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Dáil Éireann debate -
Thursday, 8 Apr 1993

Vol. 429 No. 5

Financial Resolutions, 1993. - Financial Resolution No. 10: 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.)

Before the debate was adjourned, I was referring to the agricultural provisions in the budget. An agricultural environment scheme will be introduced for the first time this year. The Government has allocated £0.9 million to that scheme. While the scheme is very worthy and welcome, I do not think this small allocation will make very big inroads in this area. Nevertheless, it is a beginning. I imagine that the scheme will be enlarged in future years and will receive further funding both from the Government and Europe. Incidentally, 75 per cent of the cost of the scheme will be taken up by the Community.

This year for the first time an upper weight limit has been placed on beef carcases acceptable for intervention. The Community first fixed a weight of 340 kilograms but, as a result of objections raised by the Minister for Agriculture, Food and Forestry, Deputy Walsh — who must be complimented for the stand he took on that issue and others — the limit was increased to 380 kilograms and will come into effect on 1 July 1993, not 1 April as previously mentioned. The fixing of a weight limit will have quite an impact on Ireland, as we export much of our beef to the Community and have more in intervention. In 1992 about 750,000 tonnes of beef was taken into intervention but by 1997 that figure will be reduced by a little more than 50 per cent, to 350,000 tonnes. Ireland will have to export much more of its prime beef on the open market, which may be a blessing in one sense but not in others. We will have to go further afield, find new markets and extend existing markets. Coras Beostoic agus Feola, the body that promotes our beef and other agricultural goods, has had its Government allocation reduced by 2 per cent this year. That is surprising, especially when one takes into account the additional task that will be faced by the organisation in the future in promoting our product. I very much regret the reduction in the allocation to CBF and I call for a much larger increase in coming years to cover the extra cost involved. In the past some of our very notable exporters sold beef on the open market only but, unfortunately, some of them have been very heavily criticised in the past 18 months. Other exporters have sold directly into intervention, a practice that will be seriously restricted after 1 July when the 380 kilograms weight limit is imposed. After 1977 less and less meat will be accepted into intervention stocks and more will have to be sold on the open market, leading to increased work and expense for the CBF.

The allocation for group water schemes has been increased by £500,000 to £2.5 million. While I appreciate that the Government has increased their contribution towards water schemes, £2.5 million is not sufficient to get the schemes already in train under way. A much greater allocation will be required bearing in mind the high percentage of rural houses which do not have running water. I very much welcome the increase of £500,000 in the allocation but that figure would have to be trebled to make a serious impact on the schemes already awaiting ratification by the Department.

I was delighted to hear that the 1993 budget would create jobs. However, I do not understand the way in which an increase in the level of VAT on poured concrete from 10 per cent to 21 per cent could signal a jobs creation operation. Perhaps the Government parties, in their wisdom, have a complicated way of working out such things, but, being more simplistic, I do not recognise how that could create jobs. The increase in VAT is most regrettable because the building industry, which is directly affected by this move, is labour intensive. Any measures that might help to increase the amount of building work undertaken would be very desirable. I should like the Minister to explain his policy in regard to increasing the VAT rate on concrete to 21 per cent.

The VAT rate on adults' clothes has been increased from 16 per cent to 21 per cent. I see 15 and 16 year old girls wearing garments that would be too big on their grandmothers. How are shopkeepers supposed to distinguish between a garment for a 15 year old girl and one for her grandmother? For some reason, present fashions seem to dictate that the bigger the clothes, the better. To say that the increase in VAT applies only to adult clothes is incorrect because it would be very difficult to distinguish between clothes for a 15 year old girl and an 85 year old grantmother.

The health services allocation has been increased by 12 per cent for which the Minister for Health, Deputy Howlin, must be complimented. The total expenditure on health services per year is about £1.7 billion, so a 12 per cent increase in the allocation is sizeable. However, it does not appear to have made any impact on the health boards. In the Western Health Board area hospitalisation costs have increased and we are also threatened with the closure of certain wards for a period during the summer, perhaps for a month. I have been told that all hospitals in the Western Health Board area are anticipating closures during the summer and I have no doubt that the same will apply to the health board areas. There is a requirement for a saving of approximately 10 per cent. I have had the experience of being a patient in a Roscommon hospital and in another in Dublin since Christmas. I thank God that things worked out well and that I am in the House today, so I should not complain too much about money.

We cannot afford the closure of any wards in Roscommon hospital. That is equally true of the hospitals in Galway and Castlebar. There are four coronary care beds in the hospital at Roscommon. During my four day stay in coronary care at nights some of fellow patients were removed to make room for other patients. At the time I was told that if other patients had arrived after a particular time at night they could not be admitted to Roscommon but would have to be transferred to a hospital in Galway or Castlebar. I do not know what will happen to patients when they are refused admission to the hospitals. Surely we cannot rely on a drastic reduction in illness, sickness, car accidents and heart problems. I contend it is most unfair to place such extra burden on nurses, doctors, in fact on any one individual who may have to say to a distressed father and mother: "Sorry, we cannot admit your child to hospital tonight." Needless to say, it will be the nurse or doctor who refuses to admit such a patient who will also be the subject of abuse, but their hands are tied because of regulations introduced with regard to hospital admissions last year. I understand that if a ward has been designated for four beds then it must contain four beds only. I understand also there is a regulation in being stipulating that any extra beds in such a ward would not be covered for insurance purposes. In the light of what the Minister said at the Labour Party Conference last weekend, perhaps he will review the overall position. I wish him luck in that respect. However, I would plead with him not to propose bed closures during any part of the year by way of a money-saving exercise.

I note that £29.3 million has been allocated to railways, which is very much to be welcomed. However, I note that those moneys will be expended mostly on the Dublin to Belfast and Dublin to Cork lines without any moneys being spent on, say, the Dublin to Galway, Dublin to Westport or Sligo to Limerick lines. This would appear to be an endeavour to keep funds very much on the Eastern sea-board.

Mr. Byrne

What about Rosslare?

Well, Cork is beside Rosslare. I am sure they would not object to sharing, with the exception of roles on the GAA field; they would never share those.

Carlow-Kilkenny): The Deputy has one minute remaining.

With regard to the licensed trade, one dear to my heart for a number of reasons, I was delighted to note that the Minister for Finance thought fit to refrain from increasing excise duty on liquor, benefiting that much overburdened, overworked, over-taxed and underpaid sector of our community, namely, publicans. That is a trade employing approximately 38,000 part-time and full-time workers. In view of the fact that taxes on beer here are the second highest in the EC league, it would be indeed desirable that the Minister in future budgets would ensure that excise duty would be reduced rather than increased — not alone desirable from the publicans' point of view but also from the point of view of their patrons, including tourists. For example, since excise duty on spirits was reduced there has been a dramatic reduction in legal and illegal importation from the North. Therefore, a further reduction on beer would also be helpful in that respect.

Acting Chairman

While realising the Deputy is speaking on a subject very close to his heart, I must remind him that he has exceeded his time.

I could not finish on a happier note, making the point that even though the licensed trade is hard hit at present the fact that the Minister did not increase taxes on them was a welcome move.

Mr. Byrne

I hope the minutes after closing time in Deputy Tom Foxe's pub are not as long as the last one during which he just spoke. I should like to share my time with my colleague and friend, Deputy Pat Gallagher, if that is agreeable.

The budgetary provisions have much to be commended. I do not want to go through the ritual of lauding its many contents. I shall concentrate on a few aspects only.

Acting Chairman

May we clarify one matter first? Has Deputy Pat Gallagher already spoken on the budget?

(Laoighis-Offaly): Yes.

Acting Chairman

In those circumstances Deputy Byrne cannot share his time with Deputy Pat Gallagher.

Mr. Byrne

In drawing up his most recent budget the Minister was subjected to severe constraints. I should like to congratulate him on his adroit manoeuvring across the political minefield. However, subtle political considerations are not uppermost in the minds of the electorate — jobs are and must constitute the thrust of all activities in this House. For example, within 24 hours of the Minister's Budget Statement 780 jobs had gone at Digital in Galway. Representing the long-standing, chronic unemployment blackspot that is Wexford, I fully sympathise with the people of Galway on their newly-found status in the unemployment super league. I must emphasise that, because many people around this House and nationwide still perceive Wexford as a prosperous county, a land of milk and honey, where there are very few unemployed. We who live in Wexford know otherwise. I am pleased to note that the Minister of State at the Department of the Environment, Deputy Browne (Wexford) is present, since he was the first to acknowledge that our unemployment rate is the third highest nationwide, second only to Donegal and Louth.

Long-term job creation is dependent on a sound, debt-free economy with a reasonable tax structure. However, neither debt reduction nor tax reform featured as priorities in the Minister's budget, which is regrettable. The long-term burden of debt service and repayment acts as a halter around our economy. It is imperative that maximum effort be undertaken to reduce that debt annually, because if we fail to do so we shall be passing that appalling economic handicap on to another generation. The realisation of that objective necessitates a long term strategic view. In this context I might remind the House of my remarks on the currency crisis, that there has been an historic incapacity on the part of our institutions as at present structured to manage our economy. For example, the Department of Finance and the Central Bank are in need of drastic reform and of the opening up of their operations since, as matters stand, they perpetrate a stranglehold on economic thought and consequently on economic development.

While recognising that the budget does not afford a forum for institutional reform, its provisions do reflect the lack of such reform. I acknowledge that in the past year there were many economic and political constraints under which the Minister for Finance had to labour. Equally, I acknowledge that seldom is progress made along a straight line. I sincerely caution the Minister not to allow bending with the breeze become habitual; hard times require hard decisions.

There has been much emphasis on the 27 per cent increase in capital expenditure. I have no ideological hang-up about State spending and welcome its beneficial effect on job creation. However, there are two things to be noted in that regard. First, we should realise that the jobs so created to a large extent will be short-term. Second, the economic effect of the increased capital expenditure will be offset by an increased level of taxation. For the first time since the mid-eighties real disposable incomes will fall or, at best, fail to rise. Such gains being reaped from changes in our tax code will be wiped out for all but the very lowest earners by the imposition of the new 1 per cent levy. This represents not so much a tax on the employed but a tax on employment and will lead to the number of opportunities for those out of work being reduced further. In economic terms, it will be counter-productive.

The gulf between the private and public sectors is glaring in that the private sector is being asked to pay extra taxes to fund the 7.4 per cent rise in the public service pay bill. The Minister has expressed his determination to reform the public service pay bargaining system and I hope we can take that at face value. From his long experience in the Department of Labour he is more aware than most of the intricacies of this task. The system is organised and is the only gaming machine which is weighted against the House. Should the Minister fail to curb the appetite of the public service our room for economic manoeuvre would be severely limited for many years to come.

In relation to taxation, I wish to congratulate the Minister, Deputy Ahern, for introducing the probate tax. This will be an efficient and equitable tax, but it appears however that it will not be applied to gifts given prior to death. This is a matter which the minds in the Department of Finance might examine.

In his Budget Statement the Minister stressed that the 1 per cent levy will be applied for one year only, but the history in relation to 1 per cent levies is deeply discouraging. I would have preferred if the Minister had avoided introducing this levy and I insist that he keep his word and abolish it at the end of this tax year, having regard to the fact that we know if it proves successful it will not be once off.

The new VAT arrangements will serve to postpone full compliance with EC commitments. The tax on labour intensive industries is anti-employment. In this regard I agree with the views expressed by Deputy Foxe. In particular I would like to dwell on the proposed increase in the rate of VAT on newspapers from 10 per cent to 12.5 per cent. The newspaper industry in Ireland is in dire straits with accumulated losses of £10 million. The combined effect of the VAT increase and the removal of the cap on RTE represents an unnecessary blow. At a time when we already have the highest rate of VAT on newspapers in Europe the Minister has decided to add a further £10 million to production costs. Not only does this amount to a tax on employment, it is a tax on democracy.

We are fortunate to have a broadly based newspaper industry which is imperative in maintaining the quality of our democracy. Should this increased pressure bring about the "Murdochisation" of the Irish newspaper industry, the first to feel the pinch will be the politicians. Unless we want the standards that prevail at the Sun and the Daily Mirror to become the norm in Ireland we should support our own industry. Although quite often I find the media disagreeable, one finds within it wit, brilliance and insight. Unless we want a diet of crude monosyllabic tabloids I appeal to the Minister in the strongest possible terms not to take this punitive step.

Since 1991 the VAT take from adult clothing and footwear has more than doubled. I share the view expressed by Deputy Foxe that it will be difficult to decide who can be described as adult. In the budget the Minister chose to increase the VAT current rate by 30 per cent. This must be viewed against a background of declining margins in the trade. In 1991, 47 per cent of domestic output, or £198 million worth of goods, was sold at home. This domestic market supports 7,000 manufacturing jobs. It is estimated, however, that 1,200 of those 7,000 jobs are now at risk. The Minister has failed to supply any worthwhile argument to support these measures and, again, they are counter-productive.

I also share the views expressed by Deputy Foxe in relation to the VAT change in regard to concrete. This does not make sense and will not contribute to job creation.

The estimated figure for the national debt at 2.9 per cent of GNP, or £760 million, has been artificially depressed by £150 million to be derived from the sale of State assets, namely, Greencore and Irish Life. It is regrettable that the historical whiff of sulphur surrounding the management of Greencore should have provoked the frenzy of suspicion which accompanied the interest expressed by Archer Daniels in the Government's 30 per cent share. I welcome the Minister's decision to put this shareholding up for auction.

I have two concerns in regard to this sale, namely, that the public interest in this strategically important industry and the interests of the company and its growth potential should be safeguarded. Neither of these constitutes ideological considerations, but the nub of the public interest is the golden share and the sugar quota vested in the company. One third of the sugar beet crop is harvested in County Wexford. Therefore, the security of this industry is of vital importance to the county and must be safeguarded at all costs.

In relation to the interest expressed by Archer Daniels, this form of foreign investment would be in line with the Culliton report and it would be a grave error of judgment if crude ideological considerations were to predominate. Of public note also is the fact that the foreign investment in Digital is different from the proposed involvement of Archer Daniels in that a partnership between the two companies would allow Greencore to expand internationally in a way that would not be possible if the share was bought by an Irish company.

Unemployment is rising against a background of a declining population. By any standards this is a doomsday scenario. Since budget day there has been no upsurge in business confidence and it now appears that our last hope for recovery in 1993 lies in the continuing favourable trend in interest rates. However, so long as sterling remains outside the ERM we have no such guarantee and it would be criminally foolish not to realise that we could have a repeat of the currency crisis in the coming months. This raises questions about our currency policy and ERM membership. It would be unacceptable if this House was again forced to accept baseless assumptions, which is what happened prior to devaluation. I no longer trust the Department of Finance and the Central Bank to do my thinking for me.

The most important aspect of the budget is the impact it is likely to have on job creation. We do not go in very much for economic planning here; it seems that we end up with a budget instead. A two hour speech by the Minister for Finance once a year is hardly the best way to establish the framework for adequate and informed debate about national economic priorities. The strong negative reaction to this budget from the business sector, in particular, was certainly a clear message to the Government. One commentator described this budget as a "Heath-Robinson contraption". It was a very elaborate budget but, at the end of the day, it was singularly unambitious. Much was expected of it but what we got in the end was a pedestrian affair that pleased very few.

At the time some even expected a radical budget — they are probably feeling sore now — which might provide some measure of the Labour Party's input into the broad thrust of Government policy. Instead we got one of the most cautious, conservative and neutral budgets for many years. Many commentators believe, as I do, that the overall impact of the budget will be bad — bad for jobs, output growth and tax reform. The forecast growth rate for 1993 contained in the Department of Finance's Economic Background to the Budget is 2.5 per cent.

It is getting curiouser and curiouser. It is a matter of optimism winning out over experience.

That is an independent figure.

On the general question of figures, I welcome the fact that the Central Statistics Office will get a 16 per cent increase in its funding — it probably needs it. I take a much more pessimistic view of the prospects for the coming year. It is estimated that consumer spending will show only a modest increase, less than 2 per cent, and the weakness of domestic demand will tend to militate against development of the more labour intensive enterprise. There will be little or no employment growth and we can expect that unemployment will rise by some 27,000 to around 19.5 per cent of the labour force by April 1994.

IBEC claim that their surveys indicate a sharp fall in orders over the past few months and that probably indicates a fall in the growth rate of manufacturing output from over 10 per cent to something of the order of 3 to 4 per cent. These figures obviously reflect the near impossible trading conditions as a result of the currency crisis. Even allowing for stability and a lower pound, the poor outlook for the European economy as a whole means there is little prospect of greater growth. Notwithstanding all of this why did the Minister for Finance make things even worse for some of the more exposed sectors of the economy? Let us take the clothing industry, a very labour intensive one, as an example. I once tried to make my living in the clothing industry and appreciate the numbers working in the industry and how hard it is to make a living? This industry is very responsive to changes in the marketplace. The Minister, in his wisdom, chose to increase the rate of VAT from 16 per cent to 21 per cent, while at the same time excessively high rates of income tax add greatly to the cost of employing workers. How will this help the fashion industry, which everyone recognises is an area of great job potential? Indeed, Irish talent and creativity in this field enjoys a certain international reputation. We are certainly not helping to encourage that reputation in the method the Minister has taken to squash any emerging talent in the fashion industry. Output in clothing and footwear fell by almost 5 per cent last year. At the end of the day the only people to benefit will be the "Arthur Daly-type" importers of cheap tat that can be sold on market stalls.

The budget will have practically no effect in terms of employment growth. On the basis of the Minister's post-budget forecast 3,000 net new jobs only will be created in 1993 and 309,000 people will be on the live register. Everyone knows that probably the figure will be much higher. Labour force survey figures for the year to April 1993 are likely to show a marginal rise in employment only of about 1,000 and a rise in unemployment of 25,000, which means that more than 18 per cent of the labour force are out of work. The labour force is expected to increase by nearly 30,000 in the year to April 1994. Were it not for the massive 20 per cent increase in the Public Capital Programme, financed mostly from EC Structural Funds, the figures would be truly frightening. I suppose we must be grateful for small mercies. Higher capital spending may give a modest boost to employment or it may just prevent things from becoming nightmarish. The boost to the Public Capital Programme may stabilise employment in the building and construction sector, although the depressed outlook for private construction will offset the increase in public sector activity.

When something radical and proactive is needed what does the Government do? It slaps on higher rates of tax and a new income levy which will further depress the level of activity. We have far too many taxes, PAYE, PRSI, the health levy, the employment levy and now a "temporary" income levy. A substantial portion of tax revenue now comes from the lower income workers. The basic allowance for PAYE is now so low that it is lower than the weekly wage of even poorly paid unskilled employees. Indeed many unskilled part-time workers can find themselves paying income tax. The so called "temporary" income levy may not be all that temporary. The Minister for Finance calculates that anyone who earns £173 per week gross is sufficiently well-off to pay an extra income tax.

There has been for a long time a consensus on the necessity and desirability of tax reform whereby tax would be levied on a broader base and in a much less complicated way. This position was endorsed by the Commission on Taxation, the NESC and the OECD. More recently, the Culliton report endorsed this position. It was argued in that report that the impact of tax reform will be pervasive. It did not argue that improving marginal tax rates, for example, by itself, will lead to an immediate and evident surge in job creation activity, but by removing the demoralising effect of the current tax system and removing the waste of all sorts of non-productive tax avoidance activities, reform will create a far more conducive environment for productive enterprise and more solidly-based investment decisions.

The Culliton report claims that "in no other single area does the Government have at its disposal the tools to make as far-reaching and effective a reform to support an enterprise economy as in taxation". This budget has to be seen as a lost opportunity in that regard.

Democratic Left believes that most people pay too much tax — a view shared by most people in the country. We also believe there are many disincentives preventing employers from hiring more labour. Unlike the other Opposition parties we believe that tax take from some sectors must be increased. Bringing equity and fairness into the tax system is an important goal. We do not believe in "tax and spend" for its own sake. Tax is just a source of revenue as the taxation system can be used to encourage the more efficient use of available resources.

One of the great puzzles of the recent Irish economic track record has been its impressive output growth figures combined with a very modest increase only in employment levels. This led to some rather glib suggestions that we had entered an era of "jobless growth". The NESC report, The Association Between Economic Growth and Employment Growth in Ireland, argues that the jobless growth claim is not literally true as Ireland had a rate of employment growth at a very modest level of 0.3 per cent per annum from 1960 to 1990, which is in line with late developers in the EC, such as Greece and Spain. The NESC document states that the extent to which economic growth impacts on employment growth is determined as much by the structure and composition of that growth, as by the absolute rate of growth.

The NESC argues that it is clear that recent trends in the structure and composition of Irish growth have tended to reduce the employment intensity of Irish growth relative to other countries. The basic point is that, while economic growth is necessary for employment growth, it is the nature and composition of economic growth that will determine how many jobs will be created and where they will be created. Much of the growth in recent years was achieved in the high-tech manufacturing sector, which is not particularly labour intensive. By contrast in the Irish owned and medium-tech sectors growth rates have been disappointingly low. These sectors are much more labour intensive. The Government must consider how greater levels of employment intensive growth can be achieved. The clothing industry is just one example of an industry where a contradictory approach is taken. In this case we are putting the squeeze on an industry that is labour intensive but that needs to be nurtured and protected. The pattern of Irish economic growth is further distorted by the operation of transfer pricing. At present Ireland is a tax haven for multi-nationals — I do not know how long that position will last. Transfer pricing created the illusion of a high export dynamic economy with big output and productivity, but in many ways this is simply due to the trickery of accountancy.

To return to the point I made at the start of my speech, the whole budget procedure is no longer up to the task of structuring a proper debate about our economic and financial priorities. Since reform is the buzzword of the moment and there is quite clearly a need for reform in many areas of our procedures, it should be considered in this area. Why should all budgetary matters be compressed into one long speech per year? Obviously a definitive statement about tax changes and revenue commitments is necessary, but the budget debate should begin several weeks before the Budget Statement rather than after it. That might take some of the misery and excitement out of the budget and certainly would make for less good television. But if its consensus about national priorities is to be regarded as a key factor in shaping positive outturns our procedures need to be changed. Everyone knows that the Minister for Finance is lobbied by interest groups in the run-up to the budget but it would be more acceptable if that process was more transparent. We were promised more open Government. Perhaps that can be expected in relation to the budget and we can look forward to some changes in next year's budget.

I will begin by agreeing with my Democratic Left colleague, who is slightly to my left——

Definitely on your left, and the gap is widening all the time.

——on her general comments about the structure and timing of the budget. It is not long since we went through the ritual of waiting for the British budget within a few weeks of which the Minister would be expected to come in here and deliver our response, as it were, taking into account the British line. Although that great modern economist, John Maynard Keynes, said that in the long run we are all dead, there is a long run dimension to economic planning, but the current budget presentation and administration does not provide for that.

This Government should try to work towards a medium-term budget, as Deputy McManus said, which would operate over three or four years, which would allow us to decide on certain priorities and pursue them over several budgets. We understand the reasons for the daft ritual that takes place at present — it relates to the Stock Exchange, to traders and so on. I noticed on budget day that new Deputies were not given a copy of the budget speech until the Minister had delivered it. Perhaps that practice, too, could be changed.

A newspaper article by Paul Tansey in the aftermath of the budget was headed: "Another Disaster From Ahern". I considered that kind of comment very unfair to the Minister considering the circumstances that existed following the fierce battle in relation to the exchange rate mechanism in the previous four or five months. I am not sure about the wisdom of the line taken by the Central Bank on that occasion but, considering international circumstances and the fact that the Government had been in office for only a few weeks, the Minister's budget was a reasonable response, one which created a framework for development.

I listened on budget night to a number of Deputies who normally occupy those vacant chairs lecture us about what the partnership Government should do. I remember in particular comments from Deputy Dukes about the difficulties and missed opportunities in the budget. That Deputy was a Minister for Finance for a number of years during which fiscal policy was at a standstill and no major initiatives were taken. The fundamental issue which should govern budgetary policy in medium and long term planning is the unemployment crisis. That is the major issue facing the economy.

Let us consider the position in Finland which has experienced major structural problems as a result of the collapse of the Eastern European, particularly the Russian, market. Unemployment in that country has increased to a figure slightly above that here. The Finns regard that as a major crisis, almost similar to that of a war. The Government there, emulating their Nordic colleagues, have undertaken effective action to deal with the crisis. Similar alarm and determination should be evident in this House in regard to our unemployment problem. Everything we do, including in this budget, must be judged by reference to the jobs crisis. In this regard, I welcome the steps taken by the Minister, particularly the increase in the capital budget of £500 million which, I hope, will have a spin-off effect of at least 3,500 jobs in the infrastructural and building trade. The Government has plans for a national economic and social forum which will consider structural changes in social welfare and taxation. We are in the process of setting up a national development plan which I hope, will consider the jobs crisis as a priority.

In The Irish Times of this morning there is an interesting article by Professor Fred Powell, head of the department of social administration and social work at University College, Cork, in which he refers to the current response to the jobs crisis, namely, the introduction of workfare. This matter was referred to by our Progressive Democrats colleagues at their recent party conference. We in the Labour Party are opposed to the introduction of workfare——

It relates to students.

——as a response to the jobs crisis. Professor Powell in his article refers to the conservative origins of this programme and contrasts it dramatically with the position in countries such as Sweden where people, having been unemployed for 14 months, have a chance of taking part in six months intensive training, almost always leading to a return to the labour force. That is the approach that should be emulated by our country. The national association of centres for the unemployed — I am a director of the northside centre — is opposed to any such development. My party, through the party leader and Tánaiste, Deputy Spring, put forward a very imaginative proposal about a year ago on a national work sharing plan. It was proposed that, through voluntary work sharing by five or six people, an extra job could be created without any loss of benefits. Such a programme would be a valuable initiative in confronting the horrendous problem faced by the long term unemployed. I categorically state our opposition to the introduction of a workfare programme. We believe that work sharing is the only way forward.

It is not very long since an MRBI survey showed that 60 per cent of workers would be prepared to examine the possibilities of work sharing if the Government brought forward a major national plan in that regard.

Concerning the negative impact of the taxation changes, I would make a special plea for the rag trade. All labour intensive industries must be protected if we are serious about solving the jobs crisis. I welcome the move to dramatically reduce the VAT rates affecting trades such as hairdressing, even though I have reservations about the extremely low wages which seem to be the norm in that business. It appears that the clothing industry did not mount a significent campaign with regard to the proposed VAT changes. The industry is now gearing itself towards the quality clothing end of the market. I would ask the Minister to consider whether or not the 21 per cent rate could be reduced at least to the British rate of 17 per cent.

I am honoured to be a member of the Committee of Public Accounts. Yesterday we questioned the chairman of the Revenue Commissioners and his staff and looked at the whole area of tax collection. Our major fiscal problems during the eighties have been due to the fact that significant sectors of business, the self-employed and the farming community did not pay any tax at all for long periods. Yesterday I was astonished at the revelation that £1.5 billion in taxation is outstanding. The Minister had great difficulty in devising ways to collect taxation and here we have this gigantic figure, equivalent to about 15 per cent of all the spending by the Department of Finance, outstanding in uncollected tax. I hope the Government will pursue that tax vigorously during our time in office.

Despite international difficulties the Minister was able to keep the EBR within the 3 per cent limit. If we returned to the policies of the seventies and eighties we would not retain the benefits achieved in recent years and there would not be any way foward for this Government. If this budget is successful and we have 4 per cent growth this year — most economists are predicting an upturn next year — and that continues up to the mid-nineties we should reach the Maastricht 60 per cent ratio of debt to GNP.

I welcome the massive Labour input to the social side of this budget. I welcome the extra £20 million provided to reduce hospital waiting lists. Many Deputies have dealt with heartrending cases of contituents on huge waiting lists for years. In its manifesto the Labour Party promised £25 million for mental handicap services. It is a great achievement that an additional £10 million will be spent this years for places for adult mentally handicapped people. I applaud the Minister for Finance and his colleague in the Department of Health on that.

I welcome the decision to put an extra £3.5 million into disadvantaged areas. Many underprivileged areas on the north side of the city need major resources. I have noticed that Germany spends the same amount of money on vocational training as we do on universities. We should be able to adopt a similar policy. When one studies factors relating to long term unemployment one finds that long term unemployed people are very often people who did not get a chance to sit the leaving certificate or the junior certificate. It is sensible to put resources into education.

I applaud the Minister for expanding the social welfare budget to £3.7 billion. The way to reduce that budget is to take vigorous action on unemployment. I am sure that the unemployment figures will be reversed as a result of some of the measures being considered by the Ministers for Finance and Enterprise and Employment.

We should reconsider the means testing of the carer's allowance. This was a worthwhile innovation which was introduced by Deputy Woods, but has been retarded by the strict means test applied to it. Many people just do not have the opportunity to benefit from the allowance. I notice that the British spend something like £8 billion on maintaining their three million unemployed people. Economists estimate that with the expenditure of half that they could radically attack the unemployment problem through training and direct labour subsidies. That is the road we should go down.

My Democratic Left colleague, Deputy Pat Rabbitte, on the night of the budget was critical of the £25 million to be granted towards county enterprise boards and of the £100 million being provided by the banks. Deputy Rabbitte suggested that it was another way of pulling money out of the hat. My view is the opposite to that of Deputy Rabbitte, who seemed to severely criticise the county partnership approach. County partnerships are part of the process of local empowerment which our President highlighted since she took office two years ago. In every community in the city, particularly in deprived areas, massive strides have been made by local-communities towards creating jobs and community development because previous Governments were prepared to give a little financial aid. The four new county partnership boards for Dublin will provide a significant opportunity to develop employment in this city. Recently in Dublin City Council we began to re-establish a Dublin enterprise board under our civic charter. We hope the Minister will fund it proportionately and that out of the £25 million which is available Dublin city will get at least £4 million and Dublin county will get the £8 million or £9 million to which it is entitled. In fact, we would be entitled to more, because we have the highest unemployment of any region in the country as the labour force surveys make clear.

I welcome the Minister's move to maintain mortgage interest relief, to increase it to 90 per cent and to provide for 100 per cent relief for the first three years in some circumstances.

On the jobs front, there are many areas of the budget on which I would like a more vigorous response. I am confident, however, that both the Ministers for Finance and Enterprise and Employment will respond, in the months and years ahead, to some of the issues which I and my Labour Party colleagues have raised concerning a major attack on the jobs crisis. At present there are approximately 70 million people unemployed in the EC. If we were to reduce unemployment by 5 per cent over the next decade we would have to create 25 million jobs. That is a major task, but by using imaginative devices, such as a national voluntary work sharing scheme, something worthwhile could be achieved. Both the Minister for Finance, Deputy Ahern, and I were Christian Brothers men — I as a teacher and he as a pupil. He was a pupil long before I became a teacher of economics at the school. If I were marking him on this budget I would give him a B or a B plus.

The Deputy was a soft teacher.

There is scope for improvement but, as a bright pupil, he will surely improve.

When Deputy Broughan mentioned that new Members did not receive a copy of the Budget Statement on budget day I remember thinking at the time that that was a strange practice. As five weeks have elapsed since the budget, I have almost forgotten the few points I wished to raise. Before becoming a Member of this House I could never understand the hype or the fuss created about budget day. There appeared to be an extraordinary amount of excitement about it, yet it is only part of the Government's financial plans for the year. Deputy McManus said the budget debate should take place weeks before the budget rather than weeks afterwards. This year was not a normal year. I understand that in other years there were debates on the Estimates and the Public Capital Programme. Normally the procedure is more long drawn out and people have an opportunity to discuss matters in advance of budget day.

We had all been prepared to expect the worst in this year's budget because of the severe international recession, soaring interest rates and changes resulting from the Single Market abolishing VAT at the point of entry. In my previous employment I worked close to that area. I was surprised that the VAT receipts released last week for the first quarter did not show a greater decline.

One Minister introduces the budget on the day and the rest of us can sit back and itemise the parts we do not like, the parts we would have improved and done differently. That is the easiest thing in the world to do. The success or otherwise of any plan or budget can be judged only after 12 months. As I have said, the figures released for the first quarter for receipts and expenditure were surprisingly good. Since the budget interest rates have reduced considerably. The unemployment figures, although very high, have shown a slight improvement during the past two months. Obviously, it is much too early to assess whether the budget has been a success, but the indicators we have had in the past weeks have been in the right direction.

I suppose we all object to the 1 per cent levy, but the Minister had to balance his budget and that is acceptable. It is extraordinary that the levy had to be imposed on those earning £173 per week or £10,000 to £12,000 per annum, the area in which there are thousands of workers. We like to think that thousands are in the higher earning bracket but when we examine the statistics that is not the case.

On a personal level I have been unhappy at how budgets have been framed during the past few years. All the emphasis has been on reducing the top rate of tax, although the standard rate has been reduced from 35 per cent to 27 per cent. Basically, if one is earning in the region of £10,000 to £15,000, the rate of tax is not all that important. What is far more important are the tax-free allowances and the bands; yet during the past few years the emphasis has been geared to looking after the higher earner. Last year the philosophy was that the high rate of tax would be reduced for the high earner, but that fringe benefit tax would be introduced. I remember listening and waiting to hear the proposals for the fringe benefit tax, but they also seem to have gone out the door. I do not know whether that was Progressive Democrat thinking or otherwise. I thought this was how the top earner would pay back something. We have all heard various stories about mortgages, school fees, university fees, holidays and everything else being paid by some companies. I understood this was the direction in which the Government of the past few years was going and that it would all balance out in the end. I was disappointed to see that the fringe benefits tax had disappeared. If we had gone through a few years of reducing the top rate of tax and felt we had gone too far and had to get revenue back into the Exchequer we should have taken it from the people who got off lightly during the past few years, and certainly not from the people on £10,000 a year.

I hope the imposition of the levy will be for this year only. The Minister did admit it was a crude way of doing things. If it remains, I hope it will be amended and that the people who have had their tax reduced in recent years will have to pay. It would be better to have an imposition of 1 per cent for people earning in the region of £12,000 to £20,000 and 2 per cent or 3 per cent for people at the higher level. That would have been more just.

There are figures in today's newspapers concerning the residential property tax. I know the changes this year have been slight but, when that tax was introduced some years ago, it did not appear to generate any revenue; nevertheless, the revenue has begun to build up. As a member of a local authority I feel the take from that tax will soon equal the rates support grant. Perhaps local authorities should have imposed a residential property tax for top earners from day one rather than water and service charges. It appears to me that the rates support grant we receive from the Department of the Environment is reduced each year while revenue from the residential property tax is increasing.

In regard to other taxation measures, I want to refer to the probate tax mentioned by an earlier speaker. That tax has its merits although I met a constituent recently who expressed concern in regard to it. He said that the Minister for Finance in his budget speech referred to a tax on resources passing from one generation to another and later implied that it would apply even in regard to the transfer of assets or cash from a spouse to a partner. That person felt aggrieved because although he does not own a house his insurance policy will provide a lump sum on the death of either partner which may be used to cover the rental on the house. That person cannot be evicted from his house but his rent may increase. He suggested that the £10,000 exemption limit is not enough for the person who does not own a house. He considers that for a non-property holder the exemption should be in the order of £30,000 or £40,000 to compensate for the exemption to which the property holder is entitled.

I welcome the changes in regard to medical services, for example, the £20 million that has been allocated to reduce hospital waiting lists. However, other changes were made in relation to eligibility for medical cards. From dealing with constituents' queries it appears that the medical card is becoming more valuable year after year. I feel sorry for people who do not qualify because they may be £2 or £3 over the income limit set for medical card eligibility. Will the Minister review this scheme and perhaps introduce a two or three phase medical card scheme? Such a scheme would provide for people who are at present entitled to free medicines and GPs' fees and a second category could be provided whereby people would be entitled to a 50 per cent or a 75 per cent reduction in their medical expenses. The revenue derived from those people — for example, they might contribute £3 towards their GP's fee and £1 towards medicines — could provide for a third category that might be entitled to a reduction of 25 per cent in their medical expenses. Current eligibility criteria are very stringent, people who are eligible are entitled to full medical benefits and those ineligible do not qualify for any.

The budget in many ways is pro-jobs but I disagree with Deputy Broughan's comment on the Labour Party being totally against any form of workfare or job-sharing scheme. We must face up to the reality that over 300,000 people are unemployed and that they will not disappear. If our economy begins to recover from the recession, perhaps over two or three years, 40,000 or 50,000 jobs might be generated and 20,000 or 30,000 people might emigrate if economies in the UK or elsewhere improve. However, we will have a hard core of 200,000 people plus unemployed and we cannot just pay lip service to the magnitude of that problem. A workfare or job sharing scheme must be devised to provide work for people who are long term unemployed. Trade unions, in which I was very active, object to such schemes as they say they constitute cheap labour. However, work could be quantified at a daily rate of £30 or £35. A person who receives £70 on the dole could be asked to give two days' work and by way of encouragement they could be offered a third day's work at £35 to enable them to supplement their income. A person in receipt of £140 on the dole could be requested to give four days' work and offered another day as an incentive to participate in the scheme. Obviously, for the first few years such a scheme would have to be voluntary because it would not be able to cope with 250,000 unemployed. However, some scheme must be devised and if its costs exceed the allocation made for it, they must be borne by taxpayers. It seems extraordinary that people who wish to join social employment schemes are not being adequately catered for by the Department of Enterprise and Employment. They are work schemes and very little additional income is given to people participating in them. It is regrettable that there appears to be difficulty in approving schemes for people who are prepared to work.

A recent answer to a Dáil question stated that 84 per cent of pensioners are eligible for a medical card. Two constituents of mine, a man and his wife, who are aged 90 and 91, respectively, are not eligible for medical cards. The husband is an ex-civil servant and the couple have had frequent medical problems, but were just over the income eligibility limit for a medical card. On making representations to a health board on their behalf I was told that if I could produce a letter to the effect that they were suffering from a terminal illness they would qualify for the medical card, but surely people aged 91 or 92 should be entitled to every consideration?

The Minister in the budget stated that there would be an increase in public sector pay of £279 million. Much of that increase relates to the negotiations with the unions a few years ago. How much of that figure relates to decentralisation? As a Dublin Deputy I resent jobs being taken out of the city year after year. Decentralisation is costing the country a fortune. I would like to know its exact cost. The cost does not relate just to the provision of new office blocks in towns or cities around the country. I heard that the Civil Service are finding it difficult to get people at all grade levels to transfer, particularly to smaller towns. It appears there is much waste involved in decentralisation. People are being promoted out of turn and in some cases may get two promotions in order to make up the transfer numbers to decentralised offices. Other people who opt not to transfer are being made more or less redundant. Not alone have their promotional prospects been damaged, in many cases people are being left in limbo and are not doing an honest day's work. That is not their choice, the Department in which they are employed may not have any meaningful work for them. In some cases they may be working in a lower grade. Money is being wasted on decentralisation. I heard that people were not prepared to transfer to Cavan and that a bus had to be provided to transport workers from Dublin to Cavan daily. I am opposed to decentralisation because I object to jobs being taken out of the city. I often think that when a factory in a rural area is closed the first demand is to move a few more jobs out of Dublin. If that happens in future there will be also a case for transferring unemployed people from Dublin.

I welcome the large increase in the capital programme. As a local authority member I am aware of the problems created in recent years by the lack of a local authority house building programme. A previous speaker mentioned a figure of £150 million of asset sales. I have no difficulty with that, particularly in relation to Greencore. I am against privatisation since I work for a semi-State body, but the Greencore decision was made some years ago and little can be achieved by arguing about it now.

The mortgage relief allowed in the budget was very welcome. Even before interest rates began to decrease the issue of mortgage repayments was addressed in the budget. It was innovative in that some mortgage holders who had small mortgages were penalised by the reduction of their mortgage relief by £200, which was transferred to others; but allowing 100 per cent interest relief for the first three years to first time buyers has solved that problem. Six weeks after the budget the main winners are the people who are paying large mortgages because they fought a campaign which brought it to the attention of the Government. They now have extra relief and, subsequently, rates have come down. Obviously, that means more money in their pockets to spend on other items in the economy, including clothing, which has been mentioned by many people. We all wish to see a low rate of VAT on everything but the figures given under the clothing heading created a lot of hype. All Deputies were lobbied — we all have friends in the rag trade. But the fact that 80 per cent of the clothing we buy is imported indicates that the VAT increases may affect sales in shops — they were in a recessionary period even before the budget — but it will not affect employment or manufacturing. Manufacturing companies in the rag trade export almost three quarters of their produce. Now people will have more money in their pockets, which will lead to an increase in discretionary spending.

Tá áthas orm deis a bheith agam páirt a ghlacdh i ndíospoiréacht na cáinaisnéise. Tréaslaím don Aire Airgeadais toisc an chái-naisnéis mhaith a thug sé anseo ar son ár dtíre agus ar ndóigh ar son an Rialtais don bhliain atá os ár gcomhair amach.

As outlined in the Programme for a Partnership Government, energy conservation is an important part of this Government's policy and will be promoted in all sectors of the economy.

The programme undertaken over the last few years has resulted in considerable investment and significant energy savings. The benefits of previous expenditure will continue in the future and the benefits derived from energy conservation measures, therefore, are cumulative.

The energy conservation programme of the Department of Transport, Energy and Communications is intended to encourage the efficient use of all forms of energy in all sectors of the economy in order to conserve scarce resources, to achieve financial savings and to protect the environment.

Our Department's role is to persuade others to act. Much of the energy savings which are possible will be realised through individual actions and improved practices. This is the case in industry as much as it is in the home. To this end education and awareness campaigns adminstered by Eolas and aimed at specific sectors of the economy are an important feature of our Department's programme.

Other initiatives include a selected group of companies working with Eolas support to develop a suitable auditing procedure and statement for energy accounts with a view to their publication in the companies' annual reports.

In the domestic sector the energy/environment special telephone service provides free information, advice and leaflets on energy use to consumers. In 1993 this will include information on the energy labelling scheme for domestic appliances launched last December. This scheme, which, I am sure, will be successful in promoting and achieving greater energy efficiency in the domestic sector of our economy, was developed following a study of the relative energy performance of domestic refrigerator appliances. The results concluded that there were energy savings of up to £1 million per annum to be achieved through influencing purchasers to buy the more efficient models available. Furthermore, these savings would amount to approximately £10 million per annum when the existing stock of refrigeration appliances is completely replaced.

Following consultation with the trade, labels have been developed for fridges and washing machines which enable consumers to readily identify the more efficient models. For washing machines the "smiling face" label indicates that such machines are fitted with energy saving features and will reduce electricity costs by up to 30 per cent. The second label will be applied to all refrigeration appliances which have been put forward by their suppliers for the scheme. Here the label indicates the actual energy performance of the refrigeration appliance on a scale of one to ten.

The labels are fully described in the support literature which is available in retail outlets displaying the labels. This is just one example of the type of initiative we wish to see developed in 1993 and ensuing years.

Similarly in the area of renewable energy, appropriate alternative sources will be promoted. The Bellacorick wind farm, which became fully operational in late 1992, is an indication of what can be done. It will produce about 17 million units of electricity per annum which will be fed into the national grid through the nearby ESB power station. Further such initiatives will be encouraged, as will developments in relation to biomass and research in other energy sources. Indeed, I am pleased that under the European Community Thermie Programme further support will be available for additional wind generating projects this year and next year.

It is the role of the Department of Transport, Energy and Communications to facilitate in every way possible the achievement of a vibrant and responsible minerals sector. At present there is an appreciable level of minerals exploration activity throughout the country with approximately 500 prospecting licences currently valid. However, as the House is already aware, the most significant development in the minerals sector of late is the probability that two major zinc/lead projects are about to come on stream at Galmoy, County Kilkenny and Lisheen, County Tipperary, offering direct employment to between 500-600 people.

However, I am also aware, that the whole issue of mining gives rise to concern on the part of those who, like myself and the Minister of State at the Department of the Environment, Deputy Browne, wish to see our natural environment protected. It is important that I make clear to the House our position on this. Deputy Browne has done this on many occasions and will do so in the future. The Government is absolutely committed to the protection of the environment as evidenced by the establishment of the Environmental Protection Agency, which, I understand, will be set up in County Wexford in the near future.

The Environmental Protection Agency will have full control over the licensing of water, air, noise and waste pollution for the mining industry. This new integrated licensing system will provide a superior all round approach to environmental development and a more streamlined procedure for the processing of environmental licences.

It is also Government policy that the potential contribution of our mineral resources at this critical stage in our economic development should be explored and exploited to the full, which is the Department's policy, but this must be done in a way which is compatible with the needs of the environment. I am fully convinced that this balance can be achieved.

Regrettably, there has been a tendency on the part of some people to feel that mining should be banned altogether and to completely ignore the fact that minerals are an important natural resource and that their exploitation makes an essential contribution to the State's prosperity and quality of life. There can be no blanket refusal to contemplate mining proposals leading to unnecessary sterlisation of mineral resources, provided of course that the relevant environmental and other local authority criteria are met. In this regard planning authorities must be seen to be both consistent and fair in their interpretation and application of Government policy and regulations on the environment. They must recognise the priorities of Government policy, such as putting the country back to work by creating useful and productive new employment, taking full advantage of all our human and natural resources.

With a view to easing the administrative burden on industry, stimulating prospecting activity and speeding up the prospecting application and renewal system, our Department is currently revising the prospecting licence and lease administrative procedures. These new measures, which I will be introducing later in the year, will greatly streamline administrative procedures both for the industry and the Department and will establish a positive footing for the development of the industry in the nineties.

The positive economic benefits of the availability of natural gas from the Kinsale Head and Ballycotton gas fields illustrates the importance of actively promoting hydrocarbons exploration offshore Ireland. There is undoubted potential for further significant commercial discoveries of oil and gas offshore Ireland. The realisation of that potential, however, is utterly dependent on the existence of a sustained and substantial level of exploration activity.

Those charged with deciding on the degree and location of investment in hydrocarbons exploration generally look to three crucial factors — world energy prices, the prospectivity of the areas under consideration and the local terms and conditions. While we obviously have no control over the first two, we do have control over the terms and conditions which we apply to the exploration industry. This is an area in which positive steps have been taken in recent times. I would like to pay special tribute to the Minister for Finance for the very positive way he has ensured that the terms have come on stream so that we can have further exploration.

The introduction of revised licensing terms and the enactment of a comprehensive, fully-integrated regime of petroleum taxation legislation within the past year demonstrates clearly to the industry that Ireland holds a modern and progressive outlook towards oil and gas exploration and development. The effect of these measures has been to make it explicitly clear to exploration investment planners that Ireland must now be viewed as a genuine contender for internationally mobile exploration investment.

In this context it is heartening to know that a number of the major exploration companies have again turned their attention towards offshore Ireland. I am confident that this renewed interest will lead to a significant increase in exploration activity in the coming years.

The Government is determined that the renewed impetus which has been given to the oil and gas exploration offshore Ireland will be sustained and developed. If these exploration efforts meet with success, we can look forward to the further substantial economic and social benefits which will flow from the further development and production of hydrocarbons off our coasts.

It has always been an important feature of our energy policy that a situation should be achieved where we are not overly dependent on any single fuel or source of supply. Naturally, the discovery of gas in Kinsale and its subsequent development has helped to further that aim. The added benefit of an indigenous supply has saved over £2 billion on our imported fuel bill.

We now have a safe and modern gas industry with customers in the industrial, commercial and domestic sectors and in electricity generation. Customers have come to appreciate the benefits of an efficient and versatile fuel, which is also and cleanest of all fossil fuels and, therefore, important to our environmental strategy.

It is Government policy that the gas industry will continue to exist, and indeed to expand, into the next century. With this in mind a major project is now under way to link the Irish and British gas networks by way of a subsea interconnector pipeline. The project is being constructed by Bord Gáis Éireann. The cost of this project is estimated at £290 million and has been approved by the European Commission for funding at 35 per cent from its REGEN initiative. The project is within budget and is on target for completion in October of this year. The pipeline will run from north County Dublin to southern Scotland and its initial function will be to provide back-up in the event of an interruption in supplies from Kinsale. For this purpose a security gas agreement was concluded last year between Bord Gáis Éireann and National Power, the UK's largest fossil fuel powered electricity generation company. Under this agreement, the first of its kind in these islands, a supply of gas will be guaranteed, in the event of disruption here, over a five year period.

Additional gas will be needed before the end of this decade, as output from Kinsale reduces, and a full replacement of indigenous supplies will be required when Kinsale is depleted. If further indigenous supplies are discovered, of course, our dependence on imports will be less; and, in the event that such supplies are surplus to our requirements, the pipeline will allow us to export them. The pipeline will give access initially to the UK grid and eventually to the greater European gird, which will enable us to take advantage of the Single European Market for gas.

The availability of natural gas has meant that our dependence on oil has decreased considerably over the last decade. Oil, however, still accounts for almost 50 per cent of our energy use. Energy policy in the area of oil has two main bases: ensuring an adequate supply of oil and at the same time reducing its price, in so far as energy policy affects it.

State involvement in the oil market is largely through ownership of the Whitegate Oil Refinery in Cork. The House will be aware that our Department and the INPC have sought investment to upgrade the refinery. While a number of negotiations reached quite advanced stages, it has not been possible to come to a deal. However, the Government is committed to achieving an upgrade to ensure the continued operation of the refinery but enable it to operate without creating a diseconomy; and our Department, the INPC and consultants, who are experts in the area, are at present examining the options with a view to finding the optimum way of solving the problem. I am confident that I will be able to come back to the House with outline plans for the future of the refinery later this year.

I hope that these facts which I have put on the record are of assistance to the House and the people of the country in understanding that the Government is committed to a solid energy policy based on clear environmental criteria and that we will continue to explore all the resources available to us to ensure that our indigenous natural resources can be exploited to the maximum benefit of both our economy and the people of Ireland.

Wexford): This budget has been framed against a background of difficult economic circumstances, including rising interest rates. It is gratifying to see that since it was brought forward by my colleague, the Minister for Finance, a sharp decline in interest rates has already taken place. This is a clear indication that the Government's strategy in managing the economy is already starting to bear fruit. The reduction in interest rates brings much needed relief to the hard-pressed mortgage holders, but one would have to question the slowness of some of our financial institutions and building societies in passing on the reduction in interest rates to their customers. I feel that some of them are not being fair to their customers. It is not good enough to wait, in some instances until 1 May, to pass on the interest rate reductions. That is totally unjustified and puts a major burden on mortgage holders.

I intend to focus during my contribution on the aspects of the budget which are particularly relevant to my responsibilities as Minister responsible for environmental protection. This year's Public Capital Programme has increased by almost 27 per cent to a total of £2,340 million. I am pleased to inform the House that this increase is fully reflected in the water and sanitary services programme. This will ensure that the good progress of recent years can be accelerated, with the construction of many new water and sewerage schemes throughout the country. The benefits from the programme will be confined not simply to enhancing the quality of our environment, although this must continue to be seen as the principal focus of our efforts. The new water and sewerage schemes will also ensure that improved infrastructure is available for economic development as well as giving rise to significant job creation — about 1,800 in the current year — both from direct employment on the construction works involved and in ancillary industries and activities.

The EC Cohesion Fund is a central component in planning and financing many priority schemes throughout the country. I was very pleased to meet last Friday Commissioner Schmidhuber, who is responsible for the Cohesion Fund at European level, when we had a constructive and cordial meeting. I impressed upon him the need for early approval of the schemes submitted so that work on these projects can commence at the earliest possible date. The importance of the fund is immediately evident from the value of the expenditure forecast in 1993 on water and sewerage schemes alone; the amount involved exceeds £42 million.

One of the principal objectives of the Cohesion Fund is to assist the member states concerned to meet their obligations under various Community directives, including the EC Waste Water Directive, which is aimed at enhanced sewerage treatment and cessation of marine-based dumping of sewage sludge.

Debate adjourned.
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