Dáil Éireann debate -
Thursday, 21 Jun 1990

Vol. 400 No. 3

National Treasury Management Agency Bill, 1990: Second Stage.

Minister for Finance (Mr. A. Reynolds)

I move: "That the Bill be now read a Second Time".

Let me commence this debate with a few stark figures to put what we are proposing here in perspective. Total employment in this country is about 1.1 million and each of these persons is on average paying out of his and her pocket almost £2,000 each year just to meet interest on the national debt. Half of that sum is going abroad. The debt represents almost £23,000 per head for each person at work. These figures are growing. Our aim in this Bill is to do everything possible to minimise this burden.

I said in my budget speech earlier this year that the Government had decided to establish, under statute, an independent office for the managment of the national debt. My statement referred to the fact that debt management has become an increasingly complex and sophisticated activity, requiring flexible management structures and suitably qualified personnel to exploit fully the potential for savings. The purpose of this Bill is to provide for the establishment of the new office, to be called the National Treasury Management Agency.

This new agency will act on my behalf as Minister for Finance and under my control. The Bill enables the Government to delegate my statutory borrowing and debt management functions to the agency, but my responsibility to the Dáil or as a member of the Government will be unchanged. In other words, the Minister for Finance's powers are not being diminished in any way. An advisory committee is being established under the proposed legislation to advise and assist the chief executive of the agency. The chief executive will be directly responsible to me as Minister for Finance and will be the accounting officer for the agency.

It is well recognised internationally, and at home, that the Department of Finance have done a good job in negotiating loans and in achieving a well-balanced debt portfolio. However, as debt service costs became a major burden on the Exchequer it has become increasingly clear that the executive and commercial operations of borrowing and debt management require an increasing level of specialisation and are no longer appropriate to a Government Department. Also, with the growth of the financial services sector in Dublin, the Department have been losing staff who are qualified and experienced in the financial area and it has not been possible to recruit suitable staff from elsewhere.

While the debt is still increasing the Government have been successful in reducing the rate of increase in recent years and it has fallen as a percentage of GNP. Nevertheless, the debt itself is very high in absolute terms at £25 billion. Even in GNP terms it remains one of the highest among the OECD countries at over 120 per cent of our GNP at end 1989. Interest payments alone come to over £2.1 billion this year or 9 per cent of GNP. This is a huge burden and is almost equivalent to the total yield from income tax in the PAYE sector. It is about 60 per cent greater than total Exchequer expenditure on the health services and about 60 per cent greater than total Exchequer expenditure on education. At its most fundamental, of course, these huge debt servicing costs can be tackled only by continuing to reduce borrowing and to limit or stop the rise in our debt. But shrewd management of that debt can also yield savings and contribute to an improved budgetary position.

The first requirement of debt management is that it should manage risk. As I have said, our debt is enormous and the range of borrowing and debt management instruments used, both at home and abroad, is large, varied and complex. Out of the total debt of £25 billion, over £9 billion is in foreign currency. It is subject to exchange rate variation vis-à-vis the IR£, particularly in regard to currencies outside the EMS such as the US dollar and the yen. Out of the total foreign currency debt about 40 per cent is at a floating rate of interest and is subject to movements in international interest rates. It is obvious, therefore, that adverse trends in exchange and interest rates can cause a severe rise in our debt servicing costs. Debt management must, in the first place, minimise the effects of these adverse trends by switching between the currencies in the debt portfolio and by varying the proportions at fixed and floating interest rates having regard to projected movements in interest rates generally. In addition to those strategic risk management techniques there are several ways of covering interest rate and exchange rate risks in the short term.

All these techniques can make valuable savings as well as averting risks. My Department have been examining the potential for savings on the national debt portfolio in consultation with a number of leading international banks and are satisfied that significant savings are available while following a risk-averse debt management strategy. I should emphasise here that savings on the national debt are available across the board and are not confined to the foreign debt portfolio. Opportunities also exist in the domestic market and an active approach can secure savings in the switching between fixed and floating interest rates, between long and short maturities and between different forms of debt instruments. The domestic gilt and bill markets alone total almost £14 billion so that the potential savings from even small, but active, shifting of the portfolio are significant. I should also mention that non-residents now hold about £4 billion of this figure. Adding this to the foreign currency debt the net result is that non-residents hold over half of our total debt and we are spending each year about £1 billion in interest payments to non-residents.

What is vital if we are to get the most benefit from all liability management opportunities — and in this I would include the raising of money as well — is to have a dedicated team of well-motivated professionals to do the job. It is readily acknowledged in financial services that it is very much a people business.Financial institutions are only as successful as the people working in them. In our dealings with foreign banks we have seen many instances of key personnel leaving. Ultimately, if these people are not replaced quickly and effectively, the services offered by their former employers deteriorate and their profitability suffers. The same can apply to any treasury management operation. It cannot operate effectively while constantly losing staff or knowing that its staff can be readily poached.

Notice taken that 20 Members were not present; House counted and 20 Members being present,

Mr. A. Reynolds

People leave for all kinds of reasons and an institution has to decide ultimately if it would cost too much to induce them to stay. But it is unrealistic not to be able to make an appropriate response in terms of financial rewards or career opportunities in order to retain valuable staff. This is especially so in what is a prolonged sellers market for their services. Even more fundamentally, the size of the national debt, the complexities of its management and the huge burden which it places on the national economy make it a very significant part of our public finances and mark it out as a special case. The Exchequer's debt represents by far the largest portfolio in the country and it is inexcusable not to devote the best possible expertise to its management.

The choice for the Government and for me as Minister for Finance is whether it is tolerable to continue to lose experienced and qualified people and expect that somehow the Department will cope or whether the risk of letting our debt management lag behind other treasury management structures, either in Ireland or elsewhere, is too great and the consequences too costly. We tried to recruit suitably qualified people into the Department of Finance but this was not successful.We must be realistic about our situation, however painful that may be, and accept that we are not going to be able to get and hold the best type of people we need in a Civil Service environment.We have got to pay market rates for the right people and devise an organisational structure which they can be encouraged to join and to give of their best in the interests of us all. I have already said that our interest payments come to over £2 billion annually. Even 1 per cent shaved off that figure would yield £20 million per year. If savings of that magnitude and upwards are feasible, and it has been demonstrated that they are, then we must commit the necessary resources and the management structures to ensure that these savings are delivered. That is why the Government are satisfied that establishing an agency as provided for in this Bill is the right solution.

I would now like to outline for the House the basic structure of the agency. The agency will operate under the general control of the Minister for Finance; the Chief Executive of the Agency will have a direct reporting relationship to the Minister; there will be no board of directors between the Minister and the Agency; instead there will be an advisory committee to whom the Chief Executive can refer; because the national debt is such a large and complex part of our public finances the present carefully constructed controls involving the Comptroller and Auditor General and the Exchequer system of accounts will continue; accountability will be enhanced by making the chief executive formally accountable to the Dáil for the financial affairs of the agency; there will be flexibility as to pay and conditions so that key staff can be recruited and retained; in return, they will be assigned clear levels of responsibility and must perform to these levels; the agency's staff will not be civil servants. Turning to the Bill itself, I would like especially to mention the key provisions in section 4 and 5. Section 4 states that the principal functions of the agency will be those delegated to it in section 5. Section 4 also makes it clear, as I have indicated already, that the agency will operate under the control of the Minister for Finance and subject to whatever directions and guidelines he may give.

Section 5 enables the Government by order to delegate to the agency the borrowing and debt management functions of the Minister for Finance. These functions of the Minister are contained in the legislative provisions identified in the first Schedule. The principal such provisions are listed at (g) in the Schedule, section 54 of the Finance Act 1970 as amended. These allow the Minister to issue debt and to engage in debt management operations.An order made under section 5 will be annulled if either House of the Oireachtas passes a resolution annulling it within 21 sitting days of the order being laid before it. Section 5 also sets out in some detail the subsidiary functions of the agency. These deal with matters such as the borrowing programme to be undertaken by the agency each year, as well as the submission to, and approval by, the Minister of the annual estimate for expenditure arising out of the national debt. Also included are various advisory and other ancillary functions to be performed by the agency.

Another provision of the Bill to which I would like to draw particular attention is section 9 which deals with the establishment of the advisory committee. The intention here is to engage the knowledge and experience on a part-time basis of senior people with a proven track record in financial services. It might be possible that some of these would have an international background and would, if necessary, be head-quartered outside Ireland. This would not only reflect the international arena in which the agency will operate but offer a useful background of experience and advice for the agency's operations.

Section 12 is also worth mentioning in particular. This provision effectively nominates the chief executive of the agency as the accounting officer for the management of the national debt. This will allow the Dáil, through the Public Accounts Committee if desired, to engage in a detailed examination of this large item of expenditure.

I commend this Bill to the House.

Mr. Noonan

(Limerick East): The purpose of this Bill is to bring the pay of those officials in the Department of Finance who at present manage the national debt to a level which will ensure that they are not attracted out of the public service by offers of higher pay and better conditions by the private sector. It is also hoped that increased pay and better conditions will enable the Minister to recruit persons of greater expertise from the private sector than are willing to work in the Department of Finance at present pay and conditions.

Notice taken that 20 Members were not present: House counted and 20 Members being present,

Mr. Noonan

(Limerick East): It is also hoped that the morale of certain officials will be raised by making them employees of an agency rather than civil servants. Finally, it is hoped that a combination of the three factors already mentioned will provide a better debt management service than at present, and that savings in debt servicing of about £35 million will be made this year.

The action by the Minister in this Bill is fire brigade action arising from the fact that he can neither maintain in the Civil Service or recruit to the Civil Service persons with the desirable level of expertise to manage the national debt. It is also a symptom of a wider malaise in the Civil Service. Morale in the Civil Service was never lower; there was never such a feeling previously among civil servants of being ill-used, overworked, underpaid and treated in a manner which communicates a view that the real players in the economy are in the private sector, and that civil servants, though necessary, are not to be held in high regard.

Action by the Minister to ease the problem in areas where the shoe is pinching tightest, such as in this Bill, is ignoring the wider problem. The Minister, if he continues to ignore it, may seriously damage public administration in this country.

Our national debt is very high. It is big in actual terms and in comparative terms. At present it is about 117 per cent of GNP and stands between £25 billion and £26 billion. It has risen every year in living memory and will rise again this year. It costs over £2 billion to service the debt. This servicing consumes an enormous amount of tax revenue and if this was available for the provision of services or for the reduction of taxes, the consequences for the country would be dramatic.

The national debt has enormous consequences for all of us in this country. Therefore it follows that the management of the national debt is one of the crucial tasks of Government, and in particular of the Minister for Finance. Most of us in politics are general practitioners. I know of no Minister for Finance in recent times who himself had the expertise to run the national debt portfolio. All Ministers have had to rely on the expertise available within their Department to do so and have been well served. The problem of the national debt has to do with its size and the rate at which it is increasing rather than with the management of the portfolio. If the circumstances are now such that the Minister cannot maintain or recruit the level of expertise necessary and desirable to manage the national debt, changes must be made to ensure that such expertise is available.

In addressing the problem he faces, the Minister has decided to reconstitute the debt management section of his Department, as an agency responsible to himself, staffed by non-civil servants and paid for out of central funds. This arrangement will enable the Minister to provide higher pay and better conditions to the same people, to do the same job, and the organisation model used will prevent the pay increases from running through the public service in relativity claims.

This is the long and the short of the situation and attempts by the Minister to dress up the Bill in "brave new world" language is decorative but not relevant to the main purpose of the Bill. Nobody knows this better than the Minister.

I would now like to deal with the manner in which the Minister is dealing with the problem which I accept he is facing. First, he uses an unusual organisational model in addressing the problem.One would have thought that the State agency model would be the one used, whereby one would set up an agency similar to the Industrial Development Authority, Córas Tráchtála or any of the other agencies, with the Minister and the Government appointing a board who in turn would select a chief executive who would be responsible to the board. The Minister is not going to do this and it is worth looking at the reasons why.

First, it would probably be unconstitutional for the Minister to attempt to proceed along those lines and, second, it would require greater changes in statute law that he contemplates at present. If the Minister were to do so he would no longer maintain the responsibility he has to Parliament and I have no doubt we would all get those letters from the Ceann Comhairle's office which we all enjoy very much which state that the Minister has no direct responsibility for the day-to-day workings of the agency and that we could not pursue matters of key importance to the economy and national life, such as the management of the debt, in this House. Therefore, for legal reasons and reasons of parliamentary responsibility, the Minister could not proceed along that road and has had to look for an alternative model.

It seems that the model he has is the Minister of State model, whereby there is a delegation of responsibilities to an agency in exactly the same way as a Minister would delegate responsibility to a Minister of State, with the Minister holding all the delegated responsibilities in his own persona. Therefore, there will be an allocation of certain functions to an agency without diminishing the totality of the responsibility of the Minister. This on the face of it looks like a good compromise.The only model we have to go on is the one where a Minister delegates responsibilities to a Minister of State but I do not think that this model has worked very well under any administration, in that there may be problems of personality and function but even when full delegation orders are made I would question whether the precedents available for the construction of this agency are such that they will convince me or anyone else that this is an appropriate model for the agency.

How will it operate? A chief executive will be appointed and he will be responsible to the Minister. In the context of managing the debt that would seem to be the appropriate way to go, in that day-to-day decisions will have to be made. Each time we have put down a question on the national debt it has been indicated that there is a variation in the portfolio which encompasses the total debt. The real problem with the national debt is not the expertise available in managing the debt but rather its size, to a lesser extent its composition as between domestic and foreign borrowings and, to a greater extent, the rate at which it may increase or decrease.

These are the real questions and they are policy questions for the Minister for Finance and the Government. These are not matters which are going to be vested in the agency. Therefore it seems, even though the Minister is going to delegate the day-to-day functions of debt management to the agency, that at the same time he will have to maintain a parallel group of experts to advise him on policy matters within his Department so that on the one hand he will be in a position to evaluate the advice given to him by the agency and, on the other, he has experts available to advise him on all those very serious matters pertaining to the national debt which are not being delegated to the agency.

The best illustration I can give is as follows. When we put down Dáil questions on the level of the debt, we find that about two-thirds of it is domestic with the remaining one-third foreign. When we probe a little deeper we find, as the Minister said in his speech, that over IR£4 billion of what is supposed to be domestic debt is foreign investment in the domestic market. This forms a major portion of the debt. It will have a major effect on the total portfolio and the management of the debt, but the key factors which will decide that portion of the debt have much more to do with the level of interest rates and exchange rate policy than with the day-to-day management of the debt. The Minister's advice on exchange rate policy and on interest rates will not be coming from the debt management agency but from other areas of his Department.

While on the face of it the model the Minister is using — what I would call the Minister of State model — is a more desirable model than the State agency model and looks on the face of it to be the model which would be effective, it is difficult to see how it will work out in practice in a manner which will separate the functions of the agency from the functions of the Department of Finance. Debt management is after all one other macroeconomic tool and there are many others which will still remain vested in the Department of Finance. In many cases it is impossible to separate them. The fact that there is over £4 billion of German money in the Irish domestic market is something over which the debt agency will have limited control. The main decisions which will determine whether that decreases or increases, moves out or remains, will not be vested in the agency but elsewhere in the Department of Finance. I would ask the Minister to clarify this. How does he see the policy roles operating and the balance being maintained between the people who will advise him on the one hand and the agency on the other hand.

I now turn to the narrow function of the agency and the management of the portfolio. The mechanism is that the chief executive of the agency will make certain recommendations to the Minister which he will accept or reject. It seems that the Minister will not be in a position to evaluate the recommendations of the agency without a parallel group of experts within his Department. I said in my preliminary remarks that most of us in politics are general practitioners. I do not say this in any slighting way. It is our job to range over a whole area of public life. There is not enormous financial expertise in this House. I know of no Minister for Finance who on his own had the capacity or expertise to manage the national debt portfolio. I do not say this in any slighting fashion since it is not his job. His job is to see that it is done properly, but he is dependent on advice. If those who have been given the job of managing the debt in a new agency have to report to the Minister, how is the Minister to evaluate the advice? Until now it has been within the Department and the checks and balances of the Department have applied. Once it is taken outside the Department and vested in an agency, how does the Minister fulfil his constitutional and statutory obligations and his obligations to this House in evaluating the advice given to him unless he has a parallel group of experts within the Department? If he has such a group of experts within the Department, will not the same problem arise again? How does one keep them there at present levels of pay and conditions when they can do far better elsewhere because their expertise is in such strong demand both in the national economy and internationally? I would raise serious questions about the nature of the organisational model being used and I should like the Minister to deal with these points. He might also explain in detail how he sees his Department advising him and interacting with the agency when decisions are being made.

The Minister might also explain the status of the people employed in the agency. The Bill states in two places that the chief executive cannot be a civil servant and that the employees of the agency cannot and will not be civil servants. If they are not civil servants, what is to happen when the Bill becomes law? Will they all resign as civil servants and be reinstated the following day as public servants or State servants paid out of the central fund or as employees of the agency? When civil servants were moved into the employ of An Post and Telecom there were transition provisions in the legislation to clarify their status as they moved from being full civil servants to employees of an agency. No such provisions are in this Bill.

Will pay be a matter for the agency or for the agency and the Minister for Finance? Will pay levels be subject to the Gleeson reports? Since the Devlin committee there has been a tradition that the pay of chief executives of most agencies and their assistants is vested in Gleeson, but there is no mention of Gleeson here or in the Minister's speech. It seems from the omission that the Gleeson committee will have no role to play in this matter. The Minister is setting up an agency which will be totally outside the controls governing pay and conditions provided internally within the public service or outside through the Gleeson committee.Perhaps the Minister would clarify this point.

Employees of the agency will also be paid out of central funds rather than out of the Vote of the Department of Finance.Effectively this means that the pay is a matter of confidentiality and secrecy. The Minister might justify this. I can see why the Minister cannot keep the expertise within his Department and cannot recruit alternative expertise. He has to use a model which will maintain the expertise. If he simply increases pay within the Department of Finance relativity claims could run right through the public service. He is trying to avoid that. He is trying to ring fence 25 or 30 people by giving them pay and conditions relative to what they would earn in the private sector. Is it necessary that we in this House should not know about it? There is reference to audited accounts being presented to the Comptroller and Auditor General in a manner laid down by the Minister. I presume there will be a single subhead governing pay and that individual levels of salary will not be addressed. Again I seek clarification. What the Minister is doing is necessary. He simply cannot hold the expertise in that section of the Department and certainly cannot recruit new experts. I am challenging the manner in which he is doing it. I wonder about the model he is using and whether it is necessary to proceed in what appears to be a rather secretive manner. I wonder what the effect will be on the wider Civil Service and what effect it will have on the morale of people who work in other very important sections of the Department of Finance but whose skills would not be in the same demand in the private sector. These are very serious questions which should be addressed by the Minister.

The Minister might also outline the basis of the savings shown. There is mention of saving £35 million by better management of the debt portfolio in the current year. Is this a once-off saving or is the Minister thinking in terms of on-going savings year after year? He mentions that even a 1 per cent saving on debt servicing would amount to £20 million but 1 per cent is a very serious saving in the context of interest rates of 8 per cent. By moving from one currency to another and by risk management savings can be made, but to make the savings further risks have to be taken. The greater the risk the greater the potential saving. Also greater losses can be made if there is more trading and there is greater exposure to risk.

I would like the Minister to state the basis for the £35 million he mentioned in his budget speech but which he has withdrawn from today suggesting that £20 million might be possible on a 1 per cent sale. It seems that is part of the decorative packaging for presentation reasons, that the agency are really being set up to manage the debt more effectively and efficiently so that we can save money. I do not believe that. People managing the debt in the Department of Finance are doing a fine job, no other group could do it better. The crunch issue is if you cannot pay them enough you cannot hold on to them and, secondly, because you cannot pay them enough you cannot recruit adequate expertise to supplement them. That is what it comes down to, and it is not a question of saving £25 million or £35 million, it is an attempt to hold expertise within a creaking State structure. The problem is there and has to be met, but I challenge the savings and would like to see where they come from.

It seems from the detailed provisions of the Bill that it is putting on an alternative statutory basis the functions which were carried out already by the debt management section of the Department of Finance under existing legislation. Some additional functions are being allocated to the debt agency on a formal basis but I presume the people involved were involved informally in the same activity up to now. For example, on the request of the Minister the agency can advise on the borrowing requirements of public service agencies and the timing of such borrowings. If CIE, the ESB or the IDA want to borrow more money the Minister can say he would like advice from that agency on that and on the best time to float the loan and so on. I am of the view that that kind of advice was available already from the Department of Finance on an informal basis, that some of the very same people were giving this advice anyway and it is simply putting on an alternative statutory basis something that was being done informally already.

On the Minister's request advice can be given on the sale of assets by the debt agency. That is a new departure in the sense that the sale of assets did not figure very highly in Government policy until recently. I wonder how that interrelates and interconnects with the request by the Minister to the financial sector to provide him with advice on the possible restructuring of the Industrial Credit Corporation, and with the Government's intent now to restructure the capital of Irish Life and to sell off a part of the Irish Life shareholding. Will the new agency have a function in these two areas? Does the Minister intend to involve the new agency in an advisory role on the sale of Irish Life or in the restructuring of the ICC, or is he simply thinking about selling off fixed assets such as property or land in the possession of the State or of its agencies? However, it indicates a certain direction in Government policy that this is included in the Bill. If we are to have a debt management agency it is a legitimate role for that agency. I see nothing at all wrong with that.

I notice that the staff complement will be decided by the agency. That is a fair departure from the practice of the last ten years. No embargo will apply to the agency, rightly so, but should the agency have the authority to decide their own numbers with no reference to the Minister for Finance who is also Minister for the Public Service? That seems a very wide departure from the practice which has pertained up to now. It is not as if the agency will be trading commercially or will be in a position to pay staff out of their profits. In the final analysis they will be a non-commercial State agency on the State model.

Some of the details of the structures are quite unusual. I would like the Minister to reply in detail on three points. First, how does he think the agency will interrelate with his Department in so far as on the one hand he will be advised by the agency on the management of the national debt and on the other hand he will be advised on all policy issues which will be vital to the national debt by other officials of his Department? What organisational mechanism has he in mind to gel the two sets of advice? Secondly, can he justify the savings shown? Thirdly, will he comment on the unusual freedom being given to the agency in the matter of pay, conditions and number of employees which the Bill envisages? Finally, I would like him in his reply to give some information on the First Schedule where the functions of the Minister which may be delegated to the agency are enumerated by reference to sections of Acts right back through the years. I do not want the trouble of having to go to the Library and search them out when I am sure he has the information to hand. He must have if he reads it into the record.

Mr. Taylor

The Labour Party fully accept that the State must have the best advice available to it on the management of Exchequer funds and the management of the national debt. However, we are far from satisfied that the scheme proposed in this Bill will achieve the desired result in a satisfactory and most efficient manner. It might well be said that this Bill has been published in order to solve one dilemma, the dilemma of how to pay public servants the market rate for the job they are doing. It is common knowledge that the job envisaged to be done by this Bill has been done effectively and well by one civil servant with a small team around him for the past number of years. It has been widely rumoured that that public servant has been courted for many years by the private sector and he could have availed a number of times of lucrative offers from that area. The public servant in question easily qualified for promotion to the post of departmental secretary and special arrangements had to be made to keep him at his present post, so great was the panic in the Department of Finance at the prospect of his departure. That in itself represents a very great tribute to a fine public servant and to his skill in carrying out his functions on behalf of the Irish people over a number of years.

However, the question is, should that dilemma be dealt with through legislation of this kind? Surely it is time we faced up to the fundamental issue involved here. The Labour Party have always argued that one of the key elements of any industrial policy aimed at creating and retaining wealth in Ireland must be a programme of development of public companies and enterprises. In that context we have argued in the past that public service managers and workers should be paid the same money as they can attract in the private sector and they should be as accountable as they are in that sector. In other words, if the job is worth £75,000 a year that should be the appropriate salary. Public service managers should be rewarded for success and penalised for failure in exactly the same way as those in the private sector.

This Bill proposes the setting up of another new Government agency and leaves the nomination powers in the hands of the Minister and the Government.There will be a chief executive, presumably a full-time official, whose salary is not indicated and up to seven members of an advisory committee serving, as is now indicated, for the first time on a part-time basis. Again, there is no indication as to what the cost will be. No doubt there will be a large additional staff to service all this and offices will have to be acquired and rented. The total cost of all this operation is going to be substantial.I am not satisfied that all of these things are warranted or necessary or that the agency will achieve the kind of results which are being forecast for them.

In his budget speech the Minister said the agency will make savings of £35 million per year by making manipulations and adjustments of the national debt and Exchequer borrowings and in his Second Stage speech he said that a saving of even 1 per cent on the national debt would produce a profit for the State of £20 million.Deputy Noonan asked if these savings can be justified. That kind of talk is not only remarkable but quite frankly it frightens the wits out of me. What did the Deputy mean by justifying these figures? One would think a profit had already been made or was clearly there to be made in the pipeline. That is a load of nonsense. One does not have to be a financial expert to know that trying to forecast trends in currency movements or interest rates in the multifarious money markets of the world is a hazardous and speculative operation and it is every bit as easy to lose £20 million, £35 million or more on such manipulations, as it is to benefit. Many of the so-called financial wizards in their day have come badly unstuck in trying to play these markets.

To talk as though it was in the bag — once the agency are set up and one enters into manipulations and speculations in international exchange rates and interest rate markets and forecasts how the interest rate will go in Japan, Germany or the United States, one will show a profit on that of £20 million or £35 million a year — boggles the imagination. I am not saying this is not possible. If one embarks on any gamble and it comes off, of course, one makes a profit but when one embarks on a gamble and it goes awry one can lose very heavily. Going into the market, as it were, carries substantial risks and this has to be recognised and accepted. There is no question of the Minister in replying to Deputy Noonan being able to justify the savings because there are no savings yet. There may be but they may equally turn out to be adverse as beneficial.

Once this advisory committee are set up meetings of these part-time advisers will have to take place — I will refer to this later — and under the scheme of things as set out in the Bill votes will take place. When one conjures up the scene at one of these meetings of the advisory committee when a vote is taking place —"if we speculate here and switch from dollars to yen perhaps we will show a profit on the deal of £35 million"— one can envisage, as is implicit in the idea that votes will take place in the advisory committee, these experts who have been flown in at great expense from God knows where arguing about whether it would be good to switch from yen to dollars. Like any other experts, these financial experts differ in their viewpoint and one can read conflicting opinions from the experts as to what the trend in interest rates will be, whether the yen is going up or down, whether the dollar is going up or down, or whether interest rates in the United States are going up or down. One assumes this advisory committee will debate such issues at length and take a vote.

Notice taken that 20 Members were not present; House counted and 20 Members being present,

Mr. Taylor

I have asked the Minister to consider the position that would arise if, at one of these advisory committee meetings attended by experts from around the world arguing among themselves as to the merits of a foray into the market to readjust a part of the national debt, there was a vote, as envisaged in the Schedule, of perhaps, three to two. We must approach the speculation that there would be savings by having such a committee with a great deal of caution. According to the Minister some members of the advisory committee will not be Irish or residents of Ireland. He has said that they would come here from the financial capitals of the world. One wonders what calibre of person we are talking about. Who will they be? Does the Minister envisage that we would have, for example, a director of the Bank of Yokohama flying in from Tokyo for one of these meetings?

Mr. Durkan

It would be hard to get answers to questions put to him.

Mr. Taylor

Is the Minister suggesting that we would have a director from a bank in Los Angeles or New York brought here at great expense to make up the quorum necessary for a meeting of the advisory committee? How much money will those people be paid?

People will be engaged in this work on a part-time basis and it is important to bear in mind that almost certainly the people involved will have important positions in the financial world. We may have bank directors, representatives of financial institutions and so on. This raises a serious question in that there is bound to be in some instances a conflict of interest arising between members of the advisory committee. A director of a major financial institution called to a meeting in Dublin to give advice on a level of intervention in the international markets may have an axe to grind, or such an intervention may affect the interests of his financial institution. In expressing my concern about this it is important to stress that we are talking about part-timers from international financial institutions.

We are all aware that the international money markets are controlled by money centres in Zurich, Frankfurt, London, New York and so on and that those centres manipulate exchange rates and interest rates. That work is carried out by more powerful forces than we represent. There is talk of the money market being an open one but it is only open to a point. Artificial manipulations take place in those centres. The House will recall that the so-called gnomes of Zurich, who were a password in the seventies, brought down governments and manipulated international monetary affairs. There was great discussion in the international press about them but the gnomes of Zurich are flourishing as strongly in the nineties as they were in the seventies. The Minister's new management agency will be very small fry in comparison to the resources that the gnomes of Zurich control.

Will the advisory committee be giving a lot of advice? It seems likely that the committee will seek advice from banks, financial agencies and advisers. It is interesting to note that section 4 gives the Committee power to employ consultants and financial institutions to advise the agency. Is it the intention to employ a group of advisers, at great expense to the taxpayers, for the sole purpose of obtaining advice from another group of advisers. Is there anything to stop the Minister, and the officials of the Department of Finance, from employing consultants and financial institutions rather than setting up an agency as intermediary for that purpose? Is there anything to stop the Minister entering contract arrangements with the specialists needed to advise on servicing the national debt? If the Minister considers it necessary to obtain the advice of such people he can sign contracts with them, preferably on a full-time basis, to advise the Department on the tasks necessary. The setting up of a new agency with a Civil Service panoply of its own, and the cost that will involve, is not necessary to secure the services for the Department of a small number of highly skilled people who deserve appropriate, substantial salaries.

One wonders if the Minister is trying to offload his own responsibility in the matter just as he disclaimed responsibility for interest rates. It may well be that when questions are raised about foul-ups and mismanagement of the nation's finances the Minister for Finance or some future Minister may say it has nothing to do with him but is the responsibility of the agency. Will the Minister say that it was not his fault, that they thought they would switch from dollars to yen and save the nation £35 million but unfortunately something happened in North Borneo and unexpected events on the world stage upset the financial markets; they are very sorry but they lost £20 million instead of saving £35 million? The view of the Labour Party is that the management of the nation's finances is of the utmost importance and is too crucial to the future of the nation to hive it off to any agency.

The Minister for Finance has responsibility to manage the nation's finances. He should accept that responsibility and get on with it. He should secure whatever advice, help and staff he needs. We accept that the Minister needs and will continue to need experts and advice on the various options that arise from time to time. The cost of such skilled staff is high and that is understandable. The State should pay the appropriate salaries for the degree and range of expertise that is needed. As for bringing in internationals from heaven knows where, are there not within the ambit of the State enough financial services and financial experts whose expertise could be availed of? For example, the Central Bank have staff and experts who know a fair bit about international finance as well as the financial affairs of the State. In addition, there are expert financial people in the Trustee Savings Banks, ICC, ACC and An Post. Is there any reason why the services of selected directors or experts from all or any of these institutions should not be availed of?

The Minister is arrogating to himself the right to appoint the members of the advisory committee at non-specified salaries.Will any of these advisers come from the Civil Service? Is this device simply to change the status of one or more senior civil servant? What salaries will be paid to the members of the committee?What will be their responsibility if their decisions go wrong and cost the taxpayer millions of pounds? Will all the members be part-time? How much time will they be expected to devote to this work? What checks will be made on their activities?

For practical purposes when the Bill speaks about the agency it means the chief executive. The fixing of remuneration for the members of the committee and the chief executive of the agency strikes me as being rather odd. It would appear to be dealt with in the Second Schedule where it states that the members of the committee are paid such remuneration as the agency, with the consent of the Minister, determines. In other words, the chief executive determines the remuneration of the members of the advisory committee. Who determines the remuneration of the chief executive? That is dealt with in section 6 (3) of the Bill where it is provided that the remuneration of the chief executive will be determined by the advisory committee.So the chief executive determines the remuneration of the members of the advisory committee and the advisory committee determines the remuneration of the chief executive. Admittedly the consent of the Minister is required but it is a rather strange, cosy little arrangement.It does not seem a satisfactory way to handle the matter of remuneration. These are questions that must be considered and until satisfactory answers are given to them the Labour Party cannot support the Bill.

Proinsias De Rossa

It is fair to say that the national debt is the most commonly discussed economic problem. It is used as an excuse for sacking thousands of civil servants although now it is being used as an excuse to transfer civil servants in highly paid jobs. It is used as an excuse for sacking nurses, teachers, health board workers, local authority workers, scientists, physical planners and for the privatisation of housing, State companies and local services. It is used as an excuse for closing hospital wards and schools and for having high pupil-teacher ratios. It is used as an excuse to restrict library services and for the failure to have proper tax reform, build roads and bridges. Most of all, it is used as an excuse for the failure to create jobs. It is argued by those on the right that jobs must be destroyed if the debt is to be contained.

The debt is not the main economic problem but is a reflection of it. The main economic problem is the failure of the State and private enterprise to create jobs in spite of the massive public subsidy given to private enterprise to do that. The magicians on the Right focus attention on the debt and away from the real issue, which is the creation of jobs.

Obviously the national debt is a cause for concern but it should not be a cause for panic. It is a reflection of the weakness of industrial growth and the underdeveloped state of the economy. The debt is large at over £25 billion and over 40 per cent of it is owed to foreign institutions.The interest repayments on the debt are a burden; if we did not have them taxation would exceed public spending and there would be a surplus each year in the budget. Foreign debt — even serious debt — is not a problem in a late developing economy. True, the interest is money going out of the country and into the pockets of foreign bankers but the influx of borrowing is keeping domestic interest rates at less than they would otherwise be. More than one third of foreign debt is in dollars or sterling, both of which have fallen internationally in the past 18 months, cutting the debt and interest payments without any particular action by the Government in parliament.

The problem with the debt is that the borrowings have not been used wisely by Fianna Fáil or by previous administrations.This also applies to members of the Progressive Democrats who previously held Government positions. They frittered them away in grants to their backers in business and farming and in ill-conceived investments which have ultimately pushed up unemployment. This lack of economic planning for job creation costs more than £1,200 million in welfare and lost tax each year. If they spent the money wisely in generating jobs and development, fewer people would be on welfare and more would be working and paying tax. Debts can only be paid by increased production and exports.

Instead of fiddling around with debt agencies, I argue that there are two specific ways of dealing with the debt problem. They must be based on the expansion of our tax base and the reform of State investment in the private and public sector so that it maximises job creation. On the latter point public spending — current and capital — must be redirected in private and public sectors.It is a truism that if you get the 230,000 registered unemployed back to work you cut public spending and raise an enormous amount of tax at a stroke. This is not recognised by some of those on the Right, who take the simplistic view that cuts in public spending will lead to jobs. That is obviously a view which has no basis in analysis and it is particularly inappropriate for Ireland.

If the Government cut public spending on roads, for example, by cancelling a contract with a private builder, the builder then makes 50 workers redundant and they stop paying income tax, spend less on taxed goods and services and the PRSI from employer and employees is lost. Each of those 50 workers must receive welfare payments and, if they are married with children and were paying income tax, they will receive large amounts of money in welfare per annum. Each job lost costs the State about £10,000 in lost revenue and welfare payments.Cuts in public services can have even more detrimental economic consequences and often result in increased public expenditure in the long run.

I strongly argue that the proposals for debt management by the Government are reflections of their failure to take on board the views I expressed. Indeed, it is quite extraordinary that the main argument as far as I can see in the Minister's speech today is that the expertise which might be available to the Department cannot be kept in the Department because of higher rates of remuneration in the private sector.

The explanatory memorandum is one of the least explanatory memoranda I have seen for a long time. The first paragraph simply states that the purpose of the Bill is to establish the National Treasury Management Agency and to delegate to the agency the borrowing and debt management functions of the Minister for Finance, under whose control the agency will operate. It then goes on to deal with the Bill section by section. That is an inappropriate and unhelpful explanation of what precisely the agency is about. One would have thought, particularly in relation to financial matters, that the Minister would have made some effort in the explanatory memorandum to give some background and detail to a House which — as Deputy Noonan said — does not have expertise in the financial area at its fingertips. It is always surprising that Members who become Ministers for Finance are quite capable of dealing with the very complex issues in the financial area, presumably because of the expertise and the support which the Civil Service provide. The point is that the Minister should not assume that, because he has that expertise available to him in terms of the back-up provided by the Civil Service, the parties in Opposition have the same facility. It would have been helpful to have more information in the explanatory memorandum.

I wish to deal with the question of successful management of the national debt which is obviously a crucial factor in relation to the health and well-being of the economy. Decisions relating to the national debt and its management are not just simply of interest to economists, financiers or bankers; the level of the national debt and the way in which it is managed can have an impact on the job security of those at work, the job prospects of those on the dole, the level of social welfare, the amount of tax paid by workers, the level of social welfare payments for those in need and on the quality of the health services and education.There is no doubt that the level of our national debt is a cause for concern. Despite all the cutbacks introduced by this Government — and indeed the previous Fianna Fáil Administration and other Governments before them — the level of national debt has continued to grow. It grew from £16.8 billion in 1984 to almost £25 billion in 1988. The national debt is greater than the economy's total output for a year, which is expected to be around £22.5 billion this year. National debt, as a percentage of gross national product, grew from 113.7 per cent to 131 per cent in the period from 1984-88.

The level of the national debt is determined by political decisions made by the Government and the day-to-day handling of debt is at present the responsibility of a section of the Department of Finance, civil servants working under the direction of the Minister and the Government. This Bill seeks to establish a separate National Treasury Management Agency to manage the national debt, an agency which would be outside the normal Civil Service structure but which, one presumes would still be responsible to the Minister and the Government. We are not convinced that a compelling case has been made for the establishment of this agency. There is no evidence to suggest that those public servants who have been responsible up to this for the management of the debt were incompetent, irresponsible, or inept.

There is nothing to suggest that if the National Treasury Management Agency had been set up ten years ago the amount of the national debt or the cost of servicing it would have been any less. I am aware that the Minister for Finance has claimed that, with the right expertise, savings of up to £35 million could be made in the cost of servicing the debt. This is a totally unscientific estimate and it is conceivable that, if the wrong decisions are made, it might cost us an extra £35 million each year instead of saving the same amount. In that regard, who is to decide whether decisions are right or wrong? Presumably they are made because they are thought to be right.

I am aware that there is a problem in the public service regarding levels of pay which can lead to talented and capable people leaving to take up similar posts in the private sector which are far better paid. It is not a problem just confined to the debt management section of the Department of Finance, but a problem throughout the public service and the commercial State sector. There have been similar problems with the Defence Forces, particularly in regard to specialist positions in the Air Corps where highly trained pilots and engineers leave or seek permission to do so to take up positions elsewhere. It would be a more honest approach to address the issue of unsatisfactory pay and conditions within the public service. As a party we have acknowledged the need for the public service to offer sufficient levels of pay to ensure it will have the most capable, talented people at its disposal. In regard to that I was quite surprised to hear the Minister's following remarks in the course of his introductory speech this morning:

However, as debt service costs became a major burden on the Exchequer it has become increasingly clear that the executive and commercial operations of borrowing and debt management require an increasing level of specialisation and are no longer appropriate to a Government Department.

Perhaps the Minister would explain precisely what he means by those remarks. The implication is that his Department and, by extension all Government Departments, are not capable of managing one of the most important aspects of our economy. If that is so what are his proposals for changing that position? Were we to take his point to its logical conclusion we would dispose of all our civil servants and simply have a Minister who would employ various agencies, State, semi-State or private, to carry out the functions of government. It is an extraordinary statement. I should like the Minister to go into somewhat more detail on his thoughts on the matter.

I appreciate that there is a considerable amount of expertise and experience required in dealing with debt management.Surely it should be possible for the Department of Finance to hire that kind of expertise in the same way as they would in other areas within their Department?If our public service is not geared to undertaking that kind of task obviously there is urgent need for reform of the structure of our public service.

One wonders as well — when talking about the establishment of a special agency which will employ people at extraordinarily high salaries; at a time when there are thousands of low paid civil servants in dispute with the Minister, seeking fairly marginal increases in their levels of pay and terms of employment — about the contradiction here in how we handle the staff within our public service. I would ask the Minister, when replying, to address that point and throw a little more light on his thinking in that regard. It would be a far more honest approach to address the unsatisfactory pay and conditions prevailing within the public service.However, it is not certain that pay represents the real problem in this area. I understand that last year the Department of Finance advertised for positions in their debt management section, offering three year contracts with pay reflecting the appropriate rate in the private sector which drew a very disappointing response. What happens if the new agency being established under the provisions of this Bill does not attract the quality of people the Minister supposes are out there? We are concerned also with the principle of handing over day-to-day responsibility to what might be perceived to be a semi-private agency in an area of such vital importance to the country. The Association of Higher Civil Servants have already made known their concern about this development and the precedent it might create. Indeed important political constitutional questions are raised by the provisions of this Bill. The question of from where these experts will come has been raised already by Deputy Taylor. Presumably the problem would be a lesser one if they came from within the public service because such people would have a tradition of confidentiality and public service whereas experts who could be drawn from the private sector — from already existing private financial institutions who, after a period on contract, may well return or set up in business themselves thereafter — would be a different matter. What obligations would be on them to regard as confidential the information which will automatically be fed to them in their position in this agency? In the nature of things such information will be very sensitive, could have major implications for Government and decisions Government may take about such financial institutions. It would be important that the Minister explain to us what constraint, if any, will be on private individuals who come into this agency from the private sector and return thereto.

What sort of control and supervision will be exercised over the proposed agency by the Minister? As I understand it, the agency will be responsible not to the Department of Finance but to the Minister and the Government. Will the Minister have the time to supervise the day-to-day running of the agency? Huge mistakes have been made in the private financial sector both here and abroad, cite the cases of Allied Irish Banks and ICI. Allied Irish Banks was and is one of the most successful profitable companies in the country. Presumably there was no limit or restriction on the talents AIB could buy. Yet their so-called expertise did not protect them from an appalling financial disaster from which the taxpayer had to bail them out. The PMPA was another example and there are many more abroad. Although not exactly the same in terms of an example, there was one case which could be described as being something of a precedent for the Government's decision in this area which does not give any cause for optimism. That was the decision of the Fine Gael-Labour Coalition in 1985 to hand over control of the B & I Line to Mr. Alex Spain and Zeus Management. We were told Mr. Spain was going to be the wonder worker, the man whose private sector expertise would sort out all of the problems of B & I, putting them back on an even keel. Certainly Mr. Spain did well out of it, earning almost £250,000 for his efforts.

An Leas-Cheann Comhairle

Perhaps the Deputy would desist from referring to a person outside the House; we do not normally.

Proinsias De Rossa

I take the point. But I am not talking about a person who was acting in a private capacity, he was employed by Government to do a job and paid to do so. What I am saying is public knowledge and comprises part of the information supplied to this House. I am not in any way disparaging the person concerned. I am making the valid point that in the past Government have employed outside expertise to undertake a particular job of management, paid them substantial sums but the management provided did not result in the——

An Leas-Cheann Comhairle

The Deputy will appreciate that he should be satisfied to refer the fact that the Government did employ a person and leave it at that.

Proinsias De Rossa

The Government did employ a person who was paid £250,000 for his efforts but, apart from shedding huge numbers of jobs, did nothing for B & I, which company is still experiencing intense difficulties. Therefore I hope that the Government's intention to bring in outside expertise to assist in the management of the national debt will prove more effective than was the case with their experience vis-à-vis B & I.

There is one specific point I wanted to raise with the Minister, more out of curiosity than anything else. I note that the First Schedule deals with the delegation of functions to the agency. For instance in subparagraph (h) of the First Schedule there are functions relating to the Postal and Telecommunications Services Act being delegated to the agency. Incidently the title of that Act in the Bill is incorrect, reading Postal and Telecommunications Act, whereas it is actually the Postal and Telecommunications Services Act, 1983. Reference to section 119 of the Finance Act, 1983 seems fair enough.

Paragraph (j) of the First Schedule delegates the function under section 32 of the Trustee Savings Bank Act, 1989, paragraph (k) delegates the functions under the Finance Act, 1988, and paragraph (l) delegates the functions under section 134 of the Finance Act, 1990. Why are the Minister's functions in relation to all these areas being delegated to the agency? As I have said, from my reading of the sections concerned it is not obvious why that is being done and I would like an explanation of it.

It seems that what we are dealing with today is an attempt by the Government to get out from under a problem they have largely created themselves in terms of their failure to modernise the structures of the public service and to provide adequate remuneration for the expertise which we require in the public service. I am concerned at the Minister's remarks about it not being suitable to deal with these matters within the public service, and I would ask him why he feels that is so. Does this mean we can now look forward to the privatisation of the public service as well as the Irish Sugar Company and a range of other companies which are on the chopping block, including Irish Life?

Mr. Kelly

When this Fianna Fáil minority Government came to power in 1987 the country was on its knees. The period of the Labour-Fine Gael Coalition Government from 1982 to 1987 will be possibly remembered as the worst period in history. Interest rates, unemployment and emigration were at an all time high. The year 1987 will be looked upon as a watershed. It was the year the Government controlled the economy and began to turn it around after a long period of mismanagement.

Notice taken that 20 Members were not present; House counted and 20 Members being present,

Mr. Kelly

Nobody will deny that the period of Fianna Fáil minority Government from 1987 to 1989 was a difficult one. It was a period in which the Government implemented policies which, in many instances, were broadly unpopular. These policies were clearly not implemented with a particular motive in mind but in the interests of the country and its future. The economic difficulties which had arisen during the period of the Labour-Fine Gáel Coalition Government were destroying all our hopes and prospects for the nation.

The most important step undertaken by that Government was getting agreement with the social partners regarding the future. The Programme for National Recovery was designed to secure the return to economic growth and increase employment. The evidence is to be seen in every part of the country today, and not least in my own constituency of Cork North-West. For example, industry in one unit in Millstreet town increased from 70 jobs in 1988 to 200 today. Three years ago nobody would have believed this was possible. Manufacturing jobs increased in the towns of Kanturk and Charleville. Prior to the Fianna Fáil minority Government coming to power, there were genuine fears that these industries would close but instead there have been massive increases in output and employment. That phenomenon in my constituency is repeated up and down the country. It would be fair to say that pessimism has been replaced by optimism, depression by growth and doom and gloom by confidence.

Following the formation of this Government, the policies initiated by the Fianna Fáil minority Government in 1987 have been followed through and capitalised upon. The process of restoring order in the national finances and reducing the relative size of our national debt will always be seen as an essential element to the future growth of Fianna Fáil. The most difficult stage of all is ahead of us, despite the massive recovery which has taken place over the last three years. It is crucial that the sacrifices which were made will bring a reward of permanent and lasting improvement in the welfare of our people. It would be easy to believe that the successful management of the public finances over the last three years has brought the entire situation under control and that we can return to the days of free lunch. It is crucial that, having come so far, we do not give in to this kind of weakness.

The Department of Finance have done a wonderful job over the last three years. Having recognised the problems inherent in the Irish economy, they at last found a Government in 1987 that were willing to listen to reality, to sacrifice their own popularity and to do so in the interests of this great country. However, the limitations of the Department of Finance must be recognised, as I am sure they are. They are the first to acknowledge that the time has come for an independent and critical look at the state of our public debt. In this regard I welcome the steps outlined in the Bill. Professional management of the national debt is a feature of many world democracies and its success has been proved more than once. I believe this is a further milestone in the history of our people and will be seen as such in future years.

A crippling misfortune to our economy over the last two decades has been the sheer volume, growth and size of our national debt. It has crippled employment opportunities, caused widespread emigration, and, indeed, job losses. In this regard it would be remiss of me if I did not say that the doubling of the national debt, between 1982 and 1987 was, perhaps, the greatest blow to our people since the foundation of the the State.

Those who stand in this House in the Opposition benches, and speak about the welfare of our emigrants and our unemployed would do well to remember that the cause for the same misfortune lies at their own door.

Mr. Browne

(Wexford): Well done.

Mr. Kelly

It is ironic to hear the leader of the Labour Party promote the cause of workers and the unemployed when it was mainly he and his comrades in Government who denied opportunities, denigrated profit and propagated the type of socialism which brought Eastern Europe to its knees. We are on the road to victory now and the new imaginative step will no doubt help us on our way. We are winning at last. History will show that today's Bill was one of the major steps on our way to securing a future for our youth in their own land.

The eighties will be remembered not just as the years of the resolution, the emigration and unemployment problems but as the years when a minority Government laid the foundation stone for the future of Irish people.

After the civil war Fianna Fáil took office, they took the country through the depressed years of the fifties, they industrialised this country in the sixties, they saved the country from the brink of bankruptcy in the eighties and they are leading Ireland into Europe in the nineties.

The Bill signals a new dynamic and imaginative approach to the management of our public finances. The nineties will be remembered as the decade when Fianna Fáil finally nailed down the national debt and laid the foundation stone to bring Ireland into the 21st century, a free and independent power.

Mr. Doyle

I congratulate Deputy Kelly on his maiden speech. It was my call for a quorum that brought 15 members of his own party in to listen to him.

(Interruptions.)

Mr. Roche

Will the Deputy need the same audience?

Mr. Doyle

The Bill before the House setting up the National Treasury Management Agency is very important legislation.Because of the current size of the national debt it is essential that it is managed in the most professional way possible. Despite the economic advances of the last two years the country remains deeply in debt to the extent that the national debt amounts to £25 billion and is still increasing. If the level of the debt were to be apportioned equally among the population, every man, woman and child in this country would be in debt to the tune of £7,000. A debt problem of this nature will continue to plague economic policy-makers for the next decade at least.

Many people will ask how this national debt arose in the first place. Since the fifties borrowing for capital purposes has been commonplace but there was always a convention of balancing current government spending with current revenue. In the early sixties American economists were advocating that in times of recession Governments could borrow for day to day spending with a view to paying it back in better times. The convention of the balanced budget remained intact in Ireland until 1972. In that year the then Minister for Finance, the late George Colley, budgeted for a current budget deficit, for the first time of £10 million. Once breached the current budget convention proved impossible to restore.

With the recession, induced by the first oil shock in 1973-74, large current budget deficits became an entrenched feature of Irish economic policies.

Notice taken that 20 Members were not present; House counted and 20 Members being present,

Mr. Doyle

By 1976 when the Irish economy was beginning to emerge from that recession the current budget deficit had reached 4.4 per cent of GNP and the national debt stood at £3.6 billion. Unfortunately when the recession was over Fianna Fáil, a very high spending party in Government, were elected. That was in 1977. The current budget deficit shifted upwards again. By 1982 it was running at approximately £1,000 million per year with a national debt of £12 billion.Deputy Kelly has accused the Coalition Government of 1982-87 of doubling the national debt.

Mr. Browne

(Wexford): Quite rightly so.

Mr. Doyle

The high spending Fianna Fáil Government of 1977-82 trebled the national debt.

Mr. M. Ahern

That is not true.

Mr. Doyle

In 1977, the national debt stood at £3.6 billion but in 1982 when they left office it stood at £12 billion. If there was ever a time to manage the national debt that was it, given that the economy which was in recession had taken a turn for the better. The then Taoiseach, in his first statement to the House, acknowledged this and thanked the coalition Government for handing over the economy in good shape to him.

Mr. M. Ahern

The Deputy has lost the run of himself.

Mr. Doyle

The OECD in their report on Ireland, published in 1989, commented unfavourably upon the size of the national debt and pointed out that our external debt was one of the highest among the OECD countries. It cost £2.142 billion to service the debt in 1988. This amounted to 26.6 per cent of total Government expenditure or 76 per cent of total tax revenue. I understand it will cost £2.2 billion to service the debt this year. This amounts to 81 per cent of total tax revenue.

High national debts impose weighty annual interest bills on those countries which allow debts to accumulate. These Bills have to be met either from higher taxes or additional borrowing or a combination of both. When the interest bill is met solely from taxation the resulting higher taxes weaken the incentive to produce and stimulate emigration among the brightest and the best. When the interest bill is met from new borrowings additional costs are incurred which makes debt servicing even more difficult.

There is one other problem we have to face, that as a large part of the money is owed to foreigners the interest payments on that segment of the total debt flow abroad and are lost forever to the economy.The amount of Exchequer stock held by foreigners is a source of concern. I understand that 50 per cent of the Government stock which will mature in the next five years is held by foreigners. The Minister indicated in his speech this morning that we pay out each year about £1 billion in interest payments to non-residents.This money leaves the economy forever with serious consequences.

I asked earlier how this debt came about. We must also ask ourselves what benefits have accrued in servicing the national debt. The economy of today is very different from that of the period between 1973 and 1977. It will take many years to come to terms with the debt. In the meantime we will continue to have high unemployment, high emigration and a large number of our people living in poverty. Only short-term benefits have been gained but these have been of little benefit to the economy. Politicians of all parties must accept responsibility for the position we find ourselves in.

Ireland is at the top of the debtors' league. Even though we have managed to stabilise the debt during the past two years we should not become complacent or relax. As I have pointed out, the debt has spiralled since the early seventies to such an extent that its control, along with a reduction in borrowings, has become the main target of successive Governments in their attempts to revitalise the economy and create employment.

I wish the new National Treasury Management Agency well in their efforts at managing the national debt and in doing so I wish to pay tribute to the Department of Finance for the excellent work they have done with limited resources. Great credit is due to staff of the debt management unit who have served this country well in recent years.

Deputy Taylor in his contribution this morning referred to the risks that have to be taken in managing national debts. It is possible that the advisory body to be set up under the Bill may advise that we switch from the yen to the dollar or the Deutsche Mark with us losing some money as a consequence. The debt management unit of the Department of Finance have had to make such decisions and they could not be expected to make the right decision all the time. Mistakes were made but we cannot always be on a winner. I hope we will be able to attract public servants of high calibre, along with people from the private sector, to this agency who will be of help in reducing the national debt. It is in all our interest that we do this. It is certainly in the best interests of the people and those who come after us as the debt creates terrible problems for the nation in that it stymies economic growth. It is of paramount importance that the chief executive and staff of the agency are of high calibre. Therefore adequate salaries will have to be offered to attract the best available talent.

I am glad the Minister outlined what the functions of the advisory committee will be. I had a nightmare last night in which his own personal assistant; a former Senator, found himself on that committee, but I am glad to see that we will have a committee of higher calibre, and its membership will not be drawn from the cumainn which is usual in setting up advisory committees.

Mr. Durkan

It was only a nightmare.

Mr. Daly

He could yet be a member.

Mr. Doyle

Given the size of the national debt and the huge burden it places on the economy, the management of the national debt is a major task. I welcome the setting up of this agency and wish it every success.

Mr. Flood

I am delighted to have this opportunity to contribute to the Second Stage debate on the National Treasury Management Agency Bill. I am convinced that this is important, timely and well thought out legislation. It was first mooted by Fianna Fáil when in Opposition during the period 1982-87 when there was a Coalition administration. We are not proposing anything new as it formed part of Fianna Fáil policy while in Opposition. Now that we are back in Government we are bringing this very imaginative legislation forward.

There is no doubt that our national debt is very high and that the Exchequer is paying out an enormous amount of money each year to service it. Given that this figure stands at over £2 billion per annum, every effort should be made to try to reduce the cost to the taxpayer. It should be understood that the national debts is a from of deferred taxation. It also has to be understood that the cost of servicing the national debt will continue to be a major drain on the country's resources and on this country's ability to engage in productive investment to provide the very things which we know to be essential if we are to expand our economy and create an economic climate which will allow for the creation of jobs. Any drain on our resources will inhibit and impede economic development, the creation of jobs and the building of an adequate infrastructure.

The National Treasury Management Agency Bill sets out to draw on the widest range of expertise available in this country and abroad. We owe a debt of gratitude to our civil servants who have coped very well to date in managing the debt and getting the best possible deal on international money markets. We can thank those civil servants who have put a great deal of time, effort and ingenuity into managing the national debt, but we should not feel inhibited in looking for new ways and mechanisms to improve the servicing of the national debt and to reduce the very high costs. If there is expertise available to us in this country or internationally we should not hesitate to draw in that expertise to help us to reduce the cost of the national debt or to find ways to save on the annual repayments.It is incumbent on any Government to seek ways in which servicing costs can be reduced. The enactment of this legislation will certainly help.

Deputy De Rossa spoke this morning about the failure of the Right and went on to catalogue its imperfections. We certainly know a lot about the failures of the Left, which are not very far from home. Their economic policies have been unsuccessful over 40 years, leading to bloody revolutions. The failure of the extreme Left has led to major food shortages in east European countries and the discarding of the old ways.

Acting Chairman (Mr. Sherlock)

The Deputy is obliged to confine his speech to the Bill before us.

Mr. Flood

I appreciate that, but I am taking the same licence as Deputy De Rossa took when he decided to launch a tirade against the Right. I have decided to launch a similar attack on the extreme Left. One hardly differs from the other.

The national debt grew far too quickly during the eighties and it is unfortunate that during the lifetime of the Coalition Government from 1982-87 no success was achieved in curtailing the national debt. It appears from leaked information and diaries that attempts were made, but unfortunately they foundered. Year after year we were treated to public information about budget over-runs of £100 million or £190 million. Recently published diaries give us to understand that it was very difficult for the Coalition partners to agree on a strategy which would control the growth of the national debt, based on proper budgetary management.

Mr. Durkan

Do not overdo that one.

Mr. Flood

That failure doubled the national debt in four years. The attempts to control budget over-runs failed miserably.

I contrast this with the performance of the Fianna Fáil administration who took over a very difficult financial situation in 1987. They set about taking decisions, some of which were very difficult and about which we were not very happy. We could have run away from taking those decisions but we did not. Now we are reaping the benefits since the growth of the national debt has largely been contained.

Mr. Durkan

By £5 million in two years.

Mr. Flood

Twelve and 12 make 24. I am sure Deputy Durkan is as good at addition as I am. I am talking about £24 billion. The Deputy cannot forget that when he is trying to camouflage the major failings of the Coalition Government during the eighties. In 1987 Fianna Fáil set about trying to deal with the growth of the national debt and we have made outstanding progress in this regard. The control we have exerted over the national debt can now be used as the springboard for major economic development during the 1990s and for building on the record of net job creation which commenced in 1988 and has been continuing since. The targets for net job creation were established between the Government and the social partners. The Government are achieving in excess of the target because among other things we have come to grips with the national debt. We have shown that taxation can begin to be reduced in a controlled and orderly fashion.

I see this Bill as a fundamental part of that successful Fianna Fáil policy and a logical continuation of it. For that reason I welcome the Bill and hope it will be enacted as quickly as possible. There are many imaginative provisions in the Bill.

Notice taken that 20 Members were not present; House counted and 20 Members being present,

Mr. Flood

As I was saying before Deputy Jim Mitchell, who is no longer in the Chamber, called for this quorum, I want to refer to section 4 of the legislation.It gives the lie to Deputy De Rossa's contribution in which the accused the Minister for Finance of attempting to depart from his responsibilities in the manner of the control of the national debt. Deputy De Rossa indicated that the Minister was attempting to use the legislation and the advisory committee to abrogate his own functions and responsibilities.I deny that because the Bill provides clearly that the agency will be subject to the direction and control of the Minister.This is as it should be. The Minister must at all times be in control of the national debt and have reporting responsibility to this House for it.

Notice taken that 20 Members were not present; House counted and 20 Members being present,

Mr. Flood

I agree entirely that the responsibility for the management of the national debt must remain with the Minister for Finance. This legislation will simply be an instrument to assist the Minister in making the best possible use——

Mr. J. Mitchell

I do not think we have a quorum.

Acting Chairman (Mr. Sherlock)

I am advised that there is a quorum in the House.

Mr. J. Mitchell

Could you count the House, Sir?

Notice taken that 20 Members were not present; House counted and 20 Members being present,

Acting Chairman

I call on Deputy Flood to resume the debate.

Mr. Flood

As I said, this is very important legislation and I regret very much that Deputy Mitchell of Fine Gael is interrupting the debate. Most of the contributions I have heard this morning from all sides of the House contained something good about the Bill. Speakers may have picked out individual portions of it that may have been unacceptable to them from their party's point of view but most of the contributions were reasonably positive about what the Minister is trying to do with regard to the national debt. It is unfortunate that Deputy Mitchell continues to interrupt the flow of debate which I have listened to this morning——

Acting Chairman

Deputy, I advise you to confine your remarks to the debate on the National Treasury Management Bill. I have advised you previously in that regard.

Mr. Flood

I appreciate that I was making a point about all the interruptions.It is very difficult to keep my contribution on an even keel when I am interrupted so frequently for such spurious reasons. In so far as the advisory committee are concerned, the Minister for Finance is entitled to draw upon available expertise either within or outside this country. That system and that committee could be of enormous help to the Minister simply in reducing the service cost which on an annual basis amounts to £2,000 million. That is a great drain on the Exchequer resources and a great impediment to productive investment, and any contribution the Government can make to decreasing those service costs is to be welcomed. This Bill is a step in the right direction.

The appointment of the chief executive officer is fundamentally important to the Bill because he will recruit the appropriate staff to assist him in his work and he will play a pivotal role in the success of the agency. I hope the net will be cast as widely as possible in an effort to recruit the most appropriate person to fill this very important position. I am not saying for a moment that that person cannot be recruited from the Civil Service — it may well be that a civil servant who has served the nation well in the management of our debt may wish to put himself or herself forward for such a position; I do not think there is any reason why they should not be able to do this — but we need to spread the net as widely as possible in recruiting the chief executive and his staff so that the agency will have the best expertise available in the management of our national debt.

By reducing the annual service costs of the national debt and putting the funds which are saved towards good infrastructural investment and investment in industry, which will help in the creation of jobs, we can continue to achieve progress during the nineties. We are now poised on the threshold of substantial and sustained net job creation over the next number of years. All the indicators, statistics and evidence show that this can be done. The significant achievements in net job creation during the past two years were based on sound Government policy which was brought forward with courage and tenacity. This policy enabled the economy to grow at a steady pace, enabled the various sectors in the economy to contribute and enabled the Government to work closely with the social partners. They recognised that our finances were in an extremely precarious state and made an overall contribution towards putting them in order.

This Bill is an indication of the Government's thinking in relation to the handling of the national debt and their commitment to using all possible means at their disposal to lessen the cost of servicing it by recruiting the best expertise available. This House should not criticise the Government for attempting to do this. I do not think the general public will criticise them for doing so. When we are able to sum up the sort of savings which will be achieved by the agency in four or five years' time we will be able to see that this was good solid Government policy implemented for the benefit of the people.

Mr. O'Shea

At a time when our national debt stands at £25 billion, £9 billion of which is in foreign currency, the need for the most accomplished debt management is unquestionable. Therefore, I agree with what the Bill seeks to achieve. However, I question whether there would be any need for a national treasury management agency if the Gleeson and Devlin restrictions had not created the situation where by very competent people are leaving the Department of Finance to take up employment in the growing financial services sector of the economy. We are not paying our top civil servants enough to keep them in the State service. Indeed, the same problem exists in the semi-State sector.

I wish to refer to section 5 (2) (a) (vi) (III) which deals with the sale of assets held by the Minister on behalf of the State. Is this a coded formula to the background work for the privatisation of the most successful semi-State bodies? If the Government were to issue new guidelines to Gleeson and Devlin I wonder whether there would be any need for this legislation and whether we would have a more successful semi-State sector. Is there a hidden agenda in this section for the selling off of semi-State companies in an effort to reduce the national debt in the short-term, which I believe would have much more detrimental effects in the long term?

The setting up of the agency proposed in the Bill will mean we will be moving towards a much riskier regime in the management of the national debt. In what way will the agency be more effective than the Department of Finance who could retain their best people through a proper pay structure? That is the basic question we in the Labour Party want answered. We have no problem with the objective of the Bill but we believe Devlin and Gleeson have created a regime — they acted on guidelines set down by the Government — whereby the best civil servants are leaving Government Departments. The Labour Party are worried that this Bill may create an unnecessary tier in the area of the public finances. Unfortunately we have lost a number of civil servants who are more than competent to do the job.

Will this Bill also reduce the role of the public service, particularly the Department of Finance, in the cental area of our national finances? Because of their training, etc., civil servants represent the national interest in a very special way. I wonder whether the people who are recruited from the private sector will have the same degree of discipline those people in the public service have. I am not casting aspersions on anybody who may become involved in the agency but I have always been greatly impressed by the commitment and public service attitude of our public servants. I am far from happy that we seem to be giving a subsidiary role to those people who have given tremendous service to this country over a long period.

This brings me to section 14 which deals with security and the disclosure of information. The chief executive, staff, advisers and consultants of the National Treasury Management Agency will have access to a wide and comprehensive amount of highly sensitive information which is of profound importance to the State. Yet the penalty for the unauthorised disclosure of information obtained by a person in the carrying out of his duties on behalf of the agency will, on summary conviction, not exceed £1,000. That penalty seems to be very low. We are dealing here with information which is of profound importance to the State and a fine of £1,000 for people who, through indiscretion or for sinister reasons, disclose this confidential information, is absolutely ridiculous in that contest. It is frightening to think that the people who will be employed by this agency, who could do severe damage to the State by disclosing information, could go to court and get away very lightly with a maximum fine of £1,000. I ask the Minister to apply himself to that topic because the consequences of having the legislation so weak in that regard are profound.

I should like to return to the point I raised about civil servants. They are trained to be absolutely discreet about information that comes their way but I wonder if we would get the same disciplined approach from those who do not have a background in the Civil Service. I worry that indiscretion could be more prevalent in regard to this. I should like the Minister to respond to that query.

The Second Schedule could be improved if it was more precise in relation to the number of members who will constitute a quorum and how vacancies on the National Treasury Management Agency will be filled. The Schedule states that where there are five members on the advisory committee a quorum of three will be required. It states that if the committee is seven in number a quorum of four is necessary. Paragraph 11 states that the committee may act notwithstanding one or more than one vacancy among its members. I suggest that the paragraph should include the following words, "provided that the relevant quorum is present". That would tidy up the provision.As it stands paragraph 11 is loose.

My greatest concern about the agency and its gurus is that it will gradually become more and more influential in regard to Government policy to the detriment of the Government, the Dáil and, most important, the people. For instance, if a Thatcherite cable gains a commanding position on the agency, particularly if the Minister for Finance of the day is not a strong Minister, we could have a monetarist regime to the detriment of our social policies, our education system and our social welfare schemes. The Labour Party are worried that the agency, which will not consist of civil servants, may become too influential in regard to Government policy. I realise that the Bill seeks to preclude that but in the real world the intent of legislation does not always turn out as originally planned. I am worried that the agency may, in certain circumstances develop into a kind of Government in exile.

The Labour Party recognise the enormous problem we have in regard to the national finances. We support any action that the Government take to reduce the national debt provided it is not at the expense of the poor, the sick and the handicapped. If we approach the national finances in a monetarist fashion the marginalised in our society may be forced to wait until the National Treasury Management Agency have carried out their work. However, we support employing the highest level of professionalism to deal with debt management but we question the necessity for the agency. Could the work be carried out by civil servants with the Minister employing the necessary outside expertise when required?

A group with debt management in their brief would, undoubtedly, look at other areas. The Taoiseach is promoting economic and monetary union in the context of 1992 and we must ask what the role of the agency will be in that regard. My concern is that there may be an undermining of the autonomy of the Parliament and that, in conjunction with European agencies, the new agency may become too influential. Debt management, and our financial affairs, should remain solidly within the remit of the Civil Service.

Section 7 (4) states that a member of the staff of the agency shall not be a civil servant within the meaning of the Civil Service Regulation Act, 1956. Subsection (2) (b) of section 7 states that a member of the staff of the agency referred to in paragraph (a) shall hold his office or employment on such other terms and conditions as the agency may determine. All politicians want the national debt reduced as rapidly as possible but I am concerned about what will happen to the staff of the agency when the great day that our national debt is reduced to minimal proportions arrives? Where will they go? Will it be open to them to transfer to the Civil Service?

Acting Chairman (Mr. Sherlock)

I hesitate to remind the Deputy that discussion on details of the Bill should be reserved for Committee Stage. The Deputy is inclined to go into detail.

Mr. O'Shea

In the event of the staff of the agency transferring to the Civil Service, will their service with the agency be reckonable for pension purposes? Will the Minister assure us that there will be no restrictions on staff who wish to join a trade union? I have some misgivings about section 10 in the context of jobs for the boys. The section refers to the position of staff of the agency nominated as a Member of Seanad Eireann or elected to either House of the Oireachtas or of the European Parliament. Under that section people so nominated or elected cease to be a member of the staff of the agency. What is the position if a favourite of the Government of the day loses his or her seat in an election? Can such a person be appointed to the advisory committee? There could be an abuse of this provision by a Government who may seek to appoint people who lost their seats in the Seanad, the Dáil or the European Parliament. The Minister should safeguard against that.

The Labour Party will be opposing the Bill not because we do not agree that there is a need to have the most professional system of debt management but for the reasons I have outlined and which were outlined by the Labour Party spokesperson on Finance, Deputy Taylor. On balance, we are not convinced that this agency is necessary. We remain to be convinced that if there was a proper pay structure in the Civil Service generally the role the Minister envisages for the agency could not just as effectively be carried out by civil servants together with financial experts. The Labour Party will not be supporting the Bill.

Mr. Durkan

It is a pity the Government side are not offering a speaker at present considering the importance they attach to this legislation. I thought there would be a line up of five or six speakers. I will refrain from yielding to the temptation that comes to mind but I remind those who usually occupy the vacant benches opposite that the temptation is very strong.

The concept has merit provided that everything is as meets the eye. It could be a very useful exercise to engage an agency with specific responsibility to monitor the nation's finances and take necessary action provided that it is not hindered by a Minister when it attempts to take action at what may be an embarrassing time, for example, before a general, local or presidential election. I do not want to decry the general idea but the setting up of the agency could be compared with the crew of a ship deciding to appoint a management group from among the passengers to run the ship when the crew had relinquished their responsibilities and failed to run the ship as they should.

I found it hard to listen to speakers opposite indicating how debt management had gone out of control in the eighties. Who managed the nation's finances for the greater part of the seventies?Who managed the finances from 1970-71 when the debt really emerged and who is managing them now? If the debt is allowed to continue as it is at present it will have doubled again in another five years. Nobody seems to have copped on to that. There is a belief that everything is in order now and the finances have been brought under control. They have not. This reincarnated Government can accept responsibility for the debt. They might all have different ideas now about how the finances should be managed but in 1977 when they charted the course for the economy over five years there was not one dissenting voice in the parties opposite. They produced policies which were calculated to massage the electorate into a false sense of security and to win the election. The problem was that the Government delivered on their promises and attempted to do the impossible. They drew up a manifesto that no one had ever heard of. It was an attempt to emulate the American system. As a result the debt was allowed to go out of control and foreign borrowings were increased to such an extent that the next two generations will be faced with continued hardship.

The Government have brought in a panacea for these ills. It has a grand name, the National Treasury Management Agency. That is a new description for debt gone out of control and for irresponsibility. Very few speakers referred to the unfortunate people who have been banished from these shores because they could not get jobs here. They were not welcome here because nobody planned for how they would exist in our economy.

I have no objection to Government speakers saying that the national finances are in order even though that might be untrue. It is one thing for the public to believe that but if Members of the House believe it, we have a serious problem. The Government have failed to accept any responsibility for the situation they created. It is ironic that the problem we are dealing with was created by those who should be sitting in the empty benches on the opposite side. What irritates a lot of people, even those of no political persuasion, is the bland way in which Government spokespersons talk about "national recovery", "recovery in the national finances", "the strength of the economy" and "confidence in the economy".They never seem to accept responsibility for the problems they have created.

Let us remember the unfortunate economic policies which have created the necessity for this legislation. Does anyone opposite want to accept responsibility for them? We all remember seeing stickers on car windscreens before the election in 1977 which proclaimed "no car tax". Rates were to be abolished and the housewife was to have more money to buy goods. That was a very attractive programme which the gullible public fell for, hook, line and sinker. It was a well charted course and a good campaign. What did we get at the end of it? The National Treasury Management Agency — that is the new name for it. In ten years the whole scene has changed from a political expedient which was gift-wrapped and presented in the best possible manner to the electorate. A new group are now to be given responsibility. The Government — not even the political parties involved — will no longer be responsible for debt management. This will now be handed over to an agency which will have powers of delegation. The agency will obviously produce reports at regular intervals which is laudible and understandable but I have a sneaking suspicion that if the news is not good the unfortunate chief executive of the agency will have to deliver it. If there is good news in the offing the Minister will deliver it and the explanatory memorandum states that the responsibility of the Minister to the Dáil — or as a member of the Government — will be unchanged and that a delegated function vested in the agency will continue to be vested in the Minister and must be capable of being performed by either. That is an indication that my worst fears will not be realised but many of the agencies formed over the last couple of years have been red herrings to ensure that we will not have an opportunity of asking questions in the House about what is happening in relation to them. There are many existing agencies — I do not have to go over them — and if you ask questions in relation to expenditure accounts or anything regarding their operation, the answer will be that the Minister does not have a responsibility to the House. Under this proposal, he will have responsibility to the House. I sincerely hope that will continue and that we will not receive replies to Parliamentary Questions on the lines which I just mentioned.

It is ironic that the Government have introduced the Bill in the House and that they should — ten years later — decide to take responsibility in a half-hearted fashion. They intend to set up an agency, the responsibility of which will be to monitor, administer and manage the national debt, for which the Government should feel responsible.

I was listening to other speakers as they basked in the reflected glory of what they see as the present resurgent economy. I cannot understand why they do not acknowledge, even in passing, that perhaps mistakes were made. Some Members outside the House — and occasionally inside it — have privately acknowledged that problems developed which should have been dealt with, that action was not taken when it should have been and that wrong decisions were made. We all recognise that. For God's sake, give us credit for some intelligence and do not pretend that the Coalition Government of the eighties were responsible for the problems in the country. Ask the people who are working in London, Birmingham and other cities about responsibility and they will soon tell you where they think it lies.

Members referred to net job creation. You can talk mathematically about job creation but you should talk to young people in New York, London, Birmingham and other cities and ask them what they think about the proposals in regard to net job creation by the Government.They will tell you very quickly what they think. If there had been a national planning or steering forum or a national planning agency in 1977 with powers on the lines now being given to this agency, to lay down guidelines for the Government in relation to what was feasible, which could have said, without political interference, that they believed a particular course should be followed, we might not have our existing problems. Surely somebody would have been able to see far enough into the future to be able to identify targets and to make provisions for them, apart from the usual one which prevails in any open-ended democratic system, the expedient of getting into office? Unless means other than that expedient are utilised in determining what is good for the economy in future, we will have a repetition of the existing problems. It is not fair to expect a Government — in an election year, for instance — to see the problems in an unblinkered fashion. They cannot look at things in an unbiased fashion because the fear of not getting into office prevails and, as a result, there is a grave danger that decisions will be taken which are not in the national interest.

Having run up a debt it is not fair to say that it is unfortunate and should not have happened. This is what the Government did and then they decided to set up a group to look after it with the proviso that if they did not manage it properly they would have something to say about it. There should be a national management or advisory agency which would advise Governments, without interference, that a particular policy or plan should be followed. This would eliminate the need for this kind of Bill.

There were many references to the cost of expertise. In order to buy the expertise necessary to manage the type of situation encompassed in this legislation, people must be well paid. I know that everybody will say that the public service generally, including politicians, are underpaid but this is a more serious matter. Unless one can attract into this agency people of a certain calibre, one will not achieve anything. The first way in which they will be attracted will be by the money. They must be paid well, have good working conditions and so on. Perhaps the ordinary flat-rate salary is not the appropriate way to go about it. There should be other ways and means devised if one wants to create an incentive for people to do a good job. There must be a financial sweetener within the package. For instance, one will not attract people of a very high calibre or gain enormous expertise with salaries between say, £15,000 and £50,000. One will not get that type of expertise for that kind of money any more. There are other people in the marketplace who want the kind of expertise who will pay three times as much. They do not mind doing so because they know that, by paying people that kind of salary, they will get the best going and that is all they care about.

Multinational companies or oil moguls do not mind paying for that kind of expertise. They will pay whatever it takes to recruit the individual or individuals they want. They will produce any incentives, bonuses or whatever to get the people they want. I can think of at least ten top businessmen in this country. After all, we are talking about a national debt of £25 billion which, in international terms, is only chicken feed. Nonetheless, it represents a lot of money to this country. How can one attract top management people into this agency to handle this debt? The theory is that such people could be recruited on a part-time, whole-time, chief executive or advisory basis. How can one attract the top ten managers here to handle this debt? I do not think one can on the kind of salaries, or whatever, being thought about under the provisions of this Bill. If one is serious in tackling the debt then why not spend money where it counts most, on staffing?

One of the worst possible exercises in which to engage after the establishment of this agency would be penny-pinching on the salaries of the individuals concerned, their working conditions, bonuses or whatever. I mention bonuses loosely in this context. Whenever debt problems arise within any organisation, company or firm and a management team are charged with dealing with it there will always be some sweetener, some quid pro quo, for success in handling it, on a graduated basis. That should be a consideration in this case also. I would warn that if we do not consider the proposed agency sufficiently important then the people we want to attract will not be interested in becoming involved. Either the attitude of any such recruits will be founded on extreme loyalty and nationalism, deciding they will undertake the task for nothing or, alternatively, they will undertake the task in accordance with what they are paid. If they choose the latter option we will have no chance at all. Therefore, as far as I can see, under the present proposal, our only hope will be that they will undertake the task out of the goodness of their hearts. I am sure all Members know there are very few experts around prepared to give their energies and efforts out of the goodness of their hearts. Indeed, if they did, they would not remain experts very long. The Minister might well examine that aspect on remaining Stages and devise some method of incorporating such provision.

In the course of his introductory remarks the Minister referred to the fact that key personnel had been leaving the Department of Finance, that is people who had been dealing with the national debt over the past couple of years. Of course they are, because they will be better paid elsewhere. They can graduate from one corporation, company or firm to another, climbing the salary scale on each successive move. They would be fools to remain with the one company. Why not allow — no pun intended — the penny to drop and ask ourselves whether we might be well advised to examine the people in those key posts throughout the public service, ascertaining whether they are being paid rates comparable with their counterparts in the private sector? I am not talking merely about the private sector here; I am talking about the international private sector. We all talk now in the context of 1992, its present and future implications, when there will be ready, free movement of people, services and money. Just as money can pass from one nation to another so too can people. Indeed, the language barriers here are not as great as heretofore. Many multilingual people will experience no difficulty gaining highly remunerative employment elsewhere. There is a message to be learned there.

I might refer to some matters which have been forgotten. Had more planning been devoted to this country's future, say, ten, 12 or 15 years ago, we might not now be in our present position. By way of one example, there were the regional development organisations who had limited responsibilities but were responsible for identifying trends in population growth, developments and so on within their regions. Nonetheless, in some way, they represented a recognition of the recommendation of the Buchanan report a long time ago. While they did not go all the way to achieving what Buchanan had in mind they were able to relate to each other in terms of developmental requirements countrywide. What did the present Minister do when he assumed office? After about two months in office — an amazing piece of strategy — he decided to abolish them, to eliminate planning.

Minister of State at the Department of Tourism and Transport (Mr. Lyons)

The Deputy should go back to Deputy Peter Barry's time in Government.

Mr. Durkan

No longer had he any need for these regional development organisations despite the fact that they had a considerable amount of information in relation to job requirements, identification of areas in which jobs were likely to become a problem in the future, where housing and other development was likely to take place, where any type of development was likely to take place nationwide; where recreational requirements could be identified and so on. The peculiar thing about it was that the Minister abolished those agencies just before the word came on stream of the Regional Development Funds. I have to admit that constituted an amazing piece of strategy. The only reason they were abolished then was because the Minister knew quite well they had amassed a considerable data bank, available on computer, which would enable them to make submissions directly to those agencies who would provide the requisite funds.

Of course, had our European friends realised how much information was available to them, obviously they would have wanted to correspond directly with them. Needless to say, the Minister did not want that; that was not something to which the Government could agree. That vital element in terms of planning for the future of our economy was totally and irresponsibly eliminated by the Minister. Then what did he do? He decided to draw up a rough outline of what he thought — perhaps I should not be unfair to the Minister — or somebody else thought would be appropriate, that the advisory groups comprised of representatives of local authorities and various other agencies, should be drawn together to form an overall advisory group, loosely formed, and new regional maps were charted. Seven new regions were created, encompassing areas which had very little in common. The people in those areas knew little about their next door neighbours because they were now in new groups. They were isolated from the old groups in the midland, eastern, northwestern regions and so on. It will take about five years for these structures to become operable, if that ever happens, but they will have no statutory function.

This is a very important area when talking about national planning, but all we have done is draw maps, set out regions and taken advice from local groups who may have been advised by local authorities, county managers and other groups, all of whom gave of their best. These people did not have much information but were trying to glean it from the areas in which they had been working previously. The new structures were totally different from those that had existed. It was a whole new ball game, at a vital time in the country's development. It was sabotage to dissolve the old organisations at a time when planning was of the utmost importance.

Unfortunately, the Minister decided to wreck the regional development organisations.I have never heard this matter referred to in this House, and I am not saying this because I was a member of the Eastern Regional Development Organisation but simply because we, in the organisations, saw a need for national planning, to plan the economy, to plan for infrastructure and to plan in the knowledge that somebody had to pay for it. No member, that I can recall, of those regional development organisations was irresponsible enough to operate on the basis that somebody somewhere would pay for it. They were all willing to take their share of the responsibility, as responsible members, managers and engineers of local authorities. They knew the parameters within which they could reasonably work.

An Leas-Cheann Comhairle

I know Deputy Durkan has the competence to relate this to the National Treasury Management Agency.

Mr. Durkan

He has and I know you have the competence to recognise the relevance of it. I believe the National Treasury Management Agency would be unnecessary if a national planning management agency had been set up, and we would not have the kind of problems we have now. I say that simply because I hope that in my lifetime, whether it be political or otherwise, there is no repetition of the financial disasters that befell this country, some of which we could have averted.

Mr. Lyons

I could not agree more.

Mr. Durkan

Do not encourage me too much because I am about to deal with you.

Mr. J. Mitchell

As the Minister is going to heckle the Deputy, I am calling for a quorum.

Notice taken that 20 Members were not present; House counted and 20 Members being present,

Mr. Durkan

As I was saying when I was interrupted, we should ensure that in future the people are protected from the excesses of Governments, Ministers or, more importantly, political parties. I want to emphasise that for the Minister opposite who was not there when I started to speak but who, like many other people, may have forgotten the reasons for the introduction of this legislation today.

Mr. Lyons

I know it well.

Mr. Durkan

The reason for this legislation is——

Mr. Lyons

The mess we inherited.

(Interruptions.)

An Leas-Cheann Comhairle

Deputies who have made themselves present are not obliged to advertise the fact. You will have to listen patiently to the Deputy who is in possession.

Mr. Browne

(Wexford): It is hard to listen.

Mr. Durkan

Hard as it might be to listen, I have to remind the Members opposite — I am privileged they should have adorned the benches with their presence, presumably to hear this short dissertation — that the reason for introducing this legislation today is as a result of the problems created by the Joint Government parties opposite.

Mr. Lyons

Created by the people on the other side of the House.

Mr. Durkan

Between 1977 and 1981 the only thing that concerned the Members on the other side of the House — I refer again to both parties, minor and major who must now, even at this stage, recognise that in that previous incarnation——

Mr. Lyons

Tell us about the three bears.

An Leas-Cheann Comhairle

The Chair would remind the House that ordinarily we are tolerant of after meal levity but it does not last forever.

Mr. Browne

(Wexford): Deputy Durkan lost his memory from 1982 to 1987.

An Leas-Cheann Comhairle

If Deputy Durkan addresses the Chair he will not be interrupted.

Mr. Durkan

I got carried away, and I very much apologise to the House for any upset I might have caused to the Members opposite.

Mr. Davern

On a point of order, perhaps you might suggest to Deputy Durkan that he contribute without inviting interruptions.

An Leas-Cheann Comhairle

That is not a point of order.

Mr. Davern

It is very tempting to get such an invitation.

An Leas-Cheann Comhairle

That is a provocative suggestion. Deputy Durkan, without interruption.

Mr. Durkan

I refuse to be provoked. Without passion and as unemotionally as I can I would like to explain again the reasons for the introduction of this legislation. It goes without saying that in the mad rush to get into Government in 1977 this country was sold down the drain for reasons of political expediency, in order to achieve public office.

Mr. Browne

(Wexford): Who doubled the national debt?

Mr. Durkan

If the necessity arose tomorrow morning I have no doubt the same would happen again — that is the saddest part.

Mr. M. Ahern

The Deputy's party would double the debt again.

Mr. Durkan

I should mention also that we hear much at present about confidence in the economy. I will tell the House what the people opposite did for the confidence of this economy from 1982 to 1987. They put up hoardings and posters at every crossroads in the country, one of which depicted a large queue of people in front of a passport office and a blown up version of a passport. I do not know what that had to do with the economy but I do know it did not serve to instil in investors any confidence whatever in this country. It merely implied that the young population were likely to have to apply for passports to enable them seek work elsewhere. If there was one thing that compaign did not indicate it was that the people who were then attempting to get into Government did not intend delivering on that implied promise, that subliminal advertising that carries forth a message to the people. The result is that now about 170,000 of the young people who were then living here have got their passports and have gone abroad. That is a damning indictment of any Government, of any political party.

Mr. M. Ahern

On a point of order can the Deputy give us the reference for the figures he is quoting?

An Leas-Cheann Comhairle

The Deputy does not have to give such references.

(Interruptions.)

Mr. Dennehy

Who doubled the national debt?

Mr. Durkan

I can give the source.

(Interruptions.)

An Leas-Cheann Comhairle

When the hubbub ceases, I will invite Deputy Durkan to continue. Deputy Cotter and Deputy Hilliard will know from the record that when the Chair says,"for the last time" he means it and that the next person to interrupt will be asked to leave the House.

Mr. Durkan

For the benefit of Members on the Government side of the House, the official figures, have already been released and discussed in the House. The official emigration figure is 46,000 for last year. The corresponding figures in relation to tourism increased by roughly the same amount. That can be used as a cross reference if anybody so wishes.

Mr. M. Ahern

How can the Deputy figure that out?

Mr. Durkan

Another implied promise in the propaganda programme which continued from 1982 to 1987 was that tourism would grow. Tourism certainly has grown: all the people who were exported in the last couple of years will be tourists one of these days. They will come back and visit us. They will become a statistic. They will be counted on the way into the country, they will be counted when they spend their money here and they will be counted again when they go out. Along with them will be counted——

Mr. M. Ahern

The 46,000 who emigrated.

Mr. Durkan

—— many of the school leavers who are now sitting their leaving certificate examination and those who have gone through third level will also join them and they will become statistics and will become part of the tourism for the future. We will be able to hear sounds from the Government side of the House about the bulge in the tourism programme and how more people are coming to visit Ireland. They are not asked where they came from or where they lived for five years previously. Obviously it hurts some of the Members on that side of the House to be reminded about these matters.

Mr. Cowen

On a point or order, does this debate relate to the national debt?

(Interruptions.)

An Leas-Cheann Comhairle

Deputies, please.

(Interruptions.)

An Leas-Cheann Comhairle

Have you all finished?

Mr. M. Ahern

What about 1982 to 1987?

An Leas-Cheann Comhairle

Deputy Ahern, I will ask you to leave.

Mr. M. Ahern

Now?

An Leas-Cheann Comhairle

Please do. I am serious, please leave.

Deputy M. Ahern withdrew from the Chamber.

Mr. J. Mitchell

Now we are having results. That will put manners on them.

An Leas-Cheann Comhairle

I think Deputy Durkan is forgetting that he has technological aids which mean he does not have to rise his voice to such a pitch.

Mr. Durkan

I am sorry.

Dr. Woods

On a point of order, I think you were mistaken in calling on Deputy Ahern because he was not speaking at that time; somebody else was. You may have thought he was. I am aware that he had been speaking earlier but he was not speaking at that point.

An Leas-Cheann Comhairle

That would not be a point of order.

Dr. Woods

I want to put on the record that he was not the person who spoke at the time you asked him to withdraw from the Chamber.

An Leas-Cheann Comhairle

I take it the Minister is not challenging the Chair.

Dr. Woods

I am placing on the record the factual position, that it was a mistake.

An Leas-Cheann Comhairle

It was no mistake. I distinctly heard — and the record will show — that he was speaking. In any case the Chair decides these matters.

Mr. Cotter

There are a few others you could call on as well.

Mr. Durkan

I am sorry for raising my voice but I was being drowned out by those on the Government side. I wanted to point out the relevance of the National Treasury Management Bill because we are now faced with the product, the end result of a programme. I am suggesting that we might learn a lesson from this situation and perhaps in the future do things a little differently. Everybody from the other side of the House shouts about the national debt being doubled between 1982 and 1987. It trebled in the four previous years. Not a single Member on the other side of the House wants to accept responsibility for that. I know they can say that it was pre-decision-day time in terms of a breakaway — the Progressive Democrats were formed afterwards — but that they were one big happy family at that stage. That was before the civil war in the party broke out. Ironically, at present the same people — as one — are back here with full responsibilities again.

Mr. Calleary

Tell us about 1982 to 1987.

Mr. Durkan

There is some significance in this, a Leas-Cheann Comhairle.The same two parties have come up with this idea that the Minister will no longer be in charge of national debt management, that he will have an agency to undertake that task. Take a poor group of civil servants, drag them in and say——

Mr. J. Mitchell

Blame them.

Mr. Durcan

——"here is your responsibility, we — the politicians — created this situation, we promised the people many give-aways, we sold them down the river but we want you to look after this area——

Mr. Calleary

I am glad the Deputy is admitting that at last.

Mr. Durkan

——and if you are good boys and produce good news the Minister will announce it whereas if you are bad boys and produce bad news you will have to announce it yourself."

Mr. Browne

(Wexford): Dáil reform.

Mr. Durkan

That is essentially what it means. I hope this agency means what it purports to mean within the term of the Bill. If it does not we could be back here in four or five years' time with another agency, one which is capable of handling bigger bills. It would have to be able to handle bigger bills because if the present trend is allowed to continue the debt will have increased in the order of 60 per cent despite all the hype from the other side of the House. In the last two years in which the present Administration have been in power the debt has increased by £5 billion. Those are the facts. I am sorry for saying something which has upset and offended some Members on the opposite benches but that is a fact of life.

Debate adjourned.