ambitious than this. External events could reduce our growth below the level I have just mentioned and raise the rate of inflation above the level I have assumed for the purpose of this calculation. In other words, we should aim to achieve a modest surplus in our finances within the next couple of years and maintain such a margin thereafter. Such a policy would not, however, preclude resources being available for the other purposes I mentioned at the outset, although the amount available within the couple of years immediately ahead would not, perhaps, be very large.

How should such a margin be disposed of? On the whole, I would retain the three areas of increased spending, social provision and tax reduction. We should endeavour to resist demands for increased spending. We ought, however, to identify certain specific areas where public services have been unduly constrained or even damaged by the cuts imposed by successive Governments since 1981, for the cutting of public spending by a Government is necessarily a crude exercise which sometimes leaves jagged edges.

The Dáil and the people have, in effect, already identified the health service as one area adversely affected. The remedy seems to lie, however, as much with the introduction of an effective health management system, which we have notably failed to achieve, as with increases in public spending in this area. Other areas of expenditure I would identify are the legal aid system, where there has been a serious failure to address the disastrous deterioration in a vital public service to the adequate provision of which we are internationally committed by virtue of the assurances given after the Airey case and I would suggest also the library services, the National Library, the public libraries and school libraries. Great damage is being done today by an inadequate provision of these services which affect not only current opening hours but, disastrously, the purchase of books which, in many cases, has come to a halt. There is a danger of a permanent gap being created in our national intellectual resources, one that will be very difficult to retrieve and, in a number of cases, quite impossible.

Other Deputies will have in mind other instances of serious deficiencies in the public services which, now that the financial situation has eased somewhat, could and should be put right at small cost — I emphasise at small cost. I am distinguishing here between urgent and possible irretrievable damage to key services and the endless claims on the Exchequer from hundreds of interest groups which have never been willing to face the fact that our resources are less than those of neighbouring countries.

I do not want, however, to exaggerate this gap between Irish and other Northern European levels to output and purchasing power. Let me divert for a moment from my main theme to put on the record some relevant facts which are also published in this mornings issue of The Irish Times which are not, perhaps, as widely understood as they should be even within the political and administrative systems. The purchasing power of disposable income per worker in Ireland is lower than in most EC countries, but by less than many people imagine, mainly by about 22 per cent as against the 33 per cent shortfall when we joined the Community in 1973. In relation to neighbouring Britain the shortfall is now only 13 or 14 per cent, half the 1973 figure. These figures take full account of the much increased outflow of real and notional profits — some of the profits are, indeed, notional arising from the pricing mechanisms of multi-nationals — from foreign industries here and also to take full account of the very much larger interest payments on foreign borrowing, these additional outpayments being offset only partly by the inflow of funds from the EC budget.

But, it may be asked, if one-third of the gap between the purchasing power of our disposable income per worker and that of the rest of the EC, and half of the gap vis-à-vis Britain, have been bridged since 1973, and if we are now within striking distance of the purchasing power per worker of some of the richer EC countries, why do our living standards seem to be below theirs by a much bigger margin than this? Part of the answer lies, of course, with the scale of our public spending, even after many years of spending cuts from the extraordinary level to which this spending was pushed between 1977 and 1981, and in particular with the high level of domestic national debt interest payments. But an even more important element is the difference between the number of dependants whom the average worker has to support, either within his own family or indirectly through taxes raised to pay for social welfare provisions. In 1986 the number of dependants per 100 Irish workers was 228 as against 158 for the EC as a whole, 128 in Britain, and 97 in Denmark. Moreover, between 1973 and 1986 our dependency ratio rose much faster than in any other EC country except Spain — partly because of the rapid rise in the birth rate to 1980 and partly because of the huge increase in unemployment in the eighties.

Since 1986, however, our dependency ratio has been falling because of a drop of some 90,000 in the number of children and some reduction in the number of unemployed, both of which are likely to continue in the years ahead, when, moreover, employment is also likely to rise. Our dependency ratio which has fallen by about 5 per cent in the past four years is likely to fall by a further 10 per cent or so between now and 1996. As there is no reason to expect a cessation of the process by which the purchasing power of our disposable income per worker has been catching up on that of our EC neighbours except Spain, this means that average living standards — viz. disposable income per head of population — are likely to catch up significantly on those of our neighbours in the period ahead.

I return now to my main theme — the political choices that lie before us in the deployment of these additional resources which are likely to become available to us in the years ahead. I have already referred briefly to two of the areas that require attention in this connection — the reduction of debt and the improvement of services that have been overpruned. I want to turn now to the areas of social deprivation and tax reductions.

In facing the choices to be made between these two areas we come to the heart of the political debate. The classical argument here is between those who stress the importance of creating conditions propitious for growth and those who stress the need to relieve distress and create a more just society. The dilemma posed by this choice is a genuine one but it is greatly aggravated by the persistent tendency of the advocates of each thesis to ignore the arguments in favour of the other, for both, of course, are valid.

An important qualification must, however, be made. There is, I believe, a qualitative distinction between the two. Economic growth is not an end in itself, but is properly a means to the attainment of social justice. The right, however, is generally careful to avoid this distinction. If challenged on the issue they may in theory admit the distinction but in practice growth is all too often treated as an end in itself, and the time never seems to be right to start to redistribute modestly any of the wealth created.

It is in my view the duty of politicians concerned for the public good to reject this approach and to insist that a balance be maintained between the creation and distribution of wealth. It is not clear that this duty is accepted by all political parties in this country. In particular the two parties in the present Coalition have not accepted it either explicitly or in policies actually adopted to date. In this they contrast with the three Opposition parties, all of which are explicitly committed to this principle and two of which, Fine Gael and Labour, demonstrated this commitment in Government under the most unfavourable conditions when they had the opportunity to do so.

During our last period in Government, at a time when the purchasing power of those at work was actually falling as a result of the deflation necessitated by overspending in the earlier period, we increased the average purchasing power of social benefits by about 10 per cent. I am not aware that any other Government in the EC, almost all of them with economies in better shape than ours during those years, effected any similar redistribution during this period, although a number of them were Socialist Governments. Moreover, I think I am entitled to say that these unique redistributive measures, criticised at the time on economic grounds, reflected fully the policies of both partners in that Government.

Unhappily this process came to an end when the Government changed in 1987, and even in a year in which considerable resources have been available for redistribution in the budget, the increase in most social benefits has exceeded the current inflation rate only by a fraction of a per cent; and when account is taken of the very large savings on the Social Welfare Vote which were not adverted to in the Minister's budget speech but were discreetly disclosed only in the document issued after the end of that speech, barely 10 per cent of the "give-aways" in the budget represented the net cost of the social welfare improvements effected — and the sum involved is much less than half the net increase in the provision for social welfare made in the last budget in 1986 of the Fine Gael/Labour Government that I led.

The facts objectively disclose a significant difference in the philosophical approach and the emphasis on the actual policies pursued by Governments on the two sides of this House as now constituted.

Any objective and non-partisan comparison of the two sides of the House would attest that in recent years at any rate, the parties in the present Coalition have neither in their statements nor in their actions accepted the concept that public policies designed to increase wealth must be a means to the end of removing social injustice and that these policies should not be presented, as they have been for some years past, almost invariably in the public utterance of these two parties, as if they were ends in themselves. By contrast, all three parties on this side of the House, while differing widely in other respects and in particular on the weight they attach to securing, by increases in the marketable output of goods and services, the increased resources needed for redistribution, are all explicitly committed to social justice as the end of public policy.

Leaving aside that political observation, which is the only one I shall make in my speech, I should like to address one specific issue of social policy, namely the manner in which we deal with the problem of poverty arising from long-term unemployment. I believe all parties in this House have failed, each in their own way, to face squarely the full implications of this issue, because of a reluctance to accept openly the scale of this problem. Each party tend to talk as if unemployment and emigration are fundamentally temporary in character and could be solved within a measurable time if only they had an opportunity to implement their policies.

The unpalatable fact is that no conceivable rate of economic growth could enable a country with our present scale of unemployment and annual inflow into the labour market from the educational system, to bring unemployment down to the kind of level we were accustomed to throughout most of the post-war period and to eliminate the need for involuntary emigration. Making due allowance for the pool of emigrants who, if jobs were available here on a large scale, would return to take up employment here, as they did on a significant scale throughout the seventies, and allowing for the number of women who are not now in the labour force but would enter it if jobs were available, it can readily be calculated that to achieve such an objective in ten years would require a sustained annual growth rate every year of 8 to 10 per cent. No country in Europe has ever achieved such a rate of growth over a ten year period and during the past couple of decades no country in Europe has achieved more than half this growth rate. Those are simple arithmetical facts and no party in this House seem willing to face them or the consequences for social policy they entail.

It is dishonest and cruel of any politician, whether on the Right or the Left, to say or imply that this objective is an attainable one. Moreover, failure to face this fact has contributed to the failure of most parties to address the inappropriateness of continuing to deal with the income support problem of older longer term unemployed by an out-of-date mechanism designed to provide temporary support to people between jobs. I refer to unemployment benefit or assistance provided by a mechanism that humiliatingly requires people without any real employment prospects to present themselves weekly in order to prove that they are not working and are available for non-existent work before they will be paid their dole.

A society in which unemployment and involuntary emigration are likely to be the lot of a large minority of people for several decades to come, should in justice accord to such people the same right to a basic income provision that is enjoyed in the form of tax reliefs by those lucky enough to be paid enough for their work to be in the tax net. That is what tax allowances provide; the tax remission provided by these allowances is a basic income provision within the tax system, although most of those who enjoy tax allowances find it inconvenient to accept this fact and are notably reluctant to do so.

I want to take four cases. First, a married man — with one child at university — who earns £50,000 a year, is a member of a superannuation scheme, is a VHI member, has a mortgage of just over £30,000, convenants 5 per cent of his income to his child and has a bank loan to enable him to buy £30,000 worth of shares. His tax allowances add up to almost £20,000, which at a 53 per cent tax rate gives him a basic income of over £10,000 a year or £200 per week. He is left with spending power of over £21,000 a year after provision for accommodation, health, old age, university fees, and tax, which in his case represents 28 per cent of his income. This is a very modest proportion on an income of £50,000 a year.

Next I will take the case of a man earning £26,000 a year, with similar arrangements, but purchasing only £7,500 worth of shares. His tax allowances are such that he manages to remain on the lowest rate of income tax of 30 per cent, and his tax allowances still give him a basic income of almost £4,000 a year or £75 per week. Just under 20 per cent of his income goes on taxes, which is also very modest for that level of income.

A similarly placed married man with one child and an income of £6,750 a year or £130 per week pays no tax at this income level. He thus gets no tax allowance and has no basic income provision from the State through such allowances. He is given no assistance with his health costs, with making provision for his old age, for child education, for purchasing a house, or — not that he could afford it — for buying shares. He gets no family income supplement because his income, while too small to benefit from any of these generous tax allowances, is simultaneously adjudged to be too big to justify supplementation through this scheme and, of course, he gets no social welfare benefit because he has a job and an income from it. Finally, a middle-aged unemployed man with a wife and one child who has no prospect of employment for the rest of his working life gets £94 a week social welfare.

What is the logic of such skewed provisions? Why does the State feel it appropriate to provide, through a combination of the tax system and social welfare, basic incomes to three of the four people I have mentioned and not to the fourth, the man with the low income? Why do the better-off people get their basic income automatically through the tax system in a manner that no one judges to be demeaning while the unemployed man who, like so many others today has no prospect of employment must queue up each week to prove that he is not working but is available for non-existent work? Would there not be an advantage all round and more social justice if all of them got a basic income paid equally and on the same basis? Incidentially, this would make it possible to abolish the great bulk of the expensive social welfare administration at a saving of some £60 million a year. All that would have to be kept would be the arrangements to verify that a few categories, such as deserted wives, unmarried mothers and people in receipt of disability provisions in respect of temporary disability, remained entitled to the higher rates of benefit they receive at present.

I am not, of course, suggesting that the transition from the present system to a basic income system would be easy. As was shown by the study which I had carried out by my economic adviser in 1986, with the assistance of the Department of Finance, and published in the January 1987 edition of Administration, there are several major problems about such a change-over. However, the benefits to society are such, especially in a country which for demographic and historical reasons faces problems of long-term unemployment for at least 20 to 25 years to come, that it certainly merits priority attention.

Fine Gael are committed to this concept as I believe The Workers' Party are. I hope I am not incorrect but I have certainly heard the thesis expounded on behalf of The Workers' Party and I was happy to join in pressing it at a recent poverty conference. I urge the Labour Party, who I know have an attachment, for historical reasons, to the Lloyd George social insurance principle, to examine it with an open mind. It is almost over 80 years since the Lloyd George scheme was introduced and I question whether it is relevant to our needs today and whether we should look at things with a fresh mind. If the parties in Opposition in this House, all of whom are committed to the principle of social justice as the proper end of political activity, were to agree together on such a radical but necessary change I believe the people of Ireland would give a mandate for such a reform that could in social terms put this country in the forefront of Europe.

Of course, any such policy must be based on a rigorous economic and financial analysis of the individual gains and losses involved in such a radical change-over, and there would be many such gains and losses, and ways would have to be found of overcoming several major difficulties that stand in the way of such a radical reform but the advantages for our society would be such that such an effort would be well justified.

I recognise that some will argue in the traditional way, that the tax allowance provisions to which I referred earlier in calculating the basic incomes of people at different income levels under our present tax system are valuable and should be retained. The elimination of any particular tax provision is not essential to a movement to a basic income system, and some tax allowances could be retained if thought useful, although at a price — we are paying a very high price today for it — in terms of the level of marginal tax rates, which are today much higher — and dangerously high from the point of view of encouraging enterprise — than they need be because of the proliferation of these allowances. However, — I am speaking for myself and not my party — I remain to be convinced that in a country with the highest or second-highest home ownership rate in the world, New Zealand being the other, we are far ahead of most other richer countries in this respect, we need to retain indefinitely incentives for people to buy their own homes. Nor do I believe that in a country where the instinct for property is already very strong, we need to give people incentives to buy shares. That is in large measure a separate issue and is not essential to the thesis of the desirability of change-over to a basic income.

There are, of course, many other issues in relation to taxation that need to be addressed. Our tax system involves grossly excessive taxes on income and expenditure while our taxes on property and corporations are much lower than elsewhere. Our tax system compared to that of any other country is extremely skewed in these respects. We are unique in the imbalance we have although some countries do have systems which are very different from each other. For example, Denmark has a rather specific system, but we are peculiar in having this particular combination. Our property taxes are a small fraction of those in Britain. The figures in the ESRI paper published at the combat poverty conference, the theme of which was Tax on Poverty, some months ago show that taxes on property in Britain are five times ours. In fairness, one can say that the British economy under the present government can hardly be described as a socialist economy.

On the corporate tax side, while I believe, there was a view to encouraging investment in employment giving enterprises, we must retain the 10 per cent tax on corporate profits derived from manufacturing or externally traded services and should endeavour to get EC agreement to its continuance after the year 2000. The process of phasing out capital allowances which encourage investment in equipment rather than in people, for which some provision was made in the budget, should be continued.

Had we been in Government longer, having reached the point where we could calculate how such a basic income scheme might work and what the problems would be I would have initiated this. What I would like to see is a long term but flexible programme setting out how it is proposed to deploy our spare resources in the years ahead as between debt reduction, public spending, social provision, income tax reform and VAT harmonisation, together with an analysis of how we could, over a period, move towards a basic income system and how income tax and social welfare changes in the interim might best be devised to be consistent with an eventual changeover to a basic income system. On the relative weight to be given to the different alternative uses to which spare resources may be put, there will, of course, be different views in this House, but that is what politics should be about.

Some attempt should be made to look ahead at various hypotheses of growth here and elsewhere and of how in different circumstances we would use within these four or five different areas the additional resources which become available. That should be put to the House and discussed so that a view may be formed. There is no such policy. Each budget is taken individually with little adjustments made either way but never within any strategy. It has been very difficult to have such a strategy. In fact, in one sense there was no point in having one during the period of deflation when all our efforts had to go into cutting spending. Once we moved from that stage to the stage we are at now where there is a choice, where there is room for manoeuvre and a bit of leeway, it would be very unwise for any Government or Parliament not to have some concept of the strategy by which they will deploy resources as between the different areas.

If such a plan were put forward by the Government in which they suggest that they would do in various alternative circumstances with different growth rates, we in other parties could then express our views and there could be a genuine focusing on the real issues. I am sure we would find in the two parties opposite a very strong emphasis on tax reductions — we on this side of the House would also favour tax reductions, but we would place much more emphasis on the redistributive aspects of budgets and would want to see much more movement towards social justice.

If there was such a framework in front of us we could see the real issues in politics deployed which are never deployed. As things are at present, we talk in circles about individual budgets and proposals, but there is no strategy. It is almost impossible for an Opposition to do the calculations to show what the alternative possibilities are. That should be done and presented to us in such a way that we could then choose our options. Ours may not be identical with those of the two parties over here but they would be very close I believe, although they would be very different. Politics could become real and the issues put to the electorate in an election would be the crucial issues.

We all agree that some money must go to reduced expenditure and taxation levels because tax levels are inordinately high; there is no doubt about this, but how much? Are we going to go along with the view that the Government take that 10 per cent, as in this budget, of available resources should go towards alleviating poverty and 90 per cent to other purposes, mainly tax reductions? I do not agree with that and the parties on this side do not agree with it. If we had some other framework they could say what they want to do, say what we want to do and the country could choose. At present there is no clear choice to be made on these issues. The issues have been posed and it is now relevant to pose them again, and that is the thesis I am putting forward in this House.

We are back in politics again after a period of seven or eight years when there were no politics; there was no room for politics. We had to save something from the wreckage and get the crisis under control. That has been done and now the real issues can be fought out in this House and they should be fought out, but this can only be done effectively if the choices are posed. I hope in some way we can get some idea from the Government what their strategies are and will be for the four or five years ahead; we could then say whether we disagree with them and at that stage the people can make their choice.

Minister of State at the Department of the Environment (Miss Harney)

One of the primary concerns of the Progressive Democrats has been the necessity to radically reform our taxation system so as to reduce the burden of tax on work, make it more economical for people to employ others and to spread the burden more equitably across other sectors of the community.

Dr. FitzGerald

Thank your for making my point.

Miss Harney

I would be surprised if Fine Gael did not agree with the concept of having a more equitable tax system, spreading taxes from work to things like property and the corporate sector.

Dr. FitzGerald

The question is what is the primary aim. The aim should be social justice. That is where we differ.

Miss Harney

I agree that the primary aim must be social justice and I fully subscribe to the principle that we should try to use both the tax system and the welfare system to bring about a more equitable system and to give many people, particularly the unemployed, an opportunity to participate in the economy and not be isolated, as they have been for so many years.

Reform of the taxation system has been one of the founding principles of the Progressive Democrats. It is interesting to look at the progress made and the influence wielded in this area by the Progressive Democrats since our formation just four years ago. At that time the standard rate of income tax was 35 per cent and the top rate was 58 per cent. Now, particularly due to the further progress made in this year's budget, the standard rate has been cut by a full 5 per cent to 30 per cent and the top rate has also been cut by a similar margin to 53 per cent. It is obvious that we are now well set to realise the targets of a standard rate of 25 per cent with one higher rate by the budget of 1993, which is the reform programme outlined in the agreed Programme for Government between the Progressive Democrats and Fianna Fáil.

A few years ago when we first adopted these policies, which are now being copied by virtually every party in the Dáil, we were derided for being unrealistic and for setting unattainable targets. Since we are now set on realising this fundamental reform of the tax system it will give tremendous confidence to people at work and to those investing in Irish industry. It also raises the prospects for those who are unemployed, particularly the 100,000 people plus who have been unemployed for a year or more.

That leads me to another policy priority of this party, which is the necessity to alleviate the burden of PRSI, particularly for the lower paid. Pay-related social insurance is nothing more than another tax on work and it is a particularly penal imposition on people on low pay. Again, since our inception, we have advocated total reform of the PRSI system. Whereas the measure in this budget is a mere token first step, it is nevertheless the start of the reform of PRSI. We are confident that much more can be achieved in next year's budget and in the next few years while this Government are in office.

Our target is to completely eliminate the PRSI burden from the lower paid and to quickly realise the initial target of getting rid of PRSI on the first £3,000 of income earned by everybody. This kind of reform would radically improve the prospects of many more people getting into the workforce, make it easier for employers to take on extra workers and significantly address the huge tax wedge which currently exists in the labour market. It is our view in the Progressive Democrats that it is absolutely perverse to tax work as if it were some kind of luxury in an economy where there are over 250,000 people unemployed.

I realise, as do my party, that no economic recovery, no matter how dramatic or how quickly it can be got under way, can alleviate the plight of all those who are long-term unemployed and the other people reliant on social welfare. That is why I am pleased with the overall improvements in social welfare in this year's budget, and, in particular, the 11 per cent increase for the long-term unemployed and the 15 per cent increase for adult dependents of social welfare recipients. The extension of the social employment schemes to the Dublin area is also a very important move in this year's budget. I would like to see these schemes dramatically expanded so that every ablebodied person would be able to enjoy the dignity of work and the sense of achievement and of playing a useful role in society rather than feeling helpless and unwanted as many people on social welfare currently do.

The reform of our indirect tax system in order to prepare this country for 1992 begins with reducing the standard VAT rate from 25 per cent to 23 per cent, also a very important measure. This will become even more vital as the pace of EC indirect tax harmonisation accelerates in the run up to the completion of the 1992 programme. We have seen for a long time the damaging impact of our indirect tax rates being out of line with those in Northern Ireland which is part of the UK and shares a land frontier with the Republic. Clearly, in a more liberalised and tax harmonised Europe the Irish economy would be at a decided and major disadvantage if our indirect taxes were more significantly out of line, particularly with those in the UK. Therefore, the measures taken in this year's budget will be of particular benefit in ensuring that we will not be left behind at the end of 1992. They will also provide much-needed relief for our Border counties which have seen so much of a haemorrhage of trade and commerce across the Border as people chase cheaper goods and services there because their indirect tax rates are so much lower than those applying here.

While I do not wish to go into the detail of the health issue, given that it was so extensively debated in this House last week, I want to record my and the Progressive Democrats' satisfaction at the special financial provisions in the budget for community based services such as the provision of extra places for the mentally handicapped, extra payments for those caring for the elderly in their own homes and extra moneys provided for the improvement of the dental and geriatric services. Of course, the real changes that need to be made in the health area are fundamental structural reforms and changes in the mode of management and the delivery of the services. That is why the reforms announced by the Minister for Health, Deputy O'Hanlon, in the last week or so are so important, and they are in line with the recommendations of the Commission on Health Funding chaired by Dr. Miriam Hederman-O'Brien. Moreover, they are in line with the structural reforms advocated by this party over the past few years.

Between the Estimates and the budget for this year an extra £133 million has been provided for the health services over and above the amount provided last year. These are enormous amounts of money by any reckoning. It is now generally agreed that it is not more money but rather the more efficient deployment of money already allocated which is the key to resolving the problems in the health service. I am confident that we have at long last got around to dealing with these fundamental structural and management problems.

I want to refer again to the social welfare package announced by the Minister for Social Welfare during the course of the debate in this House on the budget. The total package will cost £216 million in a full year and £100 million this year. There will be a 5 per cent increase in all payments and, with inflation running at just over 4 per cent, this is a real increase of almost 2 per cent for social welfare recipients. There are extra increases for those on lower payments and 16 different categories of recipients will get extra increases ranging from 7 per cent to 15 per cent. The introduction of a new carer's allowance in lieu of the current prescribed relative's allowance, increasing that allowance by £17 to £45, is welcome; but of course that allowance will stay for those who did not qualify for the carer's allowance. That is an increase of 61 per cent and I think it is long overdue.

The increases for the adult dependants of the unemployed and those on supplementary welfare benefit and the extremely generous increases in the child benefit, where there is now a minimum payment of £11 per week, are also welcome. We have a further streamlining in this year's budget of a number of child dependant allowances, decreasing from 36 payments three years ago to six now. I believe eventually we should have only two different rates, one for younger children and one for children of 11 or 12 years of age, older children. The increase to £11 per week, the minimum allowance for children, is particularly significant for social welfare families, because those living in poverty are in the main families who are dependent on social welfare as their only source of income.

An amount of £3 million has been set aside in the budget for the introduction in September this year of a new clothing allowance to give some assistance to social welfare families in buying school uniforms and with the kind of expenses involved when children are returning to school. That is significant and long overdue. It will help enormously to alleviate the burden placed on many families during the summer as their children prepare to return to school.

This budget has many positive provisions to help women. The allocation of £0.5 million for self-help groups is extremely important and I welcome it. I am particularly pleased that the Government have decided to give £150,000 to the Rape Crisis Centres. These centres do wonderful work and it is time they were put on a sound financial footing. They should not have to rely on simple allocations in each year's budget. I hope they can be put on a financial footing and will be funded properly by the State because of the enormous and important work they are doing.

The decision to give £550,000 for community development groups who were not successful under the EC poverty programme is welcome. The Tallaght Welfare Society and other groups in the Tallaght area submitted a very comprehensive programme for the Tallaght area, which is one of the most disadvantaged and deprived areas in the country. It is extremely disappointing that that project was not selected. I hope a generous allocation from the £550,000 will be given for that project so that it can get under way. I welcome also the decision to give £50,000 to the Simon Community. I think the carer's allowance will be paid almost exclusively to women who generally tend to be the carers. The increase in the adult dependant allowance for certain social welfare recipients again will benefit women who tend to be the adult dependants.

There was a time when environmental issues were fairly low down on the list of priorities for public debate. The Department of the Environment were largely concerned with the provision of practical services such as housing, sanitary services, roads and so on. However, it is a sign of the increasing maturity of our nation that we all have come to realise the importance which must of necessity be attached to our environment to ensure that what we pass on to future generations is not substantially different from and should where possible be an improvement on what we ourselves inherited. The environment is now centre stage of the political debate. It is now a major priority of this Government's programme, and I am delighted that that is the case.

In the Fianna Fáil — Progressive Democrats Programme for Government 1989-1993 in the national interest a commitment was given to the establishment of a new office for the protection of the environment. A commitment was given to the establishment of a new, independent, environmental protection agency. More recently the Government published the first ever environmental action programme of any Irish Government with an expenditure target of up to £1 billion. This is the position which should prevail, because the environment is an integral element affecting the lives of every man, women and child on our planet. For example, the eighties will be remembered as the period during which nations began to realise the full implications of the potential of serious damage to the environment at local, national and global levels. The excesses of consumer societies in the seventies and eighties are catching up with us all and rebounding in totally unexpected ways at all levels. As we go into the nineties it is generally recognised that corrective action must now be taken. It is important that this message be constantly hammered home at every opportunity. Although this Government have rightly identified job creation as the main priority and the Fianna Fáil — Progressive Democrats Programme for Government 1989-1993 in the national interest contains specific proposals for boosting employment throughout all sectors of the economy, the programme also recognises the importance of protecting the environment as a key factor in ensuring the success of a major portion of the Government's plan. Accordingly, a number of new and significant environmental protection measures are proposed in the plan as published. There is a recognition that, while development and growth must be encouraged to take place, this must be in a fashion which is simultaneously protective of the environment. In particular, the production and processing of agricultural and aquacultural food products and tourism growth are dependent on this overriding consideration. Quality of life is of the utmost importance and the provision of employment at the expense of the quality of life would signal a failure in Government responsibility.

We must adopt a pro-active rather than reactive approach to environmental protection. Proper management involves anticipatory and preventative strategies and the integration of environmental considerations in all aspects of development and Government policy. This is the road along which we are proceeding at present. The plan as published is comprehensive, it has many worthwhile targets and proposes to spend £1 billion over the next decade: £300 million on the upgrading of the public water supply and the provision of new public water schemes; £230 million to end once and for all the pollution of our inland waterways from the dumping of raw sewage, and the provision of £400 million to provide treatment facilities for the sewage being disposed in our marine waters in many of our coastal towns. Because of the location of major population centres along the coasts, over 80 per cent of all domestic sewage discharges from the population connected to communal systems is to the coastal waters. With the exception of Ringsend, Dublin, there are no primary treatment units and therefore most of the discharges into our marine waters are untreated.

The Government have asked Dublin Corporation to prepare as a matter of urgency the planning and design of a secondary treatment facility for Ringsend. This will cost £40 million, but I believe it is extremely important that we have proper sewage treatment facilities in the Dublin area and that the huge amenity of Dublin Bay on the edge of the city can be fully utilised by the people who live here.

Mr. McCartan

Is the Minister aware that all the raw sewage from the north side goes in at the Head of Howth?

Miss Harney

Yes.

Mr. McCartan

Are the Government going to do anything about that?

Miss Harney

The Deputy should let me continue and not interrupt me. Dublin Corporation are currently licensed to dump approximately 235,000 tonnes of sewage sludge at sea each year under the Dumping at Sea Act, 1981. This volume will increase by 10 per cent following the connection of Dún Laoghaire to the Ringsend works. The Government in the action plan have made it imperative that Dublin Corporation cease the dumping of sewage sludge from 1998. Alternative technologies for the disposal of sludge exist and the corporation have sufficient time to study alternatives, including incineration, digestion, dewatering and land fill. The Government have also banned all dumping at sea of industrial waste from the 31 December 1995.

I think these are very progressive and radical steps to be taken by any Government. Obviously, one would wish that some of these decisions could be made earlier; but unfortunately that is not possible because of the resources that are necessary. This is the first time that any Government have set down their environmental programme on paper for everybody to see, whether in the private sector or other Government Departments. It is the first time there has been a co-ordinated effort by not just the Department of the Environment but the Department of Industry and Commerce, the Department of the Marine and the Department of Agriculture and Food. It is time that was the case. If one takes the example of the smoke pollution which we have had to endure in Dublin for over a decade, although the problem was identified in 1980 and indeed the worst smoke pollution we have had in the city occurred in 1982, a subsequent Irish Government introduced and extended a grant system for householders to install open fire places to burn more coal and exacerbate the problem. Recently we were probably giving grants to some of the same people to remove the open fireplace and install other forms of heating. This is crazy Government policy. Those kinds of decisions happen simply because there is no plan or programme that people can work towards.

Waste recycling levels in Ireland are well below European levels. Under the plan, the local authorities are now being directed to prepare recycling schemes for their own area by the end of June of this year in order to put the overall approach to recycling on a more sound footing. They will be asked to identify recycling possibilities in their areas and to set out how they might facilitate and promote a range of such activities. Naturally, local authorities cannot be expected to undertake the recycling of waste themselves as a commercial activity, but they are being asked to consider the type of frameworks that would foster greater opportunities for waste recycling. Examples of the range of possibilities that local authorities should examine are the potential for segregation of waste at source, the scope for depots or collection points in their areas, the need for and distribution of bottle banks and recovery outlets for all forms of recyclable materials.

The response to last year's provision of £250,000 for waste recycling projects was encouraging. Eleven projects received grant assistance ranging from £5,000 to £47,000 for the collection, channelling and recycling of paper, plastics, bottles and cans. The projects selected were fairly evenly distributed throughout the country and will no doubt contribute substantially to increasing the level of waste being channelled into recycling in those areas. One of the problems last year was selecting the most meritorious projects from the large number of applications received. The increase in the provision to £500,000 in the 1990 Estimates will enable an added emphasis to be given to the recovery of waste materials.

Recycling has many economic merits. Apart from creating employment, it conserves essential raw materials, helps to reduce imports and contributes to a cleaner and tidier environment. While recycling schemes to be developed by local authorities by the end of June this year will go a long way towards assisting in having sensible recycling projects right around the country, there is also a need to examine in some detail the disposal outlets for the various waste being recovered and to develop a stable market for recycled material. Under the Government plan, the IDA are being asked to undertake as a matter of urgency a feasibility study into the scope for new industries based on the recycling of paper, plastic and other consumer waste.

Last month Ireland became a signatory to the Basle Convention on Trans Boundary Movements of Hazardous Waste. This convention enshrines the principle that problem waste should as far as possible be disposed of within the state in which it is produced. The Government are firmly conscious of the need for this country to move towards self-sufficiency in hazardous waste disposal within a reasonable time and active steps are now being taken to strengthen the national waste disposal infrastructure through the provision of a contract incineration facility for the disposal of hazardous waste. In April last private sector interests were invited to submit proposals for a central incineration facility. Many firms and consortia responded to this invitation and, following a pre-qualification process, five were invited to submit detailed proposals. The technical and financial aspects of these proposals have been carefully evaluated and, following the Government's decision in principle to make a grant available towards the capital cost, it is now the intention to continue negotiations with two of them with a view to concluding an early agreement. Subject to compliance with planning and other related environmental controls, it is anticipated that the facility can be operational very early in 1993.

The environment is all-embracing and affects many different aspects of Government Departments and life generally. Its complexity begs for the establishment of an independent environmental agency and this is what the Government are proposing in the Programme for Government and in legislation that is currently being drafted. The new agency will initially have the following groups of functions. It will control and regulate development likely to pose a major risk to environmental quality; it will be involved in the general monitoring of the environment; it will provide a support, backup and advisory service for the local authorities; and it will also be involved in environmental research. The agency will be given direct responsibility for the licensing, monitoring and enforcement functions in relation to certain classes of new developments with the potential for serious pollution, including problems relating to air, water, noise and waste. Some of the activities monitored by the agency would include activities in the agrifood business, the chemical-pharmaceutical area, power stations, sewage treatment facilities and matters of that kind.

It is the intention also to give the agency power to review the licences for existing development of this kind. Local authorities will, however, continue to play a major role in the regulation and control of development. They will continue to be responsible for licensing and monitoring most development and for the granting of planning permission for all development. However, in order to ensure that the system will work smoothly, I envisage there will be very close linkages between the agency and the local authority structure.

Other matters of a specified nature in which the agency will be involved include the operation of the environmental impact assessment, particularly with regard to the effects on water, air, soil in relation to the regulation of hazardous waste, including its movement and disposal, as well as hazardous waste management planning generally. The agency will also provide increased access for the public to environmental information, which should help to ensure that future debates on environmental issues can be based on accurate and unbiased data. The agency will be responsible for the general monitoring of environmental quality, with particular emphasis initially on water and air quality monitoring, including monitoring of estuarial and coastal waters and such monitoring as is required by European Community directives and international conventions. I envisage that much of this monitoring will continue to be done on an agency basis by the local authorities and other existing organisations, but it would be subject to general co-ordination, validation and other arrangements by the agency to ensure that comparable and comprehensive data are produced. It is essential that the agency should set up procedures which would enable them to establish, update and maintain a comprehensive data base on environmental quality and publish regular reports on the current position and trends.

The agency will be the national focal point for the European environment agency which was agreed at the meeting of the Council of Ministers in November last. The agency will also be responsible for the provision of support, back-up and advisory services for local authorities, including regional support and laboratory facilities. The agency will make use of the existing network of three regional water laboratories and add to them to cover those areas of the country outside the present network. I envisage also that the staff and equipment will be progressively expanded to cover all water problems, as well as air, waste and noise issues. The agency will need to arrange for national laboratory facilities to cater for specialised needs.

A further group of functions will be related to research. The agency will be responsible for co-ordinating environmental research by public and other bodies and for attracting and maximising funds from the European Community. Where necessary, they will carry out environmental research directly or arrange for research to be carried out through consultancy commissions.

I am sure Members will agree that the functions proposed to be assigned to this agency are wide-ranging and extensive. I am quite excited about its prospects for playing a major role in environmental protection generally in the years ahead. I do not wish to give the impression that the proposed agency will inhibit further development including, as has been suggested in some quarters, certain classes of industrial development such as the chemical or pharmaceutical industry. There is no reason why development, including industrial development, cannot co-exist with the environment.

New industry is an important element in the Government's programme for job creation. With the co-operation of all involved and the right structures in place, development can be encouraged, employment can be created and a good environment can be maintained.

Environmental protection should not be seen as a burden on society or on industry but as an opportunity. Proper management of industry and business in general is a guarantee of the continued growth and socio-economic development of this country, while also ensuring that the environment is protected. We are all accustomed, before making decisions, to taking into account aspects such as financial implications, demands on staff and other resources and I should like to think that industry could play a bigger part in ensuring that the environment is protected. It is not just a question of the minimum action necessary to comply with legal standards on emissions or waste. The message must be brought home to everybody that environmental protection is not just a matter for national or local government; it is also one to be taken to the factory floor or to the boardroom. This requires a pre-disposition to caring for the environment as an integral part of the corporate decision-making process.

Wise environmental management means, in effect, careful and efficient management of resources such as energy, raw materials and production processes. It should also involve consideration of environmental health and safety aspects of product use and disposal, including product packaging. This multi-disciplinary approach requires training and staff motivation at all levels. The returns are potentially rewarding since efficiency in the use of resources, whether in production or recycling, can lead to considerable cost savings. Savings on the double can be achieved through greater efficiency in production and the reduction of waste disposal and clean up costs. Industry must recognise the increased level of environmental awareness among consumers who realise the powers available to them through the exercise of informed choice when purchasing products. Products or services which have less impact on the environment are here to stay. There have also been developments throughout Europe in the financial area involving the launch of ecologically friendly or green investment funds. Such a fund has recently been launched in this country.

I very much support the concept of environmentally friendly labelling. This country is currently working with the other member states to try to have a Europe-wide environmentally friendly labelling system. At present only West Germany among the Twelve has such a system. If we do not succeed soon in convincing our European partners to support our efforts to have this labelling system on a European basis, we intend to proceed here. It would obviously make more sense for manufacturers and consumers alike to have a uniform green label used in all member states.

This budget is a balanced and fair one. In regard to the environment the Government have been imaginative and forward looking. They are the only Irish Government to produce on paper their policy for the next decade. Substantial resources over and above what we currently spend on the environment will be required if we are to eliminate the dangers and threats here and globally on many environmental issues. We must do what we can at home but must also co-operate with our European and international partners to ensure that issues such as global warming and so on are dealt with in an effective and sensible way and that we take action as quickly as possible to avoid many of the difficulties which could subsequently arise for our environment.

Acting Chairman (Mr. Doyle)

Deputy Kenny.

Mr. McCartan

There must be some misunderstanding. I understood that the last three contributions from this side of the House were from the Fine Gael Party and that on the arithmetics the next speaker from this side should come from either The Workers' Party or the Labour Party. I am offering.

Acting Chairman

I have been informed that there have been three Fine Gael speakers. In fairness, I call Deputy McCartan.

Mr. Kenny

You are not taking my contribution now?

Acting Chairman

Not at the moment.

Mr. McCartan

I thank the Chair, and Deputy Kenny for giving way. I welcome the opportunity to make a contribution to this important budget debate. The more global and particular financial aspects of the budget have been dealt with by the few Workers' Party speakers who have already contributed. They have dealt comprehensively and adequately with the shortcomings and inconsistencies in the budget proposals and the Government's fiscal programme. My anxiety was to deal with the area of justice, for which I hold responsibility within my party.

A matter which I have raised previously in the course of a number of debates and at Whips' meetings is the absence of the Minister for Justice time and again when important debates are taking place in regard to legislation of his concern. On Second Stage of the Rape (Amendment) Bill the Minister's speech was delivered by one of his colleagues and on subsequent days we had to deal with the Larceny Bill and the Firearms and Offensive Weapons Bill without the Minister being present. On Committee Stage, when Members can argue for change and consideration of a view in regard to particular proposals, we faced inevitable difficulties in the absence of the Minister since there was nobody in authority here who could accept well-founded arguments and alter provisions accordingly. I accept that the Minister for Justice has a very demanding schedule. The process of the Anglo-Irish Agreement, which is a very important process, requires his absence from the House time and again to deal with matters there. The fact of our Presidency of the European Commission also calls on his time. We must consider at some stage the availability of the Minister to deliver on the job expected of him within this House.

I would urge the Government to look at two things in this respect. Is it not time that a Minister of State was appointed to the Department of Justice to act in the absence of the Minister? The ability of Minister Burke to deal with the Department of Justice is one thing, but to ask him to deal with another portfolio relating to communications as well is extremely foolhardy. It simply cannot be done. It is frustrating for Opposition Justice spokespersons who have attempted to pursue issues at Question Time or other times to get so little opportunity to hear so little from the current Minister. Question Time is divided between Communications and Justice matters with the result that we have dealt with fewer issues and points of justice than ever in the history of the Dáil. That is unsatisfactory. I would ask Government to look at the matter urgently.

A feature of that absence is the non-availability of debate to establish even where the Minister is going in general terms. We have had debates about the minutiae of defensive weapons, firearms, housebreaking implements and the like, but we have had no indication as to overall policy directions in the Department of Justice or on how the Minister intends to develop the Garda Síochána as a crime prevention force in the community.

Acting Chairman (Mr. Doyle)

I would remind the Deputy that we are confined to taxation, expenditure and matters of policy.

Mr. McCartan

Neither have we had any debate in relation to issues such as the penal system and whether we are going to continue to spend so much money maintaining a prison system that does not meet its role as an effective means of combating crime. We hear time and again that crime is on the increase, and that Dublin is under siege. The only policy indicated in the budget is a continuation of spending vast sums on the maintenance of the prison service without any consideration of alternatives, such as an expansion of the probationary service and non-custodial forms of treatment of offenders. It is a great pity that we have not had a contribution to the budget debate over the last three weeks from the Minister for Justice in relation to the policy of the Department, where our money is going and what return we can expect for the huge commitment the taxpayer makes to our penal and criminal justice system generally.

One aspect of this is the way non-custodial policy has been allowed develop in a piecemeal way. Recently I highlighted irregular practices in this regard in respect of supervisors employed in the probationary service. If there was a policy of meeting overall Government targets of financial rectitude in the Department we would be spending less money in the area of the custodial penal system and diverting it into the non-custodial aspects of the penal system by employing fewer prison officers and more probationary street workers. While that system has been in existence since 1984, the supervisors who are a necessary feature of the service are still employed on a part-time basis, taken from the dole queues for two days a week. They do not have security of employment.

I raised this publicly and tried to illustrate the ridiculous proposition it represents in a policy of trying to get a better return for money spent on the penal system in that they have a 70 per cent success rate with offenders. The Minister just says everything is in order and that my suggestions are totally unfounded. It took nearly three years before their PRSI situation was regularised. Their tax is still under debate and there is still correspondence with tax officials in relation to the revenue that could be obtained through proper employment of these supervisors. That element of fiscal policy is completely out of control. The Minister should do more than flatly reject the issues raised by Members of the House and he should perhaps discuss the matter with Minister Ahern who has a concern for part-time workers and ensure that the position of these supervisors is regularised.

Another aspect of the budgetary proposals is that few specifically deal with the area of justice, a feature of the non-attention of the Minister to his brief. The Rape Crisis Centre received £150,000. I had argued and sought for a commitment in this budget that the community law centres would be given no more than £120,000 for the coming year. The reason I had to argue for that in the context of the budget was that the commitment from the Combat Poverty Agency over the last three years had come to an end and they were left without a clear commitment from the Department of Social Welfare or the Department of Justice as to who would look after them financially for the current year. At the end of the day the Minister for Social Welfare, perhaps motivated by the fact that the Coolock Law Centre provides a remarkable service to him and other Deputies in the Dublin North-East and North-Central constitutencies, stepped into the breach with £70,000 and no explanation why the other £50,000 could not have been found in the budgetary allocation to the Minister for that year. That allocation is below what the law centre needs to survive during the current year. The rent has increased and the £70,000 allocated while £5,000 greater than that allocated last year, is not enough to allow them to keep their doors open during the current year. I would ask the Minister for Justice to look into his budgetary allocation and ensure that he will meet with the law centre representatives and give them a commitment that the £50,000 needed to employ extra staff and to expand and survive, will be made available to them.

In relation to legal aid, one matter that must be addressed in terms of recruitment and budgetary policies is the law centre's civil legal aid scheme. It is time the Minister responded in a constructive way to the departure of the President of the Law Society and the Chairman of the Bar Counsel from the Legal Aid Board. That and the resignation of one other person highlights the attention needed for the civil legal aid scheme nationally. Unfortunately while the Minister talks about an extra allocation of £400,000 in the budget in the current year that goes nowhere near what is required to allow the scheme to survive, even at current levels. It will do no more than keep open four extra law centres which are facing imminent closure. It certainly allows for the recruitment of extra staff but it does not allow for expansion of the service. It is utterly inadequate.

The Minister should at least reappoint to the vacated positions those who have left. To those who remain and are vacillating in terms of their support I wish to remind them — particularly members of the Legal Aid Board who are colleagues of those who have taken a principled stand — that it is time for them to look at their own situation. They should go if the Minister does not give a commitment to the legal aid scheme.

A matter that has been highlighted recently which flows from the absence of any overall comprehensive policy from the Department of Justice in the penal area is the case of the young girl in Dún Laoghaire who has been remanded week in and week out over the last few months by District Justice Wine. He did this because he was concerned that the Minister had not allocated money in the budget to provide an adequate and proper detention centre for young juvenile offenders or girls in trouble. It is outrageous, that because of the lack of a fiscal policy and because of the lack of planning for our penal system, we are forced to use every conceivable device available to try to help those in need and before our courts. The district justice, for humanitarian motives, refused to withdraw charges at the request of the Director of Public Prosecutions. It is a regrettable state of affairs and simply another feature of the problems which arise because the Minister does not have the time, resources or energies to apply comprehensive direction and a serious budget allocation.

The Office of the State Pathologist is remarkably neglected. I do not think many people realise that the current holder of the office, Professor Harbison, so well known to us all, works under the most remarkable conditions. He is allocated a sum of money from which — and from the facilities available to him from his academic seat in Trinity College — he builds the service on which the State relies in every case requiring his investigation. On occasion, when the need arises, he has the assistance of one or two other committed professionals in this area but, by and large, the State pathology section rests on the broad shoulders of that very colourful and resilient person. As a result there is no unit of research, facility, location or office available to the State for the development of a State pathology section. To put it another way, when Professor Harbison, regrettably, departs this world the entire pathology service available to the State goes with him. It is remarkable that the resources are not there to provide staff and to get an allocation from the budget of the Department of Justice to allow for a State pathology section in their Department. This state of affairs has persisted over the years and is well known to the Department. However, the Minister makes no effort to seek a specific allocation to remedy this situation. There is no heading under Principal Features as regards £150,000 which the Minister mentioned for the Rape Crisis Centre. This matter must be addressed by the Minister in the near future before it is too late. There are other issues of major proportions and importance which need to be addressed by the Minister for Justice. They may be more appropriate to another debate but in the context of the major annual discussion of budgetary commitment, in the absence of the Minister for Justice from the debate and from the features of allocation under the budgetary allowances made by this House to the Government for the current year, it is obvious that the Minister has been asked to take on too much at a very busy time in the life of the Government generally. The Minister should seek an appointment of a junior Minister of State in his Department to assist him and he should not continue to hold two portfolios.

I strongly welcome the commitment of the Minister for Defence and his Department to accept the arguments in this House for the establishment of a representative association for members of the Defence Forces. A feature of this, unfortunately, is that the Victorian attitudes that have existed for so long in the Department and in the offices of Ministers over the years dealing with Defence matters, still continue. The very disturbing news announced last week that Mr. Michael Martin would be subjected to military discipline for simply talking in his capacity as press officer to the media is most disturbing. I call on the Minister to intervene to ensure that this matter will not go any further and that the dialogue and the co-operation about which he talked as being the basis for all future development within the Defence Forces will be pursued in relation to this matter. I have no doubt that, at the end of the day, the Minister for Defence will have achieved something remarkably historic considering the stubbornness and obstruction placed in the way of any serious debate on this issue over the last two years, especially during the office of the previous Minister for Defence.

The fallacies presented here on a daily basis by the Fianna Fáil-Progressive Democrats Coalition representatives that this budget is radical or departs from the policies which cause difficult times for working people has been addressed by contributors from The Workers' Party. I thank the House for listening and I also thank Deputy Kenny for allowing me to speak at this stage.

Mr. Power

I am pleased to have this opportunity to make my contribution to the budget debate. It is important to look at this budget as only one in a series which have transformed the economy. Significant growth has been achieved which is being translated into many new jobs. However, the creation of jobs still remains the biggest problem facing the Government and we must realise that unemployment causes many of the ills in society today.

We have been asked by Governments over the last few years to tighten our belts and it is nice to see that the section who suffered most during that period will now share the benefits of our economic progress. I find it hard to accept that a party who have supported similar budgets in recent years can be so critical of this one. There have been indications over the last few months that the Tallaght strategy would be replaced. However, nobody was prepared to say what would take its place and the evidence from recent times leads one to believe that the bootboy tactics are back.

Many words were used by Opposition Deputies in an attempt to describe this budget, words such as "mean", "uncaring" and "unimaginative". I heard one Deputy describe it as an unexciting budget. God knows we had many exciting ones during the last 20 years but, unfortunately, they were exciting for all the wrong reasons. It is not that long ago that a certain budget caused great excitement in the House. Unfortunately for the Minister concerned a majority of Deputies decided not to wear his proposals. The Government were brought down and quickly replaced.

Despite the severity of the measures implemented in recent years there is no such threat hanging over the present Government. The majority of people accept that tough and difficult decisions had to be made. People can now see the benefits of their sacrifices and it is acknowledged by most sectors of the community that the country has been transformed in a very short time.

Debate adjourned.

Dáil Éireann debate - Thursday, 15 Feb 1990