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Dáil Éireann debate -
Tuesday, 10 Jul 1990

Vol. 401 No. 4

Private Members' Business. - Economic and Social Programme: Motion.

I move:

That Dáil Éireann, conscious of the historically high levels of emigration, aware of the continuing 16.5 per cent rate of unemployment in the labour market and the present crisis in agriculture concerned at the regressive impact of Government cut-backs in health, education and housing, views with alarm the Government's disarray in the ordering of its domestic legislative programme and its total failure at EC level to spell out a clear and formal position concerning Ireland's interests in Economic and Monetary Union and Political Union within the European Community, anxious to ensure positive economic and social progress within the process of the completion of the Single Market by 1992, demands that the Government prepare and publish a comprehensive economic and social programme in consultation with the Oireachtas by December 1990 so as to restore political and social confidence by all of our people in the ability of the Government and the Oireachtas to meet the needs of our society.

With the permission of the House, I would like to share my time with my colleagues Deputies Bell and Kemmy, both of whom will take ten minutes. Deputy Bell will commence his contribution at 7.20 p.m. and Deputy Kemmy at 7.30 p.m.

Is that satisfactory? Agreed.

The Labour Party have put down this comprehensive motion because we believe the Government have become tired and complacent when it comes to economic affairs and the running of the economy. The amendment in the name of the Minister for Finance betrays not only a degree of complacency but also a worrisome tone of arrogance. One would get the impression in looking at the amendment that all was well in the economy. Let me quote a body for which the Minister must have some degree of respect and should listen to, the Central Bank. They state on page 7 of their annual report, dated 17 May 1990:

While the turnaround in recent years has been considerable, the economy continues to be beset by serious structural difficulties. Despite the continuing increase in output and the resumption of private sector employment growth, the level of unemployment, at 17¾ per cent in 1989, remains very high both by historical standards and in comparison with the levels prevailing among our EC partners; emigration also remains high. Reflecting the lower level of economic development, living standards in Ireland are about one-third below the average EC level and substantially below the levels of the more prosperous regions of the Community. In spite of the progress that has been achieved to date in reducing the fiscal imbalance, the level of indebtedness in relation to GNP, at almost twice the OECD average, remains among the highest in the EC. The need to address these problems is all the more urgent in the context of the completion of the internal market and moves towards economic and monetary union within the EC. Economic policy must, therefore, be directed at making maximum use of the opportunities presented by the current favourable economic climate and the expansion of the single market to reduce these imbalances over the medium term.

It cannot be taken that that statement indicates a degree of complacency or that the Government have achieved their overall objectives; yet, in looking at the amendment one would think that was the position.

In contrast with the approach adopted by Fianna Fáil when in Opposition, the Labour Party recognise that some progress has been made in some areas. The NESC had this to say at page 566 of their report of August 1989, and we share their conclusions:

The imperatives which gave rise to Strategy for Development 1986-1990 are now joined by the imperative of competing in a unified European market. The essential result of completion of the internal market is that the Irish economy will become more integrated into the European economy. Inefficiency will now be penalised as never before. With the increase in mobility of goods, labour, investment and financial capital, all policies and activities must be considered in a new light. Changes which increase the exposure of the economy to external forces must be complemented by measures which enhance the internal efficiency of the Irish economy. This requires changes by all elements of our society.

It goes on to state that the council has concluded that there are two prime requirements for Ireland: first, a clear national strategy for European integration which will provide a guide to external negotiations and domestic decision making; and, second, continued consensus among the social partners, at national level and at the level of the firm, to ensure a swift and flexible response that is most conducive to the objectives of fuller employment, higher living standards and a better social framework. That document was published last August prior to the major changes in central and eastern Europe which have substantially altered the conclusions of the Cecchini report and the NESC report on Ireland's ability to benefit from an upturn in the economy.

There is no doubt that there is a prospect of improved economic performance at international level. In The Irish Times of 16 May, Cliff Taylor had this to say with respect to the ESRI short and medium economic forecasts:

The medium-term forecasters have adjusted their predictions for Ireland since last June, but the overall picture of much more rapid growth in the 1990s than the 1980-87 period is maintained, with economic prospects in the EC and the rest of the world remaining broadly favourable.

The Labour Party contend that against this background of favourable international economic indicators on the one hand and the considerable turnaround from the position at the start of the last decade, certain sections of our people will not benefit from any improvement in overall economic performance and that in some cases we will go backwards.

Our motion clearly outlines that there are problems in agriculture, health, education and housing, and it is quite clear from the political arguments put forward not only by the Labour Party but also by independent commentators that there is no guarantee that the country is going to do better or solve its problems simply because the rest of Europe is getting richer. Paul Tansey had this to say in his report on a major study in the Irish Banking Review, vis-à-vis Ireland's experience of membership of the European Community over a long period of time, in The Sunday Tribune of 14 May:

In general terms, the experience of the years 1971-86 should induce a healthy suspicion of those who would promise a narrowing of the income gap between the rich and poor regions of the Community. As 1992 approaches, we must beware of Commissioners bearing gifts.

The Minister for Finance and the Government have attempted during the past year to suggest that because there will be an improvement in the economic wellbeing of the European Economic Community we will automatically benefit from such an improvement. The historical facts and the evaluation of professional commentators, including that of Mr. Maurice Doyle, the Governor of the Central Bank, do not give credence to that conclusion and the Minister is aware of this. Notwithstanding this objective analysis by the Central Bank, to whom the Minister might on occasion listen, the country and the Government are woefully unprepared to face the problems.

We state in our motion that the domestic legislative programme of the Government is in disarray. Let me explain what we meant by that. The Government have repeated that they want to see a new Programme for National Recovery negotiated with the social partners, yet they included in the legislative programme for this session two Bills which are destructive in terms of the perception of the Irish Congress of Trade Unions, the Broadcasting Bill and the Insurance Bill, and have insisted on pursuing policies which are totally opposed by the Irish Congress of Trade Unions and, indeed, the Labour Party. This attitude, which betrays a degree of arrogance, indicates, on the one hand, that they want to see economic progress but, on the other, they do not care what they do, for private or domestic reasons, to either RTE or Irish Life if it happens to suit some private agenda. There is no rational public agenda that makes sense of what is happening in relation to either the Broadcasting Bill or Irish Life if this Government are serious about implementing the policy objectives of the NESC. There is no rational explanation available but, perhaps when the Minister gets up to speak he will offer such a rational explanation.

It will be novel.

We are proposing in our motion, a Cheann Comhairle, that the Government have an obligation and a responsibility to produce, as suggested in the NESC report of last August, a concerted programme by not only the social partners but by all those responsible for developing an economic programme which is realistic and coherent. Indeed, the need for such a programme was identified by Proinsias Breathnach, a lecturer in Geography, St. Patrick's College Maynooth, in an article in Poverty Today in which he states, among other things, that:

The employment creation requirements of the Irish economy over the coming decade present a daunting challenge, not only because of the existing high levels of unemployment, but because of other rising annual number of new entrants to the labour force — a result of the demographic boom of the 1970s...

There is no prospect for a quick-fix solution to this massive problem. What is most important at this stage is that no such solution should be sought. Shortterm solutions to long-term problems which have been tried in the past have helped get us into the situation we are in today. It is vital that we now resolve to develop longer-term prospectives which emphasise the development of Irish-based exporting firms whose revenues and profits are spent to the maximum extent possible within Ireland.

He states further:

This in turn requires some sort of public forum with executive authority, drawing its membership from both the political parties and the social partners, where these objectives and strategies can be thrashed out, agreed upon and put into action.

The time for political rhetoric from which this House has suffered for so long must now surely be over. Notwithstanding improvements in the short term indicators, be it in relation to inflation, world trade or our balance of trade, the reality is that this economy has historically failed, since 1922, to provide the levels of employment that its population requires. Notwithstanding anything the Minister will say, either today or tomorrow, this Government by one instrument of measurement alone, that of employment, stands totally and completely indicated and will remain so indicated. It is, therefore, necessary to develop a coherent plan which has the support of as many people as possible in our society: that starts with the elected representatives in this Chamber and with those instruments of economic policy which are closest to us and over which we have maximum control.

The IDA have laterally and belatedly adapted and implemented the recommendations of the Telesis report. They are currently proposing that they want to grow successful Irish firms. They have identified as two indicators a figure of 150 such firms with a minimum turnover of £5 million per annum but these are all private firms. At a time the IDA are trying to grow such domestic firms to the size where they can actually have a significant impact on domestic employment the Minister for Finance is about to prepare Irish Life for slaughter on the international market, which is a firm of such size. He is preparing to enable the Irish Sugar Company to be slid off into the private sector where it will be purchased out of the hands of this Legislature and out of the control of the people.

If we are to confront the employment problem, which is real and which will not be solved overnight, we must retain — in the context of a united European market of over 300 million people — control answerable in some way or other to this Legislature, elements of the Irish economy which will be headquartered in our society, which will be based in our society and which will have a primary commitment to our society and to creating employment here. It does not necessarily mean that they all have to be publicly owned but it does essentially mean that they all have to be Irish based. This Government are displaying an extraordinary right wing ideological obsession with selling off successful, Irish publiclyowned companies for reasons which they refuse to state or articulate. The Minister's speech on the Second Stage of the Insurance Bill is a clear indication of that covert Thatcherism that he is frightened to articulate in real terms the reasons why they want to bring Irish Life to the market.

It is our view that there should be a clear programme worked out over a long period. Not just another document produced and put on the shelf but a programme that evolves from the floor of this Chamber, that is consistently monitored by an economic committee, consisting of members of the Opposition as well as members of the Government, including Government backbenchers, a programme that has the support of people outside this Chamber, a programme that can attract the support of people in the employers' organisations and in the trade union movement, at all levels, and not just around the boardrooms or the private meeting rooms of some of those organisations. Unless we get that kind of programme together we will not tackle the problems that stand today as a massive indictment of the failure of this economy over the last two to three years and certainly over the last few decades.

No Minister for Finance can stand up tonight and say that the economy is basically doing all right when he has to say simultaneously that emigration is currently at the historically high level of 45,000 per annum and that unemployment is at the rate of between 17 per cent and 18 per cent of the labour force, depending on what measure or method of measurement one wishes to apply. No other economic statistic or figure will obscure that fact. All the objective economic studies and analyses we have available to us, whether it is this year's annual report from the Central Bank — an authority which we suspect the Minister might listen to — or the authorative NESC report, No. 88, clearly indicate there are short-term and medium-term strategies that have to be pursued, but they will have to be pursued together. What we want to hear from this Minister is not a litany of economic successes that owe more to an upturn in the international economic indicators and less to anything that has happened here. We want to hear this Minister, whom we hope is not as tired as the rest of the Government appear to be——

Not in the least.

——responding to what is a constructive proposal from the Labour Party in relation to this. It is time this Government came forward with a coherent programme as to what will happen in the mid-term over the next eight years or so that will take us into the next century. How will that programme be formulated? What sectors of growth will be identified in the Irish economy? What targeted assistance from the Irish taxpayer will be delivered into food, tourism, transportation and into financial services? The Labour Party are of the view that in three of those areas we have successful companies, that should be consolidated and grown with all the vigour that the IDA can command. I am referring specifically to Irish Life in the financial services area, Aer Rianta with the Great Southern Hotels in the tourism area and the Sugar Company in the area of food. They are three instruments of economic policy that could be used to consolidate economic growth in a manner that would ensure real, sustainable employment in our economy.

What do we have instead? We have a right of centre Government playing with ideology, talking about privatisation and dancing to an ideological tune that is no longer being played either in Britain or in the United States. This economy now faces a mid-term crisis that is represented in two stark figures. One is emigration at 45,000 per annum, not only emigration of people who are destitute in economic terms but in many cases people who have received a good education and training from our society but who feel they cannot make a contribution within it. The second is unemployment. Our levels of unemployment are at the rate of 17 per cent with no indication that they are likely to fall below the figure of 12 per cent or 13 per cent for the foreseeable future. We will be looking at that level of unemployment right into the next century.

The Labour Party are putting forward a constructive proposal to this House which the Minister has not rejected in his amendment. I would urge the Minister to consider the benefits of such a proposal. The Minister has seen already, by way of the NESC study, what consensus can produce when shared by the social partners. We contend that that consensus extended to this Chamber could ensure an economic strategy that would provide the levels of economic activity and employment creation that would dispel the horror of the figures I have just quoted.

I should like to give Deputy Bell the remainder of my time.

I should like to second the motion in the name of the Labour Party which Deputy Quinn has covered more than adequately in his introduction. I fully concur in everything he had to say. I should like to identify a number of areas warranting attention from the broad thrust of his introductory comments.

I was in London recently attending a Drogheda function, representing my town, at which I thought there would be a reasonable attendance but I was absolutely amazed when upwards of 1,000 young people turned up, all from the Drogheda area. I gather that the attendance at another function held shortly thereafter by the Dundalk Association — which I was unable to attend — exceeded that number. While I was there I could not help thinking of all the talk about the reduction in the levels of unemployment. The Minister and Members on all sides of the House know that this has become a somewhat farcical position since the figures being quoted do not take account at all of the many thousands of young people who continue to emigrate.

If one takes the example of those two towns, Drogheda and Dundalk, and multiplies those figures right across the country, from Wexford to Galway to Tralee, and in respect of all the other urban and rural areas, then it is frightening to think of the numbers of young people working in cities such as London, Birmingham, Manchester. Indeed, not alone in the United Kingdom but as far away as Australia, Canada and America.

I listen to this massive public relations exercise about us endeavouring to create a good climate; one would think we were talking about the weather. Since we are certainly not talking about factual employment position we must be talking about the weather. All I can observe are more and more young people emigrating with fewer and fewer jobs for them at home.

In addition we have entered an era — of which the Minister and at least two of his colleagues, particularly the Minister for Labour, will be aware — in which many young people working in the commercial sector do so for a pittance. The norm now is part-time, temporary workers. If such people are to be included in these magical figures which are thrown at us constantly, as workers in gainful employment, we are merely trying to fool ourselves. We are not fooling the young people who come to my clinic or those of any of my colleagues on the Opposition benches nor, I suspect, those who attend the clinics of members of the parties in Government. Such young people will tell you that they work 40, 50 and 60 hours a week for a mere £30 or £40, employed by large stores such as Dunnes, or multinationals who pay them a pittance on a temporary or permanent part-time basis. They all feature in the statistics trotted out to us constantly by these professional public relations people who tell us what a good climate we have for employment.

That is something about which very little has been done despite the fact that the Labour Party have consistently raised the issue in the House and requested Government action in relation to it. These young people continue to be exploited, many are forced to emigrate. It is an insult to them to have to work at that level for such reward. In the context of the Programme for National Recovery it is contended that working class people, people on the shop or factory floor, have benefited therefrom. What benefit has there been for the unorganised workers, virtual slaves, in employment? Then we talk about poverty in relation to people in receipt of unemployment benefit, assistance or other forms of social welfare payments. It should be realised that there is a hell of a lot of poverty amongst young people who are forced to work in these part-time jobs because of prevailing circumstances.

Therefore, it will be clearly seen that we are merely fooling ourselves when we endeavour to maintain that the levels of unemployment are being reduced, that the climate is improving. Even the weather is not good at present but, when we talk about a good climate, certainly we are not talking about people employed in these part-time, temporary jobs or those not employed at all.

Also within the context of the Programme for National Recovery we observe that something in the region of 17,000 public service jobs have been lost. Those of us here — and there are many — involved in local authorities can observe it first hand, whether it be in Wexford, Wicklow, Kerry or elsewhere, where full-time workers, craftsmen, road workers and even administrators were allowed take early retirement resulting in almost 17,000 public service jobs having been lost. As a consequence, the overall infrastructure of local government has virtually fallen apart. Had we the requisite money to carry out the much needed work on roads and local authority services we would not have the people to undertake the relevant tasks; most of them have emigrated. Most of them thought they could avail of early retirement or the redundancy package proposed by this Government and would get gainful employment afterwards. That did not happen. Those people are unemployed here or, alternatively, are working in the United Kingdom or elsewhere.

In the two main urban districts in County Louth there has not been one solitary local authority house built for four years. Having spoken to my colleagues here I know the same obtains in other areas. Never in the history of my county, and certainly neither my home town, has that happened. Yet it is occurring in towns and cities all over the country. The local authority housing lists are increasing weekly. Again, just as in the case of unemployment, the safety valve has been emigration. If all those young married people were at home there would be a revolution here; we would not have jobs for them, they would be on low levels of social welfare benefits, and we would have nowhere to house them. Yet we talk about a good climate.

I hear constantly of Government policy preparing for the so-called upturn. What kind of upturn can there be when private industry is no longer encouraged to create apprenticeships? The level of apprenticeships nationwide has dropped by almost 75 per cent. It is almost impossible for any young person to gain an apprenticeship now to any trade. This means that, in the not-to-distant future, we will not have sufficient skilled craftsmen to cater for the present climate, never mind an improved one. One cannot gain access to a FÁS training centre unless one is sponsored by private industry, whereas heretofore young people could spend an initial year in a FÁS training centre and progress from there. That possibility has been eliminated. They cannot gain entry to a FÁS training centre by way of apprenticeship. Employers in the private and public sectors are no longer sponsoring young people for apprenticeship. Deputy Quinn, a former Minister for Labour, knows this. He knows the encouragement he gave to people to obtain some form of employment when he introduced the social employment scheme, which was launched in my home town at a level of £70 weekly. What happened? The Government came into power and reduced it to £60.

Look at what is happening in Waterford Glass where the employers tried to reduce the level of earnings. Here the Government just came in and wiped £10 off £70 a week for a social employment scheme bringing it down to £60. Then we heard the good news one morning that it was being increased by approximately £5, but that was only half of what it had been reduced by. This is the type of public relations that gets right under my skin. How can the Minister tell a person on £65 a week that he is okay and can pay his way out of that? How can he tell that person he is not living in poverty? The Minister need not tell that to the young people I know.

The local government scene is such that the normal programme of local government cannot now be carried out. We do not have the money, for a start, but even if we did we do not have the people to repair the roads or anything else. Yet the Minister for the Environment tries to create the impression publicly that everything is okay with local authorities. I, as a member of two local authorities know, and my colleagues know, as does everybody in this House, that the whole local authority scene has absolutely collapsed.

Let the Minister try to tell a widow on £52 a week, or a single person living alone on something similar, that there is no poverty in the country, that the climate is good and the weather is getting better, and he or she will tell the Minister what to do and how difficult it is to even feed themselves, never mind indulging in any social activity at all.

I want to wind up my ten minutes by reminding the Minister that in the Border area of Dundalk and County Louth as a whole where I come from, there is up to 30 per cent unemployment. It is not even the 17 per cent on a national basis but 30 per cent, and that is not counting all the young people and not so young people who have emigrated. If the Minister wants to make a positive contribution to the development of the economy he must start at the Border and bring tax harmonisation and get the VAT and excise duties down to the levels that obtain elsewhere in the UK. Then we might at least be on a competitive footing and some of the garages and shops that have closed might reopen. How can anybody tell me there is no poverty in the country when I am living in an area where there is 30 per cent unemployment? When I read in The Irish Times, the Irish Independent or The Irish Press what the Minister for Finance has been saying I have to remind myself that I am awake and not merely dreaming. It is about time that we were collectively honest with the public and admit that this is a massive public relations exercise, that we are only trying to fool the people.

There is a well known tenet on which the advertising industry is almost entirely based, that perception is more important than reality. The writer Elmer Wheeler put it more succinctly when he said "don't sell the steak sell the sizzle". It has been obvious to me for some time that the Ministers must be reading Elmer Wheeler books and are graduates of the Elmer Wheeler school of economics. Much of their policy is based on the dicta I have quoted. That perception is the guiding rule of the day.

Scarcely a day passes without my reading in the papers or seeing on the television or hearing on the radio that we are living in a great economic climate. There are all the cliches one could think of. Even Adam Smith did not have some of the cliches we hear tossed about every day. The Ministers go around the country boasting about the wonderful miracle that has occurred here. All kinds of rosy pictures are painted. Every kind of cliche from "bottoming out" to "upturn in the economy" is trotted out. There is talk about the need to create the right economic climate for recovery, lay the foundations for recovery. Even the late Seán Lemass's old dictum "the rising tide lifts all boats" is tossed out when all else fails. I hear that on all sides of me. Obviously the tide that has been rising here has not lifted very many boats, if we look around at the world we are living in.

The main Government party one time coined the slogan "Building on Reality". The document, bearing that title, glossy covered, was sent to every one of us by post. Reality, however, must be measured by performance, not perception. The Government have been evading reality in the last three years. There has been no economic miracle in this country, and no economic success. There might be on paper, but not in reality.

What does economic success mean? How does one measure economic success in human terms? What is economic success all about? Figures and balance sheets tell one story, but labour exchanges and poverty queues tell another. How does one judge the performance of our society as a whole? How does one measure success in that society? Success is often measured here by the success of a small number of people who make money. One must also measure the success of this economic miracle on the lives of ordinary people, the vast majority of whom live in ordinary circumstances. We must translate economic policy into human terms and the Government have not done that. The success we are talking about is a mirage, an illusion that the Government have put before us. We must look beyond these perceptions, illusions, hype, propaganda and PR work that are so common in the society we live in. We must look beyond the cliches and relate performance to the reality of the world we live in.

What is the reality? Despite all the talk in the past few years there are still nearly 250,000 unemployed in our society; nearly one-third of our people are living in poverty and emigration has risen again to nearly 50,000 a year. Tax inequality is the same as it was three years ago. There are still hospital waiting lists for treatment and operations. There are other adverse aspects of our health system. Wards have closed down in hospitals. People have to wait for hours for casualty treatment late at night. Deputy Bell referred to low wages. Many of the so-called training schemes are really cheap labour schemes. There is exploitation of workers in many industries such as manual industries, catering industries, hotels, supermarkets, etc. What Deputy Bell said about apprenticeships is true. Sometimes parents, and boys, are so desperate that they sponsor themselves in order to get an apprenticeship. Much of the sponsorship taking place on FÁS courses is bogus; the apprentice receives no wages whatsoever. Many FÁS people do not know this. The desperation to find a place on an apprenticeship scheme is such that parents would stop at nothing, even paying their own son to go on a course.

The technological education we hear so much about from the Government cannot be dealt with in isolation or in a vacuum. Limerick University was the first university set up on technological lines. It is a good thing, and I am pleased with the progress of graduates from that university. But we must look beyond that. Our graduates should not be used as fodder by the multinationals. Our university and the graduates, lecturers and professors should also attempt to grapple with the problems of our society because economic success cannot be measured in terms of some graduates getting employment with multinationals. Education, while it is a concept in itself, must also be related to the world we live in. It is time our universities, Limerick University especially, got down to solving the problems of our society.

It has been said that the building industry is experiencing a revival, a small revival. The very fact of designating areas in the cities and urban areas, however, says a lot, that we have to give people tax breaks to invest in the building industry. That is the wrong way to go about stimulating the building industry. The building industry should be given the green light to work on its own initiative, not merely in response to stimulation in certain areas. What Deputy Bell said about fewer houses being built in urban areas is totally true. Unfortunately we are paying the price of building houses in green fields instead of instituting a programme of building houses in the inner city, cutting down on crime and vandalism. Instead we are exposing those people to such anti-social practices by putting them out to those places. The building industry should be given the right to operate away from tax based speculation. Too many building workers have emigrated, many of them, illegally, to America, some to Britain and some to Australia and many have not come back and will not come back. In the area I come from — Limerick — the building boom has done nothing for the people living on the north side of the city or on the south side in Moyross and Southill. Those are the two largest housing estates in the city and unemployment is up to 80 per cent in these areas, five times the national average.

As regards agriculture, Limerick is the capital of the Golden Vale. Potatoes are imported from Cyprus and Israel and cabbage from Holland — a country which feeds 14 million people and has to send food to Limerick. Recently, I went to have my shoes mended and the cobbler said the leather he used is imported from Belgium. He said he cannot get Irish leather, and that is a tragedy in a country with plenty of cattle. Surely no Minister can listen with complacency to these facts. I know there has to be give and take and there have to be imports as well as exports, but surely an agricultural country should be able to produce food and leather. You could go on, to use a bad pun, until the cows come home——

I hesitate to interrupt Deputy Kemmy, but he might now bring his speech to a close.

The performance is not good enough. The Minister, with his background, knows very well that what I am saying is true. Recently I saw a "Late Late Show" which dealt with this matter, but it did not spell confidence. It was a very light-hearted occasion but there was too much hype, too many strokes and too many nods and winks, and it was slack on performance. It was good on PR work but there is more to life than PR work. We are short on performance.

I move the following amendment:

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

— welcomes the transformation of the economy since 1986 which reversed the economic stagnation and declining living standards of preceding years; improved the public finances following the record high current budget deficit of 1986; reduced the National Debt/GNP ratio following the virtual doubling of the debt in the four previous years; restored growth to the economy at an annual rate of 3.5 per cent; increased employment; reduced unemployment; enabled substantial real increases in social welfare benefits and significant reductions in income tax rates; brought about low levels of inflation and interest rates; and increased exports which brought the balance of payments into surplus; recognises the central role in these achievements of the policy strategy of the Programme for National Recovery; acknowledges the contribution of the various social and economic partners to its successful negotiation and implementation; and

—urges the Government to maintain its successful efforts to promote economic and social progress, based on a further Programme of Development agreed between the Government and the social and economic partners; and, with the support of the European Community and the co-operation of the social and economic partners, to prepare the economy to confront successfully the challenges of the Single Market and Economic and Monetary Union.

First, I must say I have been accused of many things in my political life but some of the things I have been accused of here by speakers from the Labour Party, I have to reject straight away. They accused me of being complacent — that is not true; confident — yes; arrogant — never; efficient — yes; performance — I will leave that to others to judge. I am elected by the people of Longford-Westmeath and they can decide on performance when the time comes. They seem to be fairly pleased with my performance up to now and when the next day of reckoning arrives it will be up to them to judge me.

Deputy Ruairí Quinn suggested the answer to the problems, and concentrated on three areas that he said would transform the economy and provide the jobs that we all know are badly needed and are not available in sufficient numbers. I do not deny that and have never denied it. I was never complacent about how far we have gone down the road. We have gone a long way and we have a long way to travel. He suggested that to leave Irish Life alone would solve part of the problem, but I cannot understand the logic in that. He said he cannot understand my logic but it is simple. Irish Life are a company that need access to new capital. They need capital restructuring, and nobody argues with that. I have had a number of discussions with the trade union involved, the Irish Congress of Trade Unions, and others whose priority it is to create jobs. Not alone will all the jobs be retained in that company but indeed the numbers will be improved upon. If that is not the right road to travel, I do not know what is. That is my rationale and the rationale of the Government.

In relation to Aer Rianta, they have diversified into many areas, and the more they diversify the better. I would urge every semi-State body to diversify into whatever area they can run commercially and profitably. The difference in this case is that the Government have no money and are not prepared to borrow more money to put into operations such as that. When they can be run and developed commercially, we are 100 per cent behind them.

I will leave the future of the Great Southern Hotels to my colleague, the Minister for Labour, who will be participating in the debate. Here again, it is a question of finding more capital. Those hotels have come a long way and it is a question of what is the best way to improve them, but I have no doubt the Minister will bring his proposals before the Government in due course.

They worked to profitability under a Labour Minister.

Yes, and they have done very well since, but they are now in need of more capital and it is a question of where they will get it.

From listening to the debate so far, one would have to ask: do the people who have contributed to the debate realise where we have come from in such a short period. Do they want to forget and wipe the record clean? When you find faults you have to correct them and then go on to build a future on the foundations you have laid. There is no instant solution, and there never was an instant solution to this problem. If the old, tired Labour Party policy of throwing money at problems to try to solve them is still their policy — I am not sure whether it is from listening to them tonight — it will not get us anywhere. It was tried and tested for four and a half years, in conjunction with a larger partner, Fine Gael, in Government and we saw the results. I have to recall some of those results here to put the whole matter in perspective.

We did not close 4,000 hospital beds.

People here have forgotten what the position was like a few short years ago. At the end of their four and a half years in Government in 1987——

We did not——

Let there be no interruptions. There is a time limit to this debate.

——GNP growth was actually negative; the balance of payments was in deficit; the Irish pound had been devalued twice within the EMS in less than 3½ years; our external competitiveness was deteriorating; the public finances were on an unsustainable course, with persistent overruns on the Exchequer borrowing requirement and a relentless rise in the national debt to GNP ratio; employment had been on a downward trend for the best part of a decade; investment, the foundation for future growth, was at rock-bottom levels; and national confidence was at a low ebb. Was all this really only three and a half years ago? It seems like another era. The reality is that on every one of these fronts the position has been transformed almost beyond recognition.

It was a situation which demanded a well-founded strategy for stablisation and development. The Government's response was set out in the Programme for National Recovery which was negotiated with the social partners towards the end of 1987. It was reiterated in the National Development Plan in March 1989 and further developed in the Programme for Government adopted this time last year.

The ultimate objective of this strategy was the achievement of strong and above all sustainable growth in output and employment. Key ingredients in this strategy were the improvement of cost competitiveness and a reduction in interest rates. This was to be made possible by fiscal discipline, restraint in pay and a stable exchange rate for the Irish pound within the EMS. This strategy gave a credibility to economic, budgetary and monetary policies that had been lacking for years. For policies to be successful, they must above all be credible. The policies of the last three years have been credible because they have been forged from a consensus on what the country needed; they were realistic; and, as the record shows, they were not a delusion or a mirage, nor were they any of the fancy names Deputy Kemmy would like to put on them. These are facts and not fancy tales. The policy goals we set were achievable.

By any standards, this strategy has been an outstanding success. It has met its key targets for the public finances, jobs and growth. Indeed it has even achieved them ahead of schedule. I will mention just a few of the many examples that could be given: real GNP growth is set to average 3½ per cent in the period 1987-90. In contrast, growth in the first half of the decade was non-existent, averaging only ¼ per cent a year; the Exchequer borrowing requirement has been brought down from 13 per cent of GNP in 1986 to a prospective 2 per cent of GNP this year; the national debt to GNP ratio which had been rising inexorably up to 1987 was stabilised and is now falling. It has come down from over 131 per cent of GNP at the end of 1987 to about 121 per cent at the end of 1989, and will be reduced further this year; and from April 1987 to April 1989, there was a substantial net increase in the number of self-sustaining jobs available; private non-farm employment grew by more than 30,000 in these two years. The indications are that the rate of growth over the past 12 months has been even better, and we need to achieve even better still in the future because of our high unemployment.

We are an open economy and our success is predicted by the performance of our trading sectors. Over the past three years these sectors have performed outstandingly: Growth in the volume of manufacturing ouput averaged more than 12 per cent per annum in that period. This growth was widely spread and included both the modern high technology sectors and the sectors producing more traditional products; and expenditure on tourism and travel by visitors to Ireland has increased by an annual average of 15 per cent since 1987. Our efforts to develop this key sector are being rewarded. The policy of liberalising air transportation and creating a more competitive environment has also contributed to this growth.

The performance of the trading sectors of our economy is reflected in export growth. Over the past three years exports have grown by an average of 16 per cent per annum. In 1988, for the first time in our history, the trade surplus exceeded £2 billion. It was over £2.3 billion in 1989 and we expect a repeat performance in 1990. Up to April 1990, the trade surplus is running some £140 million ahead of last year's level. The balance of payments has been in surplus for three years running and a further surplus is in prospect this year. Only a handful of OECD countries can match this performance — notably Germany and Japan. Contrast this with the earlier years of the 1980s when we were running large current account deficits and covering them with unsustainable foreign borrowing.

Productive investment is the seed corn of economic growth and prosperity. Investment depends fundamentally on the expectations and confidence of business in economic policy and prospects. Investment in responding strongly to the opportunities created by Government policy. There is now a willingness to commit resources to productive, employment-creating projects. There has been a major turnaround in the building industry. This sector, which was in recession for most of the last decade, witnessed strong output growth in 1989. The various indicators of building activity — planning permissions, loan approvals, housing starts and, most significant, employment — all point to buoyant activity in the sector. Indeed, you have only to look at the skylines of our cities for evidence of the vibrancy of the building industry.

It is just in one city.

The Government's general economic policy, as well as their targeted efforts in urban renewal and infrastructural investment have played their part in the regeneration of the construction industry.

As well as building and construction activity, investment in machinery and equipment is growing strongly. In 1989, the value of imports of capital goods increased by over a third. They have continued to increase this year. This is welcome evidence that business is devoting resources to the best available technology, a strategy which will increase productivity, secure competitiveness and create jobs.

Interest rates are important determinants of economic activity. The role of the Government is to provide the economic background conducive to maintaining interest rates which are as low as possible, consistent with the maintenance of a strong exchange rate within the EMS. The success of our policies in the area of interest rates may be gauged by the improvement in the differentials between Irish rates and rates in other countries. Since March 1987, to take the key three month rate as an example, the differential between Irish and UK interest rates has improved by nearly 8 percentage points. The differential with the corresponding German rates has improved by nearly 7 percentage points. This represents a significant competitive gain to the Irish economy.

As regards the latest developments, domestic market conditions have shown considerable improvement in recent months. Money market rates eased significantly during the second quarter of this year. A general trend towards lower interest rates in most EC countries and a strengthening of sterling caused favourable market sentiment to prevail. This facilitated substantial capital inflows and led to a significant recovery in the official external reserves — from £2,458 million at end-March, to £3,018 million at end-May. The improvement in domestic conditions led the Central Bank to reduce their short-term facility — STF — rate twice in June to 11 per cent. These changes in the STF were followed by reductions in retail interest rates which brought the Associated Bank's prime commercial lending rate down to 11 per cent, a reduction of 1 per cent on their January 1990 level.

I hope I do not need to remind this House of the evil of inflation. Not many years ago we had double digit inflation. People's purchasing power and savings were being eroded and their standard of living was on a downward spiral. We now have the sort of levels traditionally associated with countries such as Germany. The credibility of the budgetary and exchange rate policies of this Government and their predecessors, and the sensible pay arrangements in the Programme for National Recovery, have combined to bring inflation down. Inflation fell to an average of 3 per cent in 1988-89. This was better than the average rate in the European Community and well below the rate in the United Kingdom. By year end we will have one of the lowest inflation rates in the OECD group of countries.

All of this progress in production, trade, investment and inflation would serve little purpose if it did not translate into more jobs. Indeed, the ultimate goal of all Government policies is the creation of the conditions necessary for sustainable job creation of the conditions necessary for sustainable job creation. Jobs are being created and sustained at an increasing rate. The overall rate of employment growth has accelerated over the period of the programme to a projected 13,000 this year. Contrast this with the net fall in employment of 76,000 in the seven years to April 1987.

The Programme for National Recovery set a target of 20,000 extra jobs per year over ten years for manufacturing and internationally-traded services. Detailed employment surveys conducted by the State industrial promotion agencies show that this target was more that met over 1988 and 1989. Helped by a significant reduction in job losses, net employment in manufacturing increased by 6,000 in 1989. Contrast this with the average annual decline of 4,000 in the period 1980-87. Employment in the construction sector was up by almost 10 per cent in 1989 and the building employment index shows a continuation of this strong growth through to May of this year. Employment in services is also on an up-trend, with the number at work in banking and insurance rising by over 2½ per cent in 1989.

One of the most dramatic manifestations of the success of the Programme for National Recovery has been the decline in job losses. In 1989 notified redundancies were over 40 per cent fewer than in 1988. This favourable trend is continuing into 1990. Notified redundancies are 21 per cent lower in the first five months of the year than in the same period of 1989. Sustainable employment is what we are after and that is what we are getting.

Registered unemployment is falling, in contrast to the massive increase of 146,000 in the period 1980-87. The number out of work fell by an average of over 8,000 per year over the two years 1987 and 1988. We expect a further fall of 10,000 this year. While last month's figure is disappointing, we should be slow to pass judgment on the basis of a single number. I do not think it reflects the underlying trend of employment, and I feel sure that it will prove, in the event, to have been but a temporary aberration. I reject the suggestion that falling employment is simply a reflection of emigration. It is abundantly clear that there are more jobs coming on stream and the indications are that emigration has slackened considerably this year.

Not alone have we got more jobs, fewer job losses and reduced unemployment under the Programme for National Recovery but workers' living standards have also shown substantial real improvement. The combination of realistic pay increases, the tax reliefs granted in successive budgets and the low inflation rates achieved over the past two years and into 1990 mean that real take-home pay of workers with average industrial earnings will have increased by between 4 and 8½ per cent over the life of the programme. Contrast this with a fall of between 7 and 11 per cent in real take-home pay over the period 1980-87. Gross earnings increases in double digit percentages figures gave the illusion and mirage of progress during the early part of the decade, but the plain fact is that money gains were eroded by inflation and taxes.

The fact that real increases in living standards have gone hand in hand with moderate nominal pay rises is due in no small measure to the major tax reform measures which have been implemented over the past three years. These in turn have been made possible by the progress achieved in containing borrowing and debt.

The improvement in the public finance situation that has occurred over the past few years has been quite dramatic. This has been crucial to the major economic and social advances of the past few years. Exchequer borrowing and debt had been careering out of control. If this had continued it would have called into question our ability to provide essential public and social services, to create new jobs at home for our people and, ultimately, our ability to continue to remain masters of our own affairs.

In this motion, I detect, once again, the familiar refrain that the "cut-backs" were not needed. Do I hear a suggestion that, if only we had waited, the economy would have grown out of its difficulties? The plain fact is that the previous Government on taking office were confronted with a critical set of imbalances in the economy. If these were not addressed, and urgently resolved, they threatened to undermine the very foundations of growth. No less a body than the National Economic and Social Council, with their widely-representative and well-informed membership, had concluded that the debt problem — and its rootcause, the unsustainable level of borrowing — was the first priority. This meant to all and sundry that public expenditure had to be cut. Putting up taxes, the solution employed by the Coalition Government in 1983-87, put taxation through the roof. I hear calls tonight to dismantle immediately the high taxes imposed during that period in both direct and indirect taxation. I have started to do this, but it cannot be achieved overnight. If that Government had not put them up, I would have not have to take them down.

Deputies

Hear, hear.

Putting up taxes was not the solution, which it was thought it would be. In fact, previous attempts to curb borrowing through bringing taxes up to meet spending had become part of the problem, by undermining the economy's capacity to "grow out of debt".

Far from causing a slowdown in econmic activity and job creation, as some had suggested it might, the reduction in Government borrowing and debt has been the essential catalyst for a period of sustained economic growth and increased employment. This is so because the position of the public finances is at the very heart of confidence in the management of the economy. Without such confidence investment and expansion by business, on which jobs depend, are simply not possible.

Those who claim that we could have turned the economy around without pruning public expenditure are perpetrating a cruel hoax on those people who inevitably suffered some discomfort from the cuts. However, I do not believe that they are fooling anyone. The Irish people are not short of common sense. They have a healthy scepticism for the "free lunch', especially when nobody is willing to put the menu on the table. Are they prepared to say now where they would have made economies? Since, presumably, it is not in the areas they criticise the Government for acting, maybe they would specify what programmes would have borne the drastic cuts that would be involved in a more limited field.

Our annual borrowing requirement is now in line with the average borrowing of our partners in the EMS narrow-band. This is a useful pointer to the progress we have made. Moreover, this has been achieved at the same time as we have been making unprecedented progress in reducing direct and indirect taxes and in providing significant improvements in living standards for those on low incomes, including social welfare beneficiaries.

Nevertheless, we must be realistic in our assessment of our present position. We have a huge overhang of debt which is roughly twice the average for EC countries. This is a major burden on the economy, for two reasons. In the first place, the servicing of this debt is pre-empting a huge amount of our resources that could be put to much better use for other purposes. The cost of interest payments on the debt comes to £2.1 billion in the present year. Secondly, our economy remains exposed to the trend of interest rates, at home and abroad.

An essential part of our strategy, therefore, must be to maintain downward pressure on debt and, to this end, on borrowing. This is why, having already achieved the earlier targets, I announced new medium-term objectives for the public finances in this year's budget. Over the period up to 1993 the Government's aim will be to maintain a significant rate of progress in reducing the Debt-GNP ratio towards 100 per cent. We intend, as part of this, to achieve broad balance on the current budget for the first time in 21 years. Borrowing for capital purposes and the overall Exchequer borrowing requirement will need to be held to the minimum level consistent with this strategy and with the needs of balanced economic growth and stable monetary conditions.

As I have said before, the achievement of these objectives will not come easily. There will always be tension between the pace of progress in reducing borrowing and debt and the many other objectives we are trying to achieve within our limited resources. It is essential, nevertheless, that we build on what has been achieved over the past few years and make further progress on the basis of the new objectives.

Control over public spending has been a major contributory factor to the turn around in the public finances which we have witnessed since 1986. Overall Government spending has been reduced as a percentage of GNP from 53 per cent in 1986 to a projected 42 per cent this year. In real terms, net day-to-day spending by the Government, other than on debt servicing, is now some 9 per cent lower than it was in 1986.

The savings achieved over the past few years have enabled us to recover some of the ground lost in the years prior to 1987. Achieving major expenditure adjustment is never an easy task. Many difficult but necessary decisions had to be taken. In taking these decisions, however, the Government were always conscious of the needs of the less well off. I would strenuously deny any suggestion that the less well off carried the brunt of the adjustment process. Members of this House need only look at the budgets that this and the previous Government have introduced to see quite clearly that the Government have more than met their responsibilities to those in receipt of state welfare payments and to persons on low incomes generally.

Providing sustainable improvements in public services, in terms of the quality of and public access to those services — whether they be in health, education, housing or welfare payments — is, of course, desirable. This can only be done, however, from a position of strength in terms of our ability to fund the services and the improvements in question. The road we were travelling prior to 1987 was one which was leading us to economic ruin. Rather than improving the position of the less well off it would ultimately have led to a worsening of their position. As more and more resources were swallowed up by debt servicing costs, less and less would be left available to meet the Government's other social and economic commitments. Let me say that the Government are determined not to put at risk the fruits of our hard won recovery from the economic and financial crisis of the mid-eighties. There will be no slipping back into the abyss.

While the resumption of growth in the economy has enhanced our capacity to see through the process of budgetary adjustment, it does not absolve us from the need for continuing tight management of the level of public expenditure. The Government remain committed to the elimination of wasteful or inefficient expenditures. This, combined with improved targeting of expenditure programmes, will ensure that aggregate spending will absorb a reducing share of our national resources.

Tight controls on Government spending will, therefore, stay in place. This is a basic message which I want to get across this evening. Careful management remains the watchword. We must continue the restraint on spending so as to maintain downward pressure on the EBR.

Having said that however, let me say that the Government are conscious of and have addressed certain priority spending areas where extra funding has been clearly needed. This is evidenced by the additional resources made available this year in, for example, the welfare area, the health services and security.

The Labour Party motion before us tonight talks about the regressive impact of Government cutbacks in areas such as housing, health and education. The reality, of course, is somewhat different. In relation to housing, for example, there has been a significant increase in the provision for local authority housing this year. The 1990 provision stands at £51 million, between Exchequer and non-Exchequer sources. This is an increase of around 40 per cent on the outturn for 1989. It is allowing work to——

Did the Minister say 40 per cent?

We know that when the Deputy's party were in Government there were empty houses because there was no-one there to fill them. The difference now is that demand has started to rise and we have had to increase the amount of money being put into local authority housing.

(Limerick East): What about the 46,000 emigrants, an all-time record, who left the country last year?

The Opposition's record in Government is diabolical and they do not need me to repeat it here. In effecting necessary savings in the educational sector care was taken to ensure, in line with the Programme for National Recovery that the burden of adjustment did not fall on the disadvantaged. While teacher numbers in the second-level sector were reduced overall, 175 additional supernumerary teachers were specifically allocated to disadvantaged schools. Under the Programme for National Recovery, 125 additional teachers have been allocated to disadvantaged schools in the primary sector. A pilot psychological service has been established for primary schools while the allocation for the fund for disadvantaged schools was trebled last year to £1.5 million.

As I have already mentioned, we have set ourselves ambitious new medium-term targets for the public finances and for the current budget in particular. These targets will not be achieved easily. A basic requirement is that the tight control of public spending evident over the past few years is maintained. To do otherwise would be to loosen the floodgates and undermine confidence in the Government's commitment to the long-term welfare of the economy.

At long last we are getting to grips with the reform of our taxation system so as to gear it to the needs of the economy and, in particular, the requirements of job-creation. I have already referred to indirect taxation and the need to harmonise our taxes, as our circumstances permit. The Government are totally committed to achieving harmonisation of our taxes at the earliest possible date. We all agree that the levels of direct and personal taxation are too high. The Government have made a very good start in tackling this problem by reducing the top rate of tax from 58 per cent to 53 per cent and the standard rate from 35 per cent to 30 per cent, significantly extending the standard and 48 per cent tax bands, substantially increasing the exemption rates for the low paid and introducing an addition to those limits in respect of children. The Government have made a very good start towards protecting the living standards of those on low pay and giving a better standard of living to those at work.

As I have said, the Government have made a start towards harmonising our taxes and will continue to do so. The EC Commission study on the problems for the Irish Exchequer should be completed shortly. Hopefully this study will indicate how further progress can be made in this area. The major changes in the corporate tax area, tax collection and the introction of self-assessment will mean better collection and more revenue from the corporate side.

Our progress in the European Community has not been confined solely to Ireland, we had a very successful Presidency and we have started to spend our Structural Funds. This will bridge the gap between our economy and the economies of our more developed partners in the EC.

The Government's vision of economic and social progress in the nineties is of strong and sustainable growth in output and employment aimed at raising living standards and meeting the challenges of the Single European Market. The external conditions which face us promise to be relatively benign. The outlook for the world, and particularly the European economy, is more favourable than it has been for a very long time. Because of the progress we have made in removing major inhibiting factors, the economy now has the capacity to move into a period of sustained growth.

However, turning our vision from aspiration to reality will not be automatic or even easy. It will require an unwavering commitment to the policies that the objective demands. Let us be clear that we delude ourselves if we will the end but not the means. This is, basically, what the Labour Party motion is about. In an open economy, expansion of the internationally traded sectors is the only enduring basis for growth. To bring this about, improvement of competitiveness in all its many aspects is the key.

When, I hope, we sit down to discuss a new programme for recovery, by the end of this year the shape of the new arrangement and the particular requireements of each of the participants will, no doubt, be on the table. The Government's priority, however, is unequivocal. The overriding objective of the new accord must be to maintain the basis of sustainable growth and thus secure the maximum possible rate of employment increase. This has major implications, not only for the feasibility of pursuing other objectives, but also for the way we go about advancing them. All the participants must be prepared to face up to the "trade-offs" inevitably involved between pay and jobs, between public services and personal spending power, between preserving sectional privileges, evolving a more efficient and equitable system between welfare provision and taxation relief and between aids to commercial activity and a more hospitable general business environment, objectives which we all seek from within our limited resources.

With the permission of the House, I should like to share my time with Deputy Noonan.

Is that agreed? Agreed.

Fine Gael fully support the Labour Party motion. To quote the words of a modern day singer, the Minister's speech is an illusion because the figures he quoted indicated that everything in the garden is rosy. He pontificated about those who claimed that they could have turned the economy around without pruning public expenditure and said they were perpetrating a cruel hoax on those people who inevitably suffered some discomfort from the cuts. Indeed, that could be said about those on the Government's Front Benches when they were in Opposition who put forward that view daily and fooled the people.

The Minister's speech is set against the background of last week's devastating rise in unemployment figures. The national average hides the serious situation in many urban areas in Cork and Dublin. I know that in parts of my own constituency there is 75 per cent unemployment. The Minister's position is also against the background of the ongoing continued cutbacks in the social programme. The Minister referred to a percentage increase this year over last year in regard to housing but a 40 per cent increase on zero is still very little. In the city which I represent not one house was built in 1989 although there are 1,100 people on the housing list. Recent figures show that there are close to 150 people homeless on the streets of Cork and living rough.

There are still very long queues for the health services and the failure of the Minister for Health to act on the report of the Commission on Health Funding condemns him in the eyes of the public. We have an ever-growing divide between haves and the have-nots, the people who can afford medicine and those who are at the mercy of hospital queues day in, day out.

As Deputy Noonan interjected, 46,000 people emigrated last year, a scandalously high figure which hides the reality of the unemployment figures released monthly. Cattle and sheep prices are plummeting and there has been a dramatic drop in the price of lamb. There has also been a reduction in the price of milk which has not been passed on fully to the consumer. It shows an appalling lack of protection for the public. There is a greater division among our people now than at any time in our history but the Government are still not willing to tackle the key issues. Society is riddled by restrictive practices, demarcations, privilege and exploitation but the Government seem incapable of tackling these problems. It is a Government of the privileged for the privileged and they will funk any issue which affects their own supporters——

That is a joke coming from Deputy Allen.

At the same time the Government will ignore the rules to convenience their financial backers. They are all shadow but very little substance. Their popularity is the product of a very effective public relations machine. Their attitude is that if they cannot give bread to the people, they can eat cake——

We do not have any handlers.

(Limerick East): No handlers?

If the Government cannot provides jobs or social services, their members do a lap of honour in the Olympic stadium or put in an appearance in College Green to keep the public happy. Despite all these problems in society it is puzzling and upsetting that the Government had an over 50 per cent popularity rate in the opinion polls.

Rightly so.

That was because of the gagging of the usually very effective and vocal representative groups in society which needs to be questioned in this House. For example, I question the very lukewarm and halfhearted opposition of the ICTU to the recent Broadcasting Bill. I question the attitude of the IFA in relation to the ever-growing crisis in agriculture because of the Government's failure to submit proposals in time to Brussels in regard to disadvantaged areas. Despite all this, the leaders of the IFA, who were so vocal in years gone by, are as silent as mice. Where are the teachers' unions? Their tepid comments at their annual delegate conferences in recent months compares very badly with their fire and brimstone in years gone by.

They are all out of step.

Where are the great gatherings in Croke Park? They are not held because the leaders are engaged by the Government. It is time for members of these groups to question whether they are being effectively led and represented by the leaders of their unions and associations. I submit that they are not. The Government may impress with fiscal targets and indeed tonight the Minister's speech was full of references to targets and figures. He also spoke about tourism increasing by 15 per cent. It is not foreigners coming to this country but the returned emigrants who are pushing up the figures——

It is good barometer.

The boot boys are in again tonight. I did not interrupt the Minister and I do not expect to be interrupted. As I said, it is the returning emigrant who is pushing up the tourism figures and it is callous of the Minister to use the scandalous problem of emigration to justify tourism figures.

The time has now come to closely examine whether the position of people who suffered most from the cutbacks in recent years will improve if the economy improves. The evidence shows that the flood of Structural Funds into this country will by-pass the areas which have been deprived and which suffered in recent years. The great infrastructural works proposed by Ministers will benefit those who are already rich but the deprived areas, which need an uplift to attract employment, are being ignored and will be by-passed. The Minister referred to regional development which has torn asunder its whole concept. It will continue with an even more centralised control of Structural Funds. That policy has already cost us dearly in the allocation of Structural Funds to date and will cost even more in the years ahead. Therefore, I support the Labour Party motion fully because we have a Government representing the haves who support the privileged in every decision made daily but forget the least well off in our society.

(Limerick East): Normally when one gets a speech circulated by the Minister for Finance one can rely on its accuracy. This speech is different from the usual speeches that come from the Department of Finance and I wonder if it was written fully by the Finance officials, rewritten by some political aide, or did the Minister write it himself?

For the Deputy's information it was written by the officials.

(Limerick East): For the first time in my experience a Department of Finance speech has serious distortions in the facts and I am surprised that officials in the Department of Finance now are involved in including large sections of political propaganda in speeches for the record of this House. There is no doubt at all that there are such sections in the speech. For example, near the beginning in his recital of the sins of the previous Government the Minister's second point was that the balance of payments was in deficit. It was, but of course that does not tell the story. The balance of payment was in deficit to the extent of 14 per cent of GNP when the Government went into power in 1982. By the time the Government left power in 1987 it was down to a nugatory level and the balance of trade was in surplus. If you had to mention only one item of the many successes of the previous Coalition Government you would have to give credit for the major change in the balance of payments position. As regards reciting it as a problem when the Minister arrived in power, of course the balance of payments was not a problem in 1987.

A Deputy

The national debt was.

(Limerick East): It was not a problem from 1984 on. Another gross distortion of fact is again in the recital of sins. Item 4 is that our external competitive position was deteriorating. It was not. If anything laid the foundation for the growth in the economy from 1987 through to the present, it was the improvement in competitiveness, and if there were two items to which you could attribute that, they were the taking of inflation from 21 per cent as it was in 1982 annually down to 4 per cent in 1987 which improved competitiveness enormously and, secondly, the devaluation of the IR£ in the autumn of 1986 which improved Irish competitiveness enormously and that competitiveness was held within the economy right up to the present.

For a week; one week at maximum.

(Limerick East): I can appreciate the Minister making political points; he is a politician and he is making very strong political points.

I was in business. I know.

(Limerick East): I am objecting to the fact that a statement in this House which carries the endorsement of the Department of Finance is in sections and patches propagandistic. I remarked at the outset that it was probably rewritten by a political aide of the Minister——

(Limerick East):——but now I have on the record of the House the Minister's assurance that it was all produced by the Department of Finance.

The Deputy is right.

(Limerick East): That establishes the position. I agree with the motion put down in the name of the Labour Party. It is timely. It is good to have a general debate on the economic state of the nation when we are not having an Adjournment Debate this week. My party will be supporting the Labour Party motion without seeking to amend it when it comes to a vote tomorrow night at 8.30. I do not want to go through the elements of the recital of political charges contained in the motion, but for the very limited time at my disposal I would like to talk about the necessity for a comprehensive economic and social programme to be developed by the Government to attempt to get some kind of consensus in this House for the objectives of the programme and to remove the policy uncertainties which are widespread at the moment.

One of the main objections I have to the Minister's speech tonight is that it recites one of the great fairy tales of modern Ireland, that a Government came into power in 1987 and by dint of expenditures cuts they righted the economy. Any analysis of what happened does not support that, and I am not talking politics, I am talking economics. Most of the progress made in righting the national finances was not done by expenditure cuts. The then Deputy MacSharry, now Commissioner MacSharry, in his first budget in 1987 took over Deputy John Bruton's budget, established harder targets and got it through the House. Then the Tallaght strategy came in and the 1988 budget again cut expenditure, but there was very little restructuring. The 1989 budget was to a very large extent neutral, but the real progress in reducing the EBR was not achieved through expenditure cuts. It was achieved by tax buoyancy. In the first instance there was the success of the tax amnesty which delivered £0.5 billion and was dedicated to reducing the borrowing, last year the estimates of the Department of Finance for tax revenue were so off the rails that almost £0.5 billion more than the Department estimated was collected in 1989. The progress which took the EBR down from about 5.5 per cent of GNP to the year end result, a very good year end result indeed, was due to the buoyancy of taxation. Again this year in the run up to the budget first of all there were real increases in public expenditure for the first time in the Book of Estimates last autumn. They were well disguised, but across the Departments they averaged twice the inflation rate.

How did you get tax buoyancy?

(Limerick East): We got tax buoyancy and the tax buoyancy is coming through.

These are economics.

(Limerick East): We will come to that. I am not contradicting that. I am saying that to claim that the books are being balanced through expenditure cuts is not correct. The books are largely being balanced through buoyancy of taxation. There is an extra tax take every year and now about 45 per cent of all wealth in this country is being collected in tax. It has gone up over the last four or five years from about 37 or 38 per cent to 44 or 45 per cent of GNP. The public do not feel it because, as the backbench Deputies have said, this was a result of growth in the economy. It was not because new taxes were put in place but the old taxes which were put in place are collecting a great deal more. This year again already the Department of Finance's best estimate on budget day of a growth in tax revenue of about 4.5 per cent now seems to be going to run at around 7.5 per cent.

Only a month ago the Deputy said I would be £100 million short.

(Limerick East): I never made any charges when the quarterly figures came out or when the first half year figures came out. I am saying the Minister is overspending this year. There is evidence to show that a flow of revenue might come in where the books will be balanced again, but the difficulty arises in this. As long as the OECD countries can motor along with a growth rate of 3 per cent on average and we can do the same with 3 or 5 per cent we are all right up to a point, but the Minister's financial strategy now is based on increasing public expenditure more than the rate of inflation and hoping the buoyancy in taxation will catch up. The day the buoyancy stops he is on the rocks. That is the main problem and the first reason I would like to see a four or five year economic plan which sets out the Government targets and the Government intent.

Get a Government who will meet them.

(Limerick East): It is not a good idea to be in a position where more tax revenue is required each year to balance the books. Rather than reducing taxation the Government take in taxation has increased dramatically over the last three or four years.

There are more at work.

Yes, in London and Boston.

(Interruptions.)

(Limerick East): It is not simple and nobody is suggesting it is simple. When Deputy Cowen and his compatriots were on this side of the House they thought everything was simple, too. What worries me is the simple-minded attitude of many people who are behind the Minister because they do not understand the basics of what is going on. While it is good news they will wave the flags and God help the Minister if it begins to go wrong because some of the people behind him have not a clue as to what is happening, they do not know where it is going and they will run away at the first sign of pressure.

(Interruptions.)

(Limerick East): Deputy O'Dea who is heckling me ran away in the middle of the expenditure cuts. He ran into the Opposition lobbies when it came to the vote. He is here tonight claiming credit for expenditure cuts and righting the national finances when he could not obey a Fianna Fáil Whip and do what a Fianna Fáil Minister wanted him to do. Is it loss of memory we are all suffering from around here? Is it any wonder——

(Interruptions.)

On that local note, we leave the national issue until tomorrow night.

Debate adjourned.
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