I move:
That a sum not exceeding £11,500,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of December, 1993, for grants (grants-in aid) to An Chomhairle Ealaíon.
Six months after the formation of the new Government, I am glad to report that we have made an excellent start. The economy is improving, confidence is being restored, our programme is being implemented efficiently and expeditiously and major reforms are being carried out.
This partnership Government is a new departure in Irish politics. It is working extremely well, and is producing results. It has already demonstrated its ability to take and carry through difficult decisions. I would like to pay tribute to all my colleagues in Government for their hard work and success in their portfolios, indeed to those colleagues in the Fianna Fáil and Labour parliamentary parties, who have given steadfast support in this crucial formative period in the life of this new Government. We have already had to confront together hugely complex problems and to make painful choices, and that no doubt will continue. That is what a Government is elected to do, and we have shown political courage, commitment and determination. The political philosophies of Fianna Fáil and Labour and our policy priorities have the degree of compatibility that has enabled us to work effectively and cohesively together on behalf of the country, building on the positive achievements since 1987, but also branching out in new directions. The people voted for change. They wanted change; they are getting change.
We have made excellent economic progress over the last six months, far greater than anyone would have imagined possible last January. The one month interbank rate has fallen from around 40 per cent at the end of January to under 6.5 per cent today. Most mortgage holders have seen interest rates fall from around 14 per cent to around 8 per cent, while the rate for personal borrowers has fallen from 19.25 per cent to 12.5 per cent. The rapid fall in interest rates, with the Central Bank cutting its short term facility rate on 13 successive occasions to its lowest level since 1979, has been in good measure due to the combined result of a carefully constructed budget and a successful devaluation bolstered by the credibility won by the earlier sturdy defence of our pound over a period of months.
Devaluation, though unfortunate in itself but in the end unavoidable, was well executed and timed, and was accepted on that basis by the international markets. The best evidence for this is that the Irish one month rate I referred to is for the first time below the corresponding German rate. Indeed, we have achieved an excellent outcome from devaluation, with inflation and interest rates falling rapidly. An earlier devaluation could not have restored confidence to the same extent or ensured the stability of our exchange rate. We would not have achieved this outcome, if we had followed the line of least resistance advocated by some. As it turned out, we have secured the best of both worlds. We have improved our competitiveness in the larger European markets, and we have to a large extent restored our competitiveness with the UK compared to pre-September levels.
The income gains most people will have made, from pay increases under the Programme for Economic and Social Progress, from mortgage and interest rate reductions, not to mention the additional mortgage relief in the budget, and the 3.5 per cent increase in social welfare rates this month, will have ensured that, with inflation so low, people's living standards in real terms will improve virtually across the board in 1993.
The important thing about the budget is that it gave out a clear signal that this would be a fiscally responsible Government. Our borrowing level is one of the few in Europe to have stayed within the European Monetary Union criteria at around 3 per cent, which is necessary given that we have a high long term debt still to unwind. Our prudence will stand to us, as economic conditions improve. We hope, within the Maastricht budgetary convergence criteria, to be able to resume the process of tax reform and tax reduction, not least as an aid to improved competitiveness and continued consensus on pay moderation, while sharing the ESRI's view that radical tax reform is not a panacea for employment.
Ireland has been one of the best performing economies in Europe during the current international recession. Almost alone, we have succeeded in maintaining an average rate of growth in output of about 3 per cent since 1991, in contrast to the drop of output at different stages in most other countries. The latest world competitiveness report ranks us in terms of domestic economic strength third behind only the US and Japan. This relative strength has allowed us broadly to maintain the net gains of about 46,000 in employment made between 1987 and 1990, as against substantial job losses in some of our trading partners, and in contrast to the earlier years of in the 1980's, when the level of employment fell by nearly 80,000.
Since the budget we have revised downwards our average unemployment projection in 1993 by 9,000. Unemployment itself declined four months in a row from February to May, and seasonally adjusted shows no significant change since January.
We currently have the lowest inflation rate in Europe at under 1 per cent and we are likely to finish with the lowest annual rate in Ireland for over 30 years at less than 2 per cent. The balance of payments remains in large surplus, the highest in the EC apart from Luxembourg. While accommodating some reordering of priorities, the improved management of the economy instituted in 1987 is continuing without interruption. This is a necessary condition to solving the unemployment problem, but not of course a sufficient one.
Raising the level of employment, and reducing the numbers unemployed is the Government's top priority. For the first time this has now been made the Community's top priority by the European Council in Copenhagen, something we had strongly urged. It was also the major preoccupation of the Group of Seven countries meeting in Tokyo this week.
To help underpin employment this year, we adopted the biggest ever public capital programme of £2.3 billion, making use of the new EC Cohesion Fund agreed at Edinburgh as well as other available resources.
The next major item on the employment policy agenda is the completion of our National Development Plan, which has been the subject of extensive consultations inside and outside Government. The plan will have a major impact on our employment prospects and our competitiveness. It represents a unique chance for Ireland to catch up over a seven year period. These funds will enable us to modernise our transport network, upgrade our environment, increase sectoral investment and productivity, and provide better third level and training opportunities. They will also enable us to tackle unemployment with particular reference to long term unemployment and social exclusion, by imaginative policies concentrated where they are most needed.
In this connection a key part of the National Development Plan will be a local development programme to be implemented on a local, community-linked basis for the long term unemployed and those, especially the young, in danger of becoming long term unemployed, to enable them to counter the economic and social disadvantages that arise for them. Nobody must feel excluded.
There will be an integrated approach comprising initiatives in the areas of education, training, community development, work experience and enterprise creation. This has worked very successfully in the 12 designated areas operating the area-based strategy for the long term unemployed under the Programme for Economic and Social Progress.
In the integrated approach there will be a major focus on the expansion of the community employment development programme, which will generate benefits to participants by way of training and work experience, and to sponsors by the development of facilities and services to enhance the economic, environmental and recreational features in the areas concerned.
My Department, as the secretariat of the Central Review Committee and acting closely with the Tánaiste's office, and in consultation with the new National Economic and Social Forum, will have the co-ordinating role in the implementation of the local development programme, in association with other relevant Departments and State agencies.
Since the next tranche of Structural Funds, which will include this programme, will not become available until January 1994, the Government has decided to provide a sum of £10 million to commence the initiative forthwith. These funds will be used to provide, on an integrated basis, economic, social and community development, and enterprise creation for the long term unemployed — and those in danger of becoming long term unemployed — both through local development companies and through relevant agencies.
EC Structural and Cohesion Funds will be equitably distributed to all regions. They will help us to improve transport networks in Dublin and around the country. The Government is equally committed to the prosperity of our capital city and of the regions, to employment and better social conditions in our towns and cities, as well as the maintenance of the fabric of rural life.
The Government want to see all parts of the country doing well. Dublin city in a recent survey was expected to be the second fastest growing city in Europe after Barcelona in the 1990s and over the last six or seven years it has flourished as never before, with projects like Temple Bar and the International Financial Services Centre and the refurbishment of buildings such as the Custom House, Government Buildings, and the interiors of our national cultural institutions, including the establishment of the Irish Museum of Modern Art at the Royal Hospital, Kilmainham. Whether we come from Longford or Kerry or Donegal, we should take pride in our capital city, because it belongs to us all.
But I am also glad to note that in the 18 months that I have been Taoiseach farm incomes have improved very substantially. Following an increase of over 18 per cent last year, a substantial increase is again in prospect this year, cancelling out the income falls in 1990-91, and restoring the large income gains of 1987-97. I noted with interest that the President of the IFA, Alan Gillis, writing to The Irish Times this week, said that he would be glad to accept 1993 as a base year to measure future income trends in farming, following Common Agricultural Policy and GATT reform. We have introduced a broader policy of rural development, and we have fought strongly in Brussels and elsewhere for the essential interests of Irish agriculture. The farming community will of course get its fair share of EC funds.
I now want to turn briefly to the decisions the Government has had to take to ensure the survival of Aer Lingus and to prevent a crash landing, that would have put thousands of jobs at risk. Our unequivocal backing for Aer Lingus is underlined by our decision to inject £175 million into the national airline, subject to the agreed implementation of the cost reduction plan. The decision to seek to modify the Shannon stop-over in the renegotiation of the Ireland-US bilateral air agreement was taken in the best long term interests of the Shannon region. We have preserved the stop-over in its original form, as long as it was possible to do so out of regional policy considerations, and some would argue longer than was strictly defensible in terms of the overall national interest. The status quo was no longer a real option beyond the end of this year.
There comes a point, when the inevitability of change has to be faced up to. The determining consideration was the imperative survival of the national airline. If you do not have Aer Lingus, you will not have a Shannon Airport. The stagnation of tourist and business traffic from North America over a number of years together with the few airlines prepared to serve Ireland under existing conditions was also a related cause of concern. Blanket protectionism of this kind in the face of pressing commercial realities can only be sustained for so long and at an escalating cost. It was an anomaly, difficult to defend in current economic conditions, for all airlines to be forbidden to fly direct to our capital city, a situation that obtains virtually nowhere else in the world.
Respected voices in the Shannon region, like "Mr. Shannon" himself, Brendan O'Regan, the first chairman of SFADCo, recognise that change is an inevitable part of life. The Government will continue to build up and promote the Shannon region, and treat the airport as integral to its prosperity and as a major national asset. I would appeal to the people and the public representatives of the Shannon region to adopt a constructive attitude and innovative spirit, to rise to the challenge once more, as happened 30 years ago when foreign commercial airlines began to overfly Shannon. Governments must always decide in the national interest and do their best for all regions in the country.
The decision will allow us to develop a more all-year round tourism industry. Shannon will be able to compete far more freely in the marketplace without the handicap of compulsion. We will use Structural Funds to promote vigorously the development and growth of the Shannon region, to concentrate resources on international marketing, and to improve its basic infrastructure.
A broad political agreement on an increase in the level of EC resources and how they would be allocated for the years 1993-99 was negotiated at Edinburgh. The present Government as a whole has sought to ensure that the detailed allocation, to be decided in conjunction with the regulations now near adoption, would be in keeping with the conclusions and the spirit of the Edinburgh accord. A major diplomatic battle has had to be fought over the past two years, to ensure that Ireland would benefit properly from the doubling of structural and cohesion funding for the four poorer countries, recognising that we have used previous EC funds well. Indeed, they have helped to bring our average per capita GDP income per head to close to three-quarters of the EC average, where it was around 63 per cent in 1986. In fact, according to the latest world competitiveness report, we had the highest GDP per capita growth in the developed world in the years 1987-91. Put in simple language, we are catching up fast, but we still have a considerable gap to bridge, and we must be allowed to continue that progress.
I have been criticised for vigorously standing up for this country and trying to obtain the funds that are so badly needed, as if this were somehow unseemly and unreasonable. I have always nailed my colours to the mast. Deputies will remember the ferocious barrage to which I was subjected a year ago, when I firmly predicted that Ireland would be able to get £6 billion. Even then, there were the anonymous EC officials, ready to whisper in the ear of any receptive Brussels correspondent, saying that this was counting chickens before they were hatched.
There have been all too many who have been eager to undermine the national case at every point and to pour cold water on our claims that are well justified, particularly in the light of our very high level of long term unemployment and our peripherality. Let me illustrate with a few examples. The Leader of Democratic Left, Deputy De Rossa, in the Dáil on 16 December last predicted after the Edinburgh Summit: "We are talking in terms of a maximum figure of between £6 billion and £7 billion over seven years". He told the Dáil on 23 October last the likelihood was that the £6 billion will not materialise. The £6 billion figure, he said, was always an exaggeration.
