The Minister for the Marine is in possession and he has ten minutes left.
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).
I had been drawing together the threads of the Government programme for 1987-90 and indicating the progress that had been made under the programme we adopted for that period.
New factors are now important with regard to the development of our economy. There is the problem with oil and, while the Minister for Energy told us that only 25 per cent of the total oil production comes from the Middle East, nevertheless we can expect pressure on oil prices as long as the war lasts. The UK economy is faltering badly and the same applies to a lesser extent, to the US economy, so the circumstances which obtained for the first three years may not obtain for the next few years in the Programme for Economic and Social Progress.
We have been generous to social welfare recipients, particularly the long term ones. It is heartening to realise that the debt-GNP ratio has been reduced to 111 per cent with the objective pace Deputy John Bruton of reaching 100 per cent in 1993.
The Government regard the Department of the Marine as a major resource based industry, hence the foundation of a new Department of State, Roinn na Mara, to develop that industry. The new Minister for Defence, as the House knows, laid a very sound foundation for the new Department. We have £155 million worth of exports in the fishing industry at the moment and an employment content of 15,600 between full and part-time. The important part of the programme, of course, from the point of view of the Government has been that it has a very definite regional impact and provides industry and employment in areas where no other industry will set up. Progress was made from 1975 when 8,130 people were employed in the industry to 1990 when, as I just said, 15,600 people were employed.
We are working under quota restrictions and our fishermen deserve great credit for the development of non-quota fishing, particularly in horse mackerel where they have made a substantial impact and, of course, we have been doing experimental fishing with regard to tuna. Downstream developments from the actual fish catch are very important indeed.
In the Programme for Economic and Social Progress we set out objectives for the industry in the medium term, namely, to secure higher value added through improvements in quality and fish processing in Ireland, to increase supply of fish generally through higher take-up of existing fish quotas, additional catches of non-quota species and higher output from the aquaculture sector, to prepare the fish processing industry to compete successfully in the internal market and to increase the contribution of the inland fishery resource to the national economy, particularly through increased tourism.
The European Community has approved a £7.5 million programme for the provision of facilities such as ice making plants, auction halls, syncrolifts, landing, water and electricity facilities. This programme will be grant-aided by the EC to the tune of 50 per cent. I opened a major new ice plant at Dunmore East in July 1990 and ice is available to fishermen throughout the day and night. This state of the art plant represents a total investment of £700,000 and has resulted in a substantial increase in ice production and storage capacity at the port. Improvements involving smaller investments have been made at a large number of other ports. Further major improvements are scheduled at a number of ports, among them Castletownbere, Rossaveal and Dingle.
The exploitation of our fishery resource to maximise its contribution to the national economy is dependent on the development of our fish processing sector. Concentrated as it is around our coast — I have made reference to this already — processing generates employment and income in the peripheral regions. Full-time employment in processing stood at 2,160 at the end of 1990 while 1,460 were employed part-time. It is estimated that almost 80 per cent of the total fish landed is processed in one form or another. Most of this processing, unfortunately, is of a primary nature and our aim is to increase the amount of secondary and further processing. Grants for processing, totalling over £4 million, were approved by the EC in 1990. A Community support framework for the development of the sector has been finalised recently and is expected to result in investment of up to £30 million over the next three years.
EC aid is also available for the construction and modernisation of our fishing fleet. Grants towards construction are linked to the limits on gross registered tonnage. Aid of £1 million towards the construction of five vessels and almost £1.5 million for the modernisation of 38 vessels was approved by the EC in 1990. We estimate that the implementation of these programmes will result in the creation of an additional 1,450 full-time jobs and 1,400 part-time jobs in the period to 1991-93.
I am committed to a programme of substantial investment to provide adequate infrastructure at strategically located harbours around the country. This programme which complements the investment in harbour facilities already outlined takes full advantage of the EC Structural Fund aid available under the operational programme for rural development. The programme concentrates on the fishery harbour centres at Killybegs, Rossaveal, Castletownbere, Dunmore East and Howth which are owned and managed by my Department, a number of strategically placed secondary harbours such as Greencastle in County Donegal and Dingle in County Kerry and small harbours and piers which cater for needs which cannot be satisfied elsewhere and which require improvement works. A sum of £4 million has been provided for these works in 1991.
In the other areas of the marine significant progress is also being made. Since 1986 a programme of Exchequer assistance has resulted in the addition of 14 vessels to the Irish merchant fleet. A further £700,000 will be paid in grants in 1991-92. The Verolme Dockyard in Cork has been sold and ship repair will begin soon. Shipbuilding will recommence, in the medium term, employing up to 500 people by the end of 1995.
Our commercial ports handle about 85 per cent of exports by volume and 65 per cent by value. They handled over £17 billion of our total trade of £26 billion in 1989 and over £9 billion of total export trade in the same year. The principal objective of policy in the area is to offset the effects of our peripherality on competitiveness in the run up to 1992. Projects approved under the EC assisted operational programme on peripherality provide for the provision of new and improved handling equipment, extra berthage, docking facilities and access routes, both road and rail. A total investment of around £69 million which is being channelled through this programme will assist the development of projects at Dundalk, Drogheda, Dublin, Rosslare, New Ross, Waterford, Cork, Kinsale, Foynes, Limerick and Galway. Capital expenditures of some £21 million are planned for 1991, the majority of which will be eligible for EC assistance.
As a parallel strategy to the port development work outlined above, I recently established a group to review the policy and legislation governing commercial harbours and pilotage with a view to updating both. As the House will be aware, this move has been welcomed. The group which includes a broad representation of interested parties has sought submissions from members of the public and all agencies with an interest in the commercial harbours area. I am keenly aware of the need to ensure that our ports are competitive in all respects, including their administration, and I am confident that the deliberations of the review group will help to achieve this objective.
The House will note the provision in my Department's estimate for improved search and rescue services. It has been a consistent priority of my Department to improve safety and search and rescue services since its inception three years ago. This is reflected in, for example, the new nationwide marine VHF chain, the sponsoring of significant funding for the RNLI from the Sailors and Soldiers Land Trust and most recently in the Doherty review of air sea rescue services. In this latter regard there is provision of £1.7 million in 1991 towards the provision of a medium range search and rescue helicopter service at Shannon airport. This facility has been long sought by the coastal communities, concerned as they are with the efficacy of the search and rescue facilities along our west coast.
I have also ordered the first formal investigation or public inquiry into a maritime casualty in over 30 years. It is always difficult in the event of tragedy to balance the anxiety for immediate answers with the time needed for full investigation of the circumstances. I believe that this inquiry will serve two important functions. It will enable the circumstances of this accident to be examined in an appropriate sympathetic public forum and it will increase public awareness of maritime safety practices with a view to obviating recurrence of such tragedies.
A total of £6.75 million is provided for the development of our inland fisheries. This allocation shows the Government's commitment to the continued development of inland fisheries, a resource which is worth a great deal to the economy each year and which on estimate generates the equivalent of some 1,900 full-time jobs.
I am sorry to interrupt the Tánaiste but I merely want to inform him that the time available to him is well nigh exhausted.
I also intended dealing with the question of our commitment to arts and culture but I have not got the time.
Is minic a chloistear an seanfhocal "Tús maith — leath na hoibre". Táim cinnte go bhfuil tús maith curtha i gcrích againn. Ní gá dom a rá go mbeidh an bhliain seo deacair — tá sé sin lir dúinn cheana féin — ach táimid cinnte go bhfuilimid réidh di.
Ó 1987 i leith tá sár obair déanta again chun bun chloch forbartha na heacnamaíochta do dhaingniú ionnas go mbeidh feabhas i gcursaí fostaíochta agus i gcursaí leasa sóisialta. Tá consensus, comhar, curtha i gcrích againn. Níl ach ard-mholadh tuillte ag an Aire Airgeadais. Tá cion fir agus níos mó déanta aige ar son na ndaoine agus ar son an náisiúin.
The budget could best have been described as a dull, boring uneventful and unexciting news item, one that created only a subdued and muted audience for the first transmission on the national airwaves. Like those at home, we listened to a lot of talk for a long time but heard very little. Regrettably the budget will not provide any stimulus for an already slowing down economy. It ignored not only the glaring need but the urgency to create employment and managed to keep the middle to lower income groups in the highest taxation bracket. In this budget the Government forgot about our emigrants, and closed their eyes to the reality of a large number of emigrants who will return to our shores due to a slump in the British economy. Regrettably, the budget fails to make any worthwhile improvement in the position of the poorer and weaker sections of our community. It will cause a deterioration in our health services and a decline in our tourism industry.
To be fair, in making any assessment of the budget we must respond to and recognise the many external factors which must be taken into account but even when we make allowances for wars and recessions elsewhere the budget when assessed in this light is totally and absolutely disappointing.
In reality the PAYE taxation relief will do very little to help people at work. The bulk of middle class earners will get no positive benefit from the budget. Reshuffling the taxation burden, by 1 per cent, is so immaterial that one may ask if it needs to be done at all. I am sure the Minister will accept that the real problem with our income taxation system is the speed at which one gets into the 52 per cent income tax bracket. To make a real and lasting impact on taxation reform, the Minister must at some stage have the courage to broaden the tax bands to allow workers have a realistic income before they reach the 52 per cent income tax bracket. Last Wednesday's efforts in this regard could be classed as useless. People with modest incomes will still be on the higher rate of taxation. Sad to say, there is still no incentive for extra effort, no incentive to do overtime, as 52 per cent of their earnings will go to the Exchequer.
Fine Gael are an enterprising party believing people must be rewarded for effort. Unless people are rewarded for effort and unless there is an incentive to go out to work unemployment will continue to increase, as proved by recent figures. On the other hand, and equally important, unless there are incentives for employers to create jobs and until the hassle and red tape are removed they will continue to pause and question the value of employing an extra person. The budget failed to tackle the basic reason for the reluctance of employers to create extra jobs. It simply costs too much to provide the jobs. The budget allows this to continue. The budget showed little concern for equity and little willingness to remove the disincentive to work. In this regard the budget was most disappointing.
The problem of poverty, the greatest problem in our society which must be our greatest concern, was referred to rather than tackled. Everyone would agree that the poor and disadvantaged, should benefit from economic progress but yet again in the budget the elimination of poverty remains an aspiration and was not tackled. A 4 per cent increase in social welfare payments in the context of an estimated inflation rate of 3 per cent represents a miserly increase, less than £2 per person on unemployment benefit.
The Government must realise that in order to tackle poverty effectively it is not sufficient to go at it piecemeal year by year. Such an approach may alter but never fundamentally change the structure which perpetuates poverty. Worse still in the budget the scanty social welfare increases are countered by the increases in electricity and telephone charges due to the VAT increase from 10 per cent to 12.5 per cent. The construction of this budget indicates the Minister's right hand does not know what his left hand is doing. Surely he must have realised that the increases in social welfare which he so proudly announced would be levelled off due to the VAT increases on the commodities essential for social welfare recipients.
I now come to what I believe is the greatest disappointment of the budget, the Minister's failure to change the guidelines for eligibility for the carer's allowance. As a result of last year's budget — I have tabled a question on this — only 22 per cent of all applicants are successful in receiving the full carer's allowance. This is absolutely disgraceful. Even more disgraceful is the fact that nothing was done in the budget to make the carer's allowance a reality. The only step taken, which I welcome, was to include the carers of recipients of disabled person's maintenance allowance. However, the result will not mean that more people will get the carer's allowance but that the number of people refused will double.
It is hardly a courageous step for any Minister to extend an allowance that so few are entitled to. It rather reflects an attitude of not caring. This allowance was intended to be a recognition of the work a carer does in our society. However, it has turned out to be a public rejection of the value of such a contribution. It is pointless to introduce a carer's allowance which builds up the hopes and expectations of so many people but is based on guidelines so unrealistic that few can avail of it. A person would need to be on the breadline to qualify for this allowance. As long as a carer is assessed as having half the family income this allowance is unworkable. I cannot express sufficiently my disappointment that the Minister did not alter the income guidelines for eligibility. This must be changed and unless immediate steps are taken the work of the carers of our society, mainly women I might add, will continue to be ignored and unrecognised.
The budget is a major disappointment too from an agricultural point of view. A strong, dynamic agricultural sector is the backbone of the Irish nation. It is regrettable that the Minister once again failed to extend to the farming community the PAYE allowance and PRSI allowance for income tax purposes. At a time when agriculture is facing its severest and toughest assault, when incomes will be slashed from all sides, the retention of this inequality is most serious. To allow this discrimination to continue is a serious omission in the budget. When the PAYE allowance was introduced in 1980 the justification put forward by the Minister for Finance was that it would offset the disadvantage suffered by PAYE tax payers because they were taxed on a current year basis. Now farmers, and the self employed, are taxed on a current year basis and that surely must justify the extension of the PAYE allowance to them. Farmers are facing a difficult, competitive and uncertain future. With falling incomes and increasing expenses due to VAT changes in heating, fuel, electricity and transport the survival of many will depend on a fair, equitable and reasonable system of taxation.
The VAT imposition on veterinary services is yet another expense imposed on our farmers. At a time when farmers are compelled to use veterinary services increasingly the cost will be an added burden on them and will diminish their already dwindling profit margins. The problem of inheritance tax, which is crippling many young farmers today, was to a great extent ignored. The increase in the rate of agricultural relief under capital acquisitions tax from 50 per cent to 55 per cent is a poor response in the context of the hardship, impoverishment and misery this imposes on individual farm families and the urgent need for earlier transfer of land to trained young farmers. The elimination of the top two rates may be helpful but it applies only to farms of more than 400 acres and I do not have to say that they are scarce. Until the problem of capital acquisitions tax is addressed a great threat to many farmers' livelihoods will remain and the Government will be responsible for crippling Irish agriculture. The budget ignored the many submissions by farming organisations in this regard.
The increased allocation of £1.2 million to CBF for their promotional activities is welcome. However, I believe CBF have a limited role in promotion and, therefore, it is difficult to measure how well they have performed. For instance, CBF are quite inactive in encouraging consumption of beef, port and lamb. They have made little or no use of local radio which is an effective means of promoting their objectives. On the export market they have claimed to be a success, but are they? CBF claim they sold increased quantities of lamb into the French market, but it was at a substantially reduced price. In fact, some of our competitors would say it was merely dumped.
I believe Teagasc deserve greater credit than CBF in regard to promotion. They have encouraged farmers to increase production and their biggest success was in the grading of lamb suitable for the French market. Teagasc's role in promotion work must be emphasised and credit must be given where it is due. CBF's influence in the beef market could hardly be termed effective with so much beef going into intervention. CBF have not been as effective as they might in promoting meat as part of a good stable diet. Their reaction to critics of red meat has not been as sharp and incisive as it might be. Nevertheless, they have a useful role to play. This funding must be channelled into areas which will give the best return and will influence the health-conscious consumer to consume meat. In a recent interview published in a daily newspaper Mr. Pat O'Neill, chief executive of Avonmore Co-Operative and former director of CBF, stated that he limits his consumption of red meat to once a week. Such a comment on the part of a former director is hardly helpful. However, I wish CBF well but the effect of their promotional work is not as visible to the farmers as I would wish.
I note that Teagasc have been allocated an extra £1.2 million in the budget. With a deficit of £3 million already, surely inadequate funding of this proportion is the way to force such an organisation to die. How can they continue to operate with a deficit approaching £2 million? The only option I foresee for them is to lay off yet more staff and sell more property leading to an even more reduced service to farmers at a time when they were never more urgently needed to help them cope with their financial difficulties, to undertake the necessary reduction in production and, more important, to cope with their threatened future. I am amazed at how quiet their chairman, Mr. Rea, has been on this thorny issue of the funding of Teagasc. It is my opinion that the Minister for Agriculture and Food, with the help of our Commissioner for Agriculture, Mr. MacSharry, is allowing Teagasc die a slow, painful but silent death. In fact, Commissioner MacSharry's proposals to cut production and put in place extensive farming methods spell the death of the future of Teagasc which has been a proud organisation. The provision in this budget will keep Teagasc afloat for a time but with the dangerous prospect of their sinking into oblivion ultimately.
The extension of stock relief for another two years is welcome. Again, the Minister has failed to deal with the real problem obtaining, namely, that in the current year many farmers will be forced to sell stock to make up for falling incomes and clear debts incurred on financial investment to control pollution. Unfortunately, this will result in farmers being liable for an exceptionally high income tax bill if they sell stock. The Minister in his budgetary provisions should have allowed stock be sold where a genuine financial problem existed and then allow a no stock relief clawback. Here, again, the budget ignored the underlying crisis in agriculture.
The termination of the business expansion scheme to hotels, guesthouses and self-catering accommodation has been a massive shock to all involved in the tourist industry at a time when that industry is targeted as having the greatest potential for job creation. It is nothing short of an assault on that industry that the Minister for Finance should have withdrawn such a major incentive. While we all accept that the provisions of the scheme were abused, surely the way forward lay in tackling the causes of such abuse rather than indulging in the ultimate step of its total abolition resulting in genuine, worthy applicants being the real sufferers?
In my constituency of South Tipperary one can cite many examples of preparations under the provisions of the business expansion scheme being well advanced with large sums of money having been invested by people who will now be forced to abandon their plans, losing out on their massive financial investment. In one case I have in mind there are plans to develop a 15-bedroom, three-star hotel with the prospect of employing 24 people. This will prove to be a real casualty of this budget. At the time of the Minister's Budget Statement a detailed plan had been submitted to Bord Fáilte and endorsed by them, an architect having been engaged and detailed plans prepared. Agreement had been reached with a neighbouring property holder to acquire a piece of land necessary to facilitate this development. Planning permission had been sought, detailed projections prepared, negotiations entered into with various financial institutions and a comprehensive submission made to the Revenue Commissioners in addition to detailed legal work being underway, the full cost of which was estimated to be in the region of £30,000. I emphasise that such expenditure was incurred in good faith on the basis of the business expansion scheme then operating. If this development does not proceed — and it cannot without resorting to the provisions of the business expansion scheme — effectively the costs incurred to date will have been wasted. Yet, commitments entered into will have to be honoured. Indeed, it must be doubtful now whether the current business can be maintained, thereby putting existing jobs in jeopardy. That is just one example in my constituency of the alarming effects of the proposed termination of the business expansion scheme.
While I accept that the provisions of the scheme must be examined in their entirety with a view to eliminating their abuse, they must be retained for genuine, worthy applicants for whom there will be economic benefits to be derived. To eliminate the business expansion scheme as abruptly as is proposed is too severe and will have detrimental effects in many areas. I am glad that as a result of the arguments and objections voiced from this side of the House the Minister at least has agreed to review the scheme. It is my hope that such review will result in its retention for those applicants who have already initiated plans to benefit therefrom.
The health aspects of the budget are particularly worrying. For example, the proposals to extend hospital eligibility to top income earners — at a time when there are many overcrowded wards and long waiting lists — defies basic common sense and any economic logic. Increasing demands on ever-reducing resources does not make sense. It has become clear now that no health board will have any hope of operating within their proposed allocation unless they implement further health cuts. I contend it was deceitful of the Minister to provide only £8 million to an area with an already accumulated deficit of £20 million. It is my belief he thought he would get away with it but I warn him that the impending crisis will be worse than the hardships endured in the health sector over the past three years.
This budget is not about reform; rather it is about survival. This budget is about keeping a marriage together with no thought or concern being given to the extended family. Indeed, this budget has an unstable foundation and uncertain future, ignoring the demands of our society, their achievements being considered unimportant. The welfare and prosperity of our people have been sacrificed for the survival of one party locked in the past and that of yet another party lost somewhere between the past and the future. Both parties have failed to provide any answers to the challenges of the future resulting in the welfare and prosperity of all out people and the future of the country being sadly ignored.
The Opposition parties, predictably I suppose, have already severely criticised this year's budget. Fine Gael in particular have criticised Fianna Fáil for going in the wrong direction, maintaining that our policies are headed in the wrong direction. In fact, Fine Gael have now resorted to using cartoons to underline the wrong directon they claim Fianna Fáil are taking. While those cartoons may be amusing, the problems that Fianna Fáil had to address in 1987 — after the dismal failures of the Fine Gael/Labour Coalition Government of 1982 to 1987 — were far from amusing. The facts are there all over the place, in jobs, inflation, interest rates and so on. For example, let us take unemployment. In 1981 the percentage of the labour force unemployed was 9 per cent which figure had risen to almost 18 per cent when the Coalition left office in 1987. Under that Coalition Government business confidence collapsed, consumer demand stagnated and building activity was about half what it had been in the early eighties. Indeed, the men in white coats from the International Monetary Fund were at Dublin Airport.
To make a further specific point, in August 1986 our currency was devalued by the Coalition Government to ensure that German investors in Irish pounds would receive up to 8 per cent more on their investment. Talking of the wrong direction, the performance of the Government since 1987 has been quite remarkable under all headings.
Turning to this year's budget I see it as being the first step in implementing the recently concluded Programme for Economic and Social Progress. Its predecessor, the Programme for National Recovery, from 1987 to 1990, was the major contributor to the economic progress made in that period. The present programme is based on consensus. Goals have been worked out and agreed by Government and by the social partners, the trade unions, the employers and farmers. The goals have been translated into policies in the programme with a clear understanding by all involved of the constraints and qualifications that apply in the implementation of the provisions of the programme.
One can scarcely refer to these two programmes without paying tribute to the role played by NESC under the chairmanship of Pádraig Ó hUigínn. The NESC reports have built up the capacity and the will among the social partners in addressing a range of national issues. Through their reports they have made a direct contribution to Government being able to build up a national consensus as reflected in this and in the previous programme.
We are now more than able to pay our way in the international arena. Up to 1987, document after official document underlined the problems of the young, the old and the disadvantaged but unless the debt was tackled as it was tackled by Fianna Fáil from 1987 onwards we would all by now be disadvantaged. Take inflation — we have amongst the lowest rates in Europe. This was done over the last three years side by side with an average annual growth rate of 4 per cent. To November last the inflation rate was 2.7 per cent, among the lowest in the OECD countries and actually lower than in Germany which is a bastion of anti-inflationary policy. Wage inflation over the last three years has been contained because wage constraint was built as an ingredient into the Programme for National Recovery. The result is that Irish industry has become much more competitive, a competitiveness which was essential for success in the fiercely competitive markets of the UK and mainland Europe.
The Coalition Government from 1982 to 1987 talked a great deal, but did little about tackling the basic problems facing the country. Borrowing as a percentage of GNP was 13 per cent in 1986. This year it is 2 per cent and the Minister last week said that he aims to bring it below 2 per cent, so that our ratio of percentage of borrowing to GNP is now very respectable by international standards.
The taxpayer obviously pays a lot of the interest to service the debt. It is still too high but the debt is now falling and therefore the amount of interest paid is falling and the demand on the taxpayer, particularly the PAYE taxpayer is falling. There have been other achievements. Take-home pay in the last few years has gone up and it is seen to have increased. Confidence has been rediscovered and the building and motor industries, which were on their backs for the first half of the eighties under the Coalition, are now fighting again. Jobs continue to remain a major challenge for the Government but from 1987 to 1990 40,000 new jobs were created. Those at work increased by 40,000 at a time when the number of public sector workers was reduced by 15,000. This net increase in employment applies across the board, in the building industry and in private services. However much needs to be done. It is true that the PAYE category in particular are paying too much interest to service the debt and it is important to reduce the debt further. Any housewife must work within a budget and it behoves our financial administrators to behave like housewives in controlling the national budget.
As the Minister for the Marine suggested earlier in the debate, the international trading environment is more uncertain than it has been for the past few years. The UK and the US are in a recession and added to that we have the Gulf conflict. In addition to the human suffering brought on by the Gulf conflict there is the real threat that oil prices could shoot up again and this would adversely affect growth here and elsewhere.
There is also the temptation to postpone investment at a time of uncertainty in relation to major investments like houses and cars and in the case of industrialists, they tend to be more cautious about investing in factories, machinery and plant. We are, after all, a small vulnerable open economy. This is the time to have cool heads. I congratulate the Minister on introducing a progressive budget while at the same time maintaining financial discipline. Despite the difficult environment the basics are sound. Our financial base is right. Our economy is sound and the nineties should offer more promise than the eighties. I see the budget therefore as a strategic step in ensuring that the nineties will be better than the eighties.
In relation to the details of the budget, the penal taxation levels imposed by the Coalition Government from 1982 to 1987 had to be tackled. After all the key to growth, and that is the magic factor for prosperity, is incentive and enterprise. The Fianna Fáil Government since 1987 have succeeded not alone in reducing the debt but in reducing tax simultaneously. The standard rate of tax fell over the last few years from 35 per cent to 29 per cent. The highest rate has dropped from 58 per cent to 52 per cent. VAT rates have been reduced from 25 per cent to 21 per cent and tax exemptions have been focused particularly to help the lower paid. I appeal to the Minister to devote more resources in future to broadening the tax bands as there is still a major problem of earners reaching the high rate of tax too quickly.
The basic philosophy behind the business expansion scheme was and is sound. It was concerned with channelling funds into small enterprises. We have a lot of savings but they are not being channelled specifically to small investments and small enterprises. Our savings are in the long term financial institutions. The business expansion scheme therefore was designed to channel this risk capital into smaller enterprises. Of course, there have been abuses, serious abuses, and something had to be done, restrictions had to be imposed. Investors in the BES could get a return of 20 per cent without risk to themselves as investors. The taxpayer should not and was never intended to be a bank manager to investors. Having said that, the Minister could look sympathetically at certain aspects of the scheme. There may be transitional problems in the case of investors and they might need to be tackled between now and the implementation of the Finance Bill. I would ask the Minister to look at that. Furthermore, the lifetime restriction of £50,000 on one investor seems a bit excessive, and the Minister might also look at that.
The previous speaker, among others, referred to social welfare payments. Fine Gael have criticised the budget under all headings. I have already dealt with the dismal performance of Fine Gael in office, but the parties of the Left, Labour and The Workers' Party do not have a monopoly on concern for the unemployed and the less well off in this country. The reality is that Fianna Fáil have a consistent and honourable record in relation to catering for the weakest in our community. This year's budget is one in a succession of budgets which have set out to help the less well off and the unemployed in particular. For example, the 4 per cent increase this year for all social welfare recipients is ahead of inflation and increases of up to 11 per cent are provided for in the budget for those on lower incomes. The reality is that 100,000 people will benefit from these special increases in the lower income category.
I am particularly glad that the question of social benefits and social insurance for part-time workers has been addressed in the budget. Many people, especially women, work fewer than 18 hours per week. At present they have no unemployment benefit if they lose their jobs, no disability benefit if they become ill and no pension provision. This is a most enlightened step in the welfare area taken in this year's budget. About 21,000 part-time workers will now enjoy social insurance protection. We will have the opportunity to discuss this matter at greater length when the part-time workers Bill is introduced shortly by the Minister for Labour.
Part-time work is here to stay. That is the European experience and it has to be faced up to in the context of statutory benefits for such workers. Many women require the flexibility to work less than 18 hours a week because they must attend to household and family duties. Many of them need the money for household and family commitments. There is a case for giving protection to women in particular who need to work part-time for financial and other reasons. Equally, employers need the flexibility in their workforce to combine permanent and part-time workers. The budget rightly protects 21,000 part-time workers who work less than 18 hours a week. This is a most imaginative and necessary step because there are examples of exploitation of part-time workers. The very least they need is the statutory protection afforded by social insurance.
I now turn to the education area. Several imaginative steps have been articulated in the Programme for Economic and Social Progress and specifically addressed in the context of the budget for the coming year. The budget addresses the vexed issue of excessively large classes in primary schools. A deliberate policy is now underway to reduce the pupil-teacher ratio in primary schools to 25:1. This is most welcome. There is provision to put in place the first group of primary teachers by September 1991. The balance will be appointed in the following year to meet the target pupil-teacher ratio of 25:1.
Equally the secondary school area has been addressed and the intention here is to provide enough teachers over the next two years to reduce the ratio in second level schools to 19:1. I am glad that the third level issue is again addressed. As somebody who has been in academic life at UCD for many years, I am all too aware of the fiercely competitive entrance requirements to third level institutions. In 1991, 1,200 additional places will be provided in third level institutions. This is most welcome. This follows the measures taken last year to permit further third level places in 1990 and it marginally eases the points requirement for entry.
I particularly welcome the Government contribution, together with the contribution from the private sector, for the purchase of Carysfort College. This purchase will assure the preservation and use of the college as an educational institution. The main UCD activity there will be the post-graduate business school, but in addition UCD will take in an additional 600 under-graduate students as part of the package.
If I were to summarise the budget, I would put it as follows. I congratulate the Minister on the balance he has struck among differing needs at a time of uncertainty. In office one has a responsibility to discharge and any Minister for Finance is faced with an array of competing demands for a range of public services. A balance has been struck here, despite a range of competing demands, against the background of, uncertain international environment.
I particularly welcome the maintenance of financial discipline in our budgetary affairs and in relation to the national debt. The stranglehold which the debt level had on this country is being eased and it is the Government's intention to ease it further. Tax rates have been seen to be reduced and incentives have been increased. Incentive and entrepreneurship are the key to economic growth, which is an essential requirement in the provision of greater resources for the public services.
The needs of the less well off have again been vigorously addressed. Welfare rates are ahead of inflation. Particular attention is paid to those on low incomes and the long term unemployed, educational services have been improved at all three levels and tax reliefs have been focussed on helping the lower paid.
I welcome the budget and congratulate the Minister for Finance on a job well done. It is a remarkable achievement in a difficult environment.
At this time of the year the Government of the day allow us, through their budget proposals, a glimpse of the direction in which they intend to lead the nation. We are given an opportunity to see who is to be taxed and by how much and what the various sectors will be paying. We also see what sectors are to gain.
Budgets provide the ideal opportunity for Governments to chart new courses, to tackle problems by redistributing and targeting resources, by taking taxes from those most able to pay and by spending this money in a a manner that will be of most value in the development of our society.
Economic miracles have been performed by this Government, according to the shouts of the Taoiseach and his Cabinet. The reply of the 250,000 unemployed is that this claim is balderdash. They know that for them the miracle of getting off the dole queue and into a job has not yet been performed.
This Government and this budget are total failures. What has been presented to us in this budget provides no remedy to the single most important issue affecting the nation — the issue of jobs. Let us look at the jobs crisis in the Dublin area alone where there are 74,000 persons on the live register. That is some record to be proud of. In addition to this figure, over 40,000 people who would otherwise be part of the labour force have emigrated from Dublin since 1981. Dublin, with 29 per cent of the population and 31 per cent of the labour force, has an incredible 32 per cent of national unemployment. This is leading to undue concentration of the nation's problems in the capital city, with the corresponding depressing effect both socially and commercially. Unemployment, particularly long term unemployment, has been consistently higher in Dublin relative to other regions. Despite this, Government policies have continued to move jobs away from Dublin. For many Dublin people long term unemployment has become a fact of life. The problem is so severe that it is disgraceful that this budget goes nowhere near alleviating the unemployment crisis in Dublin. In fact projections show that by 1996 Dublin's labour force will have risen to 408,000 people, and although it is difficult at this stage to estimate unemployment in the city for 1996, if no new jobs are created the total unemployment in Dublin could rise to 120,000 people. Even allowing for emigration we will still be left with an unemployment problem in Dublin of at least 105,000. To achieve the job creation figures necessary the jobs rate has to be stepped up to a minimum of 8,000 net new jobs each year.
Given that the 1991Programme for Economic and Social Progress provides for only 20,000 net new jobs for the entire country, it is therefore clear that the jobs challenge facing Dublin is particularly disturbing, and the dread of a life lived on State handouts will be the ever present testimony to the miserable performance of this Government on behalf of the long term unemployed.
The Minister for Finance spells out his Government's failure by audaciously stating that he is allowing in the budget sufficient funds to pay for the increases in the numbers of unemployed people when he speaks of a further 3,300 people being thrown onto the dole queues. Already we have seen the unemployment figures for January go up by a startling 4,900 people. So much for economic miracles. Talking about miracles and all things religious, I could not help feeling that the Minister, Deputy Reynolds in his budget speech really wanted to believe that he was St. Vincent de Paul. His sanctimonious clap-trap that this budget is about achieving "greater social equity" and that his Government were intent on "mitigating the extent and effects of social segregation in housing" would make one laugh if it were not so serious. This Government have the distinction of not building a single local authority housing unit in Dublin city in 1989. Since 1932 this is the only time that this has occurred. That is one record for Fianna Fáil to be proud of.
So much for saying that the Government have a strong commitment to the poor and the disadvantaged in our country. Try getting the 4,000 people on Dublin Corporation's housing list to believe that, or the 600 or 700 officially homeless on Dublin Corporation's housing list.
As I am on housing, it is outrageous and a contradiction of the stated intent in the Programme for Economic and Social Progress, which is to mitigate the extent and effects of social segregation in housing, that the Government now intend to follow and implement one of the most discredited policies of the Fine Gael-Labour Party Coalition which is to give financial handouts to local authority tenants to get them to vacate their homes and entice them into the private house market. Have they not learned anything from this former Coalition Government's disastrous policy? How does one equate the policy of bribing and seducing those families in local authority housing schemes out of their communities and into the private house market with the aim of “mitigating the extent and effects of social segregation in housing”? This will reinforce segregation. It will further add to the marginalisation of local authority tenants. It will create more ghettoes and concentrations of socially deprived people. This has already been proven. Ask any of the housing authorities. Ask any of the groups involved in public housing policy. Ask the religious orders, both nuns and priests who, because of the disastrous housing policies of successive Governments are now themselves living among those marginalised communities as community activists and as tenants.
This policy must be seen as a cheap attempt by the Government, first, to generate business for the private house builders who are having difficulties selling their houses at the moment and obviously agreed to after the Government had been lobbied by the CIF; second, to generate more vacancies in the local authority market in order to deplete the growing numbers of people on the housing lists; third, to put off the day that they must restart a serious public house building programme. This discredited policy of providing financial inducements to tenants in local authority housing schemes must not be implemented. The only people who will be eligible will be those in employment. These people are often the community leaders and activists and the tenants providing the highest income to the local authorities through the differential rent scheme. When one attracts these away from their communities one is, in the long term, providing for dangerous ghettoisation, marginalisation, and a consolidation of an ever-increasing and concentrated underclass.
Let me turn now to social welfare and look a little closer at what is on offer. Against the backdrop of the gorilla-like dances being performed by various Ministers who keep jumping up and down, beating their chests and shouting "look what I am doing for the poor", we see that the majority of old age pensioners are getting only £2 per week increase. With inflation running at three or four per cent by the time this increase is due to be paid in July and with the increases and the cost of heating, electricity, clothes and footwear and the annual increase applied each year for those who are tenants of local authorities, it is likely that instead of being better off the poor will, in many cases, be poorer.
Where is the commitment to a statutory minimum wage or a statutory minimum income? Instead of reversing the gap between people with work and those without, this budget has widened the gap. The Programme for Economic and Social Progress is committed to a four per cent increase for workers over the next year. However, because of their much lower basic rate, four per cent as applied to social welfare recipients means that the gap will widen. We in The Workers' Party do not want a deeply divided two-tier society with widespread social devisions. That is why in 1983 we welcomed the Minister for Social Welfare establishing a commission on social welfare to “review and report on the social welfare system and related social services and to make recommendations for the development having regard to the needs of modern Irish society” which in 1986 reported its famous recommendations which were to lead us into this “modern Irish society”. If, since that time back in 1986, successive Governments were to have implemented its recommendations, £62 per week, not £50 per week, would be the minimum payment for a single person and £100 for a couple, not £83 as proposed in this budget. I hope that the Minister knows how much difference that £12 per week would make to the standard of living of a person in receipt of social welfare. The recommendation to move by 1993 to the priority levels of rates recommended by the Commission on Social Welfare and now as proposed by the Programme for Economic and Social Progress is totally insufficient. It is virtually meaningless as most people on social welfare would have reached the levels promised by 1993 in any case.
Again the Minister ignores the fact that the commission recommended that a differential of the order of 10 per cent should be maintained between insurance and assistance payments. He is now allowing an unemployed single worker with full insurance benefit or unemployment benefit only £50 per week. This happens to be the same as for people on unemployment assistance or supplementary welfare allowance. The Minister is in fact penalising insured workers who must now be asking what is the point of paying insurance at all if insurance on the allowances they will get is only the same as unemployment assistance or supplementary welfare benefit. He is, in fact, penalising insured workers who must now be asking, "what is the point of paying insurance at all if the benefit we will get is only the same as people on unemployment assistance and supplementary welfare allowance receive?"
With all the shouting and self praise by the Minister, his backbenchers and the Taoiseach, about his care and concern for the children of the nation, nothing, not even a brass farthing, not even 2? per cent in line with inflation will go to the children of the nation under the child benefit scheme. Families with one, two or three children will get nothing, and those with a fourth child will have to wait nine months, until October of this year, to get that increase.
The carer's allowance was heralded as a great breakthrough by the Minister last year. The Minister said there would be in excess of 8,000 carers benefiting. It is, therefore, disgraceful that at least 1,200 applicants have been refused the allowance. Instead of the projected figure of 8,000 people benefiting under the scheme, as forecast by the Minister, only 3,500 received the benefit. That represents a shocking 55 per cent fewer than was anticipated and the allowance is made worthless to the vast bulk of carers in our society because of the strict means test regime being applied by the Minister. He is discriminating against the most honourable members of our society, people who sacrificed a better life in marriage, a career or career opportunities to devote themselves full-time to the care of an ailing parent, brother or sister, or family member. They are not getting anything and that is a disgrace and a condemnation of the Government's position.
I would like to remind Members of the question I asked the Minister for Social Welfare about the cost involved in organising a conference last summer in Galway. I want to criticise the Minister for Social Welfare for spending more than £140,000 on a conference on poverty and the disadvantaged in Galway city.
I hesitate to interrupt Deputy Byrne merely to advise him that some five minutes now remain of the time available to him.
I appreciate that, a Cheann Comhairle. The conference appears to have achieved little or nothing and seems to have been designed primarily to promote the image of the Minister for Social Welfare, Deputy Woods, during Ireland's Presidency of the EC. According to the reply to the question I tabled last week, the cost of organising the conference, excluding salary costs of the Department officials, ran to an incredible £140,000. I understand that officials of the Department were involved in the planning of the conference over a period of several months and, when this is taken into account the final cost is likely to be closer to £200,000.
While I fully agree that there is a need to bring voluntary organisations together to discuss problems of poverty and the disadvantaged, in this case the huge expenditure involved seems to be totally disproportionate to the results of the conference. Other than an announcement by the Minister that he planed to draw up a charter for voluntary social services activities in Ireland — something we are still waiting for six months later — nothing of any significance appears to have emerged from the conference. Some of my constituents are living in dire poverty, face an endless struggle to feed and clothe their children and are expected to live for a full week on amounts which are less than the nightly accommodation costs of some of the participants at the conference in Galway.
I find it impossible to explain how the Government can justify the expenditure of public money on expensive hotel accommodation, lavish meals and expensive wines for delegates at this conference when at the same time my constituents are told there is no money for housing, no money to implement the recommendations of the Commission on Social Welfare, no money to properly maintain local authority dwellings, no money to assist the plight of those with mentally handicapped dependants and no money to pay voluntary carers who are staying at home to look after aged parents. The conference was primarily a very expensive public relations exercise for and on behalf of the Minister and as such was a scandalous misuse of public money, money that would have been better injected into, for example, services for the mentally handicapped.
I want to refer to the reduction of the age limit for pre-retirement allowances from 60 years to 58 years announced in the budget. The slogan of the Government clearly is, "you are too old to work at 58 years of age". Imagine providing unemployment pensions to people aged 58. This will artificially reduce the number on the live register. The Minister by introducing pre-retirement allowance schemes for persons over 60 years of age on long term unemployment assistance has artificially reduced the live register figures by in the region of 5,000 per annum. Reducing the age limit to 58 years of age not only indicates a political sleight-of-hand but also indicates the Government's acceptance of their inability to create more jobs.
When payments started in March 1990, 4,731 people transferred from unemployment assistance to pre-retirement pensions. The total number now in receipt of the pension is 6,104, and, with the age limit being dropped from 60 to 58 years, the projected increase expected from those now qualifying at 1,000 per each year of age, that is 1,000 of those aged 58, and 1,000 of those aged 59, will bring the figure for those on pre-retirement pensions to 8,104 persons. Doubtless, the Minister will herald this 8,104 drop in the number on the live register as an achievement.
The Minister told us he has maintained the level of service for people with a mental handicap. However, the parents and families of people with a mental handicap see the quality and level of services continue to deteriorate every day.
I would be grateful if the Deputy would now bring his speech to a close.
They are paying the cost of years of successive Government's neglect and inadequate planning. Why do so many of our children have little or no service?
The Government may put a brave face on the £1 million that has been allocated in the budget but how is it to be spread around the country? This £1 million must be seen in the context of the Eastern Health Board's figures requiring £11 million to care for those on the Eastern Health Board's priority waiting list. I appreciate that my time has run out. There is a lot more I would like to have said but I will have many a day in other years to do so.
The budget this year is in keeping with the responsible budgets that Governments have brought in since 1987. I am not going to go over the improvements in the economy that have been brought about as a result of the responsible manner in which the Government have managed the affairs of the country. In the time available to me I intend to deal with the health services.
This year, as in previous years, the Government after very careful analysis decided on the amount of money that could be made available to each of the public services. For the health services £1,426 million has been made available in the current year, the largest amount of money ever made available by any Government in Ireland for our health services since the foundation of the State. That includes £100 million extra than was in the Book of Estimates and a further £8 million to be targeted at certain community services. It is also important to recognise that when I became Minister in 1987, 18 per cent of what the Government provided from the Exchequer was allocated to health services in 1987. This year that is up to 22 per cent, which is an indication of the Government's commitment to ensuring that we maintain a very high level of service and develop the service where appropriate.
I listened to the Opposition parties complaining about health services and it is no harm to give one other statistic. In the years 1982-86, there was a decrease of 0.5 per cent in the amount of money in real terms provided for the health services. From 1986-1991 there has been an increase of 5 per cent in real terms. In the past two years there has been an increase of 18 per cent in real terms in the amount of money provided. There has been an increase this year for health boards of 5.7 per cent which means that the Southern Health Board will receive an increase of £6 million over their original allocation last year, the Mid-Western Health Board will receive an increase of £4 million and the South-Eastern Health Board will receive an increase of £5 million.
It is no harm to ask where Fine Gael stand, on the one hand they say we are spending too much money and, on the other, they come in here day after day and say we are not spending enough. It is time they made up their minds and if they believe we should spend more money they should tell us where they want to impose the taxation to raise that money.
The year 1990 was exceptional for the health services in a number of ways. The number of beds in the health service increased by 1,000. We now have 12,000 acute hospital beds in the health services and there has been an increase of 2,000 in the number of staff working in our health services over the last 18 months. This is not an indication of a service in decline. Productivity increased during that time. There has been an increased level of activity of the order of 4 per cent to 5 per cent. For example, the number of hip replacement operations at Cappagh Hospital increased by 40 per cent in 1990. The waiting lists for tonsils and adenoids operations in Temple Street Hospital was reduced by a half in 1990. The year 1990 was exceptional in another way. For example, we had the major 'flu epidemic, something which we have every eight or nine years. That had an impact on the service in the first quarter of the year. If we cast our minds back to this time last year we will remember that the Opposition parties were complaining in exactly the same way as they are complaining at present and as they have done over the last three or four years.
Another interesting feature worth recording is that the Garda clamp down on drink driving in December had a major impact on the level of activity in accident and emergency departments by reducing the level of activity significantly. That is something about which we can all be very pleased.
Last year's budget provided £5 million to be specifically targeted towards the elderly and £2 million to be targeted towards those with mental handicap. I am glad that similar stages have been included in the Estimate this year so that the new services provided out of that money are being retained this year. A further £3 million for the elderly and £1 million for mental handicap have been provided in this year's budget so that we can bring about more improvements for these people.
It is worth putting on record some of the improvements that have taken place as a result of the £5 million provided for the elderly last year. In the Eastern Health Board area 20 separate beds were provided at Baggot Street Hospital and ten new occupational therapists, four physiotherapists, 42 community workers and 50 care attendants who will provide the new home help care in the area have also been provided. Similarly, the other health boards increased their services for the elderly. Services provided for the mentally handicapped include 149 new places half of which were in the Dublin area, respite places for 200 mentally handicapped persons, 442 new day places and 25 new staff. It is important to recognise that this Government protected in a very real way the funding for mental handicap services. In 1986 £58 million was provided for these with a mental handicap; in 1991 that figure has been increased to £81.6 million to all the voluntary agencies who look after those with a mental handicap. That is an increase of 40 per cent and is well ahead of inflation.
As I said, the 1991 level of funding to the health boards has increased by 5.7 per cent. Of course, I recognise that 1991 will be a difficult year. Indeed, since the health boards were established — I was a member of a health board for 17 years — every year has been a difficult year. Health services internationally are facing exactly the same problem trying to deliver more and more services to meet the demand with a finite resource. It does not matter what country you are in, that is a finite resource. The United States were spending 12 per cent of GNP on this area and they too have their problems. Britain and other European countries also have problems. These problems are worldwide. Because of the expensive developing technology and new transplant operations of all descriptions, countries cannot meet the increased demand from a finite resource, and we are no different from the rest of them.
I am satisfied that, as a result of the money provided this year by the Government, the health boards will be able to sustain their activity at the 1990 approved level. As I said, the Government divided the money allocated among the various Departments. They allocated money to my Department and it is my responsibility to ensure that that money is divided equitably and that it is well spent. When it comes to spending money there are, and always will be, competing priorities. An ongoing debate over the past ten years has been whether to put any extra money which becomes available into the hospital service or the community service.
In my view, there is a consensus that we should not continue to spend the extra money that becomes available in the Community rather than in our hospital services. This is recognised and spelt out very clearly in the Programme for Economic and Social Progress. If we continue to spend all the extra money on the hospital services, effectively we will choke the system because the logic of spending the money in hospitals and not developing our community services is that more and more people will find themselves in hospital beds when they might be more appropriately treated elsewhere.
At present there are a number of elderly people in our acute hospitals who have completed their acute medical treatment and are waiting to be placed in a home for the elderly or in their own community with support services. There are also a number of physically disabled people who are permanently in acute beds in hospitals. David Kennedy, in his report, recognised these facts, and we have also recognised them. We want to spend the extra money coming on stream in the community so that we will build up our community services and provide places in the community for those who need them. The ideal is to be treated in the area most appropriate to your need. Apart altogether from the health economics, that is what we want in humane terms. People do not want to go into hospital unless it is absolutely necessary. The Programme for Economic and Social Progress spells out very clearly the direction in which we should be going. I believe there is a consensus to go in that direction, despite the fact that Opposition Deputies are saying that we should put more and more money into the acute hospital service. We heard that again this morning from Deputy Bruton.
We need to look at the use to which the 12,000 beds in the hospitals have been put. My view is that more use should be made of day care beds and five day beds. I am informed that in the US if a person goes into hospital in the morning to have an appendix removed, he can return home in the evening. I am not suggesting we should do that here, but that is the direction in which medicine is going. If you look at the statistics for the hospitals in this country you will find that some hospitals have moved very far in establishing day care beds — and are doing an excellent job — while other hospitals have been a little behind. That is one of the areas we must address.
The Government are very concerned about getting value for money. I compliment the health boards, the voluntary hospitals and the other voluntary agencies on what they have done over the last ten years in terms of getting better value for money and improved efficiency, but there is still room for improvement.
The Foxe group, which we established, looked at the health services and identified a number of areas about which we are speaking to the agencies at present. I will give an example. By combining purchasing of the implants used in hip operations the voluntary agencies — who provided these operations — were able to save 28 per cent on the cost. I am satisfied that if the health boards control their expenditure carefully and maximise savings, they will be able to maintain the approved 1990 level of service throughout 1991.
While I accept that every effort has to be made to control expenditure, I also accept that there are certain schemes in the health service which are very difficult to control and that one cannot put a finite figure on demand-led schemes, for example, the long term illness scheme and the drugs refund scheme. I recognise that these schemes can put pressure on health boards and on the other services that health boards provide. We are looking at what measures we can take this year to alleviate that particular difficulty for the health boards.
I remain concerned, as I am sure every Deputy in the House does, at the cost of drugs, £150 million or about 10 per cent of what we spend on our public health service. While the fundamental principle is that a patient is entitled to have available to him or her the medicine necessary for their illness, nevertheless I believe there is an obligation on the prescriber first, to ensure, that the correct volume of drugs is prescribed so that extra drugs are not left lying around people's houses and, secondly, if there is an equally efficient drug available which costs less, to prescribe that drug. Within the coming weeks we will circulate a national formulary to doctors and general practitioners which will help them to make balanced decisions between the needs of the patient, which are paramount, and good economics. I might also mention here that last year we achieved agreement with the Federation of Irish Chemical Industries which will save approximately £10 million on the cost of drugs in the current year.
As in previous years, a number of the health boards have requested a meeting with me and officials of my Department. Of course, I am always glad to meet with the chairmen and chief executive officers of the health boards. I would have to say that such meetings have always been constructive and very useful from both our point of view and the point of view of the health boards involved. It is wrong to suggest that something new has happened this year, as Deputy Ferris said on radio yesterday, and that health boards have rejected their budget for the first time ever this year. I am glad to see Deputy Sherlock in the Chair as he is a member of a health board who have regularly rejected their budgets, and not just since we came into office. It is not unusual for health boards to reject their budgets initially, to then come and discuss with us how they can live within their allocation and to look again at their budget.
I referred earlier to the Programme for Economic and Social Progress. This programme is very important for the health service because it outlines the consensus which exists on the way our community care services should be developed. I believe that when we develop further our community care services it will take pressure off hospital services. I have already referred to people who have been placed in the hospital service and who might more appropriately have been placed in the community. The programme spells out very clearly the direction in which we are going in the development of our community care services.
I am sure every Member of the House agrees that every person is entitled to live and be supported in their own homes for as long as possible. Fortunately people in Ireland receive great support from their own families, a practice which should be encouraged. My colleague the Minister for Social Welfare took account of this support in the budget last year by providing for a carer's allowance, which he has extended in this year's budget. We have also taken account of it in the provision of respite care facilities for the elderly and for those with mental handicap.
The programme provides for the development of community services, day care facilities, home help facilities, public health nursing services and day hostels and for more respite and residental care for the elderly, those with mental handicap, those who are psychiatrically ill and the physically disabled in our society. I would refer to the provision of £1 million in the budget for child care services which will lead to an improvement in those services. Hopefully the legislation on child care will be passed by the Seanad during the current session so that we can start to implement some of its provisions. Last year £3 million extra was provided for the dental service. A further £3 million is being provided in the current year to continue the improvements in the dental service.
I want to refer briefly to eligibility. The present position is that the three million people resident in this State are entitled to a public bed in a public ward. This will not change. At present persons in receipt of over £16,700 pay their consultant but after 1 June they will not be obliged to do so. At present there is no restriction on the number of beds a consultant may use in a public ward for private patients but after 1 June it will no longer be possible to have private patients in public wards. Therefore, the new arrangement will free up a number of public beds for public patients. This change was recommended by the Commission on Funding, NESC and the Irish Congress of Trade Unions. The Government and the social partners also agreed that it would be in the best interests of the Irish people. I do not believe this change which will be implemented from 1 June will have any impact on the Voluntary Health Insurance scheme. As I have said, at present everybody in the State is entitled to a public bed in a public ward. However, ninety nine per cent of subscribers to VHI are paying for a bed even though they are entitled to it free. I do not think there would be any major change in that regard.
The management of health boards is important. At present we are working on proposals to improve the structures in the Dublin area including all the major hospitals. We propose to establish a performance audit unit within the Department which will help to improve the efficiency of the service.
Finally, I would ask Deputies not to be alarmist and to think of the effect their scaremongering has on the public and the relatives of patients. We have a good health service. Tens of millions of items of service are delivered every year and there are very few complaints about them. I have already referred to the massive amounts of money put into the service. We want to ensure that a caring, efficient and effective service will continue to be available to all who need it.
In the Programme for Economic and Social Progress, published prior to the budget, the Government recognise that more needs to be done in the areas of employment and taxation. However, on budget day it seemed everything changed. While a televisual cosmetic presentation gave the appearance of a small nod in the direction of tax reform, once the broadcast ended and the make up was washed off it became clear that it was all an illusion, a sort of political “Muppet Show” in which Kermet the Frog, in the guise of the Minister for Finance, told interesting sounding stories which were sadly lacking in substance.
The so-called tax reforms were nothing but a political mirage. The hard-pressed Irish taxpayer, at the end of it all, was left lost and stranded in a labyrinthine maze of tax impositions and levies. For those in employment the presentation of change and reform is no more credible than the imagined oasis in the mind of the deranged traveller wandering lost in the sun-baked heat of a distant desert.
Our current tax system is a major disincentive to economic growth, investment and work. In an economy which is crying out for enterprise and initiative, the Minister's approach in the budget further entrenches current problems that confront this country. The Minister has failed to implement anything of real substance in the budget. In the context of the budget's impact on the Government's financial projections, and its implications for current expenditure targets, I do not believe it will meet the Minister's announced expectations. In human terms it failed entirely to focus on the need for jobs.
Nowhere is the Government's failure seen greater than in the area of taxation. The Government have abysmally failed to implement the tax reform measures that are so badly needed. The tax system stifles initiative for those in employment by denying them realistic rewards for additional hours worked. For employers it makes the cost of creating badly needed extra jobs too high at a time of economic uncertainty and high bank interest rates.
In the context of tax reform the focus on a percentage reduction in the standard rate or the highest rate as indicative of a commitment to reform is a nonsense. Indeed, the Progressive Democrats' chairperson this weekend confirmed that in his view equally it is a nonsense. What sense is there in the Minister publicly congratulating himself on reducing the top rate of tax from 53 per cent to 52 per cent if in the same budget he imposes additional levies on those paying income tax, which result at the end of their day in their net take home pay being effectively reduced rather than increased?
If tax rates are reduced but allowances are not increased in step with inflation the change effected is inconsequential. In this country too many tax payers on modest incomes by European standards pay tax at the higher rate. Single workers begin to pay 48 per cent as soon as their income reaches £10,000. The 48 per cent is in reality 56 per cent when PRSI and other levies are added. The single worker hits the top rate of 60 per cent, taking into account PRSI and other levies on an income of £13,000 gross per annum.
The problem with our income tax structure is not simply the tax rates but the low allowances and the narrow tax bands. At too early a stage a worker slips out of the standard rate to find himself in the 48 per cent and then the 52 per cent rate. If it is accepted that tax reform is an essential component of an employment strategy, the budget, in merely tinkering with the tax system, is a dismal failure. Not only does the budget do nothing to promote employment, it is anti-jobs. It is in dealing with employment that the Minister appears at his most misleading and confusing.
The budget arithmetic is based on a presumption that the overall number out of work during 1991 will be 228,000. Within two days that figure was blown apart with the announcement that as of 31 January of this year, the day on which the Minister delivered his budget speech, there were in excess of 241,000 people on the live register. Did the Minister, when he delivered his speech on budget day, know that figure and conceal it or was he simply blissfully unaware of it, relying on employment projections that had no basis in reality? The real number unemployed is, of course, not simply the 241,000 as shown on the live register on 31 January 1991 but is in reality 265,000 when one takes into account the large numbers currently involved in training schemes. In the midst of a growing world recession it should have come as no surprise to the Government that many of those who had gone abroad in search of jobs had returned to these shores. What is surprising is the Government's abject failure to address the crisis with which we are now confronted, either in the context of its impact on the Government's financial projections and its implications for current expenditure targets or in human terms on the focus needed to create jobs.
Nowhere is the Government's confusion, and lack of coherence, more clearly seen than in their approach to tourism. The Government's three year programme targets tourism as "a sector identified by Government as a major axis for economic development". The programme acknowledges that the tourist industry currently accounts for 6.5 per cent of GNP, almost 7 per cent of exports and sustains 6.8 per cent of total employment. It sets the following targets for 1991 to 1993: increase annual overseas visitor numbers by 1.4 million to 4.5 million; increase overseas revenue by £250 million and create 15,000 new jobs. The strategy for achieving this target is said to include the provision of a more attractive and wider product range. The programme states that fundamental to this strategy will be an extra £270 million investment by the private sector to further expand tourist capacity by the end of 1993.
It was to be expected that, having regard to the need to create jobs generally, the targeted new 15,000 jobs in tourism and the strategy stated in the programme, the budget would contain innovative positive proposals. What one would not expect in the budget, is that specific steps would be taken to sabotage multi-million pound projects designed to create the new jobs and provide the wider and more attractive tourist product envisaged by the plan.
In seeking to ensure that the business expansion scheme was not a tool of legalised tax evasion, the Minister took a sledge hammer to crack a nut and, in so doing, effectively jettisoned an essential part of the programme strategy for tourism. Just one week after the Minister for Tourism and Transport, Deputy Séamus Brennan, who now has had added to his portfolio the Communications brief, had at the headquarters of the Industrial Credit Corporation heaped praise on the impact of the business expansion scheme funds on the tourist industry and launched a new £6 million project for four hotels, his colleague, the Minister for Finance, pulled the hotel rug from under him.
The question must be asked, why did the Minister for Tourism and Transport — so well documented in the Irish Press in which there is a picture of the Minister with those involved in the launch of a new BES £6 million project — launch that scheme, praise it, and exhort the general public to invest in it when a week later the Minister for Finance pulled the rug from under him and effectively said the scheme could not operate. Why did a State agency, the Industrial Credit Corporation, become involved in that way? Who was misleading whom on 22 January when the Minister gave his ministerial approval to that scheme while one week later, like magic, the Minister for Finance in this House waved a wand and said that schemes of that nature were no longer permissible? If such a decision was contemplated why did the Minister for Tourism and Transport appear at that launch and exhort the general public to invest in the scheme? If the issue had not been discussed at Cabinet prior to 22 January when the hapless Minister delivered his speech, when was it discussed and what consideration was given to the consequences of the budget day announcement? Apart altogether from the legality of the manner in which the scheme was curtailed by an order of this House on budget night, which is legally questionable, what future credibility can now attach to public policy pronouncements by the Minister for Tourism, Transport and Communications? From where will now come the £270 million which the programme envisages will be invested by the private sector in the tourist industry? In the current economic climate what sane hotelier will turn to the banks to raise money at high interest rates to provide the more wide-ranging, attractive facilities sought by tourists which the plan acknowledges we need? Was the Minister's endorsement of this scheme simple incompetence or is there some other reason?
The confused thinking of the Government in this area is further illustrated in the same section of the three-year programme which envisages other means of financing tourism development. Under the programme the Department of Tourism and Transport — in conjunction with Bord Fáilte and the IDA — are "to examine the question of extending incentives to internationally mobile tourism projects where Bord Fáilte certify that existing capacity in Ireland is inadequate and where there is clear market demand". What does that mean? Will we give grants to foreign companies to undertake investment in Irish tourism while at the same time abolishing tax incentives that encourage those working in Ireland from investing in tourism?
There is, of course, a more simple theory to explain the actions of the Minister for Finance. At a time of political volatility within the Fianna Fáil Party — a volatility which will, no doubt, increase as a result of the obvious disappointment on the faces of so many backbenchers when yesterday's Cabinet scuttle was announced — perhaps the Minister for Finance thought it prudent to dump my Dublin South ministerial colleague in the political manure and to put him off track in case the succession race starts in the Fianna Fáil Party in the not too distant future. At a time when the political distaste of the Minister for the Environment for his Progressive Democrats junior Minister has evolved to such a degree that he fends off all other political enticements and informs the media — and indeed anyone else who would listen to him in the days preceding the scuttle — that the junior Minister and himself would be together until death parted them — no explanation is too implausible. Indeed, a less likely Romeo and Juliet, in the political sense, is difficult to envisage.
There is nothing in this budget to resolve our problems of unemployment. While it may be true that the Government cannot create the jobs that are needed it is also true that it is the duty of the Government to establish an environment that leads to the creation of jobs. While debt control is important, debt control and debt management of themselves are not sufficient. In the context of this budget a major question mark also hangs over the credibility of the Minister's growth target and his announced borrowing requirements.
Last Friday the Minister for Labour announced changes in the various existing training schemes. The problem is that, no matter how many training schemes of a temporary nature the Government apply to the unemployed, training schemes are nothing but a political elastoplast to bind some of the cracks that exist in the context of our major unemployment problem. All training schemes do is to hide the true level of unemployment. Indeed, on the day when the live register figures are announced at the end of each month stating the numbers who, at that date, are registered as unemployed, there should also be an obligation on the Department of Labour to announce the numbers who, on that date, are on training schemes. While revamped and better training schemes can extend new skills to those on the live register, all the training schemes and all the good intentions in the world matter little if, at the end of such schemes, there are no jobs for those who have been retrained. The experience of many who have been on such training schemes is that, while they are welcome, at the end of them they are back on the unemployment register and with little prospect of a job.
If it were not for the possibilities of obtaining employment abroad, particularly in Europe and in America, we would have had in excess of 300,000 currently unemployed in this country. The growing worldwide recession is now seriously diminishing the job opportunities abroad and will result in many young people who in recent years would have gone abroad in search of jobs remaining at home and many of those who have gone abroad and who are out of jobs returning home. Unemployment is now at 18.5 per cent and I do not believe that the day, tragically, is too far away when unemployment will hit 20 per cent. There is only one member state in the EC with worse unemployment figures than ours, that is Spain. In the European employment league we are in 11th place in a league of 12. If the Taoiseach was managing a football team as opposed to leading a Government, and if he had that sort of record, he would have been sacked long ago by the people who employed him. I predict that if we remain 11th in the unemployment league in Europe — and we are rapidly heading into 12th place — it will not be too long before the people see through the public relations exercise of the Government and realise that their economic policy, which they pretend to be implementing in the context of tackling unemployment, is of no more substance than the emperor's clothes. Eleventh in a league of 12, so much for the credibility of the Government's self-proclaimed success in the area of industrial policy.
No one on this side of the House gains any pleasure from having to say that the tragedy is that the 1991 budget will go down in the political and economic history of this country as an opportunity tragically lost. In the context of the lifetime of this Government it will go down as the start of its unravelling and decline. It will also be the start of the process which will result in finding a place on the Opposition Benches and I hope the Fine Gael Party will then have the opportunity in Government to tackle the fundamental problems which the Minister for Finance failed to address one short week ago.
The 1991 budget has received some rather sparkling press titles, from a Jack Charlton style budget to a boring, cautious or reassuring budget. Given the difficult times in which we find ourselves and the most uncertain international climate, I would best describe the budget as a responsible one.
For many years I have called into question the validity of the annual budget concept. The concept of an annual budget is fast becoming outdated in modern times. Annual budgets were perhaps valid in years gone by when communications were slow and the outcome of planning could be more predictable than today. We live in a fast moving world of modern technology and computers with instant information.
I often wonder if it is a valid exercise any more to focus our fiscal planning on one day in the calendar year. Indeed, it has become a parliamentary theatrical experience where we have the Minister with his battered briefcase facing a battery of photographers and where we slavishly follow an archaic British system. As everyone in business realises, the organisational affairs of a business firm need to be monitored constantly, practically on a day to day basis, if they are to be operated successfully. I wonder if what is required are more budgets during the year and constant monitoring of the situation. As the House is aware, much of the groundwork is done in preparing the Estimates and in the case of the Estimates for 1991 much of that work was done in preparing the Programme for Economic and Social Progress which excellently binds together a three year pay pact and a ten year horizon plan.
I wish to get back to the concept of focusing our attention on one day in the year as if this will be the panacea for all our economic ills. We should grasp this opportunity, and the Minister should make no apology to the House, to state that if more budgets are needed, so be it. If a budget is needed in one or three months time, there should be one. People should not fear budgetary planning; quite the reverse. The old attitude, that the price of one or two items will be increased which in turn will lead to an increase in revenue, is archaic and no longer obtains. That is a matter we need to focus on in the future.
I would now like to comment on those areas where this statement on our financial affairs could have been of practical assistance. One of these — and this is becoming a bone of contention for me year after year but I must focus on it again — is our attitude towards the Third World. This country provides 0.18 per cent of its GNP in overseas assistance. Our allocation this year is £43.7 million and a little over £10 million in bilateral aid. These figures, in the context of United Nations' recommendations, are lamentable and we ought to be ashamed of ourselves so far as our attitude to the Third World is concerned. It is not as if I am not conscious of where the money has to be found but we need to contribute something in the order of 0.7 per cent of GNP if we are to reach the United Nations target.
Let us pause a moment to think about what is happening in the Third World. Those of us who have had the opportunity to work there and see at first hand the position on the ground find it extraordinary how out of touch we are when it comes to providing funds and assistance. It has been projected that 15 million people are living at starvation levels. To put this figure in context, because people get spaced out with figures and numbers, this represents 1,500 people starving to death each day for the next 30 years. That is an enormous number of people.
As a nation, we are very conscious of this problem and respond in a very generous manner when any appeals are made. However, the Government should give a very strong lead in this area and I appeal to the Minister to take a very strong, practical look at ways of improving the position. This is also an area where there is all-party support and no divergence of views between the parties in our attitude to the Third World. We need to set in train immediately a committee to arrive at a consensus and decisions which could be put to the Government for approval. It should no longer be considered as a charitable hand out. A few years ago the Brandt report indicated that there is a duty and obligation on developed countries; and indeed on some less developed countries, to assist the Third World. This is a primary obligation and should be addressed.
The figure has been squeezed from a little over £20 million to £10 million; in other words, we are paying lip service to the needs of the Third World. With regard to the bilateral aid programme our money is primarily going to Tanzania, Lesotho, Zambia and the Sudan but, in the context of what is needed, it is a very small amount. I do not believe for one moment that we should make any apology if we were to request the people of Ireland to make a direct contribution by way of taxation. While we may find it a little difficult to put this to the people I have no doubt that if it was explained to them that they would be contributing to the Third World, they would be willing to pay a little extra by way of taxation.
There are many voluntary organisations, including Concern, GOAL and others, doing fine work abroad which I have seen at first hand. The fund of goodwill in Third World countries towards Ireland is immeasurable. Indeed, if one were to look upon it with a cynical eye, one would rapidly see that economic projects would be given to Ireland if we showed a more generous attitude towards the Third World, and I appeal to the Minister to bring about consensus with the political parties to do just this. I am aware that the Minister with responsibility for this area is very anxious to ensure that a formal approach is put in train as soon as possible.
I would like to address a number of other aspects of the budget. Realistic economic growth of 2.25 per cent is achievable given our past record. I realise that we will have to proceed with caution but that figure can be achieved. If there is any possibility of a fall back in growth for certain reasons, such as this horrendous war in the Gulf, we will have to be prepared to cut our cloth to suit our measure and not lose the economic gains we have made in recent years. Our country has been brought back from the brink of the very serious financial difficulties of four years ago to the present low levels of inflation which are very acceptable. However, there is always a temptation to let go of the reins and the economy is at the stage now where we must be very cautious about that. No matter how great the temptation to do otherwise we must hold very firmly and keep a strong attitude towards maintaining good financial management.
In regard to VAT rates, anybody involved in the implementation of the tax figures — I am speaking about people operating them on a day to day basis — must find these very awkward. We are talking in terms of a low based rate of 12.5 per cent and a higher rate of 21 per cent. There is a need to harmonise VAT levels and the EC have demanded that we do so, nonetheless, I feel a more practical way of approaching that question is to bring the two figures into line immediately and work either up or down on a single figure, say 15 per cent VAT. That can be operated successfully without great difficulty but separate levels can be difficult to operate. Certainly the 21 per cent level will be difficult to calculate. I put that thought to the Minister and perhaps he will do something to implement it and maybe consider it in the Finance Bill.
The upper limit of taxation has been reduced from 53 per cent to 52 per cent and that is an excellent indication. I have always been firmly convinced that taxation should never go beyond 50 per cent which I feel is a psychological barrier. A higher rate is beyond the level of ownership. At that level people may feel that their just reward for labour is not being returned to them. Up to 49 per cent could have a tremendous catalytic effect on people's preparedness to invest more into this economy and so reach that rate as quickly as possible. Overseas levels have been brought down and the upper limit was reduced to 40 per cent. That has the opposite effect, the effect of encouraging greed, overheating the economy too quickly, and damaging it. I have never thought that jobs can be purchased. Employment cannot be created by just pumping money into the economy and hoping jobs will come as a result of that. Job creation lies directly with investment. The incentive of an upper limit which is not too high and will not work against investment either overseas or within the country should be effective. I have always held that view and I have spoken to people who are in a position to create jobs and they agree with that. Therefore, I suggest that be examined.
The section 23 provision referred to in the budget has been extended for another year to provide rent free and tax free incentives to build more apartments, flats, houses and so on. The Minister should be very careful here. Deputies who represent city constituencies know that a great deal of very bad development has taken place directly as a result of section 23. Overcrowded, cluttered developments have taken place in congested areas. This will be a bad legacy for the future. Such homes appear very attractive at the start but when people have been living in them for a time they tend to become a little shabby, run down and worn out, particularly if their occupancy is increased by extended families and so on. For the remaining year the Minister should set up some watchdog system to monitor this type of development. The standards should be examined. A quality index should obtain in respect of section 23 rather than the obsession we have with price. These properties should be graded. With the extension which is to take place in the inner city next year, 1992, the tax exemption will be a grave temptation to maximise profit and to build more of those awful duplex apartments, as they are called which are most unsuitable for families. These are the kinds of apartments which have led to builders maximising profits in the inner city. Therefore, I urge the Minister to set a standard programme for section 23 exemptions.
In conclusion I would like to reiterate my opening comments. We should not slavishly follow a system of the annual budget. I would like to see a system of monitoring the economy perhaps monthly as happens in many firms, and Ireland Incorporated is no different from any other system. The 4 per cent increase in social welfare benefits is welcome given the fact that inflation is much lower than that. I would like to see a greater amount, but what is provided is a step in the right direction. I congratulate the Minister on preparing the budget, difficult as it was. I am glad he held fast and took a reasonable attitude and did not fall into the old trap of giving away when the gain would be a Pyrrhic victory and the loss would be ultimately at the expense of the well-being of the country. Our investment is for the future and this was recognised in the budget.
Let me commence by wishing my colleague, Deputy Chris Flood, every success in his new appointment as Minister of State at the Department of Health. That Department's gain will be the Committee of Public Accounts' loss. Deputy Flood was a very able, active contributor to the work of the committee and will be greatly missed there but he will bring to the Department of Health a great talent and I wish him every success in that Department.
I thank Deputy Mitchell for his kind remarks.
I welcome the cooperation of the social partners with the Government in producing an incomes policy. I did so on the day that agreement was reached though it has not yet been ratified. Since reading the complete document I have reservations I want to place on record today. This document — the NESC Report, A Strategy for the 1990s— stressed the need for stability, continuity and consensus in the country if the environment for investment and economic recovery is to be harnessed. The Programme for Economic and Social Progress certainly provides this but goes much further. The benefits for industry of an agreement of this kind can be significant. There have been comments about the arrangements for pay increases and how these will affect industry. But if we compare the position of industry with that of our trading partners we find that this agreement — all going well and economic growth being in any way reasonable — is good for Irish industry.
Incomes are forecast to grow by an annual average of 3.6 per cent though, with drift, it could be as high as 4.5 per cent, perhaps even 5 per cent annually over the period of the agreement. If we set this against German forecasted rates of increase, of between 5 per cent and 7 per cent, and British rates of increases of perhaps 9 per cent to 11 per cent, then we see that the agreement, compared with the costs of labour of our trading partners, is a good deal for our industry. One forecaster estimates there will be a 3 per cent productivity gain so that, in effect, the cost to industry will be perhaps 1.5 per cent to 2 per cent in real unit wage cost terms, half as much as the German unit wage cost increase, perhaps as much as one-fifth of the British unit cost increase. Therefore, on the industry side, this agreement would appear to offer a good deal.
Concern has been expressed at the rise in the public service pay bill which now accounts for 38 per cent of all current spending and approximately 53 per cent of current spending if debt charges are ignored. The public service pay bill will increase by at least 8 per cent, perhaps as much as 11 per cent or 12 per cent, this year with further substantial increases next year. Some contend that the way to deal with this problem is to buy out public servants, to render more redundant. I am not too sure that that would be very wise. It is a very expensive process. For example, between the years 1987 and 1990 a figure of 9,680 public servants were bought out or made redundant at a cost of £127 million or £13,000 per person.
We should at least examine the possibility of introducing here voluntary national service. We have rates of unemployment which simply cannot be sustained and a potentially enormous growth in unemployment figures rather than any reduction therein. Already there has been provision made in the Minister's Budget Statement for an average increase of the order of 8,000 this year. What is wrong with examining the possibility of voluntary national service? Could we not have used that £13,000 per public servant in order to buy them out of their jobs to create jobs in our national Defence Forces? Have we examined the cost in terms of vandalism, of health care, in the area of drug abuse, in terms of running prisons, of people being left hanging around street corners in many of our flat complexes and residential areas, particularly in Dublin but in other parts of the country as well? Where is our imagination? Why are we not addressing these issues? Why did the Programme for Economic and Social Progress not address this issue? That is one issue it did not address, while it did address others it should not have addressed. Obviously, the public service pay bill increase is of grave concern at a time when the Government have been struggling to deal with the serious problem of public finances. I say “have been struggling”, since it is clear that this year caution has been thrown to the wind to a great extent.
In the recent budget, increases in line with inflation have been conceded with growth rates touching 5 per cent in three of the past four years. Public expenditure was being controlled in absolute terms. Growth ensured that the debt/GNP ratio would be stabilised and gradually reduced from 129 per cent in 1986 to 112 per cent last year although the European average of 12 per cent is now 58.4 per cent. Ireland is the second highest in that league just behind Belgium, just ahead of Italy and Greece. But with growth this year of perhaps 1 per cent only — certainly not the 2.25 per cent allowed for in the Minister's Budget Statement — a further reduction cannot be expected from growth alone. Yet public spending is set to rise at perhaps three times the rate of inflation. This has resulted in an overall tax rise of 6 per cent in this year's budget, in a year in which inflation will be 3 per cent only.
Public servants are entitled to be paid; incidentally I include in that TDs, elected public servants. I make no apology for saying that all public servants are entitled to be paid. But consideration must be given to abandoning the current arbitration system applicable to public servants, replacing it with the same labour relations and Labour Court procedures as pertain to the private sector. I am not saying we should jettison that arbitration system tomorrow but that an alternative should be given consideration. The arbitration system was introduced in the fifties when few public servants were unionised. The public service, unlike the private sector, is now 100 per cent unionised. With the possible exception of TDs and Senators, almost everybody else in the public service, whether appointed or elected, is a member of one union or an other. The special system which provides for arbitration within the public service — without any adequate appeals procedure for the employer, the Government — is antiquated and needs to be reviewed. I see no reason that the normal labour relations and appeals procedures applicable to everybody else in the State should not apply to public servants. If there were, then perhaps TDs could take a case to the Labour Court about their own pay and conditions. However that is another day's work.
What is the answer to the budget arithmetical conundrum? The answer is to broaden the tax base and refine the process of public expenditure cuts which cannot be done by one or two political parties; it requires political consensus.
The NESC report says that, for our economy to prosper, we require economic consensus among the Government and the governed. In that whole process we must ask ourselves: who is being omitted? The answer is that this House has been omitted; we have not been involved in that process. It is time and it is the Fine Gael position and policy, that this House was involved. This can be achieved by all parties in the Dáil, together with the social partners, signing an economic accord, forming a national forum to address those difficulties. The Fine Gael Party propose the creation of a Select Dáil Committee, including all the party leaders, which would meet representatives of the social partners, as a national forum, to once and for all break with petty party bickering and advantage in order to maximise the efficiency of our economy and create maximum employment. This generous offer should be taken up by the Fianna Fáil and Progressive Democrat Parties without further delay. It should be grasped with both hands. It is what the country needs and it is not only for economic development reasons that it should be seized.
Earlier I expressed reservations about the PESP. My reservations are that it is essentially undemocratic in that the deal was done largely by civil servants and trade unions not only without Dáil consent and participation but without 12, 13 or 15 members of the Government participating. It is clear that the first most members of the Government knew about this was when they read the document at its launch. This is not healthy, especially since commitments have gone beyond pay into the arena of health services, education, youth services and women's issues among other things.
What role have employers or trade unions in signing an agreement of this kind without reference to this House? Who represented the poor, the emigrants or the unemployed at this meeting? Who represented the people who will be affected by the housing crisis facing this country? These items were not on the agenda, and they should not have been, but items akin to them were on the agenda. If we had a national forum to include the leaders of the parties in this House and other Members as a select committee, joining with representatives of NESC, the social partners and so on, to introduce legislation to give effect to a consensus reached, just think of what we could do in terms of planning proper expenditure cuts, broadening the tax bands and so on.
Due to the adversarial political system which operates, one or two parties operating on their own cannot deal with these problems. We are making a generous offer. It is not a Tallaght strategy, mark 2. In the Tallaght strategy we had responsibility without authority. We are offering to take our share of the responsibility if we have some authority in relation to where cuts will be made.
All the macro economic statistics show that unemployment is frightening and that it has the potential to get worse. Without being in Government Fine Gael will take their share of the responsibility in dealing with the problem, even if it means making difficult choices on expenditure cuts and in relation to broadening tax bands, if we are around the table with everybody else and have some authority. This generous offer, if taken up, would reduce party bickering which prevents this country from maximising its economic advantage, thereby increasing unemployment. It is vital that it be taken up.
There is only one body which represents the people as a whole and that is Dáil Éireann. The Dáil must be involved in the process of social and economic progress so that all the people, however lowly in economic terms, have their views taken into account when economic and social accords are being reached. We are nine years from the turn of the century and emigration is drying up and unemployment is rising or is stabilising at unacceptable high levels. Let us get together to sort out the problems. Is that not what we were elected to do? Is it not a fact that as the party system operates, we are becoming irrelevant as parties and are playing off each other, saying that one will do something better than the other? What is wrong? NESC sets it out. With consensus, stability and continuity being extended into the political sphere, the best brains in this House can get together and isolate petty self interest groups outside of this House who play us off against each other to the national disadvantage. The two members of the Government present in the House should take this generous offer back to Cabinet with them.
As public service spokesman for my party I protest at the slow progress being made in abandoning what I call the sliding hatch mentality in certain sections of the public service. It is totally unacceptable that people should have to talk about personal affairs through a hatch with other people as observers. That is taking voyeurism too far and it is a gross invasion of the privacy of citizens. Fine Gael will proceed with a Private Members' Bill requiring all sectors of the public service to make provision for people to have their affairs dealt with in private.
I also protest at the malpractice of the Department of Justice who are again referring representations and inquiries from Members to the Minister's office. No matter what Government are in power that is an abuse of the rights of Members and the public. It is also a waste of public money and it should be of concern to this House for that reason. A simple inquiry by my office as to the laws concerning citizenship was referred to the Minister's office when the Department realised the inquiry was from a Deputy. They said, "we can deal with members of the public but not with a Deputy; sorry, I will put you back to the Minister's office". The Minister's office, when contacted, ask one to hold on and they go to the citizens section, get the information and then give it to the Deputy. That is a gross abuse of the rights of Members of this House and a waste of money. Who do these mandarins in the Department of Justice think they are? If this continues there will be a major row in this House. I will look for explanations from the people whose job it is to ensure that money spent in the Department is spent wisely and well. It is an abuse of public spending, an abuse of public servant's time and an abuse of TDs time. I will also ask the Committee on Procedure and Privileges to ensure that the rights of Members are protected.
We are facing very serious economic difficulties. We got together in a national forum to consider the Northern Ireland problem and we were able to come up with some agreement. We would have less difficulty in coming up with agreement in an economic forum, particularly if it included the social partners. I commend that policy decision of Fine Gael to the House and I hope the offer will be taken up.
At the outset I congratulate my colleague and very good friend Deputy Chris Flood on his elevation to office. He has served his constituency and this House well. I have no doubt that he will bring renewed vigour to the health portfolio. My heartiest congratulations, good wishes and felicitations.
There can seldom have been a budget which has excited such a variety of responses, sometimes contradictory, sometimes negative and sometimes positive, as has this budget. We had characteristically what could most charitably have been described as a load of drivel from the main Opposition spokesperson, Deputy Michael Noonan of Fine Gael. He trotted out during the course of his response a tortuous script distinguished by some odd metaphors and quips which evidently passed in his mind as humour. Reading his script, as I did last night, I was reminded of the fact that his television producer was, in a previous existence, associated with Bosco.
The Dublin stockbroking community also come in for some chastisement in this matter. They have been extraordinarily diverse in their views. "The budget is deflationary at a time when the pace of economic activity has slowed significantly," mused one pundit. Another refugee from the pressure-cooker world of high finance suggested that the budget was expansionary and added that "the tax concessions and social welfare changes will lead to a small real rise in disposable income". He is probably right on that. The reality is that it is hard for any commentator to find something new and novel to say about the budget.
The reality arises from two specific issues which have been touched on by previous speakers. The first is that most of the budget's contents were forecastable. The Programme for Economic and Social Progress had set the parameters in key areas such as tax reform, social reform, employment and training, and agricultural development. Against these parameters the budget was drafted. Some Members, most notably those belonging to Fine Gael, suggested that there is something wrong or sinister about this. I commend Deputy Gay Mitchell for taking a more balanced view than did his party's spokesman on Finance. Fine Gael as a party seem to feel that the budget should be decided in here. Those who propose this myth — albeit a myth based on a close reading of Bunreacht na hÉireann — that the budget could be settled in the Dáil Chamber are trying to pursue a chimera which will never be realised. Whatever the constitutional myth, the reality for many years has been that the budget in its details has been drafted in the recesses of the Department of Finance and after some tinkering by Government it has been endorsed by Dáil Éireann. As budgets became more technical, the technocratic input in the budgetary process has outweighed and displaced the direct democratic input. To the extent that this budget can be said to be a departure from the norm, it is a departure that should be welcomed rather than condemned. It must surely be progress if the people who are to be affected by the economic changes brought about by a budget — workers, farmers, employers, the people of Ireland in their various socio-economic guises — are represented in some direct way in the pre-budget discussions and processes.
Fine Gael spokesmen found fault with the role played in the programme and in the budget by the social partners. I do not. While I would not subscribe, as is frequently done in this House in other matters, to taking responsibility from this place, I feel that the greater involvement of the social partners in the whole process of policy formation is a good one which we should build upon and develop.
I mentioned that two realities set the parameters against which the budget was cast. If the Programme for Economic and Social Progress was one of those realities, the continued need for macro-economic stability was definitely and unequivocally the other. It is fundamental to the national well being that we maintain a firm control on the public finances and work continually towards a reduction of the ratio of national debt to GNP. This necessity is recognised in section 2 of the Programme for Economic and Social Progress. It is recognised by the leaders of the trade union movement, by the leaders of the farm associations, by the employer associations and is recognised widely by most sane economic analysts. Sadly, the reality is not always recognised by the parties who oppose us in this House. While they privately say other things, all too frequently of late they call for an expansion of State spending without identifying additional revenue sources or extra savings to pay for such expansion. They have not the honesty to admit that their proposals would lead inevitably to more debt and would endanger the economic stability which has so painstakingly been constructed since Fianna Fáil took charge of national economic affairs again in 1987, nor are they prepared to admit that if we do not fund expansion by debt we must either fund it by cutbacks or by increases in taxation.
Before leaving the Programme for Economic and Social Progress I should like to congratulate all parties concerned in its preparation. The programme is a very fine document which will serve this nation well as we move towards the next millenium. It is worth reminding ourselves that the Programme for National Recovery which preceded the Programme for Economic and Social Progress provided this nation with stability on which economic progress has been recorded since 1987. It is also worth recalling that the Programme for National Recovery was heavily criticised by the Opposition parties in 1987. Deputy Spring referred to the programme as “the con trick of the century”. Deputy Michael Noonan of Fine Gael in doom-laden tones spoke of the economic chaos which would flow from the programme, with dole queues growing beyond 300,000. They were not alone. One of our prestigious Sunday newspapers saw the programme as “self-destructive” and went on to describe it as being “one that cannot possibly succeed”.
Ever anxious to prove that economics is indeed the dismal science, an economist from one of our neighbouring institutions claimed that the programme and the Government strategy which underlay it had dealt "a severe blow" to the policy of reducing borrowing and went on to suggest that it would undo much of the progress on the public finances achieved by Fianna Fáil when they returned to power in 1987. The commentators got it wrong. One might expect that some at least would have the courage to admit that they got it wrong but rather than do so, the majority of the criticism we heard represents nothing more than cranking up the word processors to give us more of the same.
I want to deal with two specific aspects of the budget, social welfare and taxation. The social welfare improvements will cost an additional £164 million in a full year. That represents very significant progress and I, as a taxpayer, am quite willing to bear the cost of that progress. A number of the improvements are particularly welcome. The Government's decision to grant a 4 per cent increase in social welfare benefits and in health board payments is well ahead of inflation. It is a pity we are not in a better position to improve further on that. The 11 per cent increase on the lowest level of payments is also well ahead of inflation. This represents a just and equitable transfer of resources to the less well paid and less well off. The improvements in child income support, in particular the minimum child allowance of £12 per week and the extension of the higher rate of child benefit from the fourth child onwards, is a very welcome development. Like the tax changes, this can reasonably be portrayed as a further support of the family.
Improvements in the family income supplement are particularly welcome. The Minister for Social Welfare has stated that these improvements arise in part because of the general improvement in social welfare payments. The FIS has to be boosted to ensure that there is still an incentive to work for those stuck in the low pay brackets. The change in pension payments signalled in the budget in the form of a pro rata pension for persons on mixed full rate and modified insurance contributions should be welcomed by every Member. That social welfare anomaly has been one of the scandals in our social welfare code. The Minister, to his great credit, set out in 1987 to remove anomalies and now he is addressing this one.
Debate adjourned.
Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.