Jim Higgins
Question:2 Mr. J. Higgins asked the Taoiseach if he will make a statement on the progress achieved to date under the Programme for Economic and Social Progress.
Ceisteanna — Questions. Oral Answers. - Programme for Economic And Social Progress.
Substantial economic and social progress has been achieved under the Programme for Economic and Social Progress. The achievements over the period 1987-90 under the Programme for National Recovery have been sustained under the Programme for Economic and Social Progress, despite the unfavourable economic environment. Our economy has continued to grow with GDP growth averaging about 3.5 per cent per annum, which is well in excess of the growth rates in the EC or OECD. Employment has held up while there have been net job losses in both the EC and OECD. Our inflation rate — averaging just over 3 per cent per annum in 1991 and 1992 and forecast at just over 1.5 per cent in 1993 — is one of the lowest in the EC. We have a substantial balance of payments surplus — £673 million in the first quarter of this year, an increase of £255 million over the same period in 1992.
Take-home pay for those in employment has continued to increase in real terms — approximately 1.6 per cent per annum since 1987, that is, 1.6 per cent per annum over and above inflation, compared to 1.2 per cent per annum between 1980-87 — as a result of pay increases, reductions in income tax and lower inflation. Further real increases in payments have been provided to those dependent on the social welfare system. At the same time, there have been important reforms in the areas of health, education, housing, justice, equality and the treatment of people with disabilities aimed, in particular, at achieving greater social equity.
The long and deep recession in the economies of our trading partners has had a serious and significant negative impact on unemployment. Job creation in 1991 and 1992 was reasonably close to the annual target of 20,000 new jobs in manufacturing and international services set under the Programme for Economic and Social Progress. This, however, was offset by job losses as a result of the international recession, continuing outflows from the agricultural sector and a loss, though small, in our competitiveness between 1990 and 1992.
Under the Programme for Economic and Social Progress, the Government has taken — and will continue to take — particular measures to tackle the unacceptable unemployment situation. Measures already taken include: the establishment of area-based partnerships on a pilot basis; the establishment of county enterprise partnership boards to promote and assist integrated local devleopment, in particular by means of enterprise creation and development leading to increased employment; a two year exemption of employers from PRSI payments for additional employees taken on; the easing of eligibility criteria to increase take-up under the job training scheme; the payroll levy on employers to fund apprenticeship training; the provision of extra places for FAS employment programmes; an additional 5,000 places on the social employment scheme — community employment development programme; an improved business expansion scheme; an extension of the urban renewal incentives and adjustment of stamp duty to assist the building industry; an expansion of the vocational training opportunities scheme — 1,000 places in 1992 and a further 900 in September 1993; the introduction of a back to work allowance and the students' summer jobs scheme; additional third level places for some 5,200 students; and provision for a local development programme in the National Development Plan recently submitted to the EC for structural funding.
The Government placed primary importance on jobs and employment in the National Development Plan. The implementation of the plan will provide the basis for drawing together, in a coherent way, action to achieve the improvement in employment performance I believe we can all agree on.
Does the Taoiseach not recall one of the key aspirations in the introduction to the Programme for Economic and Social Progress which stated that the programme would give us the capacity to transform Irish society in this decade so that we could increase significantly our prosperity and distribute that prosperity more equitably and fairly? Does the Taoiseach not agree that the programme has been a monumental failure in terms of meeting these key objectives? There has been a failure to do anything significant about unemployment — we have the highest unemployment rate in the EC — a failure to do anything about poverty, the Conference of Major Religious Superiors recently estimated that poverty now affects 1,100,000 people, and a failure to put in place any economic strategy to give hope to what is supposedly the best educated workforce in the EC.
May I ask for questions rather than speech making?
Deputy Higgins has made a speech instead of asking questions and I totally reject what he said. We would like more progress to have been made in the creation of employment but in a small, open economy like Ireland one cannot ignore events in the countries with which we trade and the trends in world trade. Given that we export 70 per cent of what we produce and the number of people employed in producing goods which are exported, we cannot ignore what is happening in our export markets. Nevertheless we have just come through the worst world recession since the 1930s with less damage caused to our economy than that caused to the economies of many of our stronger EC partners.
I would point out to Deputy Higgins that over the period of the Programme for Economic and Social Progress many reforms and improvements were introduced in the areas of health, education, housing, justice, equality and the treatment of people with disabilities, all of which were aimed at achieving greater social equity. The Programme for Government follows from the Programme for Economic and Social Progress in terms of introducing the improvements we want to see throughout society. The Government's aim is to transform society and it intends to pursue this aim while in office.
The Taoiseach must be living on a different island.
I acknowledge that Ireland's general economic performance over a number of years has been impressive. However, will the Taoiseach accept the argument put forward last week by the Governor of the Central Bank, Mr. Maurice Doyle, that the growth figures for Ireland are seriously misleading and that when we look at those figures we tend to evaluate how well we are doing in a way which misleads and misinforms us in policy terms? Will the Taoiseach also accept the contention by the Governor of the Central Bank that the employment returns in Ireland are extremely poor and that at least half the growth in unemployment during the past several years has been due not to demographic factors or the international recession but to the failure of policy in the management of the economy?
I reject any suggestion that the international environment has not played a major part in the number of jobs created in Ireland over the past number of years. We must accept that the international environment has a part to play in job creation in Ireland. I agree that the growth rates achieved between 1987-92 — an average of 4.5-5 per cent — do not reflect a corresponding increase in employment creation. This is due to our failure to take up the linkages in the economy. Over the years companies in which the State has made large investments have imported too many services and raw materials.
We have not been successful in making the proper linkages between investment, growth and job creation. This area needs much more attention. If one looks at other European countries and Japan one will see that they are trying to answer the same question as to why they are not getting the proper return in terms of employment from the growth initiatives we have undertaken. It is clear that demographic trends and the new technology which has replaced people are contributory factors to this lack of job creation. Another factor is that there are not enough markets to which we can export our goods and services. Therefore, it is not one single factor; it is a combination of factors.
Where was the Taoiseach during the past four or five years when all these linkages failed to be developed and Ireland stood alone as the country with the highest growth rate and the worst employment creation performance? In regard to the Government's responsibility in this area, how does the Taoiseach account for the doubling of the current budget deficit to date when it was promised in the Programme for Economic and Social Progress that the current budget deficit would be balanced? I would like him to account also for the fact that despite the fact that the Programme for Economic and Social Progress promised a 25 per cent tax rate, we now have a 27 per cent rate in addition to a 1 per cent levy.
If the Deputy wishes to examine the record of the Programme for National Recovery and the Programme for Economic and Social Progress in relation to tax, to take one item, he will find that under the first Programme for National Recovery we promised approximately £255 million in tax reductions when in fact it was nearer to £800 million. In regard to the Programme for Economic and Social Progress, if we fell short of achieving a 25 per cent rate we at least achieved a 27 per cent rate which, in the economic conditions that were prevailing, was not a bad effort on our part. It is very easy for a Member in Opposition to say that the Government did not meet its target but the Deputy must also take into account the conditions in which we were operating.
We are trying to create the environment for better linkage to take place within the Irish economy. Deputy Bruton's brother would be the first to admit, and I am sure the Deputy would, that it is the individual decisions and actions of people in the economy that will help us capitalise on the opportunities that exist and that the Government can only do so much. It is up to individuals, semi-State bodies and others out there to avail of the opportunities for better linkage within the Irish economy. The Government has not failed in this regard but others have failed to take up the opportunities.
Would the Taoiseach agree that he is mistaken in seeking to make comparisons with any country, least of all Japan, he choses to mention, when rebutting the phenomenon introduced by the Governor of the Central Bank of growth with unemployment? There is no country, and certainly no country within the OECD, where the badness of the correlation between growth and jobs is as pronounced as it is in Ireland. If the Programme for Economic and Social Progress was the great success the Taoiseach claimed, why does he not want another Programme for Economic and Social Progress? Why is he and the Minister for Transport, Energy and Communications holding back the Minister for Finance from concluding another agreement if the last one was all it was cracked up to be?
There is an ongoing debate about that at present.
There is, Sir, I agree but the Taoiseach may be able to tell us why he wants to nobble a new agreement.
We will enter into negotiations for a new agreement when everybody else agrees to do so. Deputy Rabbitte, who is an experienced trade unionist, would never get himself into a corner by laying down preconditions that could not be achieved before entering into negotiations. It is not a good practice for any trade union or anybody else to do that. The same relevance exists in relation to preconditions whether we are talking about the problems in Northern Ireland or about a new Programme for Economic and Social Progress.
The Taoiseach made promises.
I would remind Deputy Rabbitte that the Irish economy exports more per head of population than even the strong Japanese economy to which he referred——
Did the Taoiseach ever hear of transfer presidency?
To suggest that we do not take international factors into account when looking at the performance of the Irish economy is nonsense and the Deputy knows that.
That is not what I said.
That is not what he said.
The sooner the Deputy gets away from that, the better.
A dodger.
The Deputies opposite cannot answer the question about the poor jobs creation.
The Taoiseach should tell the House he made a mistake. He is almost as bad as Minister Burton. He knows he should not mislead the House but Minister Burton has not learned that yet.
If Deputy Rabbitte does not know the position, I will tell him. Does he want to listen to the answer or does he wish to confuse everybody? He is not confusing me one iota.
The Taoiseach is confused already.
I wish to tell Deputy Rabbitte that Europe or Japan have not found the answer to the problem of the bad relationship between growth and employment and if they have I would be only too delighted to accept it.
We have 4.5 per cent growth.
Deputy Rabbitte, this continual interruption must cease. You asked a question, please listen to the reply.
I am trying to assist the Taoiseach.
I have already said that we out-performed every economy in Europe but we did not manage to create the jobs we had expected from that.
That is poor comfort for people who are unemployed.
We are continuing to out-perform the best economies in Europe. We have the lowest inflation in Europe and the best balance of trade surplus.
And the highest number of unemployed, that is the point we are making.
We do not have the highest number, Spain stands at approximately 22 or 23 per cent at the moment while we are running at approximately 17 per cent. The Deputy should get his facts right before he tries to lecture us on the true position. We have the second highest rate of unemployment and as soon as we can improve the linkage between growth and jobs we will, but other countries have not found the answer to this problem. Many opportunities exist to tackle the problem through linkage but if the commercial State sector and the private sector do not respond, we must look at other approaches.
We are still on course.
The Deputy is a fair man to create a few jobs himself.
Is the Taoiseach aware that we export more people than any other country in Europe? In relation to this question would the Taoiseach agree that the Programme for National Recovery— and the Programme for Economic and Social Progress— did not bring about either a national recovery or economic and social progress and that the main reason is that all the vested interests were around the negotiating table except one, the unemployed? Will the Taoiseach assure the House that in any future plans of this kind he will cease to call them plans for national recovery or programmes for economic and social progress until such time as the unemployed are put centre stage and are involved in the whole process in a meaningful way?
I know the Deputy was a very busy Lord Mayor of Dublin but in his absence we set up the Economic and Social Forum——
I know all about it.
——on which the unemployed are very strongly represented. In fact, I would always regard Members of this House as being representative of the unemployed also because it is our job to represent everybody. Consequently, the Government and Members of this House have an input in relation to the cause of the unemployed. However I would not regard the Programme for National Recovery, that produced an additional 70,000 jobs, as a failure when one takes into account the number of people that left the public service, nor would I regard as a failure a programme that brought renewed growth into the Irish economy over a three year period, lowered inflation, generated higher investment and achieved a very strong balance of payments surplus. The only one unsolved problem remaining is unemployment, all the other economic indicators are a reflection of the success of both programmes.
We have spent an inordinate amount of time on these two questions to the Taoiseach today.
Would the Taoiseach agree that it is little comfort to the 300,000 unemployed people to say that we have the lowest inflation rate in Europe? In the course of his reply he said that the people "out there" and the semi-State bodies should create the jobs. Would he agree that the real problem is that the people "out there" do not see any incentive to create employment because of lack of policy on the Taoiseach's part and an insufficient rate of return? In regard to the semi-State bodies, will the Taoiseach tell us what he has done in terms of reform of the commercial State sector to encourage those companies to expand and generate employment, other than to take a dividend every year and reduce their opportunity for growth?
I am sure Deputy Barrett would not call on the Government to create jobs——
I am asking the Taoiseach a question.
——when we expect the private sector to do so. It is the most simple catch-cry in the world for an Opposition Deputy to say that low inflation is no help to the 300,000 people unemployed but I have not heard one constructive suggestion as to how this serious problem can be addressed.
We are not allowed to make speeches during Question Time.
The Government is addressing the problem in a range of areas——
This is Question Time.
——and I will not list all the initiatives we have taken to deal with this problem. Certainly there is serious confusion among the private sector, the general public and the people out there, as he calls them——
The Taoiseach said that.
——in trying to recognise where Fine Gael is coming from with its contradictory signals and policies.
The Taoiseach makes the decisions, he should not pass the buck.
Fine Gael had one policy this year and will have a different one next year, here today gone tomorrow. That is the Deputy's party's policy and he should forget it.
Does the Taoiseach remember the days when he sat on the Opposition benches.
The Deputy never heard me make the statements he is making when I was in Opposition.
(Interruptions.)
Deputy Quill has been offering.
In his analysis of the Irish economy last week, Mr. Maurice Doyle, the Governor of the Central Bank, who also happens to be a former Secretary of the Department of Finance, referred at some length to the failure of growth to translate itself into jobs. He acknowledged that 50 per cent of the fault was due to external factors but equally, he did say that 50 per cent of the fault was due to domestic factors.
First, would the Taoiseach acknowledge that latter fact and, having done so, would he now assure the House that some kind of analysis is being undertaken of those domestic factors with a view to effecting the changes in our economy that would at least remedy that part of our failure to create the numbers of jobs now so badly needed? When I was teaching there was a prayer about knowing the difference between the factors one could change and those one could not change.
I expected brevity from the Deputy. May I call on the Taoiseach——
A Cheann Comhairle, let us have the prayer.
Deputy Quill, I think that should be sufficient.
A Cheann Comhairle, prayer is our only chance.
Perhaps we could address ourselves, a Cheann Comhairle——
Would the Deputy please bring her question to an end?
——to the factors over which we do have control.
(Interruptions.)
The people opposite will be praying at the next general election.
I do not accept or agree with the contention that 50 per cent of the lack of conversion of growth into jobs is a reflection on Government policy, nor will I add any comfort to Deputy Quill's support for the Governor of the Central Bank——
I did not indicate support.
——in his comments about people out of work and his answer to that specific problem. I will leave that to the Members opposite. We are not supporting that contention and I want to put that clearly on the record as far as this Government is concerned.
Why did the Government appoint him?
(Interruptions.)
I might also inform Deputy Quill and the House that a study of the poor growth conversion rate into jobs in our economy, emanating from our high growth rate, has already been undertaken by the European Community at the behest of the Irish Government. I have to say that they have no magic solutions either, with the exception of recommending certain initiatives which we are taking.
I think the people opposite need a growth hormone to bring them up to the conversion rate.
Would the Taoiseach confirm whether it is a fact that the 1 per cent income levy, supposed to be the main impediment to the new Programme for Economic and Social Progress, was introduced on the specific understanding that it was to be a very short term measure and would be eliminated in the next budget? Would the Taoiseach not confirm also that it is a fact that the central review committee, supposed to be the key monitoring mechanism of such programmes, is comprised essentially of vested interest groups such as farmers, employers, unions and civil servants, that it is the primary interest of each group to protect its own flank, so that at the end of the day nobody is undertaking a global analysis of the effectiveness of the particular programme?
As the House well knows, the 1 per cent levy was introduced in an endeavour to defray some of the costs of increased unemployment. Certainly, it did not reduce the standard of living of the people out there, as Deputy Higgins and others would suggest. I have already indicated to the House that there has been a real increase in the standard of living of everybody out there of approximately 1.6 per cent over and above the rate of inflation. Therefore, the contention being advanced in relation to that is not correct. That is the first thing.
Second, it was never said it was being introduced for one year and would be eliminated in the next budget. It was said to be temporary, short term. Indeed, I might remind the House that budgetary policy is a matter for the Government annually at budget time. What we have said in regard to the talks vis-à-vis a new Programme for Economic and Social Progress is that preconditions are not acceptable, that we will be as reasonable, pragmatic and constructive as everybody else in relation to the formulation of a new Programme for Economic and Social Progress if others will adopt the same attitude, which has not been the case to date.
I think the Taoiseach meant something different by the use of the word "temporary". He is on the record in relation to the Kanturk Declaration.
I am calling Question No. 3