I move:
That Dáil Éireann approves the Programme for Economic and Social Progress.
The Dáil debate on the new Programme for Economic and Social Progress provides all parties in the House with the opportunity of approving the broad thrust of economic and social policy as set out in the programme for this decade.
I urge approval of the programme by the House because it builds on the success of the Programme for National Recovery and maintains the consensus approach to economic and social planning, it provides the basis for continued social progress throughout this difficult decade and its economic and social provisions will transform Irish society into a more prosperous, more equitable and more enterprising society.
The achievements of the Programme for National Recovery are clear to all. The country was rescued, just in time, from economic and financial crisis which threatened our economic viability. The national debt has doubled in four years, employment was rapidly decreasing, taxation was growing unsutainably, investment was steadily declining, business confidence was at a low ebb, and capital was leaving the country at a rate which undermined the stability of our exchange rate.
Three years later we can clearly see the benefits of the consensus approach adopted in the Programme for National Recovery. The national debt has been held at £25 billion, the debt/GNP ratio has been reduced by 20 percentage points since 1987 and the Exchequer borrowing requirement by almost 11 percentage points as compared with 1986. Economic growth of an annual average rate of 4 per cent was achieved compared with GNP growth of less than 1 per cent in the preceding three years. Unemployment fell by 20,000 but, more importantly, there was a net increase of 40,000 in employment including a net increase of 70,000 in the private non-agricultural sector. Income tax was reduced, the standard and top rates by 5 per centage points in each case, personal and PAYE allowances increased, the standard and 48 per cent bands extended and tax exemption limits raised. Social welfare recipients, particularly the long term unemployed, received substantial increases in real terms.
The biggest achievement of the programme was that it created a low inflation competitive economy which is essential for economic progress and is the only basis on which we can increase employment and reduce unemployment and emigration. All this was possible due to the willingness of the major economic and social interests in our society to establish an agreement on the policies necessary to restore the public finances and secure economic and social progress.
The success of the Programme for National Recovery has been hailed internationally. I have already drawn the attention of the House to the judgement of the EC Commission in their Annual Economic Report that “the most spectacular results were achieved in Ireland”. The Guardian has also recently referred to “the continuing Irish economic miracle”.
I have outlined the approach to the Programme for National Recovery and the success it achieved because it is that success which encouraged the Government and the social partners to embark on a new programme to succeed it and to negotiate this Programme for Economic and Social Progress which I now commend to this House for approval. Naturally there were some who were sceptical of the merits of the first programme when it was debated here over three years ago. I would hope that its proven success will encourage the House generally to take a constructive and approving view of this successor programme.
The second reason I commend this new programme to the House is that it continues the spirit of consensus and social harmony established by the preceding programme. A small open internationally trading economy like ours can best advance in prosperity if the main economic and social interests recognise and accept the benefits of a united approach. We all want the best possible education for our children, job opportunities to match their skills and abilities, a growing standard of living, an end to involuntary emigration, satisfactory access to a high standard of modern health care and adequate social welfare provision for those who become disadvantaged or deprived. All this is possible through greater economic growth which, in turn, means that all interests in the economy must combine together to make Ireland a low cost competitive and efficient economy.
It is surely welcome and encouraging that our trade unions, employers and farmers united in both these programmes to make Ireland, by their common efforts in co-operation with the Government, a more prosperous and more just society. I am optimistic that Deputies will respond positively to what has been achieved and consider that the new programme deserves every support and success. Our history has been too often marked by disunity of effort and purpose. In these two programmes we have turned away from aggressive confrontation and look forward to a decade of common purpose and concerted effort to make Ireland a much better place for us all.
Before turning to the content of the new programme, I would like to comment on the fact that a number of Deputies in recent discussions in the House have expressed concern that these types of programme represent a diminution of the functions of the Oireachtas. I think that the concern of Deputies in this regard is entirely unjustified. In the first place, it is and always has been the function of Government to draw up programmes for economic and social progress. Economic and social planning has for many years been an accepted instrument of Government here and in almost every other Western European parliamentary democracy. In this country it has been adopted by successive governments, some I may say with more success than others. It is now a well recognised, normal procedure for Governments in the course of drawing up such plans or programmes to consult with the different interests and groups in our society.
Essentially the Programme for National Recovery and this programme do not differ from previous plans or programmes in that they are drawn up by Government in an approach of consulting with major economic and social interests. Without that such plans and programmes would have little hope of success. In return for the commitments made by Government in this programme in economic and social policy areas the social partners have themselves made a number of vital, realistic commitments on key issues.
The prerogatives of the Oireachtas are not impinged upon or infringed by this programme any more than they were under previous programmes. To give effect to many of the commitments under the programme the Government will require financial and legislative approval by the Oireachtas. I do not delude myself that, if the House gives overall approval to this programme when we come before the House in due course for financial or legislative approval for individual items, we will not be subjected to criticism, scrutiny and the rigours of parliamentary debate. We can, in principle, be prevented by Parliament from giving effect to provisions in the programme when we come for specific parliamentary approval to individual provisions. It has been said that some of the provisions extend beyond the lifetime of the Government. It is normal for Governments to make financial and legislative proposals which extend beyond the lifetime of a Government. Any succeeding Government are free to propose amending proposals and would in such cases enter into the necessary negotiations with the social partners to vary the programme.
There is, therefore, no infringement or diminution of the prerogatives of the Oireachtas by the negotiations of the last two programmes or by any of their predecessors. In fact, it could be argued that if, as some Deputies have urged, the political parties should become involved in the negotiations outside this House that would in effect transfer outside this House the political debate which is properly the function of Parliament. It would require the Oireachtas to rubber-stamp economic and social policies which the political parties would have already agreed in another forum outside the House. That would really diminish the status and function of the Oireachtas.
Finally, on this topic, let me point out that there is no certainty that the social partners would be prepared to enter into negotiations involving representatives of political parties as distinct from the Government. In fact, I understand that the National Economic and Social Council have indicated that council members are of view that the council should remain as currently constituted and that they should not have participation, whether by membership or observer status, by representatives of political parties.
I appreciate that Opposition Deputies are impressed by a procedure whereby the Government and the social partners are able to agree on an agenda to transform Irish society in this decade. Their role is the political role, the prerogative of Parliaments is to assess Government proposals, policies and agreements negotiated and to approve, amend or reject them.
I would like in this context to deal also with the amendments to the motion put down by the Opposition parties proposing, inter alia, that an economic and social affairs committee of the Oireachtas or a Dáil review mechanism be established in order, in the words of the Labour Party amendment, “to complement the important work of the social partners with a clear and representative democratic mandate”.
The Government cannot accept these amendments. The programme is now before the House for approval. Such approval gives the ultimate democratic mandate to the programme. The specific legislative, financial and administrative provisions of the programme will come in due course before the House for discussion and decision in the ordinary course of parliamentary procedure. Furthermore, the central Review Committee under the programme will publish periodic progress reports. I am prepared to undertake to have these reports debated in the House whenever there is a request to do so. Furthermore, Deputies can through the democratic process of the parliamentary question seek information from members of the Government on an ongoing basis about developments as regards specific provisions in the programme. I see no practical value, therefore, in duplicating what can be dealt with in the ordinary course of business in this House by establishing the suggested economic and social affairs committee or Dáil review mechanism.
I reject the implication in the Labour Party amendment that a programme of this nature, if approved by the House and with all the other parliamentary processes that individual provisions must undergo, could lack a clear and representative democratic mandate. The direct opposite is the case. There can be nothing with a greater representative democratic mandate than a programme approved by the Government and, hopefully, by all the representative organisations who are party to it and by this House.
I will now turn to the principal provisions of the programme.
Essential to the growth of our economy is that we maintain firm control of our public finances so that there is a steady reduction in the ratio of national debt to GNP. That was an objective which the Government and the social partners agreed on and achieved under the Programme for National Recovery and which is now continued in this programme. Specific targets have been established of reducing the debt-GNP ratio to about 100 per cent by 1993 and, as part of this, to achieve a broad balance on the Exchequer current account. No other course will ensure the lowest possible interest rates and inflation, two essential conditions for enterprise and investment to grow. I am sure that there are few, if any, Deputies in the House who would not approve of these objectives of the programme having regard to the havoc wrought upon our economy by uncontrolled public expenditure and a spiralling national debt of former years.
I want to make clear that throughout the programme there can be no weakening of that firm fiscal framework. Without it, we risk rising interest and inflation rates, lower real incomes, declining standards of living and collapse of the investment needed to create and sustain jobs.
To support the policy of macro-economic stability, the programme provides for restraint on pay for the coming three years. Everyone now recognises that the pay restraint of the Programme for National Recovery contributed greatly to the lowering of inflation which, together with the income tax reductions under that programme, significantly increased real take-home pay and thereby directly improved living standards. There is no benefit for anyone in high nominal pay increases which are outpaced by inflation. We see examples of that in other economies. I think that one of our most satisfactory achievements in the past three and a half years has been to have broken out of that spiral of rising prices which so harassed and angered housewives trying to manage family budgets which were being constantly undermined by rising prices.
The pay increases provided for in the programme are fair and reasonable in that they will maintain our competitive costs in relation to our trading partners while ensuring that employees can expect, with the further income tax reductions provided for in the programme, a significant improvement in their living standards. A special feature of the pay provisions — as it was in the Programme for National Recovery— is that those on low incomes will receive proportionately higher pay increases than those on higher incomes. These higher pay increases for those on low incomes will be further increased by the bigger family income supplement payments which were such a socially-important innovation in this year's budget.
I have already mentioned the reductions in income tax provided for in the programme. This continues the process we began in the Programme for National Recovery under which more than £800 million in income tax reliefs were provided mainly by reducing the standard rate from 35 per cent to 30 per cent and the top rate from 58 per cent to 53 per cent. This process will now be continued so that by 1993 the standard rate will be 25 per cent and there will be a single higher rate of 48 per cent. This and related reforms will reduce income tax further by £400 million in current terms in a full year.
This reform — and there is no greater reform in tax matters than to reduce the burden — is revolutionary as compared with the long history of increasing income taxation in the years prior to 1987. It has been possible only because of the consensus approach which controlled public expenditure, restrained pay and caused the rebirth of growth in what had been a stagnant economy. Lower taxation lowers inflation, improves standards of living and generates confidence and enterprise. That is our objective in the income tax provisions of this programme, as in its predecessor. I commend that part of it strongly to the House.
The programme also envisages continuation of the process already begun of harmonisation of indirect taxation with our Community partners. The eventual form the harmonised structure of indirect taxation will take is not yet clear. The programme makes clear that we will approach the community discussions with a view to ensuring that the burden of adjustment is not borne disproportionately by member states which have traditionally, and for wider social and economic reasons, relied upon indirect tax revenues. The programme also envisages an increased contribution from capital taxes, continued improvement in our already very successful programme of improving tax administration, collection and enforcement and sustained pressure on the black economy.
It is our intention that the social reform provisions of the programme will profoundly change the equity and quality of our society and I believe they will. Successive Governments have built up our social services which, given the resources of our economy, compare well with those in other comparable economies. But, in too many respects, our social services have deficiencies, inequities and imperfections which we are now committed in this programme to eliminate.
Our education system must provide the opportunity for all to develop their potential to the full. Only the highest standards in educational instruction and facilities can satisfy us. All children must be given equal opportunity. Only as a highly educated and skilled people can we achieve the standard of living to which we rightfully aspire.
The programme, therefore, contains a comprehensive series of measures which we have worked out with the teacher unions which will greatly enhance the quality of our educational system. The principal measures will ensure: improving pupil-teacher ratios; greater resources to remedy disadvantage in education; extra vice-principal and guidance posts in post-primary schools; a sixyear cycle of post-primary education; in-service training of teachers; expansion of caretaking and clerical services in primary and post-primary schools; provision of an extra 8,800 third-level places to respond to rightful additional demand for higher education; upgrading or replacement by 1997 of all substandard school buildings; expansion of continuing and adult education and measures to improve access to third-level education particularly by those from disadvantaged areas.
A Green Paper on Education will be issued by the summer of this year to be followed by a White Paper early in 1992 and then by an Education Act. Youth services will be kept under review in consultation with the social partners and youth organisations. The role of parents is recognised and their involvement will be promoted.
These measures represent a coherent and comprehensive set of measures which, pursued throughout the decade, will ensure we have an educational system second to none, geared to the needs and opportunities of the modern world and, most important of all, accessible to all.
We have similarly decided to overhaul radically and reorient the health services so that they are comprehensive, equitable and efficient and so that the patients' interests are central. The principal measures include: development of community-based medicine which will develop and expand services for the elderly, the physically and mentally handicapped or disabled and children, and will establish local health centres and expand the dental services. This programme will be developed over seven years commencing with the provision of £8 million made in this year's budget; reforming eligibility for hospital services so that all inequity of access to hospital treatment is removed; continued support for Voluntary Health Insurance; uniformity and consistency in assessment for medical cards; rationalisation of the administration and management of the health services; improvement of women's health services; a charter of patients' rights; better and more comprehensive health promotion and controlling the cost of drugs by price reduction and changes in prescribing practices.
This programme of reform which takes account of various studies and reports on the health services will ensure that our standards of medical care are organised and oriented equitably and efficiently towards the needs of the community.
Our social welfare services are already highly developed. This has been our response over the years to an economic and social structure characterised by relatively low incomes, exceptionally high dependency ratios, large families and high unemployment. Under the Programme for National Recovery, we set out to make significant real increases in our social welfare rates. Long-term benefits were increased in three years by 27 per cent. As a society, we already devote a higher proportion of our resources to social welfare than the OECD average. This reflects our fundamental commitment as a caring society. We recognise, however, that those forced to live on social welfare benefits particularly those with large families deserve, as our economy grows, to share in the rising living standards of the community as a whole.
The programme, therefore, contains a Government commitment for the first time to give effect to the recommendations of the Commission on Social Welfare. By 1993, all benefit rates will be brought up to the priority rates recommended by the commission and the full rates recommended by the commission will, thereafter, be applied as the resources of the economy grow. This will represent a major improvement over time in the living standards of those in receipt of social welfare benefit. The full improvement cannot be made overnight as the cost in 1990 would be £327 million but it will be made steadily as a priority claim on our growing economy.
We will make other improvements in our social welfare system under the programme. These include extension of social insurance to part-time workers, improved child income support and the major improvement in family income supplement announced in this year's budget.
There is a major debate in our society about the incidence of poverty. We are not among the wealthy societies but we already devote a higher proportion of our resources to social welfare than betteroff countries. Our record as a society in this matter is not one to be decried or denigrated. The Government under this programme are giving priority in the allocation of resources to making a new major contribution to reducing the incidence of poverty.
Decent accommodation is a major necessity of life. We have a record in social housing which is second to none in the world. As an independent State, we were left a fearful economic and social legacy in what were among the worst slums in Europe. We have successfully eliminated that major social evil.
In the programme, we have now outlined a housing policy for the nineties which will ensure every household a dwelling suitable to its needs. Increased funding for local authority housing and new forms of social housing are part of that policy. We will eliminate homelessness and ensure that the accommodation needs of the travelling people are met. We will also ensure that reasonable safeguards are introduced to protect tenants in the private rented sector while encouraging continued investment in that sector.
On employment, the programme continues and expands the successful policies of the Programme for National Recovery which reversed the downward trend in employment. The approach is twofold. First, to create the low-inflation economic conditions which stimulate investment and enterprise and make us competitive in our trading markets. Secondly, to develop, by special measures and incentives the sectors with potential for increasing employment. Our exports have been growing at a rate unprecedented in our history so that we have had a balance of payments surplus for the past four years. This has not only increased employment in our exporting industries but the balance of payments surplus has supported the stability of our exchange rate, itself a significant positive aid to our trading enterprises.
Our sectoral approach has been highly successful. Tourism, financial services, forestry, construction are all sectors in which the policies continued in this programme are giving increased employment.
In the manufacturing sector the programme will continue to generate 20,000 new jobs annually as the previous programme did. Here again, the low-cost low-inflation competitive conditions created by the programme will enable us to continue to attract overseas investors at the high rate of the past four years. The development of indigenous exporting industry will be a firm priority under the programme. The objective of industrial policy is to increase by 100 over the decade the number of Irish manufacturing companies having an annual turnover greater than £5 million in real terms.
We cannot be complacent about our employment targets. We suffer very high unemployment by comparison with many other countries because our labour force has a natural annual increase of 1.8 per cent as compared with 1.0 per cent for Community countries generally. In most other Community countries now, the population has stabilised and the number leaving the labour force on retirement and death is roughly equalled by those entering it. We have, therefore, a formidable task to create new employment at a rate which will absorb our exceptionally rapid growth in the labour force. We cannot solve it by increasing public expenditure specifically to create jobs. We have learned that lesson. We can only do so by the policies contained in this programme.
Our response to the long term unemployed may well come to be recognised as the most fundamental change brought about by this programme. We are establishing a new integrated partnership between the local community and public agencies to remedy the social deprivation that exists in many black spot areas and to increase the job chances of those who are long term unemployed or who are in danger of becoming so. The new strategy spelled out in the programme will enable the public agencies, the social partners and local communities to band together in local companies which will tackle in a comprehensive way the social and employment problems of their local communities.
For people who are unfortunate enough to find themselves with a disability, we have set down a series of significant positive and constructive measures to improve the quality of life and the possibility of obtaining employment. The Government will examine, in consultation with the ICTU and the organisations representing people with disabilities, how best the right of the disabled individual can be promoted.
In the area of equality we have a series of positive measures that can be implemented now. The work of the Second Commission on the Status of Women will provide a positive and constructive input to improving the position of women in our society.
The programme also sets out objectives for the development of agriculture and the maintenance of farm viability. The agriculture and food industry continue to be of central importance to the Irish economy. I want to reiterate that. I have given that assurance to the farmers. They require reasonably favourable economic conditions especially with regard to inflation and interest rates, if they are to compete in a more difficult and challenging external environment and cope with the changes that are likely to emerge from present developments. The programme recognises the importance of negotiating compensatory arrangements in the form of increased EC-funded income supports orientated towards the family farm, as well as the need to promote structural reforms. Our overriding shared objective is to maintain as many farm families in the countryside as possible with acceptable income levels, recognising that family income in many cases will not come exclusively from farming, while at the same time promoting an Irish food industry of high quality and efficiency. It is very important at this time of uncertainty to maintain confidence and motivation among farmers, and the best way to do this is undoubtedly full participation in the national programme, so that problems, anticipated or unforeseen, can be dealt with in a mutually supportive framework operating at the very highest level.
In debating this programme in the House, I hope all will acknowledge the gratitude we own to the trade unions, employer bodies and farming organisations for coming together with Government to negotiate this programme. It was not easy for them. In such negotiations, there are always gains and losses to be weighed. In the case of the trade unions, and the employers, their memberships will be meeting later this week to consider ratifying the programme. I understand that the FIE have already approved the programme.
It has been an historic development that the social partners have reached such a comprehensive, radical and beneficial consensus in regard to the direction and content of our economic and social policies. Let us recognise that in this House. In doing so, we should also recognise that the National Economic and Social Council by its painstaking research and its process of free discussion between the social partners laid the foundations for this programme and its predecessor. We should, therefore, in this debate also express our thanks and appreciation for the work of the members and staff of the National Economic and Social Council.
I will conclude by emphasising to the House the importance of the decision we will make by approving this programme. It will continue the stability of the public finances and the economy in the face of challenging world trends. It will give us a competitive base from which to expand our output and increase employment. It will enable our economy to grow — the only way in which we can improve our living standards. It will enable us to become a more just and equitable society sharing fairly the fruits of our increasing prosperity. It will, above all, enable us to face the challenges and opportunities of a changing world, united in our policies and objectives at all levels of society This is the essential principle that a small nation, confident of its abilities, should adopt and this programme is the embodiment of that principle.