I understand that Deputy Allen was in possession and had agreed to share his time with Deputy Theresa Ahearn. Deputy Ahearn has nine minutes remaining.
Private Members' Business. - Economic and Social Programme Talks: Motion (Resumed).
The following motion was moved by Deputy Rabbitte on Tuesday, 23 November 1993:
That Dáil Éireann regrets the collapse of the talks for another Programme for Economic and Social Progress provoked by the failure of the Government to terminate the 1 per cent income levy and eliminate the ‘dirty dozen' social welfare cuts; and, in view of the hardship caused by both measures, calls on the Government to reverse them in the next budget.
Debate resumed on amendment No. 1:
To delete all words after "That" and substitute the following:
"Dáil Éireann notes
—the preconditions set by the Irish Congress of Trade Unions before it will enter into discussions on a new programme, viz. ‘the removal of the 1 per cent levy and the full reversal of the social welfare cuts within an agreed time span as well as the full implementation of the current Programme';
—the agreement reached at a meeting between Congress and Government on 13 October, 1993, that ‘the General Review Committee should continue to meet in 1993 to transact the business it has undertaken well in the lifetime of theProgramme for Economic and Social Progress and that in relation to the social welfare issues raised, the Committee would work to identify any issues that required action and would convey their views clearly to the Minister for Social Welfare’;
—the proposals put forward on 15 November, 1993 by the Minister for Finance and the Minister for Enterprise and Employment on behalf of the Government confirming that the phasing out of the 1 per cent levy would begin in the 1994 Budget and would be completed not later than in the 1996 Budget;
—the expressed wish of both Government and Congress in their joint statement of 21 October, 1993, ‘for a new Programme that had employment as the cornerstone';
—that the Government remains available at any time to resolve the present impasse in a way which would be consistent with its responsibility in terms of employment and the public finances;
and expresses the hope that Congress will review their position and open discussions on a new Programme in the light of the Government's stated position."
—(Minister for Finance.)
I listened with a certain amount of difficulty to Government Ministers last evening. Judging by their reactions to the motion it is obvious that Fianna Fáil and Labour have very short memories. If one or both parties had honoured their pre-election promises or budget statements, there would have been no need to table this motion as the talks about another programme for economic and social progress would have been making progress.
Last evening the Minister of State at the Department of Social Welfare, Deputy Burton, had the audacity to accuse Opposition Members of intellectual dishonesty. This time last year the Labour Party had concluded its general election campaign based on commitments to reversing the so-called dirty dozen cuts and reducing the taxation of low-paid workers. The constant hypocrisy of the Labour Party is so brazen it defies belief. Perhaps the Minister of State at the Department of Social Welfare will admit that in April last she misled the public by claiming repeatedly that all the dirty dozen cuts had been reversed. Indeed she accused Deputy De Rossa — I am sure he will support me in this — of dishonesty when he pointed out correctly that only four of the 12 cuts had been modified. Yet the Minister of State could say last evening that the Opposition had an unwarranted obsession with cuts in social welfare. Such a statement on the part of a Minister with responsibility for poverty, is extraordinary, particularly when her party claims to be the champions of the poor——
We are.
——and the less well off. Of course, all that was expressed when they were in Opposition.
What about child benefit?
There is simply no justification for the self adulation in which the Minister engaged last evening for any of the changes effected in social welfare.
Today social welfare payments represent the same proportion of GNP as they did in 1982. We must remember also that, since 1982, the average industrial wage has increased by 14 per cent in real terms whereas spending per head on social welfare increased by approximately 10 per cent. Will the Minister accept that 80 per cent of social welfare recipients are in receipt of payments below the minimum level of income recommended by the Commission on Social Welfare in 1986?
Therefore, the Minister for poverty, by not only opposing this motion but by the entire tone of her contribution——
Members of this House must be referred to by their appropriate titles — Minister of State at the Department of Social Welfare. I should tell the Deputy that appendages of the kind she used are not in order.
It was the poverty of the Minister's philosophy to which the Deputy was referring.
I was referring to what was supposed to be her responsibility, but I will conform to your wishes.
Proper titles, please, in accordance with Standing Orders of this House.
Bearing in mind the entire tone of the contribution of the Minister of State at the Department of Social Welfare she will now have to convince us by her actions that her aspiration is to eliminate poverty rather than perpetuate it.
Now locked in Government by its senior partners, no longer having the freedom to preach about the needs of the unemployed or social welfare recipients, the Labour Party does not want anybody else to speak on behalf of those people either. I warn the Government parties that we will not be silent or be silenced.
In September 1992 the Leader of the Labour Party, now Tánaiste, Deputy Spring, accused the then Minister for Social Welfare, Deputy McCreevy, of social vandalism because of the dirty dozen cuts. At a Labour meeting in Clonmel in my constituency, he went even further and described the then Minister for Social Welfare, Deputy McCreevy as "a cut a fortnight Minister" who was hacking away at social welfare entitlements at the rate of approximately one every two weeks. Deputy Spring said that the then Minister for Social Welfare was deliberately and consciously trying to create a new type of citizen, that Deputy McCreevy and Fianna Fáil thought in terms of two classes of people, donor and recipient, and that, for very crude political reasons, it was endeavouring to exploit the fears and prejudice of that mythical donor class by turning the equality mythical recipient class into scapegoats. Deputy Spring continued to say that he had news for the then Minister, that there was one class of citizenship only and that all the Minister's efforts to create second-class citizens, based on the appeal to politics of envy and begrudgery, would fail. That is the recorded view of the Leader of the party of the Minister of State on the dirty dozen cuts last year about which she now claims the Opposition parties have an unwarranted obsession. Those were her Leader's views on social welfare cuts which she claimed in the course of her contribution last evening were really not all that important. In fact she said:
There are other, much more serious, issues in the social welfare system which do need consideration but which have been ousted from discussion by the unwarranted obsession with the 1992 cuts on the part of certain people.
What a U-turn, what blatant hypocrisy. The Minister for Finance endeavoured last evening, but failed, to justify the Government's continued refusal to eliminate the 1 per cent income levy introduced in the last budget. He will not listen to Congress, Members of this House, or the loud opposition voices among the public at large. He explains that domestic and international bodies such as the ESRI and the OECD want him to reduce the national debt further, thereby obliging him to retain the 1 per cent levy for at least another year. Perhaps the Minister is surprised that the imposition of this levy provoked such a backlash but he must face the reality that the levy is being imposed on modest incomes. Neither is any allowance made for the payment of a levy when a person's income tax liability is computed. In other words, the money extracted from the citizen in the form of the 1 per cent levy is also subjected to PAYE and other income tax. Therefore, the blatant assertion on the part of the Minister for Finance that he must frame his budgetary strategy in accordance with the desires of the ESRI, the OECD, the World Bank and others is formal confirmation on the part of Fianna Fáil and Labour that their primary objective is to reduce, the national debt.
How can we expect a Government, so obsessed with lofty aspirations to reduce the national debt, to have firm control over public finances? I admire its aspirations but certainly not when the price must be paid by those who suffer from the effects of the 1 per cent income levy and the dirty dozen social welfare cuts.
Unfortunately we now face a future without any Programme for Economic and Social Progress because of the Minister's stubborness about the 1 per cent levy and Labour's disregard of the dirty dozen.
I support the motion.
A Cheann Comhairle, I should like to share my time with the Minister of State at the Office of the Tánaiste and Department of Finance, Deputy Eithne Fitzgerald, and with Deputies Broughan and Noel Ahern.
Is that satisfactory and agreed? Agreed.
I welcome the opportunity to speak on this motion. The Programme for Economic and Social Progress and its predecessor the Programme for National Recovery have been good for this country. We have achieved much that would not otherwise have been achieved. We have secured a level of economic growth that is the envy of most European countries.
Substantial progress has been made in improving our social welfare services. Weekly payments for the 800,000 people and their 700,000 dependants on social welfare have been kept ahead of inflation. Some 83 per cent of people now receive the priority rate recommended by the Commission on Social Welfare. Real progress towards achieving the priority rates for the remaining group has been made through consistently targeting this group for special increases.
Families have benefited significantly through child benefit increases and improved family income supplement for those bringing up families on low pay. Measures have been introduced to tackle fraud, abuse and unwarranted claiming of benefits and to protect the workers PRSI fund.
The law in relation to the security of occupational pensions schemes has been strengthened to protect the £13 billion in assets which the 500,000 members of these schemes have invested.
We have improved the range of options for second chance education and introduced new work return supports for unemployed people and lone parents.
A new relationship between Government and the voluntary sector has been achieved and will be developed further.
All of these improvements, which cover every section of Irish society — workers, employers, those who depend on social welfare, those who work full-time in the home and those who work with voluntary and community groups — have been made possible by the consensus approach brought about by the Programme for National Recovery and the Programme for Economic and Social Progress. These agreements have harnessed the commitment of the Irish people represented by the social partners in a concentrated drive to build a stable economy and a better future for everyone.
We need another programme for economic and social progress type agreement with the social partners if the progress made to date is to be consolidated and progressed. We must be positive and forward looking. These objectives are far from the minds of those who tabled this motion.
I have made my position on the 1992 measures — the so-called dirty dozen — very clear in this House on a number of occasions. I hope the Deputies opposite are in no doubt in that regard.
In 1992 the Government provided for a range of improvements to social welfare including a 4 per cent increase in weekly payments and special increases for those on the lowest payments. Those improvements cost some £85 million in 1992 and £162 million in a full year. This year's budget provided for a general increase of 3.5 per cent in weekly payments and a number of other improvements at a cost of a further £180 million in a full year.
Expenditure on social welfare services increased from around £3.1 billion in 1991 to £3.4 billion in 1992 and to £3.7 billion in 1993. That is a measure of this Government's commitment to improving the position for those who are dependent on the social welfare system.
The other social welfare measures introduced in 1992 which had an impact on particular groups have been reviewed. Some have been eased substantially and in other cases I have taken significant initiatives to alleviate the difficulties which they cause for people. I will continue to review the impact of the remaining measures on people and any further changes necessary will be made.
For the information of the Deputies opposite, I will briefly set out the adjustments that have been made. First, the introduction in 1992 of a new contribution condition for receipt of disability benefit which requires at least 13 paid PRSI contributions in a recent contribution year was revoked for people on long term unemployment assistance and pre-retirement allowance. These people could not satisfy the new paid contribution condition because they were already on social welfare. Second, the contribution condition for receipt of dental and optical benefits requiring at least 13 paid PRSI contributions in a recent contribution year was revoked for people in receipt of disability benefit for more than 12 months, invalidity pension, long term unemployment assistance, and pre-retirement allowance. Third, dental and optical benefits have been restored to pensioners affected by the change in the contribution condition for receipt of those benefits requiring five years paid contributions instead of three. Fourth, dental and optical benefits have been restored to PRSI contributors earning up to £30,000 per annum and £60,000 per annum if the contributor has a dependent spouse. The previous earnings limits were £25,000 and £50,000 respectively. Fifth, access to unemployment benefit which was restricted for certain part-time and casual workers has been substantially improved. The condition for entitlement to unemployment benefit for part-time workers has been relaxed by reducing from two days to one day the loss of employment which a part-time worker must incur in order to be regarded as having sustained a substantial loss of employment. Sixth, the amount of daily earnings disregarded in assessing earnings from casual insurable employment for unemployment assistance purposes has been substantially increased. The new disregard amounts to the daily rate of unemployment assistance plus an extra £15 for each day worked. This is a very practical improvement. It means that a married man with two children can now earn up to £34.42 for each day in which he works without affecting his rate of unemployment assistance for the days in which he does not work. A full review of the eligibility rules for unemployment benefit for all categories of casual workers is underway and if necessary, I will bring forward legislation to address their situation.
Seventh, as regards exceptional needs payments under the supplementary welfare allowance scheme, the circulars issued to health boards have been withdrawn since last June and have been replaced by a new code of practice for those on social welfare who are having difficulty in meeting their fuel bills. I believe this measure will be progressive and developmental. Not only will it cure the difficulties that were created but it will bring the whole system forward in the direction in which I think Members would like to see it developing.
I want particularly to make it clear to Deputies the importance of the new code of practice. This code of practice has replaced the controversial circulars issued in 1992 to health boards which had the effect of limiting the assistance given as an exceptional need in respect of fuel bills. The objective of the new code of practice is to link the various supports offered by the utilities and the health boards so as to provide a co-ordinated assistance programme for those on social welfare payments who get into difficulty with their ESB and gas bills as a result of exceptional circumstances.
The code sets out agreed procedures to be followed by the utilities in responding to the customer's difficulty. An important feature of the new code is that discretion to make payments to customers with exceptional needs rests entirely with the health board. Let me emphasise that point. Discretion to make a payment remains an integral feature of the new arrangements. When we talk about an exceptional need, an example might be where there is sickness in the household or where the customer is obliged to meet other essential needs. I am satisfied that the new procedures enshrined in the code of practice will offer the customers a practical and supportive basis for resolving difficulties with outstanding bills.
The overall effect of the initiatives I have taken, as a result of my review, has been to alleviate any particular difficulties identified as arising from last year's measures. I assure the House that the measures still in force will continue to be reviewed in the light of their impact on social welfare customers and any further necessary changes will be made.
The Minister has dealt with only three of them.
We will debate them at length another day. I have dealt with the key issues. I know the Deputy has a particular political hang-up about it but it is time the Deputy engaged in rational discussions about it.
My constituents have a hang-up about it and they are suffering from it.
I believe the country needs another programme for economic and social progress. The Government wants another partnership agreement to share and shoulder the tasks and opportunities that lie before it over the next few years. Above all, young people and the unemployed depend on the social partners to show the way for a breakthrough in tackling unemployment and developing our valuable indigenous resources. Let us concentrate especially on our indigenous resources and talents, on the needs of our young people and those without work.
The Government has participated in a responsible way in the pre-PESP talks and has made it clear that it will be imaginative, progressive and realistic in a further Programme for Economic and Social Progress agreement. The parameters are clear. Both sets of doors are open. The Minister for Finance and the trade unions have made that very clear. Let us use both “doors” together, put the country first and come to the table and talk business for another Programme for Economic and Social Progress agreement.
I believe in the value of a consensus based approach to solving our economic problem and securing a stable economic and industrial relations climate.
In negotiating any new national consensus both sides must bring something to the table. The Government has clearly signalled its commitment that the 1 per cent levy is to be temporary and on 15 November put forward proposals to the Irish Congress of Trade Unions to begin phasing out the 1 per cent levy in the 1994 Budget and to complete this process not later than the 1996 Budget.
As outlined by my colleague, Deputy Joan Burton, last night and by the Minister for Social Welfare tonight, substantial progress has been made in the social welfare area. But real negotiations mean that both sides must bring something to the table. There has to be commitment to an agreement that actually delivers on stability. There has to be certainty in planning the public finances. Most important, any new agreement must focus on the greatest single problem facing the Irish economy, that of unemployment. It must be an agreement that maintains and improves competitiveness, that supports the creation of new jobs and, as is so clearly a central issue, one which retains existing jobs.
Tackling unemployment must be the cornerstone of any new agreement to replace the Programme for Economic and Social Progress. Just as in the late eighties the problem of the public finances was top of the agenda in negotiating the Programme for National Recovery, now is the time to put tackling unemployment to the top of the agenda in any new national settlement. Unemployment has virtually trebled since 1980 and the rapid growth in the labour force and the prolonged recession in Europe which have helped fuel that increase are likely to continue for some time to come.
The National Development Plan was drawn up to maximise the long term return to the Irish economy in terms of economic growth and job potential. A central response to hard-core unemployment is the £900 million. Local development programmes are targeted at unemployment blackspots and the long term unemployed. The success of the plan in achieving the top range of job targets is crucially dependent on domestic economic responses and in particular the maintenance and improvement of competitiveness. Any new pay agreement should be driven by the need to create and maintain employment and the need to tackle the problems of long term unemployment. While we all aspire to improved standards of living, we need now to put jobs first.
To achieve a real consensus focused on unemployment may involve all sides moving away from established positions and being prepared to make short term concessions in the wider interest. The broad approach to pay determination has to concentrate on improving our competitiveness through pay moderation. It must also aim for a settlement at a level which will enable resources to be assigned to policies for improving employment. We need to establish structures where people can see that their sacrifices are being translated into jobs and not just disappearing down an economic black hole. Restraint on the pay side must be matched by restraint in the growth of other incomes.
In order to improve our employment performance it is vital that we improve competitiveness. While competitiveness involves productivity, product quality, management and a host of other factors, competitive factor incomes, including wages, are central to employment growth, particularly in indigenous industry and services, which are our most labour intensive economic sectors. Ireland exports 70 per cent of what we produce. Competitiveness is clearly essential in the exposed sectors of the economy, those competing at home and abroad with goods and services of other countries. Calculations using the Department of Finance's economic model suggest that every 1 per cent improvement in competitiveness vis-à-vis our trading partners results in an extra 4,000 additional jobs.
Under the Programme for Economic and Social Progress, those at work across all sectors had substantial increases in earnings. In manufacturing, earnings increased by 16 per cent; in the public sector, by 21 per cent, and in the building sector, by 30 per cent. These are substantial increases when compared to the 8 per cent cumulative increase in inflation over the period.
Over the first two years of the Programme for Economic and Social Progress, we had little or no gain against our main trading partners as a group, against the UK or against the former ERM narrow-band countries. This year we expect to gain about 6 per cent competitiveness against our main trading partners and a little over 3 per cent against the former ERM narrow-band, but a loss of over 1 per cent against the UK is forecast where we export our most labour intensive produce.
This year's gain in relative competitiveness has been due to devaluation rather than moderate growth in incomes. In the longer term, of course, devaluation increases import prices, which tends to cancel out short term gains, and moderate wage settlements must be the key to long term competitiveness gains.
Competitiveness is equally important in the non-traded sector of the economy, in public and private services which are sheltered from direct competition with the outside world. The cost of these services, whether in the private sector or in the public sector, has to be financed by the rest of the economy and should not put our traded sector at a competitive disadvantage or serve to lower the economy's job performance.
Restrictive practices and lack of competition means that many private services impose excessive costs on the traded sector of the economy, costing jobs. For example, the cost of banking and legal services and the excessive insurance costs we face in this country due to the "compo" mentality, all make Ireland an expensive place in which to do business and serve to lower our economic performance.
Pay determination in the public sector poses two separate issues. First, the overall level of pay settlements should reflect what both the public finances and the wider economy can afford. The overall level of pay increase comprises annual increments, basic increases under national wage rounds and special pay claims. The public sector need to be able to compete fairly for skilled workers, and mechanisms are needed to ensure that pay levels in key areas do not fall behind the private sector in a way which jeopardises efficiency. The mechanisms for special pay claims have been the subject of detailed negotiations with unions and Civil Service management.
The Programme for Government spells out an ambitious agenda for reform, for improved public services, for example, for the mentally handicapped and the homeless, and for tax relief targeted on the low paid and those caught in poverty traps. To implement this agenda we need cartainty in planning the public finances. It is my personal belief that mechanisms are needed in any new national agreement to ensure certainty in the total public pay bill, both general pay increases and "specials". Such a system is essential if Governments are to be able to plan ahead with any degree of certainty.
Over the past three years inflation has averaged just over 3 per cent and is forecast to be slightly over 1½ per cent this year, the lowest inflation rate in over 30 years. However, any new pay settlements must take account of both the almost nil inflation rate at home and, more particularly, the anticipated movement of prices in our trading partners, where many are now facing falling output prices, posing both a competitive challenge and an alarming fall in real spending power in many of our customer countries.
With Europe deep in recession there is a real need for a serious growth initiative at European level on a scale sufficient to tackle the problems of falling output and rising unemployment. As an exporting country Ireland has a particular interest in developing such an initiative, as our prosperity depends critically on that of our customer nations. Microeconomic policies alone, aimed at securing better functioning labour markets, will not rescue Europe from the depths of the current recession. Europe as a whole is close to a large closed economy, not a small open economy, and small open economy policies in individual countries on aggregate turn out to be the wrong policy for Europe as a whole. Expanding investment can give the European economy the short term lift and long term supply side improvements needed to improve the European economies' competitive and long term performance.
In this context Ireland's high savings ratio, which is not being translated into productive investment, is lowering our growth potential. It is hoped that lower interest rates, with the steady fall in rates since last January, will help a pick-up in investment.
The Government is willing to open negotiations with the social partners on a national consensus on pay and jobs. In keeping our door open, it must be emphasised that we need a sense of realism. There are no blank cheques for reducing the tax burden, increasing social services, reforming the welfare system or for paying ourselves. Any reductions in taxation have to be paid for elsewhere, and must be done in a way which safeguards the public finances and essential public services.
In expressing the Government's willingness to enter meaningful and realistic negotiations with jobs as the priority, in implementing major reforms in the welfare system, and in placing a commitment on the table about the phasing out of the 1 per cent income levy, the Government is asking the other social partners to come to the table in an equal spirit of generosity. We want to see all sides around the table putting into practice what so often is lipservice — let us put jobs first.
We must proceed to lift the 1 per cent income levy irrespective of whether there is a new national pay agreement. Obviously the pace of its removal must be linked to a radical new approach which would put employment first. Both the Ministers for Finance and Enterprise and Employment have clearly indicated the time table for the removal of the levy.
It would be impossible to ignore the context in which the 1 per cent levy was introduced. Approximately £280 million in additional public service pay costs arose in 1993 and £70 million was paid out in December 1992 to meet existing commitments under the Programme for Economic and Social Progress. A forecast by the Department of Finance on interest rate developments in 1993 has proved to be very conservative. The Labour Party has consistently maintained that lower interest rates were possible. There was also an unstable currency situation in the ERM.
The 1 per cent levy must go in the context of a Government policy to tackle unemployment seriously. We want the trade unions to agree a realistic pay agreement but the Government cannot address unemployment if those at work are not prepared to trade off some proportion of income increases in return for increased recruitment by both the public and the private sectors. National pay agreements go back to 1964. If we analyse national agreements over the past 25 years we can agree that one consistent factor has been a trade off in relation to pay increases, of embargoes on public service recruitment and the stifling of employment growth in the economy. That is what happened in the 1980s under the Programme for National Recovery and it must be avoided in the next national agreement.
I do not have any difficulty with the sentiments in the motion tabled by my colleagues in Democratic Left on the removal of the levy but some of the comments about the Department of Social Welfare have been very unfair. I campaigned on some of the key elements of the dirty dozen social welfare cuts, for instance the removal of optical and dental benefit and disability benefit for long term unemployed people. They, and various other cuts have been fully restored. A major difficulty for Deputies who represent the constituencies encompassing large unemployment areas is related to supplementary welfare benefit. We campaigned hard for a code of practice and the Minister has recently come up with such a code which is beginning to make an impact.
If we are to deal with unemployment we must aim higher than previous administrations. To put the live register in perspective, unemployed people would much rather pay income tax than be forced to rely on the dole. I am heartened that the Delors paper on Growth and Employment set the objective of reducing the EC unemployment rate by half, by the year 2000. In the context of Ireland, this would translate into a reduction in the live register of at least 140,000 or 20,000 per annum over the next seven years.
A number of critical decisions must be taken if we are to see this through. I was surprised that the Governor of the Central Bank did not once refer to the research findings of his staff which estimate that 32,000 jobs were lost from 1980 to 1992 because of the appreciation of the punt. The latest NESC study, A Strategy for Growth, Competitiveness and Employment, in its comments on exchange rate policy echoes the silence of Mr. Maurice Doyle on the currency debacle which affected this country, courtesy of the Bundesbank and the ERM. I am relieved that Mr. Peter Cassells, General Secretary of ICTU, has criticised the report as being too conservative in its approach to unemployment. What worries me is that the study appears to rubber stamp an automatic return to the old narrow bands ERM which simply means Bundesbank rule. The deputy leader of our German sister party, the SPD, Mr. Oskar La Fontaine, has attacked the Bundesbank's policy. In The Financial Times this week he said:
It was a great mistake to have raised interest rates once again at the beginning of the recession. That has cost us hundreds of thousands of jobs, because exports have collapsed.
He made the point that the 10 per cent effective revaluation of the Deutsche Mark against other European currencies has the same affect on German export prices as a 33 per cent wage increase.
I hesitate to interrupt the Deputy but I would remind him that it was intended to share time with another colleague of his. Three minutes now remain.
When the final paper is produced by the European Commission I hope it will be supported by the Government. The Minister for Finance would agree that we were put off side by the hard currency lobby last year. I trust he will not listen to the same sources when the final draft is due for consideration.
I look forward to another national agreement in the context of it containing serious efforts to tackle unemployment.
Listening to the proposers of the motion last night I felt that this was an attempt to embarrass the Labour Party rather than anything else and as a member of Fianna Fáil I almost felt left out of the argument. The motion regrets the collapse of the talks and we would all share that regret, but to say that the collapse was provoked by Government is ridiculous.
Trade unions here are becoming a bit like the Unionists in the North. They are afraid to sit down, afraid to talk, afraid to get in and do some hard bargaining. They cannot expect the agreement to come to them so I would urge the unions to get in and do their best for their members.
Nobody welcomed the levy and we all hoped it would be temporary. The Government has indicated its willingness to abolish it over two or three years although it has not said how that will be done. It has not said whether it will reduce the levy by two-thirds of 1 per cent next April and by one-third of 1 per cent of the following April, or whether the threshold will be increased next April to £280 and the following year to £380. Most people did not object to the levy in principle but that it applied at such a low level. It is clear that one interpretation of the Government's offer would exclude most industrial workers from the levy from next April. In that context, I cannot understand why the unions do not negotiate for their members.
I was an active trade unionist for years and I am aware that under a national agreement everyone is looked after. In a free-for-all strong employees are looked after but vulnerable employees fall by the wayside. I appeal to the unions to talk and to look after their members.
I would like to share my time with Deputy Cullen.
That is satisfactory and agreed.
Tonight the Progressive Democrats will oppose the Government amendment to what we regard as a timely Private Members' motion tabled by Democratic Left. A key reason for that relates to the fact that we could not support the Government's brazen prevarication on the question of removing the 1 per cent levy which should never have been imposed and which should not be the kind of issue which would lead to a collapse in the negotiations on a pay consensus. That appears to be the case.
From the day of its announcement the Progressive Democrats opposed this fifth tax on work, which has added, as the Minister for Finance belatedly admits, the equivalent of a 2 per cent increase to the standard rate of tax. It was a means of bringing in by the back door a measure which, if spelled out clearly on the first day, would have been grossly unacceptable even at the Cabinet table. Now that we know it is the equivalent of writing off the changes in the basic tax rate of the previous year, this crude measure should be disposed of now. It was never anything more than a smash and grab tactic for money, introduced without due regard for its effects on individual taxpayers or its employment consequences.
In his budget speech on 24 February last the Minister for Finance stated that the levy would yield approximately £78 million during 1993 and £130 million during a full year. It is interesting to note from the Minister's speech last night that during the several months since the Minister made that speech the £130 million yield for a full year has increased to £145 million. If this levy was designed as a temporary measure, why not dispose of it now? Why wait until the public finances grow fatter from its yield, when weaning the Exchequer off will be more difficult then weaning if off now following a temporary introduction and before a full year's yield is produced?
In revenue terms it would be easier for the Government to say no now rather than in the future. If the anticipated receipts for this year are the £78 million gross which the Minister stated would be the case in his budget speech last February, I estimate that the net cost to the Exchequer of abandoning the levy at this stage would be the equivalent of £65 million in terms of the closing budget position for the current financial year. If that is the case the Government should call it a day now and drop what was an ill-conceived measure from the outset. If this is a way of opening the doors, about which the Minister for Social Welfare spoke tonight, for consensus on pay policy and competitiveness in the future, the price should be considered seriously by the Government. Once we start to gear up on the full year revenue effect of this levy, gearing down will be much more difficult than disposing of it now.
Can we afford to do without the £65 million? It is simple in any political speech, particularly in Opposition, we claim what we can. But I noted with interest the case with which the Minister for Finance explained how, because of a European Court decision in respect of enforced changes in the VAT proposals in this year's budget, we would have a shortfall of £65 million on the figure stipulated in the original budget estimate. Will he close down shop as a result? Will it wreck the world as we know it? Will it throw the public finances into gross disarray; or is it a shortfall the Government can afford to live with, give or take a little?
In reply to a parliamentary question tabled by my colleague, Deputy McDowell, this week, the Minister stated that he remains satisfied the Exchequer borrowing requirement for 1993 will be reasonably close to the budget estimate of 2.9 per cent of GNP. Therefore, the Minister is not unduly perturbed about the economic consequences of a £65 million VAT shortfall this year as a result of a European Court decision. A sum of £65 million was explained away with comparative ease yesterday by the Minister; but the net cost of disposing of the levy, which would amount to approximately £65 million in respect of this year's out-turn, could not be contemplated.
The truth is revealed when one compares the casual ease with which assurances were given in respect of the financial effects of the VAT changes and the doggedness of the Government's position in maintaining the 1 per cent income levy. It is obvious the Government will not give in on the 1 per cent levy, even though it gave in with ease to the financial consequences of the European Court decision this week. This little arrangement is not a temporary one and was never designed to be so temporary as to be fleeting. If, as Deputy Broughan stated, the Labour Party backbenchers have no difficulty in supporting that aspect of the motion, then the Deputy should know how to vote. It is votes such as his that made this levy law and maintain it in law. It is pointless having an each way bet on this matter. If one opposes the levy, there is a parliamentary mechanism to show that opposition.
The Government should not have introduced this smash and grab income levy in the first place. Neither should it have allowed the levy to become what appears to be the key obstacle in achieving consensus on pay and competiveness in the economy, if that is what the Government wants. The example of the VAT changes, to which I referred earlier, begs the question as to what the Government wants. The intransigence of this Administration on the 1 per cent levy poses a question in the minds of Members of the Progressive Democrats about the seriousness of the Government in its assertion that it wants the social partners to sit down and hammer out a new consensus. It is because of that intransigence that the Progressive Democrats will be voting against the Government's amendment to this motion.
The Minister for Social Welfare stated earlier:
The parameters are clear. Both sets of doors are open. The Minister for Finance and the trade unions have made that very clear. Let us use both "doors" together, put the country first...
It is pointless calling on people, whether it is Unionists in Northern Ireland or unions in the Republic, to come through an open door to meet a closed mind. If the 1 per cent levy is a temporary measure I fail to understand why we cannot dispose of it now when we have not yet seen its results in a full year and when the withdrawal symptoms would have less impact than in the future when, presumably, it will be disposed of.
Discussion on pay policy inevitably focuses one's attention on the overall competitiveness of the Irish economy. As the Minister for Finance assured the House last night, Ireland has some basic achievements of which we can all be proud. The recitation of those basic achievements was repeated at length this afternoon during Question Time. Both the Taoiseach and the Minister for Finance stated that during the three years of the Programme for Economic and Social Progress GDP growth is expected to average about 3.5 per cent per annum here compared with just over 0.5 per cent in the European Union and a decrease of more than 0.25 per cent in the UK economy during the same period. That growth has been export driven and there has been an impressive growth in merchandise exports of more than 11 per cent during that time. Those figures are not peculiar to the lifetime of the current Programme for Economic and Social Progress.
In her review of economic statistics, the Minister of State at the Department of Finance correctly sought a wide focus and quoted figures spanning a decade in terms of employment, economic growth and so on. From 1980 to 1992 the size of the Irish economy, measured by standard national income statistics, increased by almost a half, while during the same period the volume of exports increased by 168 per cent. Despite this the dividend in jobs was meagre with the total number at work in the economy falling by 3 per cent and non-agricultural employment increasing by just over 3 per cent. Manufacturing industry has been at the core of increasing national income. Yet, while manufacturing output almost doubled, one in every seven jobs in manufacturing was lost.
It is obvious to any observer, keen or otherwise, of economic statistics that the so-called achievements of which we should all be proud have a hollow and superficial ring when judged against the yardstick of our employment needs. The paradox of growth without jobs needs more than a passing nod or an occasional glancing reference.
Against that background, on behalf of the Progressive Democrats, I strongly welcome the core of the analysis in the speech last week by the Governor of the Central Bank, Mr. Maurice Doyle. While that address attracted much comment because of references to social welfare, if one takes the time to read it — it runs to 15 pages — one will see that these were not the core of the remarks.
The governor noted correctly that there was little evidence of a recession here in the accepted sense of the word——
What about his responsibilities in terms of employment?
If we grant privilege the governor could appear before the committees and we could put those questions to him.
He is due to appear before the Committee of Public Accounts.
As I said, the governor noted — I agree with him on this point — that there was little evidence of a recession here and that we are entitled to be proud of our achievements. However, he underlined the fact that our performance had been characterised as "growth with unemployment". He also said the Central Bank had done work to devise an alternative to GNP as a measure of economic activity. The Central Bank is not the only agency trying to come up with an alternative but it is interesting that Mr. Doyle went on to note that "this approach indicates that growth over the past few years has been more modest than the GNP figures would suggest".
This afternoon the Taoiseach informed the House that the Government was committed to improving the links between growth and jobs — this is a longstanding commitment and the aim of the programme implemented by the Industrial Development Authority — but the Government cannot do this without first acknowledging the link between growth and reality.
Our growth figures have been puffed up because of our high dependence on multinational export-oriented industry that clearly engages in transfer pricing. This has the effect of producing phantom growth which is nothing more than an illusion. This is not a side swipe at the multinationals because they have played a strong, powerful and positive role in the economy but it has been overstated and gives the wrong picture. For instance, one recent study reveals that in 1990 the value of our chemical exports was 55 per cent greater than the officially recorded value of gross output in that sector while in the office and data processing equipment sector we exported 33 per cent more in terms of value than we produced. This is proof, if proof was needed, if we take export values and gross output, that companies are engaging in transfer pricing and as a result the figures are distorted.
Given the existence of studies available to the Government, including the report from its own task force on the Culliton report — the Moriarty report which deals with this matter at some length — the report of the NESC which examines the question of transfer pricing among other things and the recent submission by a person of the stature of the Governor of the Central Bank we should cease clapping ourselves on the back for our wonderful achievements in terms of growth. This simply serves to wrongly focus our attention in the debate on employment policy.
In effect, there are two parrallel economies with real but more modest links between them than our rosy official statistics suggest. We have, to employ a sporting analogy, steroid-enhanced, super-performing, Ben Johnson-like, multinational sector on the one hand and on the other the rest which, far from giving enhanced Olympic-style performances, are closer to the community games.
The dangerous illusion is that in reading and conducting public debate on our official economic statistics, without due reservation and qualification, we are producing policy prescriptions for our community games economy based on the fallacy that we are Olympic gold medalists. Far from being castigated the Governor of the Central Bank must be congratulated for his realism and honesty. I hope this pervades public debate on this matter which he sought to address in his paper last week. When the easy alternative was open to him to march to the phony drum beat of the official statistics he — to his credit — courageously chose a path which most others have strenuously chosen to avoid.
In terms of policy prescriptions to deal with that half of the rise in unemployment in recent years explained by domestic policy failures, Mr. Doyle claims that significant reforms are necessary to make future economic growth more employment friendly.
He took his cue from the Central Bank.
If the Deputy has something constructive to offer in a debate on the Central Bank I will hear him but the priority of the Governor of the Central Bank, and I agree with him, is a reduction in the tax wedge which drives up the cost of employing labour because of the enormous difference between the cost to the employer of hiring someone and the value of take-home pay to the employee. This year, for the first time in six budgets, the tax wedge was widened as a result of the 1 per cent income levy which the Government insisted on defending pigheadedly before the House tonight.
A classic example of the effect on employment of the tax wedge can be found by comparing a British and Irish worker, each earning the respective minimum wage rates in the labour intensive clothing sector. The figures are expressed in Irish pounds. From a minimum gross wage in Ireland of £131 per week the Irish worker takes home £96.52. In Britain the gross pay cost is only £113.96 and the British worker is better off on net pay of £99.18. Therefore, in Ireland it cost an employer in a labour intensive industry like clothing much more to hire someone to work for them and at the end of the week the Irish employee takes home much less. This is crippling labour intensive industries here and is first on the hit list of the Governor of the Central Bank. He is right to highlight this key issue which needs to be addressed.
Mr. Doyle also said that the PAYE sector shouldered a disproportionate burden of the income tax bill. I wonder how many people in this House disagree with him. He commented on the anomalies in the system from the widely publicised welfare and poverty traps, in terms of the disincentive to work, to the size of the black economy. Again, he is right to focus attention on this issue. A married man with four children needs to earn more than £14,500 per year at work to be better off than in the welfare system. Any person who says the system is crazy should not be derided because it is crazy that someone should have to earn more than the average industrial wage to be better off at work than out of work.
In the context of tonight's motion the Governor of the Central Bank has highlighted the need for a more flexible wage bargaining process which is more sensitive to changes in the macro-economic environment. He commented in particular on the high average increase in public sector pay and he said that in the context of rising unemployment, the increasing level of public sector pay under the Programme for Economic and Social Progress was unsustainable. I believe he is right.
In our amendment to this motion, we regret the failure of the Government to terminate the 1 per cent income levy, note our belief that consensus on national pay policy, but not at any price, is important and insist that the system of public pay determination in the public sector needs to be reformed with or without a Programme for Economic and Social Progress.
The level of unemployment in Ireland, and the chilling prospect that this could substantially worsen before it gets better, is a reflection of an economy and a society reeling from a reality which is far removed from the Olympian heights of our official rhetoric and statistics. The Governor of the Central Bank has helped to puncture this rhetorical balloon and in doing so has done the country a favour. My party will vote against the Government's amendment because of its dogged defence of the indefensible 1 per cent income levy. We would like, but we do not expect, Deputy Broughan and his colleagues to act according to their belief for a change. We will be opposing the Government and moving our amendment to the motion.
I welcome the opportunity to contribute. The impact of the 1 per cent levy in terms of employment creation has been devastating. Not alone has it affected our ability to sustain jobs, particularly those at risk at the margins, it has affected our ability to create new jobs. Listening to Deputy Broughan, I waited with bated breath for the punchline thinking that, perhaps, we were going to have a very interesting vote in the House this evening and that the Labour Party would reassert itself. Sadly, as Deputy Broughan continued, I found that as usual the Labour Party backbenchers were trying to have their cake and eat it, look both ways at the same time, ride two horses in two different directions and please everybody.
People who live in glass houses should not throw stones.
What happened to trust in politics?
The Deputy will have his opportunity. The way he will have to vote tonight may stick in his craw, but it is his conscience he will have to live with. My conscience is clear.
There are sectors in this economy which have the ability to create reasonably large numbers of labour intensive jobs. The clothing industry has been mentioned on a number of occasions.
When that industry was experiencing growth and was in a position to sustain its jobs the Government crippled it with full knowledge of a report setting out the difficulties facing that industry. An industry that ran the gamut of functions, manufacturing, retailing and wholesale, paid the price of the arrogance of this Government's need to be in office and not implement the policies for which the people voted. How hollow the promises made ring now.
The Minister sitting opposite me established the National Economic and Social Forum which involves not alone the political and commercial strands but the trade unions, the unemployed, agriculture and practically every reasonable strand of society. She knows of the meetings and the type of discussions that have taken place. It must be with a wry smile that she sees the barriers to employment creation being sustained and new ones erected. It flies in the face of the efforts of that forum, and others, to create jobs.
The Minister must recognise that the removal of the 1 per cent income levy beckons greatly in next year's budget. I have no doubt that the projected income of about £145 million from that levy will prove too big a cherry for the Government to abandon, and that is a tragedy. The price of that is that the prospect of sensible bargaining for a new pay agreement between the social partners has been put at risk because of the Government's stubbornness in regard to the levy. Although I subscribe to the view that we do not require an agreement at any price, surely it behoves the Government to at least remove the 1 per cent levy so that serious discussion can take place. We may not have got the wage increases but we could have got real tax reform which would have greatly increased the net take home pay of workers.
Some pertinent questions must be asked. Are the social partners part and parcel of the Programme for Economic and Social Progress? Obviously, the answer is yes. The word “partner” means one who shares. It seems strange that a partner would set conditions before entering into negotiations. Partnership does not mean publicly putting one's partner's back to the wall before one commences talks, not to talk of negotiations.
I would have expected Congress to approach this matter in a level headed manner and on the basis of what had been achieved in the previous Programme for Economic and Social Progress agreement. I would have thought it would have asked what has been the increase in a person's take home pay since some of the provisions of the Programme for Economic and Social Progress were not fully honoured. On average the increase has been 5 per cent. It should have asked if public spending had been kept in check; the figures show that it has been kept in check. On average our exports have increased by 7 per cent and inflation here is at its lowest for many years. Those employed in the public sector are satisfied with the pay increases during the period of the Programme for Economic and Social Progress.
A Leas-Cheann Comhairle, may I share my time with Deputy Ó Cuív?
The Deputy may share the remaining four minutes of his time with Deputy Ó Cuív. I am sure that is satisfactory.
I would question whether Congress is doing a disservice to it members. Has it put its members' backs to the wall, some of whom would be happier to see national consensus than individual bargaining?
None of them is happy with the 1 per cent levy and that is the issue we are discussing.
How could Members of the Progressive Democrats, who were involved in the Programme for Economic and Social Progress negotiations, ask any Government or Minister for Finance to succumb to threats to impositions before the commencement of negotiations?
It is simple. Our party was trying to reduce tax, but the Deputy's party has increased it.
The Deputy in possession without interruption.
If that were to happen that party would castigate the Minister for Finance for succumbing. It would say that the Minister gave in; a price was requested and he gave in to it. One could imagine the howls from the Deputies opposite if that was the position. It is easy for the Democratic Left to table such a motion. Did it table it because it is in eternal opposition without responsibility.
One never knows that.
It is easy for the Democratic Left to table a motion containing headline grabbing ideas.
The Deputy is making his partner in Government look very uncomfortable.
Democratic Left is not forthcoming on suggesting where the resources may be obtained, but that is the prerogative of Opposition.
The Deputy should always be nice to people on the way up.
Has Democratic Left considered where the £145 million will come from before the real bargaining begins? It advocates giving away the £145 million and then proceeding to bargain.
That money should be given back to the people.
I look across at the union traditionalists and I ask if they were on the other side of the House what would they say?
We would not have done what the Deputy's party did.
The clock is running out for Deputy Ó Cuív.
This Government is making responsible decisions even though they may be unpopular. Government is about responsibility but, unfortunately, the same is not true of the parties opposite. This Government will achieve more for the underprivileged in our society than Members of Democratic Left in their short political careers. For the benefit of Democratic Left I wish to refer to the Strategy 2000.
I must ask the Deputy to conclude.
It says there are three principles that has marked the Left's influence on Government.
I must call another Deputy.
In Strategy 2000 the Democratic Left say that the Fianna Fáil Party has introduced policies appropriate to a social democratic party. In effect, it is saying that it is redundant and that it can depend on Fianna Fáil.
The Deputy's Party is similar to the Democratic Left.
It always helps to have some amusements here on a Wednesday night. In proposing item 15 on the Order Paper, primarily we seek to ask this House to vote for the reversal of the 1 per cent levy and the reversal of the dirty dozen cuts. That is what the House is being asked to vote on. Those who vote for the Fianna Fáil-Labour Party Amendment — I presume the Labour Party put its name to it — are voting for the retention of the 1 per cent levy and the retention of the remainder of the dirty dozen cuts which still remain in place.
The Deputy should read the resolution members of his party tabled.
Deputy Ó Cuív should read the resolution.
A Leas-Cheann Comhairle
The Deputy in possession without interruption.
He may be also able to read it better in Irish. It specifically calls on the Government to reverse the 1 per cent levy and the dirty dozen cuts.
The collapse of the talks on a new Programme for Economic and Social Progress as a result of the Government's refusal to give a firm commitment on the early removal of the 1 per cent income levy and the dirty dozen social welfare cuts and the response of the Government to this motion has shown beyond question the fact that the Labour Party has little or no economic clout in this administration.
In my very first comment on the Programme for Government on 7 January, the day on which it was published, I described it as largely reflecting Fianna Fáil policy in the economic area, while the influence of Labour was strongest on the social content. Almost 12 months on, the unchallenged dominance of Fianna Fáil is clearer than ever. Labour has won some welcome reforms in the social area — and it is entitled to credit for that — but on the key economic issues of unemployment, poverty and the injustice of our tax system, it appears to have thrown in the towel.
The performance of Labour on these key issues has been a great disappointment to the many people who voted for the Party in the belief that when it talked about change, it also meant change in the economic area. The Labour Party, a fearsome Rottweiler in Opposition, has turned out to be a toothless old mongrel in Government. Throw it a handful of titbits in the form of a few prestigious Government positions, a fleet of Government cars and a brace of well paid jobs for family and friends and it will willingly roll over and let Fianna Fáil tickle its belly.
Nowhere has the failure of Labour to make its presence felt been more evident than in the area of unemployment. When Labour entered Government in January the seasonally adjusted live register figures were at 294,800. The comparable figure for October was 294,000. In August of 1992, when the Labour leader was still on this side of the House, unemployment figures of 292,000 led Deputy Spring to demand the recall of the Dáil to discuss the crisis. That sense of urgency and concern seems to have been totally dissipated by the comforts of office.
The only acceptable measure of the success or otherwise of an economy should be the number of people in secure, well paid jobs. Judged against this yardstick, the economy under Fianna Fáil and Labour remains in freefall. Nobody expected Labour to wave a magic wand and solve the unemployment problem. But what has been a sickening disappointment is the failure of Labour to ensure that the problem was given any additional urgency.
The indifference of the Government to the greatest economic and social crisis confronting society is demoralising the unemployed and creating an unprecedented sense of despair in parents of children who are coming out of the education system with nothing to look forward to but unemployment and the misery of the dole queue.
The Labour Party excuse for its minimal influence on the February budget, particularly for its support for the 1 per cent levy and the failure to secure the reversal of the social welfare cuts, was that it had just entered office and did not really have the time to put its socialist stamp on the budget. Almost a year later that excuse no longer has any validity. Clearly the Labour Party does not consider the imposition of the 1 per cent levy or the failure to reverse social welfare cuts to be of sufficient importance to jeopardise its comfortable positions in office.
Deputy De Rossa is not listening to us.
It is time, in particular, that the Labour Party backbenchers made up their minds where they stand. Will they stand with Deputies Reynolds, McCreevy and Brennan defending the indefensible, or with the trade union movement, PAYE taxpayers and those on social welfare to demand an end to these injustices? At least some of the Fianna Fáil back benchers showed the courage of their convictions in regard to the Shannon stop-over and forfeited the party whip rather than vote for something with which they disagreed. It did not take long for the Labour fire to be quenched. We all remember the period immediately after the election when Deputy Kemmy, Deputy Upton or one of the other Labour TDs told Charlie Bird almost daily on the plinth that Fianna Fáil would not be allowed to take Labour for granted. The influx of so many new Labour Deputies, we were told, would change the face of Irish politics. Alas, for those who put so much hope in them, the Labour Party TDs have turned out to be the timid 33.
The trade union movement was correct to make an issue of the 1 per cent levy and the social welfare cuts. Both were in breach of the spirit of commitments given in the last Programme for Economic and Social Progress, and there could be little reliability placed on future agreements without early action from the Government. It may not have been possible anyway to secure agreement on another Programme for Economic and Social Progress, as there would clearly have been many more hurdles to cross but it is disgraceful that the country has been denied the opportunity of even opening discussions on another agreement because of the Government's intransigence.
Even if there was no problem with regard to a new Programme for Economic and Social Progress we would still be seeking action on these issues because of the basic injustice involved. The decision to apply a 1 per cent levy to relatively low and middle earners was one of the most objectionable features of the February budget. It was contrary to commitments given by both Government parties in advance of the last election and flew in the face of the advice offered in the Cullition report. The threshold of £9,000 is well below the average industrial wage so many ordinary workers, already substantially overtaxed, are finding their pay packets robbed once again. It is regressive in that it applies to every single pound earned, irrespective of allowances, regardless of family size or financial commitments. It has created another poverty trap and is encouraging low pay. People earning just below the weekly threshold of £173 are being told that it is pointless to look for additional money when even a small increase will mean that they have to pay the full 1 per cent levy on everything they earn.
The levy has to be considered against the background of the overall tax picture and the failure of successive Governments to honour commitments to introduce fundamental tax reform. I doubt if the levy has created many problems for the self-employed, farmers and professionals who are able to take every advantage of tax breaks and massage their incomes down to an artificially low level. For the PAYE workers, who pay 81 per cent of all income tax there is no escape. The thumbscrew keeps turning and what causes most anger is that other sectors are still allowed to evade their fair share. Figures given to me by the Minister, Deputy Ahern, in October show that between 1989 and 1992 the average tax paid by PAYE workers increased from £3,122 to £3,662. This represents an increase of £540, or 17 per cent, more than twice the rate at which most wages and salaries increased. However, the average tax paid by farmers in the same period actually fell by £72, or 9.3 per cent. Farmers now pay less than one fifth of the average tax paid by PAYE workers. I accept that there are many farmers on low incomes who would not come into the tax net, but these tax figures do not reflect the reality of the income levels of the two sectors. If we are to have genuine tax reform, we need a Government that will stand up to the powerful agricultural lobby and insist that farmers and all other groups pay a fair share of tax.
There is no doubt that the Programme for Economic and Social Progress and the Programme for National Recovery which preceded it, despite their limitations, offered a degree of protection to lower paid workers that they would not otherwise have had. Part of the opposition now being expressed to another Programme for Economic and Social Progress from right wing economists, business interests and farming organisations is motivated by a desire to see that degree of protection taken away from the lower paid.
Particular attention has focused on the increase in the public sector pay bill over the period of the last two agreements. Any substantial growth in public expenditure like that is, of course, a matter of concern and has to be kept under review. It is a myth to suggest that all public sector workers have done well. Those at the top of the pile have done best, and the benefits for those at the lowest levels have been least. Pay increases for the lowest paid civil servants in 1992 and 1993 were 3 per cent and 3.75 per cent respectively and were capped to a maximum of £5 and £6.50. Many clerical staff in the Civil Service earn half of the camparable rate in the private sector.
Farming organisations have been among the most vociferous critics of the increase in the public sector pay bill. In September the outgoing President of the IFA, Mr. Alan Gillis, warned that farmers would not support another Programme for Economic and Social Progress if it amounted to "a rubber stamp for a future public sector pay deal", but what the farming organisations do not tell us is how well they have done. Between 1987 when the Programme for National Recovery started and 1992, the public sector pay bill increased by around 32 per cent. However, in the same period the value of grants and subsidies paid to the agricultural sector increased from £191 million to £464 million, an increase of £273 million, or an incredible 143 per cent.
The other issue which the trade unions made a condition for the opening of talks was the dirty dozen social welfare cuts. The Minister of State at the Department of Social Welfare, Deputy Burton, is another Labour TD who appears to have been seduced by the comforts of office, her former crusading radicalism now just an embarrassing memory. I do not know whether it was as a result of her political naivety and the cuteness of the Minister, Deputy Woods, that the Junior Minister, Deputy Burton has been cast in the role of principal defender of the social welfare cuts or whether she decided to champion them herself, but her speech last night was indeed remarkable. After almost a year of falsely claiming that the cuts had been reversed, she has suddenly lurched in a different direction and the line now is that the cuts were not all that important and that we should concentrate on what she described as "the most serious issues in the social welfare system."
Deputy Burton accused Democratic Left of being obsessed with the cuts and me of repeating a monotonous mantra about the dirty dozen. What a short and selective memory she has. I remind Deputy Burton that it was not Democratic Left which coined the phrase the "dirty dozen"— it was the Labour Party. The candidates who most shamelessly exploited the social welfare cuts during the election this time last year and who gave such unequivocal guarantees of reversal were members of the Labour Party. Her colleague, Deputy Stagg, another Labour TD, discovered that the road to Damascus was the route to Government buildings, produced a detailed leaflet attacking his constituency colleague, Deputy McCreevy, saying: "McCreevy makes the less well off pay for bad government. Support Emmet Stagg and Jack Wall in their fight against these savage cuts."
The most dishonest passage in a thoroughly dishonest speech was where Deputy Burton managed to imply that organisations like the Combat Poverty Agency and the Conference of Major Religious Superiors were not concerned with the dirty dozen. In fact the CMRS in its submission on the 1993 budget said:
During the past year the Minister for Social Welfare has introduced a variety of initiatives which he describes as "targeting". In one twenty week period eleven such measures were introduced. The most striking characteristic of many of these measures has been the way that they take money and entitlements away from the poorest people... It is crucial that this destructive approach to targeting be reversed. We have no problem with targeting resources at the most needy and doing this in an effective and efficient way. However this is very different to what has been happening in 1992.
Similarly, the Combat Poverty Agency in its last annual report, published in June of this year, also referred to the dirty dozen cuts and the need to have them reversed.
The social welfare system is an enormously complex code, governed by legislation consolidated in one Act, and volumes of regulations. Both the Minister for Social Welfare, Deputy Woods, and his Minister of State, Deputy Burton, have used the complexity of the system to try to obscure and obfuscate what they are doing in regard to the cuts. The Minister for Social Welfare came into the House tonight and pretended to deal with seven of the dirty cuts, but he dealt only with three of them. The reality is — I have with me a document which proves this — that only one of the dirty dozen cuts has been reversed, the one referring to the supplementary welfare allowance system, and even that is in doubt.
That is untrue.
It is completely true.
It is completely untrue.
The facts are there to prove that it is true.
Perhaps the Deputy would conclude his remarks.
I appeal to both Ministers and the Labour Party to stop trying to mislead the House in relation to the dirty dozen cuts. I also appeal to them to support the Democratic Left motion tonight——
They will.
——and vote for the reversal of the 1 per cent levy and the dirty dozen cuts. Let us see the Labour Party display some courage tonight. It should show Fianna Fáil that it is not prepared to roll over and have its belly tickled once again.
Amendment put.
The Dáil divided: Tá, 66; Níl, 45.
Tá
- Ahern, Michael.
- Ahern, Noel.
- Bell, Michael.
- Bree, Declan.
- Brennan, Séamus.
- Broughan, Tommy.
- Burke, Raphael P.
- Byrne, Hugh.
- Callely, Ivor.
- Collins, Gerard.
- Davern, Noel.
- Dempsey, Noel.
- Doherty, Seán.
- Ellis, John.
- Ferris, Michael.
- Fitzgerald, Brian.
- Fitzgerald, Eithne.
- Fitzgerald, Liam.
- Flood, Chris.
- Fox, Johnny.
- Gallagher, Pat (Laoighis-Offaly).
- Geoghegan-Quinn, Máire.
- Higgins, Michael D.
- Hilliard, Colm M.
- Howlin, Brendan.
- Jacob, Joe.
- Kemmy, Jim.
- Kenneally, Brendan.
- Kenny, Seán.
- Killeen, Tony.
- Kirk, Séamus.
- Kitt, Michael P.
- Lawlor, Liam.
- Lenihan, Brian.
- Leonard, Jimmy.
- Martin, Micheál.
- McCreevy, Charlie.
- McDowell, Derek.
- Moffatt, Tom.
- Moynihan, Donal.
- Moynihan-Cronin, Breeda.
- Mulvihill, John.
- Nolan, M.J.
- Ó Cuív, Éamon.
- O'Donoghue, John.
- O'Hanlon, Rory.
- O'Keeffe, Batt.
- O'Keeffe, Ned.
- O'Leary, John.
- O'Shea, Brian.
- O'Sullivan, Toddy.
- Pattison, Séamus.
- Power, Seán.
- Reynolds, Albert.
- Ryan, John.
- Ryan, Seán.
- Smith, Brendan.
- Spring, Dick.
- Stagg, Emmet.
- Taylor, Mervyn.
- Treacy, Noel.
- Upton, Pat.
- Wallace, Dan.
- Wallace, Mary.
- Walsh, Eamon.
- Walsh, Joe.
Níl
- Ahearn, Theresa.
- Allen, Bernard.
- Barrett, Seán.
- Bradford, Paul.
- Browne, John (Carlow-Kilkenny).
- Bruton, John.
- Carey, Donal.
- Deasy, Austin.
- Deenihan, Jimmy.
- De Rossa, Proinsias.
- Doyle, Avril.
- Durkan, Bernard J.
- Finucane, Michael.
- Fitzgerald, Frances.
- Flanagan, Charles.
- Foxe, Tom.
- Gilmore, Eamon.
- Gregory, Tony.
- Higgins, Jim.
- Hogan, Philip.
- Kenny, Enda.
- Lowry, Michael.
- Clohessy, Peadar.
- Connor, John.
- Cox, Pat.
- Crawford, Seymour.
- Creed, Michael.
- Crowley, Frank.
- Cullen, Martin.
- Currie, Austin.
- McCormack, Pádraic.
- McDowell, Michael.
- McGinley, Dinny.
- McManus, Liz.
- Mitchell, Gay.
- Mitchell, Jim.
- Molloy, Robert.
- O'Donnell, Liz.
- O'Keeffe, Jim.
- Quill, Máirín.
- Rabbitte, Pat.
- Shatter, Alan.
- Sheehan, P.J.
- Timmins, Godfrey.
- Yates, Ivan.
Tellers: Tá, Deputies Dempsey and Ferris; Níl, Deputies Rabbitte and E. Kenny.
Amendment declared carried
Amendment No.2 not moved.
Motion, as amended, agreed to.