I understand that Deputy Cullen is in possession and I would be grateful if someone would indicate to me how much time he has left.
Private Members' Business. - Clothing and Footwear VAT Rate: Motion (Resumed).
The following motion was moved by Deputy Yates on Tuesday, 27 April 1993:
That Dáil Éireann condemns the increase from 16 per cent to 21 per cent of VAT on clothing and footwear and calls on the Government to reconsider this measure in view of the fact that since 1991 this particular VAT rate has more than doubled and is now higher than the UK rate and as this will lead to increased clothing imports, substantial job losses, both in the retail and manufacturing sectors, and increased sales of clothing and footwear through the black economy.
Debate resumed on amendment No. 1:
To delete all words after "That" and substitute the following:
Dáil Éireann welcomes the overall thrust of the Financial Statement of 24 February in terms of its potential to generate and sustain employment and its financially responsible and balanced nature.
—(Minister for Finance.)
I have ten minutes left.
It is my understanding that a Fine Gael speaker is due to resume the debate. The standing arrangement is that the Progressive Democrats have 20 minutes when a Fine Gael motion is taken on a Tuesday night in Private Members' Business.
I am in your hands, but my note says that Deputy Cullen is to resume the debate and he has ten minutes remaining of the time allocated to him. If the House decides otherwise, I am your servant.
I understand from my own Whip that that is the case. However, I think I have one minute left.
There is irrefutable evidence that the increase in the rate of VAT from 16 per cent to 21 per cent has already led to substantial job losses in the manufacturing sector of the clothing and footwear industry. This is unacceptable. The increase in the rate of VAT is anti-jobs, but it is not too late for the Minister to rescind his decision to increase the rate to 21 per cent. If he fails to do so it would be a cruel blow for this indigenous industry upon which so many jobs in the manufacturing and retail sectors depend.
The Minister made the point last night that a substantial portion of the goods manufactured in this country are exported. This is true to some degree, but we should not forget that the companies concerned would not be in a position to export goods to foreign markets if they had not first gained a strong foothold in the domestic market. It is because they are so strong in this market that they are in a position to seek markets abroad. Therefore the point the Minister made last night is unsustainable. On that note I ask him to rescind his decision to increase the rate of VAT from 16 per cent to 21 per cent and to accept the motion this evening.
I wish to share my time with Deputy Kenny.
Is that satisfactory? Agreed.
I welcome the opportunity to speak on this important motion and to compliment my colleague, Deputy Yates, for introducing it. It is timely, and having spoken to Members of the House today, I feel it has the support of a majority of Deputies, but this may not be reflected in the vote later tonight.
I speak on behalf of retail traders and manufacturers in the Border region who will be devastated by this hike in the rate of VAT from 16 per cent to 21 per cent. It is unsustainable. In my own county of Cavan one excellent manufacturer was forced to close towards the end of last year because of the bungling of the Government during the currency crisis when it failed to take action in time. That industry manufactured ladies' fashions and 30 jobs were lost. Many other small retailers in my constituency and along the Border will suffer the same fate because the effects of this increase in the rate of VAT to 21 per cent will be particularly felt in that region.
People will be encouraged to travel to Northern Ireland where the VAT rate is 17.5 per cent. If the Minister felt it was necessary to increase the rate, he should not have increased it beyond the rate prevailing in Northern Ireland, which is in direct competition with us. Despite all the talk about harmonisation of VAT rates and the need to create a level playing pitch, people will, as I said, be encouraged to travel there. Indeed, despite all my protestations in this House, it took years to get the message across to the Government that the rates of excise duty on petrol were encouraging people to travel to Northern Ireland in huge numbers to buy petrol and, needless to say, other household items with the result that many small businesses in the Border region were devastated. Small clothing retail outlets in my constituency will suffer the same fate on this occasion. I ask the Minister to back off, to accept the good advice that is being given to him and not to be stubborn.
The Minister has claimed that this increase is necessary to create jobs, but there is no point in creating jobs at the expense of others. It may look well in Government statements that a certain number of jobs have been created but we also have to consider how many jobs have been lost as a consequence. Indeed, yesterday the Minister said that it was necessary to increase telephone charges by 300 per cent to create jobs. However no account has been taken of the effect this will have on people.
Small retail outlets already face severe competition from the multinationals. These multinationals generally provide a poor service. The customer picks the items he wants from a rail and then goes to the cashier to pay for them, whereas in the small retail outlets one can have five or six assistants to assist a customer choose their clothes or footwear. This is a specialised job and it is an ideal position for a bright young girl or boy. The Minister need be in no doubt that these young people will lose their jobs as a result of his proposal. If one is out of the business for even a short time it can prove difficult to get back into it.
I wish to allow my colleague, Deputy Enda Kenny, contribute to the debate. I appeal to the Minister to listen to what the people are saying and take heed of the advice he is being given. He will be admired for that. I hope this appeal does not fall on deaf ears. From talking to Government backbenchers who are involved in business I know this increase is devastating. They should vote for this motion because they know where the benefits will be reaped.
One of the hallmarks of any Government's understanding of the people's problems is how it responds to pressure where the retention of jobs is at stake. If one reads the measure introduced by the Minister for Finance in the budget it will become obvious that the claims by manufacturers in the clothing and footwear industries are real and substantial. If the VAT rates proposed are introduced there will be increased clothing imports and substantial job losses in both the retailing and manufacturing sectors.
Many of the jobs in those sectors were established a number of years ago by family enterprises and Government organisations. Many jobs are located in the remote parts of the country where businesses have to contend with transport charges, poor infrastructure and related problems. It is obvious that the cashflow advantage to those who import will lead to a genuine reduction in jobs. One of the pillars of this Fianna Fáil-Labour Government is not alone the creation of new jobs but the retention of existing ones. Speaker after speaker at the recent Labour Party Conference condemned the VAT increases as being out of hand. As a junior partner in this Coalition Government, the Labour Party has the opportunity this evening to vote against these increases which will result in a reduction of employment and general economic activity in their constituencies.
It is obvious from speaking to manufacturers in the west, in Westport, Erris, Tourmakeady and other districts in Mayo, that if the Government does not reduce the rate of VAT and the employers' PRSI contribution in manufacturing enterprises many of these hard won jobs will be lost in areas that cannot sustain themselves even at the best of times. The Minister for Finance, and the Fianna Fáil and Labour Deputies, should recognise the veracity of the claims made by manufacturers in their constituencies that jobs will be lost in the local towns and villages due to imports from Northern Ireland and other parts of the EC which are to the detriment of our economy.
If the hallmark of this Government is to be the retention of existing jobs and the creation of new ones, it is ridiculous in the extreme that a budget that is being portrayed as being advantageous to the country should strike a mortal blow at the heart of an industry that has been fundamental to the creation and sustenance of the fabric of rural life. The Minister for Finance should drop this increase in VAT and the Fianna Fáil and Labour Deputies should put pressure on him to do so.
With the permission of the Chair I wish to share my time with three of my party colleagues, Deputies Ó Cuív, Ellis and Hughes.
Is that agreed? Agreed.
While I deplore the political opportunism inherent in Deputy Yates' motion——
That is coming from the greatest opportunist in this House. Deputy, you shot down your own members in Cork.
——I would like to use this opportunity to respond to the Opposition case.
There is a strict time limit for this debate. It is essential that Deputies be heard without interruption.
It is important to put this VAT increase in context. Fianna Fáil is committed to creating sustainable jobs and ensuring well-founded economic growth. This necessitates firm control of our public finances. In order to increase spending in some vital areas it was inevitable there would have to be some increases in taxation. Budget formulation must maintain a careful balance between prudence and economic growth. Members opposite seem to have forgotten this important principle. However, recalling their attempts to introduce budgets in the past, it would seem they never took that principle on board.
With regard to VAT on clothing, certain factors have to be taken into account such as our obligation arising from our participation in the Single Market and the overall budgetary situation. The EC Directive on VAT rates adopted last October obliges member states to have a single standard rate which must be at least 15 per cent. Clothing and footwear must ultimately go on the standard rate of VAT. Are Opposition Deputies suggesting that we have an à la carte approach to our membership of the EC? I doubt if they are.
Where member states had to increase the rate of VAT on goods and services which were previously at a reduced rate, the Directive gave the option of applying, as a temporary measure, a parking rate of at least 12.5 per cent until the end of 1996. All the products which were at the 16 per cent rate prior to the budget were destined for standard rating as a consequence of this Directive. The Minister signalled this very clearly in the 1992 budget. He had to decide in this budget whether to move these goods to the standard rate on this occasion or to what extent, if any, to avail of the parking rate option.
This year the decisive factor was budgetary. While a limited application of the parking rate was possible for labour intensive services—thereby benefiting in excess of 50,000 jobs—a wider application to the remaining commodities such as clothing, footwear and telecommunications simply could not be afforded. I would like the Opposition to bear the following figures in mind—a reduction from 21 per cent to 12.5 per cent for clothing and footwear alone would cost the Exchequer almost £48 million in lost revenue this year alone and £77 million in a full year.
I have great sympathy for those involved in the clothing industry because of the difficulties they face. I said this at the meetings I attended.
What hypocrisy.
Those industries share these difficulties with many other branches of Irish industry. Such budgetary decisions are not taken lightly. On the contrary, they are taken only after a very careful process of consideration. Opposition Deputies have languished on the benches opposite for so long they no longer have any real concept of the responsibilities and difficult decisions that are part and parcel of being in Government.
I do not deny that the clothing sector is labour intensive at both retail and manufacturing levels. The Government must, however, decide what is best for the economy as a whole in terms of promoting economic growth and the sustainable jobs that flow from that. Concern has been expressed that the higher VAT rate would encourage retailers to import cheaper supplies and this would adversely impact on clothing manufactured here. Unfortunately, high import penetration is already a well established feature of the Irish fashion trade with almost 80 per cent of the total clothing on the market being imported before the budget. This figure has not changed much in recent years. May I remind Opposition Deputies that the standard rate of VAT applies to all clothing sold here, regardless of country of origin? Would Opposition Deputies suggest that we adopt some form of protectionism against foreign clothing manufacturers? Up to 65 per cent of Irish manufactured clothing is exported and that will not be affected by the VAT changes here.
What I find most amusing about this motion is its attempt to portray Fine Gael as a champion of the clothing industry when the opposite is true. Fine Gael's credibility in this area is non-existent as Deputy Yates knows.
Credibility?
In case he has forgotten, let me refresh his memory by taking him back to 1982 when he was a newcomer to this House. His Leader, the then Minister for Finance—the only one who did not succeed in steering a budget through the Dáil—attempted to slap a punitive 18 per cent rate of tax on footwear and clothing. I remind Deputy Yates that this was 13 per cent more than the prudent 5 per cent imposed by the present Minister for Finance. In a notorious insensitive move, Deputy Bruton also attempted to introduce VAT on children's clothing and footwear.
The memories of the Members opposite are short. There can be no doubt that this was the most objectionable budget in the history of the State. Fortunately it was thrown out by this House and I have no doubt that the Irish clothing industry breathed a collective sigh of relief that it was free from the VAT happy clutches of Deputy Bruton. No doubt Fine Gael would like us to forget this particularly ignoble period in their history but I think it is worth recalling when we see them leap to the defence of a clothing industry they once tried to bury in VAT. If there was an award in politics for having a brass neck there is no doubt Fine Gael would be——
The Deputy would be first to get a reward.
He should ask Deputy Joe Walsh about it.
——a leading contender, having put down this motion, in spite of its deplorable attitude to the clothing industry. Fine Gael's credibility regarding the clothing industry amounts to nothing, or to use a clothing analogy, the Fine Gael emperor has no clothes. This motion amounts to humbug of the highest order, and there is consensus in this regard throughout the country.
The bottom line for the Fianna Fáil Party is careful, structured growth. We are determined to persist with this productive strategy. Part of this process entails listening very carefully to the concerns expressed by all branches of Irish industry. In the case of the clothing industry we will listen to the concerns with the utmost consideration. Proposals on cost competitiveness are currently under consideration. This is the way Fianna Fáil proceed, by way of consensus and consultation, in direct contrast to the leadfooted approach characterised by Fine Gael led by Deputy John Bruton. There is no doubt in my mind as to what is the most productive approach.
I would like to offer some words of advice to Deputy Yates and his party. I realise they are in dire straits over there but I suggest that before they put forward such opportunistic motions they jog their collective memory regarding their past actions and temper their outbursts accordingly. Fine Gael has lost the battle.
We have seen an improvement in the economy in the last few weeks which we never thought possible. Interest rates are collapsing and there is an air of confidence in the country, with crowds attending race meetings——
The Deputy tried to commit suicide in the last few weeks.
——yet Fine Gael fails to recognise this fact.
I hope the Deputy gets chairmanship of a committee. I hope the Whip is listening carefully.
Cuireann sé an-áthas orm labhairt ar an ábhar seo. Tá ionadh orm mar gheall ar an gcineál cainte a chuala mé go dtí seo go mórmhór ón bPáirtí Daonlathach, páirtí a bunaíodh le dearcadh nua a chothú i bpolaitíocht na hÉireann. Cuireann sé iontas orm, leis, go raibh sé de dhánaíocht acu sa cheist seo gan breathnú go géar chun a chinntiú go gcaithfí an t-airgead san áit is mó a thiocfadh an brabach-tionscail déantús-aíochta náisiúnta in ionad a bheith ag tabhairt cúnaimh d'iomportálacha.
Tá an cheist chomh simplí leis seo. Chaith mé 17 mbliana ag plé le tionscal déantúsaíochta. Chuaigh mé siar go Conamara chun tionscal a chur chun tosaigh agus tá tuiscint mhaith agam ar an ábhar seo. Go bunúsach tá a fhios ag gach duine sa tír gurb é an costas ard saothair, idir PRSI agus cáin ioncaim, an bac is mó ar thionscal deantúsaíocht éadaigh na hÉireann.
I am particularly disappointed with the Progressive Democrats in this debate. They preached from the beginning that we were directing our policies in the wrong areas. Fine Gael said that taxes on labour in the form of PRSI and PAYE should be tackled in the interests of creating jobs.
Is VAT not a tax?
It is not a tax on labour, and I will explain that. I cannot understand the logic behind this motion. Let us look at the manufacturing side of this business. Clothing and footwear manufacturers have been decimated since 1973 and one of the greatest causes was that they could not compete with importers. If the blunt instrument of VAT reduction—it is a very expensive blunt instrument—is used to stimulate growth, of every pound spent 80 per cent will go towards importers while only 20 per cent will go to manufacturers. There will be no cost competitive edge for the native manufacturer over the importer. Neither will there be any advantage for exporters — 65 per cent of clothing manufactured here is exported.
I made very strong representations to the Minister for Finance to put back into the clothing industry some of the money taken by way of the VAT increase. This must be done in such a way as to ensure a maximum effect on jobs, not as in this proposal which would favour the importer. There should be a bias in favour of native manufacturers and incentives such as PRSI exemption should be given to help manufacturers compete with importers.
I accept there is a depressed clothes market here but the extent to which that is due to the VAT increase is questionable. I accept also that by using the blunt instrument as proposed in this motion, to stimulate sales we would be helping the multiple stores who have a big turnover because assistance would be given on a turnover basis. Small retailers in country areas have great difficulty competing with multiple stores. We must find a way to eliminate the poverty trap for low paid workers and direct assistance in such a way——
By a 1 per cent levy.
Instead of reducing VAT perhaps the 1 per cent levy could be used to create employment. That would make more sense than the proposal in this motion. Relief must be directed towards job creation rather than to the market where the big multiple stores will get a greater share than the small retailers.
Are they not creating jobs?
An Teachta i gceannas gan aon chur isteach.
Ní mór caiteachas in aghaidh an job a mheas sna tionscail éag-súla agus airgead a dhíriú sa treo a gheofar uasmhéid fostaíochta.
As somebody who has fought consistently for more than 20 years for a radical overhaul in this area and who believes that much of what the Progressive Democrats said in their early days makes little sense, I am more than disappointed at their attitude to this matter. More money is needed for this industry but it should be properly directed. I spearheaded the equalisation of west coast costs with east coast costs. For example, the west was penalised in transport and telephone costs, and it was that fact rather than the cost of goods that determined the extent of sales. This is the point the Opposition parties have missed.
I hope the Minister will ensure that extra money is made available, particularly in view of reduced interest rates, for the clothing industry. This money should be directed towards job creation in the retail sector, which is an area with a high labour input. We should ensure a competitive advantage for the manufacturing sector, while not forgetting exporters. Imports should not be subsidisied—that surely must be the most regressive suggestion ever made in this House.
Creidim go gcaithfear airgead a chaitheamh ar thionscal an éadaigh ach tá moladh an Fhreasúra suarach agus lochtach. D'fhéadfaí an t-airgead atá á mholadh — £77 milliún — a chaitheamh ar bhealach níos tairbhí agus is dóigh liom gurb eol dóibh féin é sin.
That may make sense to the Deputy but it makes no sense to me.
We should not look at the VAT rate change in isolation. We should look at the overall budgetary situation. When the Government framed the budget it was facing a major crisis of confidence created by currency fluctuations and instability throughout Europe and the world which was outside of its control. A budget has to be framed taking into account what is envisaged for the 12 months ahead. The budget was framed on the basis of Government requirements which will not change very much in the coming 12 months. We all regret the decision that had to be taken to increase VAT on clothing and footwear in the interests of all our citizens.
When considering the clothing industry we should look at the small retailer based in the country town. These people are the life's blood of the clothing industry.
They are being screwed by this tax.
I am sure that Deputy Cox will not go to see many of them when he is buying his clothes. He will be going to the designer people, the people who are making the real money in the clothing trade.
I am proud to wear Irish designer clothes.
I am quite happy as long as they are Irish, but I thought that the Deputy's European tastes might have taken him a bit further afield in recent times.
I have the opportunity to be a good ambassador for Ireland in Europe, wearing Irish clothes.
I am delighted. I agree that help should be given to the manufacturing sector of the clothing industry because they are the people who are keeping imports down. It is sad that clothing imports are increasing regularly. The major chain stores and the people involved with multi-national companies are bringing in imports of second class clothes which can meet the budget of the consumer. One of our problems is that in many cases the cost of Irish clothing is beyond many people.
(Interruptions.)
The Government is putting 5 per cent more onto the cost.
Due to time constraints I cannot go into the entire budget but in any budget there will be sections which none of us likes. We would love to drop this section, but we as legislators have responsibility to legislate and to provide for the services delivered to the people. The services are delivered through the means of taxation. It is a pity that this is a way to raise extra taxation, but do Opposition Deputies wish us not to pay the welfare increases introduced in the budget and many other proposed expenditures?
I hope I will get the opportunity on the Finance Bill to go into this with a fine-comb. I have no doubt that the time which has been given to this debate could have been better used on more urgent matters.
Shame.
Arrogance.
I have read with keen interest the submission of the Apparel Industries Federation, the Irish Knitwear Exporters Guild, and especially the documentation produced by the specially formed group, the Clothing and Footwear Against VAT Committee. I have a particular interest in this matter as my family has had a lifelong involvement in the manufacturing and retail trade. Together with four of my brothers we employ about 300 people in the west of Ireland in the clothing trade, right through from high fashion knitwear to protective clothing. In the retail side we have been involved in approximately 12 retail outlets throughout Ireland.
With some trepidation I rise to defend the Minister's imposition of the 5 per cent VAT increase, hoping that he will take on board in the Finance Bill the comments that were made in this debate last night and tonight. I welcome the assurances that measures will be introduced in the Finance Bill to encourage and protect existing employment and to create new employment. I do not envisage the wholesale closing down of factories or retail outlets. The Irish industry is stronger than that. We cannot fly from Ireland and set up in far eastern countries or in England.
The imposition of the VAT increase has led to a partial examination of the industry and all its facets. There will have to be an ongoing examination of this industry which comprises diverse parts. In the main the roots of this industry are in Irish hands. The industry was originally established behind tariff walls about 50 years ago. A large portion, up to 50 per cent, of the output of the industry is sold on the Irish markets, and in some instances that percentage is considerably higher, especially for niche markets. The whole output of some manufacturers is sold on the Irish market. This is the output of many small operators who would not have the marketing skills or the financial resources to develop markets overseas. We must be concerned about all facets of the industry, not only with large operators or the large retail multiples.
The Minister for Finance has explained the background to the VAT increase, having indicated in the 1992 budget that the industry was destined for standard rating as a result of an EC VAT rate Directive. I am sure that the people in the industry did not know what that meant at the time or realise that it would mean going from 16 per cent to 21 per cent. Since the 1992 budget the industry in the retail sector had to cope with some terrible shocks which were not apparent when the 1992 budget was framed, for instance the currency crisis, the continuing strength of the Irish pound, interest fluctuations and a creeping recession in consumer spending power. On top of this, the campaign of at least one large retail operation who enjoy a dominant position on the Irish market has sucked up the spending power of those consumers, and that, above anything else, has damaged the traditional retail scene.
Wages in the clothing trade are approximately 14 per cent higher here than they are in England. A qualified machinist in England starts at a rate of £107 sterling as against £122 in Ireland. Employers in Ireland pay 6 per cent higher PRSI than employers in England. This total of 20 per cent makes our industry 20 per cent less competitive vis-à-vis our English counterparts.
Why support more VAT?
Part of this uncompetitiveness was overcome when our currency was at 90p against the pound sterling. Now that we are near parity a further 10 per cent cushion in costs is gone. The challenge facing Government is to ensure that costs to industry are reduced. With improving economic indicators I hope that the Minister can find the necessary flexibility to carry out some improvements. I am satisfied that the Minister is giving serious consideration to these matters as a result of the efforts of the Apparel Industries Federation. I know that the Minister will consider reducing employer's PRSI so that Irish manufacturers can effectively keep their price points to retailers at a level that will overcome consumer resistance. This measure would immediately give a competitive edge to Irish manufacturers, as against a VAT reduction at the point of sale which would be of greater benefit to concerns who import a large amount of their present retail stocks.
In general, I accept the figures which indicate that approximately 80 per cent of retail sales in Ireland comprise of cheap imports from low cost far eastern countries. Through wage moderation we must try to bring our wage structures into line with those in Britain. The question must be asked whether joint labour committee wage agreements are relevant post the Single Market. If we are operating in an open economy, market forces must be allowed to prevail. These joint labour committee agreements oblige manufacturers to pay a fixed wage, which is reviewed each year and takes into account the cost of living etc. I know of one operator in County Mayo employing at least 100 people in a clothing concern who will be obliged to break the law and refuse to pay the joint labour committee rate if he is to survive. If he is obliged by law to pay the joint labour committee rate he will be forced to close down or move to a cheaper manufacturing environment.
He will not be too happy with the Deputy's action here tonight.
Part of the clothing industry is made up of knitwear manufacturers who produce a fashion garment for the Irish market but increasingly for our tourist visitors. In the main they are small operators situated along the west coast from Donegal to Kerry. During the currency crisis and the period of high interest rates a number of these operators had to lay off some of their workers, while others had to lay them off on a part-time basis. The prospect of obtaining alternative employment in these areas is remote. That sector of the industry was hammered at the end of last year when the main buying season, namely November to January, coincided with the strength of the Irish punt.
We must recognise that the industry, during the past 12 months, has used a large amount of its own capital, with the assistance of the Irish Trade Board, to carry out an effective campaign called "Look to Your Own" to increase awareness of Irish-manufactured goods and to encourage the public to buy Irish. It was sold on the strength of quality rather than at a price. I would hope that the Government in considering the submission from the industry will encourage the furtherance of this campaign and, apart from paying lip service to it, devote resources to ensure that a similar type campaign can continue to enhance job prospects and job protection measures to the industry.
The market development fund was successful in protecting jobs during the currency crisis. The experiences gained from that initiative should be closely examined and I would ask the Minister to look favourably on suggestions made to him by representatives of the industry on a replacement type vehicle which would provide working capital at attractive interest rates to small companies in the labour-intensive indigenous sector. Any new type of market development fund will have to be carefully structured to ensure that it is not only directed to companies orientated towards markets abroad but to those retailing on the Irish market.
The retail trade has suffered badly, especially small retail operations. In what was once a well structured portion of the retail scene there is a chaotic situation of near everlasting special offers and sales. Sale periods are not only twice a year but more frequent, due to increased pressures on retail operators. The time has come for legislative interference in this area to restrict genuine sale periods to twice a year. Present consumer legislation is not effective and is extremely difficult to police and implement.
I support the industry's submission in the main and ask the Minister not to allow statistics produced to him concerning the level of clothing imports to be his sole guide in introducing measures in the Finance Bill which can give a fillip to the industry. I know from experience, being involved in the trade, that any help the Minister can give will be much appreciated by all involved in the industry.
With the assent of the House I should like to share my time with Deputies Creed and McGinley.
Is that agreed? Agreed.
My party will be supporting the Fine Gael motion for two reasons. I am sorry Deputy Hughes is leaving the House because I wanted to refer to a few points he made; however, I shall do so undeterred.
It is a hit and run type of thing.
We want to support the motion for two reasons: first, the adverse implications for jobs and, second, the fact that the actual increase does not affect the well off and the poor in our society equally. In relation to jobs some considerable information and back-up has been supplied to us by the Apparel Industries Federation and others during the course of this controversy. I find it difficult to accept that Deputy Hughes can support the content of these submissions as well as the increase in VAT which taken over a period of two years, is an exceptionally stiff one, that he can still blithely vote for that and say he is fully behind the submission from the Apparel Industries Federation. I find that mesmerising and it is typical of some of the statements from Government backbenchers that have been made during this and other debates.
In his contribution last night the Minister effectively accepted the arguments that have been advanced. He explained that because of European trends on VAT harmonisation and so on there was little room for him to manoeuvre. The bottom line was that he accepted that it was a matter for budgetary cost and the amount of revenue he can expect to bring in. He quantifies the loss if he were to reduce the current rate to 12.5 per cent as being £48 million. I note the Minister availed of the opportunity to range far and wide and well away from the net point of this motion—the VAT increase on clothing and footwear. He ranged over what he sees as further miracles in the economy.
An apparition.
It is exceptionally difficult to see evidence of these miracles. In fairness to the Minister I will restrict my comments to the area of interest rates where there has been an improvement. We all welcome that improvement. I am sure the Apparel Industries Federation and other employers welcome it also in terms of confidence, investment potential and so on. For the Minister to say that this is because of the intrinsic merits of his budget is absurd. It is because of the more realistic assessment of the valuation of the pound. As one of the few Deputies in this House who raised this matter as early as 1 December 1992, I am entitled to say it is clearly the impact of devaluation that has brought about the situation where confidence has been restored, funds have flowed back and interest rates are moving in the right direction, as well as developments in Europe and specifically in Germany. It is nonsense for the Minister to hang his hat and claim there is no necessity to change the increase in VAT because interest rates have improved.
I should like to dwell on his general range through the economy in more detail but I am sharing time with my colleagues. The point should be made that the Minister chose to increase the VAT rate to 21 per cent on clothing and footwear at the very nadir of the fortunes of the industry. He claims that the interest rate position has improved and is an excuse for not making any alteration, yet he made that negative decision at the lowest point of fortunes in the industry when jobs were already being lost and when, in the midst of the devaluation crisis, almost all sections of this industry were most seriously impacted on by the weakness of sterling. A great deal of the output of these manufacturers is exported directly into the sterling area. As a result they were most adversely impacted upon, nevertheless, the Minister went ahead in order to raise this £48 million in revenue. Why the obsession with raising that? It escapes me because even conservative economists agreed in the aftermath of the budget that the EBR at the end of the year was a good deal lower than many expected and, having regard to the employment crisis, it would have been reasonable to be flexible.
Deputy Hughes and his colleagues have a very selective approach to the information with which we are providing them. I cannot say whether the projection that 1,200 jobs will be lost in the manufacturing sector and 2,000 jobs in the retail sector is accurate. The arguments seem cogent. However, it is natural for people with vested interests to put forward their best case, and I do not know whether the situation is that bad. However, confronted with 300,000 people unemployed, we cannot afford to lose even one job, not to mention the number of jobs predicted in the submissions made to us. I cannot see how Deputy Hughes can support the case, but not the purpose, of this motion. It is amazing that Deputy Hughes's argument —with which I suppose many employers in the industry will agree—is the question of wage moderation. I am not long enough out of the trade union movement not to recall that the rag trade is a very low paying industry. Whereas labour unit costs may be difficult in the competitive environment in which the employers must function, wages received by workers are exceptionally low. I cannot understand how Deputy Hughes can advocate the abolition of joint labour committees in this industry as a solution rather than adopting the proposal before the House.
The unity on both sides of the industry is unusual. Employers and trade unions are agreed on the objective enshrined in the resolution. I have discussed the matter with some of my trade union colleagues and they assure me that they are extremely concerned at the possibilty of the jobs fallout resulting from this measure. If wage levels are to be squeezed more it would be utterly unpalatable to people who work in the industry.
There is another good reason for supporting this motion which has not been adverted to during the debate, the impact of these increases on the consumer. Deputy Ellis was concerned that Deputy Cox would only, quite properly, present his body to the top end of the market to be suitably garbed, which is proper and fitting for a Deputy of Deputy Cox's standing. A great many of my constituents would not be able to avail of the same kind of tailoring as Deputy Cox and yet are subject to precisely the same 21 per cent standard rate of VAT on everything they buy.
With friends like the Deputy, who would need an enemy?
It seems callous indifference to the poorest sector of the community that this is also imposed on them. It is also interesting that it is imposed with effect from 1 March, whereas the social welfare increases do not take effect until the end of July and the increases in children's allowances do not take effect until the end of September. Those of us who work on the ground, as most of us do, know that many parents depend on accumulated children's allowances to buy the necessary clothing for their children, the distinction between small adults, as we know from another era, and adult children is minimal. God be with the days when Deputy Kemmy would bring down a Government on an increase of VAT on footwear and clothing. The situation seems to have changed and I regret that because the immediate impact of this measure on the poverty ghettos will be extremely severe.
Even if the job losses predicted are not realised, there is no doubt that the implications will be adverse. Most sections of this industry compete with British manufacturers in particular, this measure will increase the level of import penetration which has already been achieved here.
It is regrettable that the Minister held out virtually no hope last night. The package of measures he is promising and that have been so much promised in the last few weeks in the Finance Bill are not likely to tackle any of the problems of this industry. I do not think this extreme and punitive measure is necessary in the short term.
I wish to share my time with Deputy Creed.
Is that agreed? Agreed.
The budget proposal to increase the rate of VAT on clothing and footwear from 16 per cent to 21 per cent will disastrously suppress the already extremely depressed manufacturing and retailing clothing trade.
This will lead directly to additional unemployment within these sectors estimated yesterday evening by Deputy Yates as an extra 3,000 on the unemployment register. The clothing and footwear industry which is still a major employer in this country, is currently going through one of the worst periods in its history due to unacceptably high exchange rates and recession at the retail level. The exchange rate has totally destroyed the industry's competitive edge for sales into Britain and sales on the home market or the rest of Europe relative to British clothing manufacturers.
Sadly we are seeing company closures every week with a consequent rapid rise in unemployment and this will continue at an accelerating rate unless this budgetary proposal is withdrawn, amended, or compensated for.
The situation is particularly critical in my own constituency in a county where over 14,000 people are registered as unemployed, probably the highest per capita in the whole country. The clothing industry has been and still is a major source of employment in Donegal. Many of the companies there are brand leaders —Fruit of the Loom in Inishowen, Magee's of Donegal, Molloy's and Bonners of Ardara, Clubman Omega Shirts of Buncrana and Nena Models of Stranorlar to mention but a few. Magee & Company employ 320 people in Donegal town and 210 in Northern Ireland and they are doing their utmost to maintain employment in both centres but this Government's policy is making it increasingly difficult for the Donegal centre.
Nothing has been done here to lessen the PRSI burden on labour intensive industries such as the clothing industry. As an employer Magee pays 12.3 per cent in Donegal relative to 8.5 per cent in Northern Ireland, so the Northern Ireland unit has a clear advantage as far as PRSI is concerned.
The income levy of 1 per cent also introduced in the last budget will inevitably, lead to wage demands to compensate, at a time when statutory wage rates in the clothing industry are already 7.5 per cent higher here than in Northern Ireland.
IDA assistance in the form of plant aid and capital investment is, I understand, legally banned here unless a company is expanding and, therefore, increasing employment. No consideration is given to job maintainance which is in stark contrast to the IDB's policy in Northern Ireland, who will grant aid up to 40 per cent established companies, to assist such a company to maintain its competitive position with the use of advancing technology.
That is the story of one company on this island, a unique company with centres North and South. That story is an eloquent indictment of the adverse and negative industrial climate and conditions here vis-à-vis Northern Ireland.
Retailing provides employment in every town and village in the country. The imposition of 21 per cent VAT on clothing and footwear will have serious implications for this sector, particularly in Border counties. The lower VAT rate of 17.5 per cent across the Border will certainly boost retail clothing sales there at the expense of our outlets and will further exacerbate unemployment here.
Cheaper production costs in Northern Ireland and the UK generally make their products more competitive. Much of the production of small and medium sized factories in Donegal is sold in the Republic and is now much more likely to be replaced by cheaper imported clothing. Retailers do not have to pay VAT on imported clothing purchases until such purchases are sold while they do pay VAT on domestic purchases on normal credit terms. There is, therefore, a cash flow advantage in replacing domestic production with imported goods.
I listened with some dismay to the Minister's contribution last night and his blank refusal to withdraw or amend this disastrous proposal. The Minister will have a final opportunity to retrieve the situation in the forthcoming Finance Bill. It is imperative that immediate concessions are granted to the clothing and footwear industries if we are to avoid further job losses in an already battered industry. If nothing is forthcoming in the Finance Bill and if the Government does not take steps to alleviate the almost impossible situation that these indigenous industrial sectors are in, companies will go out of business resulting in more redundancies and additions to the unemployment register.
In the brief time available to me I wish to concentrate on the wording of the Government amendment to the Fine Gael motion calling for a reduction in the VAT rate. The amendment reads:
That Dáil Éireann welcomes the overall thrust of the Financial Statement of 24 February in terms of its potential to generate and sustain employment and its financially responsible and balanced nature.
Nothing could be further from the truth because having listened to the contributions of Government representatives tonight, particularly Deputy Hughes, and attended meetings against the VAT increases organised by the clothing and footwear industries around the country, it is obvious that the Government is embarrassed by the proposal which will directly result in job losses.
It is important to record the contribution in terms of employment by the clothing industry, both retail and manufacturing. Approximately 35,000 people are employed in the industry of whom 16,500 are in manufacturing. While the lobby groups may exaggerate figures for job losses it is obvious that there will be substantial job losses, a figure of 3,000 has been mentioned. The reality is that people have lost their jobs and if this measure is retained in the Finance Bill the job losses will accelerate to the 3,000 figure mentioned.
This is a tax on jobs and, given that employment is a scarce resource here and this Government's overriding objective to resolve the unemployment problem— indeed, we were told this was the primary function of the budget—it is nonsense to tax an intensive job creating industry such as the clothing industry to this extent. The increase in VAT cannot be absorbed by the manufacturer or retailer and must be passed on to the consumer. Given that the only variant available to both retail and manufacturing is labour costs, then, inevitably, we will see job losses.
If Deputies vote against this Fine Gael motion it will represent a suppression of democracy. While the ultimate test for the Government will come in the Finance Bill it would be foolish to disregard the extent of the concern and anxiety that is shared not alone by all Members but by people employed directly in the industry.
This is not an irresponsible motion because we accept that the Government must work within certain financial constraints. Fine Gael believe that the Government have room to manoeuvre. The recent reduction in interest rates has left considerable leeway in terms of debt servicing which was not included in the arithmetic of the budget. The relief promised to mortgage holders in the budget will not now be necessary in light of the significant interest rate reductions. That again is an opportunity for the Government to reconsider the VAT issue. If necessary cuts in public expenditure and, in particular, an increased tax on special savings accounts should be considered in order to protect employment in this industry. It is important also for the Government to bear in mind that revenue from VAT will not be as anticipated given the reduced sales and, more important, the cost of paying unemployment assistance to those who find themselves unemployed as a result of this measure.
I read with interest reports of a Cabinet meeting to the effect that the Minister for Enterprise and Employment, Deputy Quinn, is considering the implementation of some 40 recommendations of the Culliton report. Ministers are propagating the county enterprise boards and yet we are turning our backs on an employment intensive industry and forcing 3,000 people onto the dole queues.
An important element of any policy to resolve unemployment must be job preservation. The logic of the Government's proposals on VAT increases seems to fly in the face of its overriding objective to resolve the unemployment problem. There are some straws in the wind that the Government intends to adopt an approach of divide and conquer in terms of the campaign organised by the clothing and footwear industry and that some relief will be made available to the manufacturing sector. I would caution the Government against doing this as VAT is a single policy issue which deserves recognition on its merits and should be reduced. Any incentives to those involved in the manufacturing sector will be welcome in their own right but not as a sop to dissipate a campaign which has its own merits.
I join with my colleagues in supporting Deputy Yates' motion. The Minister, in his response to the motion last night, gave us his global view of budgetary policy and what he felt was happening here. He omitted to deal in any specific way with this industry. He did not mention the effect of the 1 per cent levy or other charges in the budget. He spoke about budgetary strategy and how the Irish economy would lift. I suppose the boats were to be used again— he did not use that metaphor but it was implied—and that we could expect Ireland to become the land of milk and honey as a result of the 1992 budget.
Fianna Fáil Deputies argue that it was necessary to introduce this measure. Why does the Minister not stand back and review this matter now that there have been changes since the budget took place? That is the most disappointing aspect of the Minister's speech. He has not said that because interest rates have fallen he can review the matter. He has thrown out a sop by saying he might reconsider something in relation to the manufacturing side. The Minister might not have taken note of what I said last night because I was a little disorderly. I will repeat the point that the Minister is asking those who work in the retail drapery industry, which does not enjoy the greatest of margins to pay an additional 1 per cent charge on their earnings. He wants those employees to pay half their week's salary to the Exchequer to bail out the Government. The worst feature of this was that all the Labour Deputies and delegates who attended the Labour Party convention in Waterford to hear the Messiah, Dick Spring, were ashamed of this measure, yet throughout this debate no Deputies have been present on my right—even if it is the excommunicated side.
The Minister of State, Deputy Eithne Fitzgerald, has arrived and has not said anything about this motion. That is the contribution of the Labour Party to the proposals in relation to employment outlined by Deputy Creed. What are the public to expect of this Government? Will they steamroll legislation through this House because of their large numbers? They are all complacent tonight. None of them is concerned about their constituents, shop workers or textile industry employees. The motto of the new Coalition for change made up of Labour and Fianna Fáil is to let the textile industry go to the wall.
The Minister has an opportunity in the Finance Bill to review this matter and he might withdraw the insulting amendment he has put down tonight. He might have intimated in his speech last night that he will do something about VAT but he has proceeded with this insulting behaviour to this industry. I do not believe in the long run he will make any change. That is most disappointing.
I was employed in the textile industry for 20 years. I saw a textile firm grow from employing 40 to 1,000 people and then saw it demolished. As Deputy O'Keeffe mentioned earlier, there were successive Governments from 1973 onwards which did not look after the textile industry. People who work in the textile industry are aware of the camaraderie that exists in the industry, even though it does not provide large incomes. People in the industry dislike inactivity on the part of the Government who have shown such insincerity to the plight of these people. In the mid-west region which I represent, Lanaknit in Shannon closed, Crescent, Donovan's and many other firms in Limerick City closed and Burlington closed in Clonlara. The Government is penalising the industry out of existence. I am ashamed that nothing concrete can be done for this industry.
I would like to share my time with Deputy Yates. This debate has served to highlight the Government's hypocrisy in their policy on job creation. It has served also to unite the people involved in the footwear and clothing industries. They are a more cohesive group now and they will be a stronger lobbying group for the future. To gauge by the success of the hairdressing, motor and photographic industry lobbies it would appear that those who lobby hardest have the most success. Representatives of the clothing and footwear industries will realise it is very important to apply as much pressure as possible on their representatives when it comes near budget time. The forthcoming Finance Bill is the only saving mechanism available to those people. If the Government is sincere in its policy on job creation, especially in the indigenous sector on which they have placed so much emphasis, they will react to the case being made tonight by Fine Gael and the other parties. They will also react to the very serious concerns of the manufacturing and retail industries.
I do not wish to go over ground which has been covered effectively by my colleagues, mainly due to the good briefing we received earlier. We are aware of the facts involved and the threat to the 3,000 jobs mentioned. I would like to refer especially to the 3,500 retail outlets. We hear much about the decline and the demise of family farms. I would remind the Minister that we will witness the demise of several of these retail outlets. My wife's family is involved in the footwear industry in Tralee and I am aware of the pressure being applied to the people in that industry by this cruel imposition that defies logic on both the clothing and footwear industries. It is obvious that they were easy pickings.
The Government thought that they would get away with its ludicrous decision which runs contrary to their policy on the development of the indigenous sector. Culliton emphasises the need for a strong Irish manufacturing base. If the clothing and footwear manufacturing industries are to be strong in their export markets, they need a strong core market here before they can launch forward. If that is taken away from them because their products are less competitive then further firms will collapse.
I would like to refer to the tourism industry. As spokesperson on tourism, I realise that many Italians come here to combine recreation with shopping. Some of the major stores in Dublin are experiencing a fall-off in the number of Italian customers this spring. That is as a result of the increase in costs here and also because we have lost competitiveness due to the devaluation of the Italian currency. Tourists who come here this year will see an increase in prices. That portrays a bad image of Ireland from a cost base point of view and from the point of view of attracting tourists here, who purchase high quality products. The way forward for our clothing industry is to produce high quality, well designed branded products that can compete in Europe. It will be difficult to compete with countries from the East who mass produce products at low labour costs which are imported here. However, we can compete by producing high quality and well designed products. This debate has exposed the Government's hypocrisy.
Where are the members of the Government? They should come back, all is forgiven.
Empty benches.
The Minister is on her own.
(Interruptions).
Let us hear the Deputy, without interruption, please.
I will leave it to the people in the Gallery to judge where their support really lies.
A Deputy
Perhaps they will not vote.
I thank my party colleagues who have contributed in an articulate and eloquent manner to this important debate and made a forceful case for the removal of the heinous imposition of 21 per cent VAT on clothing and footwear.
Would the Deputy prefer it to be on food?
Is that the next item on which the Minister will apply an imposition?
That is what the Deputy suggested.
I thank members of the Progressive Democrats and Deputy Rabbitte for their support and acknowledgement of the logic of this case.
I would like to refer to the speeches from the other side and to dismiss the opportunism of Deputies Lawlor and O'Keeffe as this debate coincides with the appointment of chairpersons to committees. Another plethora of appointments to salaried positions will be made which will increase the £6 million per annum already being paid in respect of special advisers, programme managers, assistants and so on. I will ignore their opportunism because I realise their ambition is to try to get on.
The Minister's speech was singularly pathetic. It was a rambling discourse, a rehash of the budget and not even a good one. It was also insidious in so far as it sought to divide and conquer the unified lobby in the clothing and footwear sectors between manufacturers, designers and retailers. It presented the manufacturing sector with a glimmer—nothing specific or definite—of PRSI reform but nothing for the retail sector who are being thrown to the wolves between the multiple chain stores, on the one hand, and the Minister who is happy to see them go out of business, on the other. A dishonest argument was put forward from that side of the House in regard to the EC alibi.
Hear, hear.
The Government blames the EC for this high VAT rate. We have the second highest standard rate of VAT in the EC and there is no obligation on us to have a 21 per cent standard rate of VAT. A rate of 17.5 per cent applies across the Border and in the UK. We are only compelled to have a standard rate of 15 per cent or higher and we should drop the pretence that anyone outside this country is forcing the Government to act wilfully in regard to this sector.
I do not accept the Minister's figure of £77 million. Detailed surveys have been carried out on the decline in retail sales. If one takes a unit of sales in 1990 at £100 and disregards inflation and the depreciating value of the pound, in 1993 that £100 will be down to a net turnover of £81. There has been a systematic slump and decline in sales as VAT rates increased. In 1990 the VAT rate was 10 per cent, it was then increased to 12½ per cent, then to 16 per cent and now to a rate of 21 per cent in an effort to squeeze the remaining life out of that sector. We are talking about a particularly vulnerable sector, especially during the currency crisis. The first sector to be affected by the currency crisis and to put workers on short-time was the clothing sector.
The first effects of this VAT imposition will be an exodus across the Border. The tills in Dundalk and Letterkenny will not be ringing but they will be ringing in Newry and Belfast because of the Government's decision to price our clothing and footwear goods out of the market. The independent retailing sector will be thrown to the wolves. If an indigenous clothing manufacturer sets up operations the big multiples will not stock his goods but the independent retailing sector will be put out of business by the imposition of this VAT rate.
Our principal argument relates to the jobs which will be lost because of more sales through the black economy—a sector which will not pay the VAT— and to job losses in the manufacturing industry. An impromptu survey spontaneously carried out on ten ladieswear manufacturing companies reveals that 171 people have been laid off and that 66 are working short-time. Clerys department store, which employs 400 people, are letting 60 people go. Last night I outlined an endless list of footwear and retail outlets which have closed since January of this year. Boylans closed eight of their shops, Nova Shoes closed three shops, Vive Shoes closed three shops and many others have closed outlets in Finglas, Walkinstown, Bandon, Cork, Kildare, Limerick, Laois, Wexford, Monaghan and other towns. There is no end to the litany of failures of this Government. It believes in high spending and high taxation that will squeeze real jobs out of the economy, not the make-believe jobs that are supposed to be created from the £25 million allocated to the county enterprise boards and not the make-believe jobs that will come from the Minister for Arts and Culture who splashes another £10 million per annum on behalf of the hard-pressed taxpayer every time there is a development in the area of arts and culture. We know that at the end of the day all those make-believe schemes must be financed by the competitive sector who cannot bear a burden of 21 per cent consumer tax. It is not possible to pass on this increase in VAT to the consumer. Instead, companies will have to absorb £48 million out of their own margins because they know if they increase their prices further they will not get a turnover on their goods. Anyone in the clothing industry will say that they must turnover stock three times a year in order to break even and it is important not to have unsold stock on the premises.
Any Member of this House who walks down the main street of a provincial town or city will see signs for special offers, sales and cut price discounts. This is April, not January. These shopkeepers cannot get rid of the stock on their shelves because of the impact of this tax.
The big lie perpetrated by the Government in this debate and by the Taoiseach on a continual basis in America and in this House is that in some way the economic miracle has occurred, interest rates are coming down and all is sweetness and light. We have to get rid of this big lie. While the upturn in the economy is due in part to the success of the devaluation of the punt, it is mainly due to the appreciating value of sterling and the international decline in interest rates. This upturn has not been brought about by the Government. In fact, the underlying trend in the budget was to increase borrowing by £400 million. Nobody believes the Government myth in this regard.
Another insidious point was that we have not been prepared to say how we will finance this reduction. It has been clearly stated in the debate how this can be done. It is wrong that we do not have adequate scrutiny and control over the expenditure of £10.5 billion in order to ensure that we get value for money. Leaving that aside, it is wrong and reprehensible that the level of tax on special savings accounts, which will not be put into any sort of productive investment and which are not linked to any conditions, is only 10 per cent. It is lower than income tax, VAT or any form of corporation tax. What reward does a person who invests his lotto winnings or retirement lump sum in business—it may be one of the three out of ten companies which succeed—get for creating jobs? He has to pay 40 per cent corporation tax. That is a distortion of the tax code.
The Government has shamefully and wilfully neglected the clothing sector which employs approximately 37,000 people. We will not let this matter rest, we will raise it again during the debate on the Finance Bill. There will be no escaping the reality that the 3,000 jobs being destroyed by the Government through this measure can only be saved if the Government reverses its decision and reduces VAT on clothing and footwear to 12.5 per cent.
Amendment put.
The Dáil divided: Tá, 69; Níl, 42.
Tá
- Ahern, Bertie.
- Ahern, Dermot.
- Ahern, Michael.
- Ahern, Noel.
- Aylward, Liam.
- Bree, Declan.
- Brennan, Matt.
- Briscoe, Ben.
- Broughan, Tommy.
- Burton, Joan.
- Byrne, Hugh.
- Callely, Ivor.
- Costello, Joe.
- Coughlan, Mary.
- Cowen, Brian.
- Davern, Noel.
- de Valera, Síle.
- Doherty, Seán.
- Ellis, John.
- Ferris, Michael.
- Fitzgerald, Brian.
- Fitzgerald, Eithne.
- Fitzgerald, Liam.
- Flood, Chris.
- Foley, Denis.
- Gallagher, Pat the Cope.
- Gallagher, Pat.
- Geoghegan-Quinn, Máire.
- Hughes, Séamus.
- Hyland, Liam.
- Jacob, Joe.
- Kavanagh, Liam.
- Kemmy, Jim.
- Kenneally, Brendan.
- Kenny, Seán.
- Killeen, Tony.
- Kirk, Séamus.
- Lawlor, Liam.
- Leonard, Jimmy.
- McDowell, Derek.
- Moffatt, Tom.
- Morley, P.J.
- Moynihan, Donal.
- Mulvihill, John.
- Nolan, M.J.
- Noonan, Michael (Limerick West).
- Ó Cuív, Éamon.
- O'Donoghue, John.
- O'Hanlon, Rory.
- O'Keeffe, Batt.
- O'Keeffe, Ned.
- O'Leary, John.
- O'Shea, Brian.
- O'Sullivan, Gerry.
- O'Sullivan, Toddy.
- Power, Seán.
- Reynolds, Albert.
- Ryan, Eoin.
- Ryan, John.
- Ryan, Seán.
- Shortall, Róisín.
- Smith, Brendan.
- Spring, Dick.
- Stagg, Emmet.
- Treacy, Noel.
- Upton, Pat.
- Wallace, Dan.
- Wallace, Mary.
- Walsh, Eamon.
Níl
- Ahearn, Theresa.
- Allen, Bernard.
- Boylan, Andrew.
- Bradford, Paul.
- Browne, John (Carlow-Kilkenny).
- Bruton, Richard.
- Burke, Liam.
- Clohessy, Peadar.
- Connaughton, Paul.
- Connor, John.
- Cox, Pat.
- Crawford, Seymour.
- Deenihan, Jimmy.
- De Rossa, Proinsias.
- Doyle, Avril.
- Dukes, Alan M.
- Durkan, Bernard J.
- Finucane, Michael.
- Fitzgerald, Frances.
- Flaherty, Mary.
- Foxe, Tom.
- Gilmore, Eamon.
- Harney, Mary.
- Higgins, Jim.
- Hogan, Philip.
- Kenny, Enda.
- Keogh, Helen.
- McCormack, Pádraic.
- McDowell, Michael.
- McGinley, Dinny.
- McGrath, Paul.
- McManus, Liz.
- Mitchell, Jim.
- Molloy, Robert.
- Nealon, Ted.
- Noonan, Michael (Limerick East).
- O'Donnell, Liz.
- O'Keeffe, Jim.
- O'Malley, Desmond J.
- Quill, Máirín.
- Sheehan, P. J.
- Yates, Ivan.
Tellers: Tá, Deputies Gallagher(Donegal South-West) and Ferris; Níl, Deputies E. Kenny and Boylan.
Amendment declared carried.
Question, "That the motion, as amended, be agreed to", put and declared carried.