Dáil Éireann debate -
Thursday, 31 Jan 1991

Vol. 404 No. 5

Financial Resolutions, 1991. - Financial Resolution No. 6: General (Resumed).

Debate resumed on the following motion:

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

—(The Taoiseach).

Mr. Stagg

I welcome this opportunity to speak on this issue. I regard the budget presented by the Minister for Finance yesterday as a "do nothing", tired and unimaginative budget. I am amazed that it took one and a half hours of empty rhetoric and waffle to tell this House that nothing was being done about anything. In the area that I am particularly interested in the reality is that 30 per cent of the population of this State are living below the poverty line and arising out of the budget at the end of 1991, next Christmas 30 per cent of the population will still be living below the poverty line.

Unemployment is also going to increase. The Minister told us that there will be an extra 4,000 people unemployed. I would be extremely worried that the figure should turn out to be much higher. We were told also that there will be an average increase of 4 per cent for social welfare recipients. Indeed, some will get less than 4 per cent while others will get more. The living alone allowance is to be increased by 20p. That would not buy a bar of chocolate. The child allowance will be increased by £1 per week and that is the glorious 9 per cent increase we have heard about. I would say 9 per cent or 4 per cent of damn all is still damn all and the people who receive it will have that amount at the end of that period.

I want to take the opportunity to nail the type of misinformation we heard yesterday and again this morning. Somehow or other the national newspapers were convinced and gave headlines showing there were very real increases in social welfare benefits. The Minister for Industry and Commerce, Deputy O'Malley on "Morning Ireland" this morning said there was a one third real increase and a Fianna Fáil backbencher on the same programme said there was a 25 per cent real increase. There are lies, damned lies and statistics. If what the Minister said on radio was not damn lies it was deliberately misleading. He juggled figures to such an extent that it became farcical to prove there was a 0.33 per cent increase. There was no real increase at all and most people at the end of the year will be worse off than they were at the beginning of the year; 30 per cent of the population will still be below the poverty line.

Let us remind ourselves what "below the poverty line" means. It means families have not enough money to buy clothes for themselves and their children, to buy an adequate amount of food, to heat their homes or pay for adequate shelter. In this wonderful Christian country of ours that seems to be acceptable, but it is not acceptable to me. The Government say they are giving priority to the creation of employment and tackling poverty. The budget proves this to be empty rhetoric, fine words and no actions. It seems the Government have thrown in the towel on the creation of employment and the tackling of poverty, and there is an acceptance that the present state of affairs is all right. We are told, of course, that the economy cannot afford more than is being given to the poor, but if we insist on the form of society where a large section of the population are poor we will find they are very expensive to keep. The poor and low paid, and those on social welfare, bore the brunt of the cuts for the last two or three years and they are told now, when the economy is supposed to be on the up and up and an economic miracle has been performed before our eyes, that they must wait.

What were the results of this economic miracle people are all talking about if the poor have to wait? Certainly it has not been an economic miracle for the 30 per cent of our society who are marginalised but it has been very good for others. A story in The Sunday Tribune of 4 March 1990 stated:

GNP boss Tony Ryan to get bumper bonus pay-out.

GNP Group chairman, Tony Ryan, is set to receive an £86m "pat on the back" at tomorrow's shareholders' meeting. The bonus would be on top of the £20m Mr. Ryan already receives in annual share dividends from Ireland's most valuable company......

The new shares will add £8m to Mr. Ryan's dividend payments annually. The board which recommended the payment includes former Taoiseach Dr. Garret FitzGerald, former EC Commissioner Peter Sutherland and former British Chancellor Nigel Lawson.

To give any man £86 million as a "pat on the back" is obscene in a society where 30 per cent of the people of that society are below the poverty line. To give him an annual increase of £8 million on top of his £20 million is equally obscene. The stark contrast between that happening in our society and what I am talking about in our society is social dynamite. The amount of money the Minister is proposing to spend additionally on social welfare this year for half a million people is less than this one individual took out of our society in one year. That is obscene.

As the Labour Party social welfare spokesperson I want to deal with the issues of poverty and unemployment. The Government have failed to confront these two issues. As I have said, they have produced fine words but very little action. There seems to be an acceptance of tired, failed and now proven failed, Thatcherite economics and the economic gurus parrot the old lines to us, "we must cut public expenditure; we must create the right business environment". There is no doubt about it, it is very good for Tony Ryan. He would not want the environment changed at all. It is fine for him and others like him. They tell us we must reduce the corporate tax and the tax on the wealthy in the hope that companies and individuals will invest in the economy and create jobs. They signally failed to do so and there is no Government action in the budget to encourage or force them to do so. The low paid and unemployed are products of this lack of policy but we are advised by the gurus that the Government must not interfere, the poor must wait, jobs must wait, at the whim of the private sector.

What has been the result of this hands off, non-policy of the Government? We have the highest levels of unemployment and poverty in the EC. We have the lowest investment rates per capita, minuscule research and design investment, low levels of management and marketing skills and one of the highest levels of real interest rates in the EC. Of course, not all things are going wrong in the economy. That is a very one-sided picture. There has been an explosion in company profits. Job creation has been minimal arising from those profits but repartriation of profits has doubled and the figure for last year is calulated at £3 billion. To indicate clearly what £3 billion is like, if somebody were to hire a cart, car or lorry every day since Christ was born nearly 2,000 years ago to bring £3,000 into this Chamber they would not have reached £3 billion. That is the amount of money we let the multinationals send back home out of our country every year. The ESRI stated specifically that this export of capital is one of the main reasons for the lack of creation of jobs. These companies are reaping enormous profits in Ireland. I am not saying that is a bad thing. I am not knocking the creation of wealth, but these profits are not being sent to Dublin, the midlands, the west or Cork, they are going to the US and Japan and the Government are pursuing a policy that says that is OK.

I believe unemployment is the main cause of poverty. Over 40 per cent of social welfare recipients live in households where others are unemployed. Unless there is a substantial increase in job creation, poverty and unemployment will remain high. However, the Government have thrown in the towel in the fight against unemployment. The Government have agreed job creation targets in the new Programme for Economic and Social Progress that will ensure unemployment remains at a high level over the next three years. Already the decline in unemployment has ended with the Government announcement that unemployment is expectd to increase by 4,000 in 1991. That is part of a general trend. In 1990 unemployment declined by less than 2,000 and in 1989 it declined by 12,000. If the present trend continues unemployment will increase beyond the projections laid down by the ESRI and the NESC. This levelling-off of unemployment combined with an increase to a number of social welfare recipients such as old age pensioners, lone parents, widows and widowers, will result in more people making greater demands on the social welfare system. There are no proposals to stop or reverse this trend in this budget. In fact, there is an acceptance that this problem will worsen.

The major element in combating poverty must be an industrial and service strategy committed to a major redirection of policy. It is impossible to believe that the same individuals, companies, institutions and policies can create the jobs we need when those same individuals, companies, institutions and policies have failed in the past. Any such strategy should contain the following principles: profits that are reinvested in the economy to create employment should be taxed at a lesser rate than profits disbursed to shareholders or exported; the phasing out of all tax reliefs and the moneys saved to be used for direct grant funding of private and public sector companies for the purpose of expanding employment. In addition, all grant funding should be based on employment creation. Industrial reform should be brought about to allow public sector companies access to grant funding on the same basis as private sector companies, granting them complete and uninhibited commercial freedom to expand into any area in which they can create growth and wealth. Such a programme would not cost the state £1. Rather it would redirect State subsidies to the generation of employment and growth enterprises and reward companies which contribute to our economy rather than lining the pockets of a few wealthy people.

The Government have opted to do nothing in this budget to stimulate job creation. They have used neither the carrot nor the stick to get private and public sector companies to invest in employment-generating activities. They have not used taxation, direct grant-aiding, fiscal or other instruments as a means of increasing employment. It is as though they either do not care or are completely perplexed as to how to go about devising an employment strategy. Either way, unemployment will certainly increase as a direct result of this Government's inactivity.

Job creation alone will not eliminate poverty; that should be clearly recognised. Tens of thousands of people will continue to be unable to work or will not have an opportunity to do so. In the long term they will have to rely on payments from the State in the form of social welfare. Again, there would not appear to be any clear policy or direction in the area of developing social welfare, which was evident from the hotch-potch or bits and pieces of schemes that become apparent from the Minister's replies just before this debate resumed. In fact, Exchequer spending, in real terms, on social welfare is down 14.5 per cent since 1987, the take from other areas having risen. There has been no White Paper produced on the long term development of the system, no detailed response to the report of the Commission on Social Welfare now six years old. In fact, only seven of their 65 recommendations have been implemented. There has been an ad hoc approach to Government spending which, while increasing the lowest levels of payment, has left the majority of social welfare categories with only marginal real increases in payments since 1987. Indeed, Government tax and social welfare policy has been to target the highest income groups with the greatest benefit while minimising benefit to the lower income groups.

I noticed the Minister for Social Welfare was absent during the Minister for Finance's presentation of his budget. I am sure he was absent on urgent Government business. But listening to the Minister's statement it struck me that the Minister for Social Welfare must have been absent from the Cabinet table when discussions were taking place on the content of the budget. He might as well have been at home for all he got in this budget for the people in whom he has a special interest and to whom he has a special responsibility.

The report of the Commission on Social Welfare stated that the minimum adequate income — here I am talking about an income sufficient to buy clothes and food, to provide heat and shelter at the very minimal level — for a single person in 1985 was £50 and for a married couple £80. In 1991 this would mean a minimum adequate income of £62 for a single person or £99.20 for a married couple with a 10 per cent higher payment for social insurance. This budget leaves all social welfare recipients below that poverty line.

The following percentage increases would be necessary to reach minimum adequate incomes as defined by the Commission on Social Welfare after implementation of the 1991 budgetary proposals: unemployment and disability benefit 36 per cent; supplementary welfare allowances 24 per cent; carer's allowance 24 per cent; invalidity pension 20 per cent; widows contributory pension and deserted wife's benefit 17 per cent, old age pension 12 per cent. Following the 1991 budgetary proposals all social welfare categories will receive below the minimum adequate income as defined by the Commission on Social Welfare with some groups up to one-third below the recognised poverty line.

It is not only social welfare recipients who live below the poverty line. Nearly 30 per cent of the workforce have a gross weekly income of less than £130. Low pay is endemic in our society. The Government have failed utterly to confront this problem and have categorically rejected the notion of a national minimum wage which would ensure that slave wages would be abolished, that young people, and women especially, would not be exploited. A national minimum wage is the only way to defeat poverty among the workforce and it is a disgrace that this Government refuse to countenance its introduction. Instead, they stand over gombeen employers and nasty, exploitative practices in our economy.

Our so-called Christian society has frightening features, such as 40 per cent of children living in poverty-line households according to the Combat Poverty Agency. Recent reports of the ESRI and NESC have criticised the Government for lack of a child income support policy but to no avail. A major contributor to the poverty trap is the present child income support, the mix of child dependent allowance, child benefit, family income supplement and tax relief, creating inequities and inefficiencies. In a study undertaken two years ago the Conference of Major Religious Superiors demonstrated that the operation of the family income supplement produced marginal tax rates of over 100 per cent; in other words if one were in receipt of the family income supplement and had a £2 per week rise in wages one would lose £2.40 and would have been better off not receiving the increase.

The long term goal of the programme of the Labour Party is to introduce a basic or guaranteed annual income for every man, woman and child regardless of income, employment or marital status. That has been the historic goal of socialists since the last century and would mean the eventual abolition of the status of dependency and of means-testing.

In the medium-term the Labour Party seek the introduction of the basic payment rates recommended by the Commission on Social Welfare, the payment of social welfare adult dependant payments to be made directly to those dependants — mostly women spouses; an increase in child income support by way of a substantial upgrading of child benefit; the introduction of a national minimum wage of £140 per week or £3.50 per hour for part-time workers; reform of the PRSI levy system to levy all incomes, remove contribution ceilings and the introduction of allowances to ensure that levies are progressive in their tax effect; the rationalisation of means-testing and the abolition of the benefit and privilege rule so that young people living in their parents' home would be entitled to full social welfare payments, a major expansion of community development programmes, especially women's community groups and the establishment of a national community development fund.

I am appalled at the uncaring attitude demonstrated in this budget. I am amazed at the type of "you never had it so good" speeches on the part of Government Ministers, one after the other. The people for whom I am primarily concerned, 30 per cent of our population below the poverty line, will not welcome the lack of action on the part of this Government. It is a conservative budget introduced to conserve things as they now are, as if they were good. Of course it has been introduced by a conservative Government whose interests are in keeping things the way they are.

Minister for Labour (Mr. B. Ahern)

This 1991 budget is particularly significant. It comes at the end of the Programme for National Recovery, which was so vitally important in underpinning the economic recovery which has taken place over the last three years or so. It comes at the start of a new programme set firmly in a ten-year strategy for economic and social development.

The Programme for Economic and Social Progress is without precedent in terms of consensus and co-operation in any country in Western Europe. It is unique in two ways: first, in its inclusion of all the important interest groups in our society, and secondly, in its depth and coverage range from macroeconomic policy to taxation, social reform, employment and training, agriculture, and in pay and conditions of employment.

Maybe without realising it, what we have effectively been doing over the past four years is turning Ireland into a social democracy in line with the best European models. We are creating a society which balances the need to create a climate for investment and wealth creation with a determination to protect the weaker sections. In the budget, as in the draft programme, we have struck the right balance between sound economic policies and social advancement. We need both dimensions to our strategy; otherwise we would drift right back to the situation we used to face—conflict over goals, conflict between the different interest groups, and conflict in industrial relations with millions of days lost. As a small open economy in a very unstable external environment, we cannot afford conflict or instability at home.

Just to give a brief example of the real benefit of the last programme, last year saw a continuation of the overall positive trend in the number of strikes. There were 51 strikes in the year, about half the number in 1986, and only ten of these lasted for more than five days.

Although the number of days lost was 203,723, above the historic low of 41,400 in 1989 and above the level of 130,000 in 1988, three strikes — Waterford Glass, Barlo and Gateaux — accounted for 84 per cent of those days lost. I was glad that in the last quarter of the year there were only some 9,000 days lost bringing us back well within the 1989 and 1988 ranges. We can be confident that with a further programme — and of course with our new industrial relations structure with the labour relations commission — industrial harmony will continue.

Turning back to overall strategy, we do not face easy tasks. We live on the periphery of Europe. We have high levels of unemployment and emigration. We still have a crippling level of national debt. All of these severely inhibit our room for manoeuvre. Over the next ten years we will act to remove these constraints, solve these problems and bring the standard of living of all of us closer to the European average. This objective is the starting point of the budget. It maintains the prerequisite of fiscal rectitude. Its provisions will stimulate growth in employment. It gives specific assistance to the disadvantaged.

The budget clearly indicates the Government's commitment to the targets outlined in the draft programme. Many of the specific initiatives promised are already being delivered through the budget — indeed in some cases the Government are already ahead of target. We are confident that, despite the real and growing international difficulties, the strategy will enable us to build on these gains and lead to further transformation of our economic and social environment.

There has been considerable research to show that families with children are particularly at risk of being caught in the trap of poverty. For the third year in a row, the budget gives them very real improvements in their living standards. For those in low paid jobs, particularly those with three or more children, the combination of higher income tax exemption limits and marginal tax relief with the substantial improvements in the family income supplement will make a dramatic difference. Under the FIS, income limits will go up for all families; there will not be a ceiling on the top-up payments; and children up to 21 years old in full time education will be eligible. For instance, the family income supplement alone will have increased since 1988 by some 50 per cent for married couples with four children. This will of course benefit not just PAYE workers but also farmers and the self-employed on low incomes.

Part-time workers have often been at a considerable disadvantage in the labour market. Those who work fewer than 18 hours a week have been excluded from the protection of the social insurance scheme and from the protection of labour legislation. Last month I introduced legislation to bring them under the safety net of labour legislation and I hope to bring this through the Oireachtas as quickly as possible. I know part-time workers will now welcome their inclusion within the next three months in the safety net of social welfare. This recognises the reality of change in the patterns of work and will further encourage this diversification.

For the unemployed, allowances will increase generally by 4 per cent, well above the inflation rate of 2.7 per cent and above the commitment in the draft programme which was merely to match inflation. Those on supplementary welfare will get a 9 per cent increase, and child dependant allowances go up by a further 9 per cent. This is the third year that people on long term unemployment assistance will get substantial increases. Long term unemployment assistance will go up by almost 6 per cent — double the rate of inflation. We have now reached the priority rate recommended by the Commission on Social Welfare for the long term unemployed.

Recent figures have been encouraging on real employment growth. They show that 30,000 more people had jobs in mid-April 1990 than were working in mid-April 1989. It is estimated that over 20,000 more people were at work at the end of the year compared with the beginning. This year we expect 11,000 more jobs in non-agricultural sectors. Last year redundancy figures were marginally lower than 1989, which was 42 per cent below the 1988 figure.

It is disappointing to see how people rush into the debate to say how the figures will always be wrong. Last year, the figures achieved were far higher than those projected in the three year programme, where we had higher employment than we set out to achieve and we had higher real employment because redundancies fell from the high levels of 1980 of over 30,000 down to 12,000 and 13,000 in the last few years. This level of net job growth is in line with the targets of the Programme for Economic and Social Progress. The programme targeted job growth in manufacturing and international services of 20,000 new jobs each year. Small business has made a particularly valuable contribution in the past, and we expect this to continue, with 15,000 new jobs on stream in this sector over the next three years.

Mr. Sheehan

Pie in the sky.

Mr. B. Ahern

The tourism sector has also done particularly well recently, creating 15,000 new jobs under the Programme for National Recovery. We expect this to continue at the same rate, despite the possible drop in US custom because of the Gulf War and the US recession. Indeed growth from the European market and indeed our own domestic market has been so encouraging that the tourist industry is still looking forward with cautious optimism.

In my own area, CERT will continue to play a vital role in helping the industry to reach the necessary standards of quality and service. Management is particularly targeted this year for CERT's attention.

Further jobs are projected in the fisheries, horticulture and forestry sectors, in ship building, and from the new emphasis on environmental projects. The major investment projected from the Exchequer, and from the Structural Funds, will also lead to job growth in education, transport, construction, agriculture and the commercial state companies.

But the live register still remains stubbornly high. We are almost unique in the European Community in that our labour force is still growing. Every year we have more young entrants leaving school and college. We expect many emigrants to return home this year as opportunities elsewhere disappear. Fewer people are emigrating in the first place. All of these mean a return to the disappointing prospect of the live register average growing — for the first time in four years.

We need all hands on deck to tackle this problem of long term unemployment. To that extent we are introducing a new approach. We will concentrate everyone's priority attention on solutions rather than on analysis or despair as we have had today from opposition spokespersons. In particular, we have to concentrate on the plight of the long term unemployed.

The Programme for Economic and Social Progress has set out in detail an exciting new approach to solve the problem of long term unemployment. People who have been on the dole a long time often need a wide range of supports to get them back to work. They may have needs in education, in training, in actual experience of work. They certainly need support from their local community and from local employers.

Tomorrow I will be launching the first three in a pilot series of integrated initiatives. They are based firmly in the local community with all its strengths and supports. They involve all the relevant organisations, such as FÁS, CERT, the vocational schools and local community bodies. And I am glad to say that we are getting over £2 million support from the European Community for this pilot project.

The three projects to be launched tomorrow will be in three of the most severely disadvantaged areas in the State. In Tallaght, Dublin's inner city and Cork City north, unemployment rates are stuck at about 50 per cent and other social problems are common. We have chosen these for the first pilot projects. About 100 people will be selected for special assistance by all the agencies involved.

We plan to launch a further six projects later this year. The most successful models will go nationwide over the next three years. This programme will offer real help to the relatively few people who spend more than 12 months on the dole without either finding a job or getting a place on an employment or training course. As Members know, at least half of those joining the live register find jobs within four weeks of signing on.

Mr. Sheehan

Some people have been on the register for six years without getting a job.

Mr. B. Ahern

Unemployment is also some of the main causes of emigration. While emigration fell by 15,000 in the year to mid-April 1990 and has fallen even further since then, the Government's real concern for emigrants in difficulties is shown by our keeping the DÍON grant at £500,000. Last year 29 organisations shared this amount, benefiting a wider range of projects and helping a more extensive range of problems than ever before. I am glad that the value of this money is being maximised by the great deal of support received from local authorities in Britain and by the increased co-operation between the agencies themselves.

At the end of the day, we must not forget that we are approaching full mobility of labour within the European Community. Irish workers have the right to use the opportunities presented by the Single Market. Indeed, around 2,000 people used FÁS services last year to get jobs abroad. Our function is to ensure that if they go, they go prepared, but that, if they are not prepared, they are dissuaded from going. In this FÁS have a front-line responsibility.

In the fight against long term unemployment, the manpower agencies have a vital role. The availability of skilled labour to be recruited is a major part of the strategy to create jobs.

We are already renowned for the highly educated, highly qualified young people we have. This has been a major factor in encouraging investment to locate here, despite heavy competition from other member states of the EC. This will be further enhanced by the major programme of educational development heralded in the new programme. The budget yesterday took significant steps in this direction. The quality of our educational system will be topped up by the maintenance of FÁS training programmes at their existing level, despite the difficult public finances.

I particularly welcome the doubling of the capital allocation to FÁS. Again this reflects the pace of technological change in manufacturing industry over the past two decades. In the nineties, it is no use providing skills in obsolete technology.

The main intervention for the long term unemployed continues to be the social employment scheme. The scheme will cost the Exchequer about £60 million this year, with some EC support. This means that about 10,500 people a week can take part in the scheme. I am particularly pleased that, by changing the allowance structure over the past two years, I have made the schemes more attractive to participants with family responsibilities. They often find it more difficult to escape the poverty trap and harder to find real help. There are now a majority of people with families on the scheme. Going on this worthwhile scheme means a real improvement in their job prospects. And of course the scheme also is of great benefit to local communities.

Apprenticeship is another manpower area highlighted in the Programme for Economic and Social Progress. We look forward this year to the introduction of a new system based on a “standard reached” rather than “time served” basis. I am glad that the social partners support the proposals. The funding arrangements are still being discussed and will be considered further by the social partners and Government agencies.

I must stress again the Government's view that primary responsibility for training rests firmly on employers, whether for apprentices or for other employees. Nevertheless, as Minister for Labour I have a responsibility to promote and encourage employers to train. In this area two initiatives will play a particularly important role. First, the quality of Irish management is vital for the success of our overall strategy and, of course, for keeping and creating jobs. Companies that are poorly managed do not grow. They contract and indeed they fail. It has been estimated that 80 per cent of company failures were the result of poor management.

I decided this year, in consultation with the Irish Management Institute, to set up a special programme, "The Year of the Manager", to encourage companies to tackle their management development needs. And the report of the Advisory Committee on Management Training revealed just how badly neglected those needs are.

Secondly, the budget provides for a new programme in FÁS, targeted at those small and medium sized companies which face competitive difficulties in the Single Market. This will cost £4 million a year.

In the work of my Department, the programme has clear priorities. We hope to get legislation through the Oireachtas which will be helpful. Already we have the Worker Protection (Regular Part-Time Employees) Bill and, taken with social welfare legislation, this will give great assistance to people on low pay.

I know that Deputies have shared my concern at the growing number of part-time workers who were cut off from major employment rights, but I felt it vital to have intensive discussions with both sides of industry to ensure a fair balance between the needs of part-time workers themselves and the legitimate needs of employers for flexibility in operating their businesses.

I also plan to introduce amending legislation on payment of wages in this Dáil session, and later this year I will be introducing my proposals on employment equality. I am confident that these Bills will represent a constructive contribution to improving and updating legislation, while at the same time retaining what is best of the spirit and intent of the existing enactments. All this legislation will help people to understand their responsibilities. It will not interfere with the competitiveness of industry but it will allow the social partners to consider the constructive consensus in the programme and thereby facilitate investment and employment.

There are, of course, many other initiatives apart from legislation which can be taken in the area of equality and these are highlighted in the programme. In the fight to achieve real equality at work one of the basic tasks is to get enough information about where women are and what is being done in each organisation and company and to acknowledge and use women's potential. Earlier this week we published a report on the implementation of Government policy on equality in semi-State bodies and we will be following up closely the contents of that report this year and extending the process to health boards and local authorities. We will encourage companies to set up positive action programmes in their workplace, giving more women an opportunity to participate actively in the labour market. FÁS have a major role to play in giving women the necessary training to overcome any skills disadvantage and they will continue to set targets and assess further needs. The budget contains provision for additional courses nationwide. These courses were used extensively in 1989 and 1990 and we welcome the further provision this year.

I have left mention of the Structural Funds almost to the end. Funding through the Structural Funds underpins almost everything we are trying to do in the economy. It is particularly important now as an engine of growth in uncertain times. Already the results of the surge of investment through these funds are beginning to be felt and they will be very obvious by 1993.

By that time over £1 billion will have been provided for vocational training and employment measures alone. This year, over 130,000 will be assisted by the European Social Fund in Ireland.

Some questions were raised earlier in this debate about what was being done for the unemployed. A great deal is being done through direct training, which involves approximately 30,000 people, and indirect training in the educational system, in training centres and under social employment schemes. For those who cannot get into that cycle and do not benefit directly through education, training or short term work experience, we are aiming to set up a pilot scheme, involving the private sector and State agencies to give people from unemployment black spots an opportunity to get back into the labour market. This will not be brought about by talking or by quoting despairing statistics showing how bad things are in a particular area. It requires commitment, effort and State resources to help the people. We have sufficient money in the budget to do so.

Finally, both the budget and the draft Programme for Economic and Social Progress are set firmly in the context of a ten-year strategy, with the over-riding objective of transforming our society. They set our feet firmly on the path to achievement. In this time of uncertainty, I know that this sensible, soundly based strategy will maintain the investment and confidence which are the basis of success.

Mr. Sheehan

This budget will go down in history as the 1p budget. It missed an opportunity to lift a flagging economy to a perceivable height which would restore buoyancy in our economy and make it attractive to foreign investors. It is apparent from the text of the Minister's budget speech that many of the large number of investment projects which would create a high level of employment will now be shelved owing to the Minister's action.

The major sector to be affected will be the construction industry. Tourism was dealt a severe blow by the actions of the Minister in removing hotels and self-catering accommodation from the business expansion scheme. Nobody needs to tell me what the tourist industry means to an area as deprived as south-west Cork and all along the western seaboard from Mizen Head to Malin Head. Everybody knows that the only sizeable income for the small farmers apart from agriculture comes from tourism and fishing. The Minister for Finance has, however, dealt a body blow to agri-tourism and the tourist industry in general. Does he expect small farmers along the western seaboard to live on fresh air and cold water? The serious effects of this budget will be felt for many a day by the people engaged in tourism, the people who are trying to bring the industry to the level it should have been at many years ago. All their hopes have now been dashed with a stroke of the pen of an uncaring Minister for Finance. At a time when promotion and help for this sector is much needed to build up a thriving tourist industry the Minister pulls the mat and plunges the industry into a state of stagnation.

The building industry will also be seriously affected with massive lay-offs envisaged. The reduction in income and the increase in PRSI offset each other, broadly speaking. At present it costs an employer £2.85 to produce £1 take home pay for an employee. Surely this is a shocking state of affairs that that sort of impediment is put in the way of employers taking on employees. In the United Kingdom employers can put £1 in an employee's pocket for £1.70. This enormous difference has resulted in making Irish industry uncompetitive and the Minister has failed to correct the situation.

The Minister has also failed to rectify the situation where farmers and other self-employed people who are over 65 years of age and are compelled to pay PRSI contributions for the first time will not qualify for contributory pensions because they have not paid ten years contributions. Why does the Minister not facilitate such farmers by allowing them to pay the ten years' PRSI contributions by way of a lump sum as was done in the UK when the scheme was introduced there? Why make small farmers and self-employed people pay PRSI and PAYE contributions to the Department of Finance when they are told, on attaining 65 years of age, that they do not qualify for a contributory pension because they were past the age of 55 when they entered the scheme? Why do the Ministers for Finance and Social Welfare not give them the opportunity to pay up for the back years that would make them eligible for this contributory pension at the age of 65? Surely it would not be too much even at this late stage to ask the Minister to include a provision in the Finance Bill which will be discussed for the next few weeks to give those people an opportunity to qualify for the contributory pension at the age of 65?

In regard to agriculture, there is very little in this budget for the farmers. I would describe it as a Doctor Dolittle budget. I would like to ask the Minister whether the tax amnesty up to September relating to inheritance tax payments applies to the exhorbitant interest on that inheritance tax. The farming bodies were promised a number of concessions in income tax, PAYE and PRSI. They were also promised a simpler method of determining their income without the aid of tax consultants. God knows some of them do not even have an income that would pay the fee of a tax consultant. Does the Minister realise that? Has he any notion of relieving that situation? I see no evidence of his keeping any of those promises in his speech. I would be amazed if the farming bodies accepted this kind of approach from the Minister who, a week before the budget, promised all those concessions and then did not deliver. He refers to it in a vague way. I want the Minister to explain here in the House what his intentions are.

I listened to the Minister for Agriculture when he mentioned the £1.2 million for Teagasc. Does he now intend to supply clerical staff to farm development offices throughout the country and allow the agricultural instructors out on the field to instruct our farmers? It is a sad state of affairs, that, for the past 18 months, I have been asking the Minister for Agriculture to replace one clerical assistant in the farm organisation office in Clonakilty and he has failed to accede to my request. We hear a lot about the £1.2 million for Teagasc today. Where is this £1.2 million to be gobbled up? I envisage that the present situation will continue under an uncaring Minister for Agriculture and an uncaring Minister for Finance. The farmers deserve better treatment than that. Farmers who are only getting grants of between £200 and £400 are compelled to pay £60 for each visit that the agricultural instructor makes before that grant is paid. In other words almost 50 per cent of the grant is paid back to the Department six or nine months before the Department pay the grant to the farmer. These are anomalies that must be corrected if there is to be a future for our beleagured farmers throughout Ireland. The budget gave no hint as to when Ireland's application for an extension of the disadvantaged areas will be announced from Brussels. The Minister for Agriculture and our EC farm Commissioner, Mr. MacSharry, are equally to blame for this fiasco.

Never before in the history of this State were our farmers subjected to such humiliating treatment. The Minister for Agriculture and Food told us 12 months ago that he would definitely see that fair play emanated from his Department as far as farmers' applications were concerned. In response to questions from Deputy Connaughton and myself he promised in this House that he would give a fair examination to each individual farmer who applied to be included in the disadvantaged areas scheme. About nine months ago the Minister stated that a decision on our application was imminent. On 26 November our EC Commissioner, Mr. MacSharry in a personal interview with our MEP Mr. John Cushnahan and myself in Brussels promised he would have a decision made on Ireland's application within three weeks. He said a decision would be made the week before Christmas. Since the Commissioner gave us that promise three months have elapsed and no announcement has been made.

The manner in which the inspections of the areas concerned were carried out was pathetic. No detailed examination of any consequence took place. The yardstick was quite easy for the Minister, Deputy O'Kennedy, and his Department to operate: simply every area that met the criteria laid down under EC regulations for the extension of a disadvantaged area should have been ascertained by the Department. What has been the result? Everybody knows that the inspectors who came from the Department sat inside their motor cars and drove through the townlands without even letting down the window of their cars or opening the door to get out to inspect the land in case they dirtied their shoes.

In the submission to Europe for an extension of the disadvantaged area scheme, areas of the country were included which have very good land while other areas in my constituency of south-west Cork, places where you could not even raise a snipe, were omitted. How does the Minister stand over that policy?

Last night we heard great talk from the Minister, Deputy O'Kennedy, about the budget and how he was bringing the 1992 rate of headage payments forward to 1991. However, some of the 1989 headage payments have not yet been paid by the Department. That is a fact I can stand over. Thousands of farmers throughout the disadvantaged areas and other parts of the country are waiting for payment of cattle headage grants, sheep headage grants, and grants under the beef premium and suckler cow schemes. All the payments are held up. I had to make 42 inquiries to the local departmental office in Cork city the other day.

Mr. Cowen

That is a very small number.

Mr. Sheehan

I had to make 42 inquiries one weekend. Had I put down parliamentary questions to the Minister for Agriculture and Food it would have cost £4,200 to get answers. I took the responsibility of calling into the local offices and I was told that some of the files had gone to Dublin for payment at the end of October and 1 November 1990, but still no payments have been made to the farmers. God help those poor farmers who are depending on this uncaring Government and the uncaring attitude of the Department.

Do the Government want to completely wipe out the small farmer along the western and south-western seaboard? Do the Minister for Finance and the Minister for Agriculture and Food want to turn the area into an Indian reservation? What have they in mind to preserve the area in the future? There will not be an income — and I can guarantee that — from the famous scheme the Minister for Agriculture and Food announced the other day where grants of £4 million to £5 million would be given for the breeding of horses, goats and rabbits. Is that not a very good combination to save the small farmers of the west?

Mr. Cowen

It is better than rearing snipe.

Mr. Sheehan

If the Minister had any common sense or any clout in the European Council of Ministers he would have put forward a case for preferential treatment for our farmers. We are the only island in the EC now that England has the Channel Tunnel. We have to cross two stretches of sea to get our products to the European mainland.

Minister of State at the Department of Foreign Affairs (Mr. Calleary)

One stretch of sea.

Mr. Sheehan

Since the foundation of this State the islands off our coast have been given the preferential treatment they need to survive. If the Minister had any common sense——

An Leas-Cheann Comhairle

Deputy Sheehan, an experienced parliamentarian, will accept that his contribution is probably more appropriate to a discussion on the Estimate for Agriculture and Food.

Mr. Sheehan

The points are all included in the famous plan for agriculture in the budget speech. The Minister spent 20 minutes spouting nothing.

Mr. Cowen

What did the Deputy's party do the five years they were in Government?

Mr. Sheehan

We have a proud record as far as agriculture is concerned, far better than Fianna Fáil ever had.

Mr. Calleary

Talk about quotas now.

Mr. Sheehan

We were the party who had the policy of one more cow, one more sow and one more acre under the plough. We were the party who got the lime lorries rolling into the fields; we were the party that brought back maturity to the land.

Mr. Cowen

Deputy Sheehan is on automatic now.

Mr. Sheehan

We made the land more fertile. This Government have sentenced the small farmer to stagnation.

An Leas-Cheann Comhairle

Deputy Sheehan has only one and a half minutes left. The Deputy does not have to acknowledge these interruptions.

Mr. Sheehan

If the Minister is serious about giving aid to the small farmers, why does he not issue a policy to his colleague, the Minister for Social Welfare to instruct the social welfare officers to give direct aid to farmers through the smallholder's allowance scheme. That scheme is almost defunct due to the present policy of means testing operated by an uncaring Minister for Social Welfare. Finally, I call on the Minister for Finance to wake up before it is too late and to give our farmers, business people and workers an opportunity to live in decent conditions. A nation's wealth is its people. Preserve them before it is too late.

Mr. Cowen

How did they survive in your time?

Mr. Sheehan

We are still there and we will be back to ensure their survival.

Mr. Cowen

The Lord help us.

The Tánaiste

Tá áthas orm go bhfuil faill agam failtiú roimh an óráid a thug mo chara, an tAire Airgeadais, inné agus roimh an cháinaisnéis a chuir sé os comhair an Tí seo agus roimh an pobal i gcoitinne.

I am pleased at the reception the budget got from the decision makers and the thinkers in our community. It is the substance of the budget that matters. The substance is paramount, not the "sound bites", the instant analysis, the ephemeral comment which admittedly our adversarial system imposes on people who have to make instance replies. The Gulf war imagery was a little out of place in a serious economic debate, a debate which occurs only once per annum. Whatever about its appropriateness for healthy satirical entertainment I do not think it is appropriate for a serious economic debate on the budget.

One of the words used in connection with the Minister's speech and the budget was "prudence" and it was used by way of a criticism of the budget. Prudence is a cornerstone virtue and one that is to be commended rather than used as a term of obloquy. The budget fits precisely into the process we initiated in 1987. It is another blood transfusion in the process of restoring what was then a very sick economy indeed, restoring the economy to full health. Then, if the House remembers, the Exchequer borrowing requirement was 13 per cent of gross national product, it is now 1.9 per cent. Those figures speak for themselves. The confidence was gone then. Naturally there was low investment because high interest rates obtained and employment and emigration were at their peak. The consensus that has been developed for social and economic development is the most important thing that has happened in this country for some time. When the economic history of this period is being written the consensus which has been reached between the social partners should figure very highly.

We have sophisticated trade union leaders, we have sophisticated employer, farmer and Government leaders and consequently we got underway, as the House is aware, from 1987-90 a Programme for National Recovery and the results were very pleasing. We have achieved in the years since 1987 sustained economic growth and low inflation — the figure is down to 2.7 per cent. In fact, Jacques Delors praised this country for its achievement vis-á-vis our low inflation. Depending on which criteria are used it can be either the second lowest or the lowest inflation rate in the Community. Denmark is mentioned as one that is better but I think different criteria are applied in different countries. We have increased employment and we have industrial peace, the fruit of the consensus between the trade unions, the farmers, the employers and the Government. Admittedly, all that has taken place in a world economic climate which was favourable to development. All we have to do is look at the results of our exports, our current account has been in surplus for the past four years and this was a very substantial achievement.

The Government were committed and will remain committed to the maintenance of the value of the punt in the EMS. It is consoling to look at the figures published regularly in The Financial Times or in The Economist and to see there that the Irish punt is maintaining its position. It means that people who want to invest are not worried about exchange risk. An investor need not be concerned about an exchange risk if he wants to invest in Ireland at present. The result is obvious to all. There has been a continuous inflow of funds into Irish Government bonds from abroad, the best test one could possibly apply. A strict exchange rate policy is a sine qua non of any social or economic development. That is the business we are in, that is what this budget is about and it is the Government's first instalment in the new plan for economic and social progress. It goes without saying that low inflation and national debt reduction is important. That equals a reduction on interest rate pressure and consequently, of course, encouragement for investment.

No one is being complacent about the economic situation. The Minister for Finance is not complacent and indicated that to the House. He will not allow anybody else to become complacent and has said that whatever steps he has to take he will always take to maintain the progress we have been making. This strong well integrated budget is an indication of that. I will give a brief conspectus of what has happened. The National Economic and Social Council produced a strategy for development 1986-90 on which our first programme was based. Now we have another study from NESC which, fide et fiducia, is in line with section 1 of the new Programme for Economic and Social Progress, strategy for the nineties. There is an emphasis in that section on consistent budgetary monetary exchange rate policies which are essential. There is also an insistence on the importance of the consensus in Irish economic life. It is set, as has been mentioned by my colleague the Minister for Labour, Deputy Ahern, in a ten year framework.

It is important that the pay element should be seen to ensure our competitiveness and, more importantly, to ensure that the people who are working in our community get a fair share of what profits are made.

Taxation is the next very important factor in this programme. We are committed to bringing the standard rate down to 25 per cent by 1993. As in earnest of what can be done I remind the House that we have reduced from 35 per cent to 29 per cent the standard rate since we took office in 1987, that we have reduced the higher rate from 56 per cent to 52 per cent and that we are committed to a single higher rate in our programme.

In the NESC programme and incorporated into the Programme for Economic and Social Progress there are provisions for the development of health, education, social welfare, housing, roads, environment, forestry and the marine in which I have a special interest. The whole purpose is to create an environment for growth in our economy. Why do we want growth? It is not an abstract. We want growth so that numbers in employment will increase.

I call the attention of the House to the fact that since 1987 there has been an increase of 70,000 in non-farming private sector employment. It is important to put that on the record. It is important also that the programme has incorporated in it an integrated locally-based response to long term employment plus, of course, provisions for apprenticeships and training.

An Ceann Comhairle

I call on the Tánaiste to move the adjournment of the debate.

Mr. Wilson

I am truncated, schizophrenic. I presume I will have ten minutes more the next day when I will indicate that this budget is the first instalment of the Government's commitments in the programme.

Debate adjourned.