Dáil Éireann debate -
Tuesday, 28 Jan 1997

Vol. 473 No. 6

Financial Resolutions, 1997. - Financial Resolution No. 5: General (Resumed).

Debate resumed on the following motion:

THAT it is expedient to amend the law relating to customs and inland revenue (including excise) and to make further provision with finance.

—(The Taoiseach).

Mr. Cowen

The budget debate affords us a rare opportunity to discuss in this Chamber the economic performance of the Government. This matter is usually discussed in committees where nobody listens. In the Chamber there is an opportunity to consider the objectives of the budget and the extent to which the political imperatives as identified by the Administration have taken over from what is fiscally prudent in the circumstances. There is a definite lack of consideration of our entry into the single currency. There is an assumption in the mid to long-term fiscal scenarios outlined in the budget that the future will be certain and favourable. It ill behoves the Minister for Finance to claim to be munificent on the one hand and the author of fiscal rectitude on the other.

This budget, as with many other areas of Government activity, is an amalgam of policies, cobbled together by the parties involved in an attempt to satisfy their own perceived narrow political constituencies. If the economic philosophy of the Fine Gael Party means anything, it is difficult to see how Democratic Left, or indeed the Labour Party, can claim total credit for its direction. It showed its teeth some months before the budget when it got in on the Labour Party act of establishing a parliamentary party committee under the chairmanship of Deputy Hogan who demanded that the top rate of tax should be reduced. That was a core demand of the Fine Gael Party in the negotiations on the budget, but there has been a distinct failure on its part to achieve it since the other parties did not seek such a reduction. The top rate of tax should be reduced since it applies at a base of £13,200. For many people earning that amount of money, the failure of that party — which claims to be more in favour of private enterprise and the productive sector of the economy than the social services sector — to achieve a reduction in the top rate of income tax is ample testimony to its impotence in conducting negotiations in the lead-up to the budget.

That is obvious from the fact that the Minister for Finance and the public service did not conclude the public service deal. It was concluded by a side of the social partnership model rarely seen — a trade union leader went to the Labour Party Leader and sorted it out with no involvement by the Taoiseach, the man who has written books and pamphlets about how we should order our public finances. He is at the pinnacle of political power but had no involvement in a critical part of Partnership 2000. In addition, the Minister for Finance, as has been reported without denial in newspapers recently, was totally undermined by his party leader. However, we understand all is rosy between them again.

It is clear this is an election budget. It is an attempt by this Administration to boost its popularity so that it can go to the polls with some confidence in its prospects for re-election. I am sure many of its members have gone to their constituencies and found it was not the election budget they thought it was. It has been met with an unvarying degree of apathy everywhere I have been. No one was overly impressed and the main reason was the inability of this Administration once again to keep its mouth shut before it presented the budget. Public relations officers of the three parties, in various breakouts to the media, were getting in one before the other to see who was going to get out the best story. Two weeks before the budget, the Minister for Social Welfare, Deputy De Rossa, claimed credit for social welfare increases beginning on 5 April when tax cuts would be introduced. This was to be a major achievement for Democratic Left. Fine Gael and the Labour Party offered their platitudes as to how they would do in this budget. Unfortunately, they talked up the budget before it was announced to such a degree that no one was listening. People were disappointed because the spin doctors had given the impression there was going to be more on offer. The fourth instalment of the standard rate of mortgage interest relief was not mentioned in the budget. What people recognise is that they may be better off by £4 to £6 per week. In these buoyant economic times that is not regarded by taxpayers as a particularly munificent gesture.

This Minister has had less room to manoeuvre on tax cuts because, on the publication of the Book of Estimates before Christmas, he had already dealt his cards. The old maxim of the sign of a good government being the ability to say no is certainly one that cannot be applied to this Administration. Public expenditure increases are too high. Over the past three years it had a real opportunity to get a better mix between increased public expenditure and tax deductions which would make its electoral position better than it is now. Its failure to do anything about it in the 1996 budget and its preparedness to front load everything into this budget will be seen for the cynical political exercise it is. One particular statistic bears that out — £393 million of the £900 million in tax deductions or 44 per cent of the commitments given in Partnership 2000 is front loaded into this year's budget. This is evidence that political imperatives have coloured the Government's thinking and economic logic in the presentation of this budget.

The Government's jibe in regard to public services is "where would you cut?" The problem is that the Labour Party and Democratic Left see high public expenditure as a good end in itself. They will always seek to point to the high levels of public expenditure involved in the running of Government while they were in office so that they can build a reason for being in office again some time in the future. All public expenditure should be related to total GNP and subjected to value for money audits on an ongoing basis but this Administration does not see a problem. The fact that we have such favourable economic conditions is blinding them to the fact they are building into the base. I am concerned good public service and high public expenditure will become a misnomer because it usually means unsustainable public services in the medium and long term. That does a great disservice to those they claim to represent or of whose political constituency they claim ownership over any other part of the political spectrum.

When Fianna Fáil returned to office in 1987 there was a need to make swingeing cuts. Our position was so difficult economically that there were serious dislocations in the provision of services which caused great hardship. These were necessary in the interest of trying to return public finances to some state of order. An increase in the provision of public services is seen as an end in itself with no thinking as to how they are provided. Are there other ways in which they can be provided? Are there ways and means by which we can control the level of public expenditure and provide more money in people's pockets and give them the choice as to what services they wish to pay for or to have?

Fine Gael has failed to get back to a culture where there is nothing for nothing in the running of the economy. We have had the abolition of this and that to service every narrow political constituency, whether it be the 300 people who attend the Democratic Left annual convention or the few Labour Party activists who still have some ideological hang ups about the provision of local services. They will be paid for some other way and people will have charges imposed on them in other respects because there is nothing for nothing. That has been a great step backwards under this Administration.

It is hyperbole of an unreasonable kind for a Labour Party Minister to say this is a tax reforming budget. He has reduced the standard rate of income tax by 1 per cent. This Administration cannot deliver tax reforms if that is all that can be done. Over the past three years with GDP growing by over 25 per cent and tax revenues at record levels, the outturn has meant that over £900 million extra in taxes have been collected. One would have expected a greater return for the taxpayer under these buoyant economic conditions.

One of the reasons there is apathy among the electorate about the ability of political parties to deliver is that in good times we decide their money is our money and spend it rather than returning it to those involved in the economic activity generating those taxes in the first place. This Government will pay for that when the eleclected tion is called because it is a ground of criticism it cannot evade. If one represents working people who pay high rates of tax on low levels of pay and does not resolve that problem under favourable economic conditions, there is no point in seeking their support on the basis one will do it the next time because one can only win their support on such issues by doing the business.

If that problem is not resolved when economic conditions are favourable there is no point in seeking their support on the grounds that we will do it next time. One can only win their support on such issues by doing the business. Unfortunately, Fine Gael is in the position that Labour in the economic ministries and Democratic Left in all ministries have the capacity to insist upon growth in public expenditure which is neither warranted nor required. Although we have already had too many, the last three years have seen a further proliferation of quangos of every description. Many of them are not politically accountable and some of those which are receiving millions of pounds are not required.

Mr. Dukes

For example?

Mr. Cowen

For example, many of the partnership programmes, work schemes and ADMs in my area.

Mr. Dukes

Deputy Cowen wants to do away with them — that is interesting.

Mr. Cowen

People are coming to our area to tell us what the problem is but local community groups should claim ownership of the schemes.

Mr. Dukes

The Deputy wants to take the money away.

Mr. Cowen

Deputy McCreevy had south Kildare included in the Offaly project. I can assure the Minister that the people who came down to run the scheme know far less than you or I know about the problems in those areas. We could identify community groups who would spend the money far more wisely.

Mr. Dukes

It is not the spending the Deputy is worried about. He is prepared to spend money.

Mr. Cowen

I would not spend it through those people. I am prepared to look at any given item of expenditure but in a whole range of areas we are not getting value for money. We are told that one problem in our economy is that we do not have a sufficiently trained labour force — for instance, the construction industry is finding it difficult to obtain plasterers. What has been done with the £400 million spent by FÁS in the past ten years, year on year? What is happening in the social services job training, which is also supposed to involve the long-term unemployed in general activity? Nothing is happening in those areas. Those issues should be addressed by the Government on a yearly or monthly basis but they are not.

It is crazy that there are still far too many long-term unemployed, despite our favourable economic conditions. They could take up jobs in the construction sector, now that it is doing so well, or semi-skilled jobs in other sectors, or could receive training which would provide them with the basic manual skills needed by contractors on building sites. We do not have people with those skills. We have no shortage of training schemes or companies involved in training, such as the one I mentioned, but sub-contractors cannot find plasterers, electricians, bricklayers or labourers.

We have a myriad of training schemes, as I was telling the Minister when he was engaging me a moment ago. There are many service providers and people to tell us how to do things but when we look for people to do the work we cannot find them. That area should be examined because significant amounts of money, both from taxpayers and the Structural Funds, is being spent but the rate of return cannot be seen and there seems to be no direction in the area.

The level of social welfare expenditure is so high that any expenditure over and above cost of living increases should be targeted — the continual across the board increase makes no impact. Successive Governments have not sufficiently targeted the money at widows or widowers, who have probably lost the main income earning spouse in the family and whose income has reduced by over 50 per cent in many cases. A widow's pension for a recipient under 65 years will be £71.10 per week after this budget. She receives an additional £17 per child so if she has three children she is expected to live on £126 per week. The husband she has buried may have been in his mind — to late forties or early fifties and may have earned £250 per week, so she has to run the house on half the money. She is not automatically entitled to the free electricity allowance, a free television licence or the free fuel allowance, which are available to other categories not having the same measure of family responsibilities as widows and widowers.

If the constitutional protection of the family is to mean anything, it is time that our commitments were made practical. We should declare that we will differentiate between varying degrees of need. I do not suggest that everyone receiving social welfare has an adequate income but, given the limited extra resources available with an expenditure already totalling over £4.2 billion, spending should have been targeted to these identifiable categories. We all encounter hardship cases in our constituencies but we still run into a bureaucratic wall which is incapable of providing an answer for those families. This is not good enough. I am not making a party political point. I have said this since I entered the House in 1984 but for whatever reason the system seems incapable of dealing with this problem. It is not acceptable that a widow should have to rear a family on a basic income of £71.10 per week. We must do something to help people trying to bring up children having lost their partners at a critical time of life.

The Minister for Social Welfare claims to have a monopoly of virtue and a greater understanding of poverty issues. That is a joke; he is no better than the rest of us in that regard. He is unable to solve the problem but it should be solved. If nothing else were to happen during my political career other than that problem being solved, I would be happy. I would rather see that happen than anything else in the budget, if it were fiscally neutral. A growing number of people are trying to keep a home together who feel totally alienated because they are not entitled to benefit from schemes which help other categories of social welfare recipients, many of whom either do not appreciate the help when they receive it or do not know that they are entitled to it. Something should be done to help people trying to rear and educate a family on very little money.

On pensions, we should target people who would like independence in their later years and want to look after themselves rather than being entitled to a free fuel scheme. We should give them money to buy their own fuel so that they are not dependent on a health board official to decide whether they have other means. We should discriminate in favour of certain categories and defend our decision to give them more than they currently receive, while others will have to make do with cost of living increases. That is a far more practical and sincere approach than giving a £3 per week increase to everyone, as if that will keep the lid on the problem for this Administration or whoever introduces the next budget.

The only way we will make a significant impact on tax reform, to get more people back to work and more money in workers' pockets, is to tackle our debt. Half our income tax revenue, some £2.56 billion, goes towards the interest on our accumulated debt. It is an indictment of successive Governments that the national debt has gone from £1 billion in 1973 to £30 billion now and the Government is projecting it will be £32 billion by the end of 1999. Is it beyond the means of this House to broadly agree to not increase our debt above a certain level and to work within those constraints? We would have a much more intelligent debate about the management and administration of the country if we were prepared to do that.

Until we reduce the interest bill we will not be able to provide for real sustainable increases in public services and tax reduction. The best way to maintain public services at the level to which we all aspire and require for our constituents is to do something about the interest bill. The only way we can find an extra £100 million every year to improve the health services, target social welfare, put more money in people's pockets by extending the tax bands and so on — whatever political decisions the Cabinet wishes to make — is to control and reduce our debt.

If we do not begin to make such macro-economic decisions together in this House, we will continue to have silly budget debates. The reason we have silly budget debates is that some people pick out the good parts while others pick out the bad, resulting in a mishmash which makes no sense. It would be far better if we agreed to cap the national debt at £30 billion and then argued about the political priorities.

The dynamic of this Administration is to build up the spending base of Government expenditure. Times are good at the moment which means it is in a position to provide tax cuts. It then says paternalistically to the people: "We are looking after you well; please re-elect us so that we can reinforce the stereotype". That is politically stupid because the electorate is politically sophisticated. Many people tried pretty successfully to do that for many years but it will no longer work because the electorate is now far more discerning and far less prepared to give blind loyalty to political parties. Voters want to know if something makes sense, which this does not.

There is very little about agriculture in this budget, which is an increasing feature of budgets. There does not seem to be the political courage to acknowledge that reinvestment policies for farming so as to maintain the maximum number of viable farms mean providing benign tax regimes for farmers. It seems to be politically incorrect to advocate that. However, if we are serious about dealing with issues such as rural depopulation and the other manifestations of social change, such as the reduced impact of agriculture on the economy, we will have to do something about it.

The control of farmyard pollution tax relief of £20,000 is to be welcomed. However, low income farmers who are trying to get into REPS on completion of pollution control works must wait for the mid-term review. That should be looked at, given that commercial farmers will be able to get £20,000 tax relief and a 50 per cent write-off in the first year.

There is no dairy hygiene support for small dairy farmers in the budget, which is to be criticised. There is reference in Partnership 2000 to pushing that out into a mid-term review. However, it should be dealt with now because it is by far the most profitable enterprise in farming.

There is provision for 100 per cent stock relief for two years, which will mean that the additional value of cattle at the end of the financial year will not be treated as income. That is a welcome development but the two year time period is insufficient. I also welcome the stamp duty relief and the increase to 90 per cent of the relief for farming assets for capital acquisitions tax.

However, there is failure to make provision in the budget for qualified young entrants to farming. We must recognise that the farming sector is stagnating. We need enterprising and innovative schemes, particularly in relation to production rights, which would make it much easier for young people to get into farming than is the present position. I hope that as part of the ongoing review of the beef and dairy regime at European level, the Minister for Agriculture, Food and Forestry will devise innovative solutions to that problem, otherwise, we will have an aging farming population and a declining farming sector. We all recognise that the dynamic increase in agricultural production over the past few years has come from young, enterprising, trained farmers.

Minister for Transport, Energy and Communications (Mr. Dukes)

One of the two most important features of the budget has received hardly any attention from the Opposition because it does not seem to understand it; the second has received a great deal of attention from the Opposition but it has completely missed the point.

The first important feature is that, having brought in a surplus in 1996, the Government is budgeting for a surplus this year and projecting surpluses in the next two years. There has been very little reference to that in Opposition speeches on the budget so far or in statements by Opposition Members before the budget. That astonishes me because if the Progressive Democrats, in particular, meant even half of what they say about budgetary policy, they should home in on that aspect. Budgeting for a surplus this year and projecting surpluses for the next two years is the most powerful statement which can be made about the future course of budgetary and fiscal policy and the most powerful reason for people to believe that we have, at last, arrived at a maturity in our approach to budgetary and fiscal policy, for which we have been striving for quite some time.

I do not claim that all the striving towards that aim has been on this side of the House. At least one Fianna Fáil Minister for Finance, former Deputy Ray MacSharry, clearly saw the importance of that and was heading in that direction. The pity, of course, is that his two Fianna Fáil successors as Minister for Finance dropped the ball in terms of financial management and set us back quite some way on that road. I am delighted we are now back on that road. Although the Progressive Democrats do not like to admit it, they have got that message. However, as usual, the understanding of that message is imperfect and very patchy in the Fianna Fáil Party, which worries me.

The second important aspect of the budget is that, for once, we have seen a very measured and deliberate approach to the changes in personal income taxation. Fianna Fáil and the Progressive Democrats have emoted a great deal in the past few days about how nothing has been done about the 48 per cent tax rate, because the Progressive Democrats are deliberately pitching for a particular part of the electoral market and Fianna Fáil just think it is a good idea to criticise the fact that nothing was done about the rate. However, they have completely missed the point. The fact is that whatever is done about the basic rate of taxation, the width of the first band and personal allowances delivers its full benefit to those who pay tax at the higher rate who, uniquely, can be sure of getting the full and undiluted benefit of the changes. The difficulties with poverty traps arise for those who pay tax at the basic rate or who, if they entered the labour force, would pay tax initially at the basic rate. The importance of concentrating our fire on that part of the tax system where resources are always limited is underlined.

A clear, simple concept on taxation policy such as this is foreign to the Progressive Democrats. It does not suit its niche in the market, nor does it suit Fianna Fáil. Although the party understands the concept it does not want to articulate it because it is not good at making choices. Deputy Cowen illustrated this when he gave out about the amount of expenditure.

Mr. Cowen

What claims did the Minister make in 1987?

Mr. Dukes

When he is asked to explain or make choices on expenditure it becomes clear that his problem is not with expenditure but with how money is being spent and by whom. However, he would happily spend the money in any event. This is a feature of Fianna Fáil comment on public expenditure.

Mr. Cowen

Our record on expenditure is much better than that of the Minister's party.

An Ceann Comhairle

Deputy Cowen had a good hearing.

Mr. Dukes

His party pretends to object to the level of current expenditure, yet it complains daily of insufficient public expenditure on this or that, and there is nothing on which it wishes to spend less.

Deputy Cowen has argued for a greater degree of discrimination and selectivity in given budgets with regard to various social welfare payments. I sympathise with that view, but the problem is that everybody in Fianna Fáil has different priorities and cannot agree on where the choices should be made. The Government has agreed and produced a budget that is defensible, but Fianna Fáil never agrees on a limited number of targets in any given year. Deputy Cowen, for as long as he is a member of Fianna Fáil, is therefore doomed to be a voice crying in the wilderness because nobody will agree with him. His other colleagues, who take a similar view, have other priorities. As a result they try to be all things to all men and women and turn out to be nothing much to anybody.

Mr. Cowen

The Minister is being whimsical.

Mr. Dukes

There has been much speculation in recent weeks in the media and among the Opposition about the expectation that there would be a pre-election budget. However, they cannot tar the budget with that brush because they have seen a sound and sensible set of measures.

The budget has been produced in an election year, but it has far more to do with the needs of our economy, and of different groups in our society, for stability in the management of public finances than it has to do with the fact that this is an election year. In his recent speech Deputy Bertie Ahern referred to this when he said an election budget, by its nature, is an exceptional event, unlikely to happen more than once every five years.

Neither the Deputy nor his colleagues in Fianna Fáil would have much chance of recognising an election budget because they have not had the chance to produce one for a long time. In 1978 they produced a post election budget following their pre-election promises. It was a disaster and set us on the road to ruin. Since then, they have been unable to plan one.

The party pulled down its own Government in 1989. The then Taoiseach, having thought he told his Minister for Health to resolve a specific problem which would have cost £1 million, returned from a trip to Japan to find the Government had lost a vote on a Private Members' motion. He called an election, which he lost. The next Government — the first coalition Government involving Fianna Fáil — reversed that which its predecessor had objected to and on which it had decided to hold an election. This Government was then pulled down by Fianna Fáil before an election budget could be produced. It next pulled down the subsequent Government, again without having the opportunity to create an election budget.

I understand, therefore, Deputy Bertie Ahern's remark that an election budget is exceptional; it is extremely exceptional for Fianna Fáil. It has not had the chance to have an election budget because it holds elections without budgets. On the last three occasions when Fianna Fáil has been in Government it has run the Government into a wall. It is no wonder it cannot tell the difference between an election budget and a non election budget.

Mr. Cowen

Would the Minister accept this is an election budget?

Mr. Dukes

The Deputy should be patient.

Mr. Cowen

May I interrupt?

Mr. Dukes

I will not accept an interruption from the Deputy.

An Ceann Comhairle

The Minister has the right to give way but he is not prepared to do so.

Mr. Dukes

Around budget time the Opposition has the opportunity to set out its stall in terms of economic policy and to tell us how it would handle different parts of the economy and different economic situations. Deputy Harney gave her views in an interview with the business supplement to The Irish Times on 17 January 1996, while Deputy Bertie Ahern provided his views in the same forum a week later. In addition, they made speeches on budget day and since. These beg the question as to whether the two parties are capable or working together in Opposition, let alone in Government. It appears they are incapable of working together in Opposition because they face in different ways on several key, important issues in the economy.

Mr. Cowen

Is the Minister happy with the participation of Democratic Left in Government?

Mr. Dukes

Although Deputy Dermot Ahern's outburst a few days ago was disowned by his party leader it was at least honest. When he said the party wanted to be in the driving seat, regardless of what the other party in Government may think, he indicated that Fianna Fáil had not changed from the time when the party was in coalition Government with the Progressive Democrats and the Labour Party. His leader attempted to recover the situation with emollient words, but it does not wash, because if one looks at the two parties views on key economic issues it is clear there are enormous differences between them. Indeed, what they say is a cause of concern.

Deputy Harney is renowned for being unable to resist a glib soundbite. In her interview in The Irish Times on 17 January she said:

I don't think we reward risk-takers or appreciate them in Ireland. There's an assumption that if you start your own business you're some class of semi-criminal, or that you're a fat cat.

She went on to say: "The State almost does everything it can to stop rather than support Irish business".

That sounds fine. It is a wonderful statement from a platform or the back of a lorry at election time but does she mean it? If she means it, what type of world view does she hold? I do not know anybody who set up a business who is classed as a "semi-criminal". However, I know people who set up business who might be described as "fat cats", some of whom have been members of Deputy Harney's party. More power to them if they set up a business.

Mr. Cowen

That says more about the Minister's mentality than Deputy Harney's.

Mr. Dukes

Deputy Harney knows that, but it is a good line to use. It suits the type of yuppie market which the Progressive Democrats wish to court. Deputy Harney said the State does almost everything it can to stop rather than support business. However, that was not her tune when she was a Minister of State. She would have said then, the State was pursuing wise policies to support business. Although the Government has reinforced the measures that were in place when Deputy Harney was last in office, she now finds, because she is in Opposition, that it is smart to say the Government does almost everything it can to stop business. She knows it is not true but she cannot resist the glib and easy soundbite. If that is policy driven parties, they are not for me.

Mr. Cowen

The Minister is a member of a "no policy" driven party.

Mr. Dukes

Deputy Harney said she would like the State to realise £2 billion over the next five years from the sale of assets, including the Trustee Savings Bank, an old reliable target. However, the Deputy should be aware — if she is not aware it is culpable ignorance — that there is no sense in which the State owns the TSB. It belongs to its depositors and has trustees to look after it. The State does not own it and has no moral right to the proceeds of the sale of the TSB. I wish the Progressive Democrats would realise that point and leave the TSB — which is a sound financial institution that has found a viable place in the market — alone and allow it to get on with the job it is doing well. It should stop its right wing, fashionable, yahoo nonsense of wanting to sell off the TSB.

Deputy Harney is worried about the taxpayer bearing risks. She mentioned Aer Rianta, another company in which I have more than a passing interest. She warned us she does not think taxpayers should carry the risk for successful Aer Rianta ventures in running shops in Karachi, St. Petersburg and Bangkok. However, the taxpayer is the ultimate shareholder in Aer Rianta and is deriving value from it. Taxpayers are making a capital appreciation from the success of Aer Rianta in running those shops. There is no sense in which they are being asked to bear a risk there and I wish Deputy Harney and her colleagues in the Progressive Democrats would catch on to the realities of business about which they pretend to know and stop making such howlers.

However, there is a worse example of a lack of understanding in the Progressive Democrats. Deputy Harney made the ringing statement regarding the ESB that the national grid should remain firmly under State control. However, she should be aware, as Deputy Cowen is aware, that Ireland agreed with its EU partners as part of the business of opening up the semi-State sector to competition — a move one would think the Progressive Democrats would favour — to give access to the national grid to companies which want to compete with the ESB in the supply of electricity. I paid tribute to Deputy Cowen and my predecessor, Deputy Lowry, for their work in bringing our semi-State companies increasingly into a competitive environment. That needs to be done and the member states agreed to do it at EU level in relation to public utilities. However, Deputy Harney obviously does not understand that. She would say anything for a soundbite.

The Deputy then picked another semi-State target because it suits the Progressive Democrats to pretend that nothing in which the State is involved can work properly. She stated that the Government's endorsement of strategic alliances in companies such as Telecom Éireann is inherently flawed and has left them vulnerable. She continued that the consortium involved in Telecom Éireann will be able to take it over in a few years. She said Comsource, the consortium comprising KPN-Telia, got its share at a knock down price and has the first option to take it over completely.

To use a phrase one of my teachers used, Deputy Harney has dribbled a bib full on this matter. The strategic partner does not have a right to take over Telecom Éireann. It has acquired a 20 per cent shareholding and has an option to acquire a further 15 per cent. It did not acquire this at a knock down price; it paid an initial consideration of just over £180 million for the 20 per cent share. When that matures and the final reckoning of the value of that shareholding is made, it will be valued at approximately £500 million. This matter has been dealt with comprehensively and if Deputy Harney does not know the details, I accuse her and her colleagues in the Progressive Democrats of culpable ignorance and I conclude from it they cannot be allowed next or near the levers of Government power. We would be in for a rude awakening if they were making decisions about the semi-State companies on the basis of that type of idiocy. I do not know what Fianna Fáil thinks of that matter but I doubt Deputy Cowen would find it congenial to work in Government with somebody who so distorts the position.

In another case involving an important issue of policy, it appears the two parties in Opposition, which are making goo goo eyes at each other and trying to cuddle up to persuade the people that they should be allowed to govern together, are facing totally different directions. This relates to a single currency and economic and monetary union. Deputy Harney stated that a final decision on whether Ireland becomes part of economic and monetary union cannot be taken in the absence of a comprehensive analysis of the reper-cussions for the economy of Britain going it alone. She continued that we must keep an open mind and assess our options much closer to the event. However, Deputy Ahern sounded much more sensible.

Mr. J. Walsh

"I would not be found dead in the same room as them", is what was said.

Mr. Cowen

That is what the Minister said.

Mr. Dukes

That is wonderful. What wonderful togetherness among the Opposition.

Mr. Cowen

Does the Minister for Social Welfare leave the room when the Minister walks into the Cabinet room?

Mr. J. Walsh

How do they stomach each other?

Mr. Cowen

Never say never.

Mr. Dukes

While recognising the challenges in budgetary and other policies of monetary union, Deputy Ahern has no doubt that Ireland should enter, even if Britain stays out. He said it must be good to be involved — he can sing that — because it will lower transaction costs for business and maintain low interest rates. On the other hand, remaining outside could deter tourism and inward investment. He then made a much more perspicacious statement, with which the Progressive Democrats have not caught up, that the potential growth markets of the next ten years will also be economic and monetary union members and Ireland must be a full member of this single market. He also believes that countries which remain outside will not get away with aggressive devaluations against the Euro. This is sensible on the part of Deputy Ahern but I wonder what type of a dog's dinner will emerge if those two parties ever try to get together to run economic policy?

Mr. Cowen

We will be the same as the Labour Party; we will dictate policy.

Mr. Dukes

The Progressive Democrats Party is supposedly policy driven but it is unable to make up its mind. Fianna Fáil, on the rare occasions when it can manage to take good advice from me about economic policy, has made some sensible decisions.

Mr. Cowen

Was this before or after the Deputy was shafted?

Mr. Dukes

Put them together and it is a recipe for disaster.

An Ceann Comhairle

The Minister should be heard without interruption.

Mr. Dukes

I agree. Deputy McCreevy is a friend of mine and I hope he will continue to be. I was listening to his budget speech while in the RTÉ studio that day. Deputy O'Rourke was there also and seemed to be having problems listening, which is common enough. She said at one stage: "Is Charlie still talking?" The only answer I could give was: "Yes he is, but he is not saying anything". It was not until that moment that I realised how much Deputies McCreevy and O'Rourke have in common. They can talk for hours without saying anything. Deputy McCreevy did so on budget day. He was trying to be like Deputy Noonan but was without the substance. He lacked what Deputy McCreevy himself called the "whole nut" and was all soft-centred. I have never heard Deputy McCreevy give a more inconsequential response to any economic policy matter.

Deputy Michael McDowell was different. He made the extraordinary proposition that instead of spending some public money in previous years, the Government should have saved it so we could spend it in 1997. He is objecting to the level of public expenditure. His only complaint in his budget day response was not about the total level of spending but that the Government had spent it too soon. The Government should not have spent it in previous years but should have spent it this year.

I am unsure whether people would thank the Progressive Democrats for saying that from time to time we should stop spending money we know we are going to spend but hold it for a couple of years.

Ms Burton

Deputy O'Rourke argued for no tax cuts.

Mr. Dukes

Never mind what people would suffer in the meantime but release it all in a given year for no reason other than to produce a nicer looking balance that appeals to the kind of business community Deputy Harney and her colleagues think they are after. These are, she claims, regarded as semi-criminals or fat cats. It is not a good idea to construct budgetary policy that way.

Then there is Deputy McDowell's other extraordinary proposal on capital expenditure. The Deputy was making a case for us not to have capital borrowing this year. We should not borrow for capital expenditure this year as he thinks it would be a good idea for us to go through penury in capital spending because in a couple of years EU funds might dry up. That is not a good investment policy. Stop investing this year, next year and 1999: the EU might not have as much money to give. It seems total lunacy to pretend to starve ourselves for three years to get ready for being hungry later. That is not a policy I would recommend and I suspect that it is not the kind of policy that Fianna Fáil would support. If one tries to put these two prescriptions for the economy together, what will we get out of it?

We would have an amazing forced self-denial recommended by Deputy Michael McDowell on one hand and Deputy Cowen's approach to expenditure on the other. He does not mind spending but worries a little about who gets to do the spending.

Mr. Cowen

That is the Deputy's version and he is sticking to it.

Mr. Dukes

To put those together and expect any kind of coherent economic policy to come out or steady management of budgetary policy would be asking far too much of people who are, as Deputies Cowen and McCreevy said, very sophisticated. They are not going to fall for that. I can think of nobody, no matter how unsophisticated, who would agree with Deputy Michael McDowell's prescription that we should starve ourselves for three years to practise for being hungry three years later.

There is more one could say about Deputy McDowell's economic policies. On capital expenditure, he denied he was going to hit in with swingeing cuts in the semi-State sector. Somebody should tell him it is a long time since the State put huge amounts of capital for current investment into the semi-State sector. He asks: "Does it make sense to borrow money and pour it, by way of capital, into an enterprise which is expected to compete with other enterprise on a level playing field and at the same time to have the Irish Government be the regulator, referee and arbitrator on that level playing pitch?" I have news for Deputy McDowell. That question has been taken up and examined. It has been negotiated on and conclusions were arrived at some time ago. Deputy Cowen will bear me out as he had the same portfolio some years ago as I have. He was involved, from the early days, in negotiations on bringing competition into the electricity, gas and public transport industries. The questions of regulation, arbitration and shareholding have already been addressed. We passed the Telecommunications (Miscellaneous Provisions) Bill last year that dealt specifically with that question in terms of telecommunications. We will be installing a telecommunications regulator in the course of this year.

If Deputy McDowell and his Progressive Democrats colleagues feel the need to contribute to economic policymaking, then as a first step they should catch up with what the real world is about. Then, rather than waving ancient ideological and theoretical constructs they have taken from the more dog-eared textbooks, they would have something real to say about the economy we live in. Until they do that, they cannot present themselves as being valid critics of economic policy, much less valid pretenders to being in charge of it.

Mr. J. Walsh

I am glad to have confirmation that this is an election budget. This year many of the difficult problems besetting our society could and should have been tackled. The Conference of Religious of Ireland has published an analysis of the budget. It states:

There is something profoundly wrong where resources are growing dramatically yet it refuses to give priority to tackling poverty, unemployment and exclusion. This is exactly what Government has done in its budget for 1997. The massive new resources which are coming onstream have been allocated to those who are already well-off. Meanwhile, poverty, unemployment and exclusion will persist at their present totally unacceptable levels. This Government had the resources to impact dramatically on poverty, unemployment and exclusion. It chose instead to allocate these resources to those who were already well-off. Budget '97 marks the triumph of greed over need. When the whole budget is evaluated it is clear that most of the resources will continue to go to the better off in Irish society. This budget aggravates the widening of the poverty gap between the long-term unemployed and all those with jobs. The gap in take-home income between an unemployed couple and a couple on £20,000 a year has widened by £530 a year in this budget alone. Compared to a couple on a salary of £40,000, the gap has widened to £1,072. This simply continues the trend of budgets in recent years. Since coming to power, this Government has presided over a widening of the poverty gap by £1,405 a year in the take-home income of a long-term unemployed couple compared to a couple earning a salary of £20,000. In the case of a couple on £40,000 a year, the gap has widened by £2,737 a year since 1995.

That gives some indication of the Government's less than caring attitude in regard to high relief.

In the Budget Statement the Minister for Finance said:

... take the case of a family of parents with two children both over 18 and in full-time third level education, again with one spouse earining say twice the average industrial wage. Their annual disposable income will have risen by about £2,350 as a result of pay increases and the tax and PRSI changes in my three budgets, even after taking account of the standard rating of certain discretionary reliefs. This represents an increase of 13.5 per cent or over 6.5 per cent in real terms. They will also gain by say a further £3,000 per year as a result of the abolition of undergraduate third level education fees.

That average family to whom the Minister referred will get an increase of about £100 per week.

The Minister went on to say that "an elderly person will be £7 a week better off from the increases of almost 10 per cent in the old age contributory pension in my three budgets". Under this budget old age pensioners will get a weekly increase of £7 in their income compared to the beloved middle class who will get an increase of £100 per week.

Before examining the specific provisions in the 1997 budget, I would like to consider the economic context in which it was presented. Nobody can be in any doubt that we have a good and growing economy with low inflation, low interest rates and virtually all the economic indicators are sound. This dramatic improvement in our economy was brought about by sound financial and economic policies developed from the mid-1980s, specifically since 1987. We all recall that in the mid-1980s, particularly after the abysmal performance of the 1983-87 coalition Government, our national finances were not in good order. The Government of that era broke up after failing to introduce a budget in 1987. Sacrifices and difficult choices had to be made, particularly from 1987 to the early 1990s.

Through discipline and prudent, skilful and courageous management of the national finances and the economy a dramatic was achieved. I pay tribute to the social partners for their work in achieving that welcome turnabout. The trade unions, ordinary workers in various organisations, factories and plants throughout the country, the farming community, and particularly their leaders, must be commended for maintaining displine through very difficult times. They took a decision that it was in the best long-term interest of the national economy and our people to maintain discipline. It is against the background of achieving that level of good health of the economy this budget was drafted.

On coming into office more than two years ago the Government was presented with a sustained level of industrial growth, a balance of payments surplus in the State's finances and a growing number of multinational companies deciding to set up here because they were impressed by the performance of the economy and the discipline, high output and the level of technological and literate skills of our workers. A very healthy economic position presented itself to the Government.

There were also a number of challenges to be faced, notably the high level of unemployment. We have heard a good deal of rhetoric about the level of unemployment, particularly the long-term unemployed and how that problem should be tackled. With our good economic performance no doubt many people thought the old adage that a rising tide would lift all boats would be brought to bear on the unemployment problem, but sadly that is not the case. Today, there are more long-term unemployed than there were three years ago. That is regrettable. I accept it is a particularly difficult problem, but it must be tackled more vigorously.

A second major problem in our society is the persistent poverty experienced by many families and the particular needs of various socio-economically deprived groups. Many reports have dealt with this issue. One recent report dealt with the level of homelessness in Dublin city and towns, villages and cities throughout the country, particularly the young homeless who are unable to gain access to resources that should be available to them. When people seek to highlight the problem of homelessnes, they approach a health board, the Department of Social Welfare or the Garda Síochána but find that they are fobbed off from one organisations to another. Given the state of our economy, surely the problem of homelessness more than any other should be seriously addressed.

There is also the problem of the growing level of domestic violence and abuse. A recent report outlined a harrowing account of the level of domestic violence. We seem to be anable to tackle that to provide the necessary resources to tackle that problem. There are also difficulties concerning the travelling community. I accept this is a difficult problem, but it is not one from which we should shy away. It must be addressed.

In the immediate aftermath of the coalition's third budget, their performance must be assessed in regard to three key opportunities. What overall impact has the coalition Government has on our society? Has it given quality leadership and exerted a major positive influence? What specific groups have benefited from the Government's policies? In particular, it is vital to carefully assess the impact of the Government's policies on those most in need. The include the elderly, the unemployed, lone parents and widows and those suffering from persistent illeness and disability. We cannot forget that the overall cohesion of communities is heavily dependent on the quality of our social welfare system. Given the various indicators of growth and expansion in our econnomy, the need for a clear overt signal of support for social welfare recipients has never been as profound. How has the rainbow coalition responded to the challenge? In particular, how has the Minister for Finance responded in his three budgets?

It is important to acknowledge that the 1997 budget includes a number of welcome features. The above inflation increases in certain personal social welfare payments are much needed, while minor but useful changes have been made in areas such as the family income supplement, carer's allowance, eligibility for adult dependant allowance as well as treatment, maternity and adoptive benefits. The changes proposed to rationalise the qualifying conditions for free electricity allowance and free telephone rental allowance are a stap in the right direction. It should be the priority of every Government to streamline the administration and operation of each and every scheme. This applies not just to the Department of Social Welfare but to all other Department and State agancies.

An old age pensioner living on his or her own is in receipt £64.50 per week. This is to be increased to £67.50 per week. Givern the healthy state of the economy, can anybody truthfully say the elderly are being trated fairly? It is eleven years since the commission on Social Welfare produced its report but its recommendations have yet to be implemented in full.

Elderly people living on their own are in vulnerable position. They are, as everybody knows, subject to violent attack and some have been murdered for small amounts of money. Although a task forde was set up this time last year, the mot we could do on this occasion was provide £2 million for the provision of modern telephone systems to allow the elderly sleep peacefully at night. This is insufficient given that there are thousands on the waiting list. We should not adopt a begrudging attitude. I therefore ask the Ministers for Finance, Justice and Social Welfare to look at this matter again. The protection and security of the elderly should be given priority in the formulsation of each and every budget.

The back-to-work allowance scheme is worthwhile in that it facilitates the return of unemployed persons to the active labour force. The numbers on the live register must be reduced. There are 836,000 people with over 500,000 dependants in receipt of social welfare payments of one kind or another each week. The issue of fraudulent claiming must be tackled in the most aggressive but fairest way possible and recipients encouraged to take up worthwhile jobs. We must aim to reward work. The education sector has an extremely important role to play in this respect.

I am glad the Minister for Education is present in the House as earlier today I received a press release from the National Economic and Social Forum concerning its report entitled Early School Leavers and Youth Unemployment which makes some stark findings. The press release states:

Although the number of early school leavers (i.e. those leaving before the end of the junior cycle of second level) has been falling in recent years, the problem is now more critical arising from the process of "qualification inflation" and a drop in traditional job opportunities for the unskilled. As a result, the problem of marginalisation and social exclusion for this group is becoming more acute.

The unemployment rate for those aged between 15 and 24 with no educational qualifications was around 64% in 1995 (almost one in every two.) This was almost 2.5 times the overall rate of youth unemployment (19.1%). The long-term unemployment rate for those without qualifications in that age group was around 30% in 1995 (almost one in three, compared to around one in ten for those with qualifications) and is one of the highest in the EU. Rural areas have the highest level of educational disadvantage.

Over half of our early school leavers come from families where the father is unemployed.

The Forum considers that the link between educational disadvantage, poverty, drug abuse, crime and long-term unemployment has been clearly established and that a more comprehensive and integrated strategy on a number of policy fronts is, therefore, necessary to deal with the problem.

The Forum proposes that the Department of Education should set a target to eliminate early school leaving within the next five years.

To achieve this target the forum makes a number of recommendations in its report. In response the Government has decided to establish a high level interdepartmental group with representatives from the Departments of Education, Enterprise and Employment and Social Welfare and from FÁS. The Government should target more resources at the Minister for Education to deal with this problem.

As Opposition spokesperson on social welfare, I have been trying for the past two years to obtain information on the unemployed, their ages, skills, qualifications, background and how concentrated the problem is in certain areas but all the CSO can tell us is how many are male and how many are female. A detailed and comprehensive profile of each unemployed person is not available. The Government should ask the CSO to provide this essential information which would be invaluable in policy-making.

I welcome the increase in child benefit for two main reasons: it involves an explicit acknowledgement by the State of the importance, integrity and full rights of each person from the beginning of life and the direct payment of such allowances to mothers guarantees at least a certain level of protected income each month, irrespective of other financial and social realities affecting individual families. While I acknowledge the increase in child benefit during the lifetime of this Government is significant, the child benefit scheme is one of the few State programmes which are neutral in terms of targeting poverty. The stockbroker's family and the unfortunate unemployed trying to avail of the family income supplement both get child benefit. Therefore, it is totally neutral in terms of targeting poverty and its impact is completely diffused across all socio-economic strata. While any real improvement in the level of payments represents a welcome gesture of support to mothers and children, its impact on narrowing the gap between the poor and the affluent is nonexistent.

I welcome the substantial child benefit increases over the lifetime of this Government. However, recently, the butter voucher scheme was halved in a most surreptitious way. Nobody knew much about it but social welfare offices were sent Department circulars to say that from the start of this year the butter voucher scheme would be reduced from two butter vouchers per month to one, which represents a slashing of 50 per cent. I know a family of five children and two parents who previously got 14 butter vouchers per month. This number has now been cut to seven. The cutting of this scheme, which was most helpful to largers and poorer families, was cruel. There are butter mountains in Ireland, Britain, France and throughout the European Union, farmers are complaining about spilling milk down the drain because they are over their quota and we slash a butter scheme for poorer people. I ask the Minister for Agriculture who is responsible for policy and the Minister for Social Welfare who is responsible for the implementation to look at this scheme. It is unacceptable to cut this scheme for larger families in a country with mountains of butter.

In overall terms, what is a fair assessment of Minister Quinn's budgetary performance over the last three years? Our evaluation of the Minister and his colleagues since they took up their duties must take three key factors into account. First, by the end of 1994 the State finances had been retrieved from the disaster of 1983 to 1987 and put on a secure footing. Furthermore, the economy had been prudently stimulated to record growth levels while interest rates had been reduced substantially. Second, the domestic challenges facing the Government were explicit and extremely well defined. Principally, it was vital to make significant strides in terms of net job creation, with the long-term unemployed being particularly targeted. An equally major onslaught was required on the level of profound poverty we have in Irish society. Third, the Government contained personnel who had a long record of rhetoric and verbal commitment to those most in need in our society. People expected that the poor and deprived would be looked after, especially when some of the most vocal Ministers were in charge of some of the caring Departments. Regrettably this has not happened and any fair assessment of developments could only conclude that this Government has dissipated the massive potential for good at its disposal to an unprecedented degree.

Instead of the rising tide being used to confer especial benefit on those most in need, the Government has indulted in what is undoubtedly the most profound and prolonged example of incoherent fumbling for a long time. We have had the bizarre situation over the last few months of one Minister after another falling on their swords. The business of Government clearly became almost an irrelevance in an alarming atmosphere of self-preservation at all costs. Unfortunately, the unbelievable sequence of self-inflicted disasters, which have become the defining characteristic of the rainbow coalition, has taken its toll.

As we review the three budgets of Minister Quinn, we see that a unique opportunity to make a profoundly positive impact on Irish society has been almost totally squandered. The only discrenible rationale behind the various policies of the Government seems to be an ill-fated attempt to regain power at the forthcoming general election. For a Minister of the calibre and track record of Deputy Quinn it is extremely disappointing to note the only coherent strategy which seems to underpin his three budgets from 1995 to date is the maximising of the giveaway nature of this budget. There were spartan increases in the 1995 and 1996 budgets — for example, the infamous 2.5 per cent to the elderly — so this year's budget could be increased. The full extent of this gross manipulation of the State's finances, particularly in the area of social welfare, is only now apparent. It has been a question of seeking to spread a little good too thinly and not targeting and focusing on the almost intractable problems in society. It will be left to an incoming Fianna Fáil Government to really tackle these problems.

Minister for Education (Ms Bhreathnach)

I wish to share my time with the Minister of State, Deputy Burton.

An Leas-Cheann Comhairle

Is that agreed? Agreed.

Ms Bhreathnach

I welcome the opportunity to contribute to the debate on the budget. It enables me to outline to the House how the financial provision for education is central to the Government's strategy for the economy and society in 1997 and into the future.

In a world of global markets, multinational corporations, satellite television and almost instant communication by the Internet and other technologies, it is clear that education is, and will continue to be, the basis for economic prosperity. It will be no less important for personal fulfilment and social progress. Knowledge is at the heart of new products and new processes. The knowledge revolution has surpassed the industrial revolution in its impact on human life and it continues to grow at a phenomenal rate. As an eminent educationalist, Frank Rhodes of Cornell University, recently said, "nations that can work smarter — not harder — will be the ones to lead the world into the next century". That is not too far away.

The new national agreement, Partnership 2000, is a strategic approach to lead the Irish economy and society into the 21st century. Education is a vital component of this strategy. In framing the budget the Government has added £6.5 million to the £22 million already provided in the Abridged Book of Estimates to the allocation for the First Level Capital Building Programme in 1997. This extra funding, along with the additional £8.5 million made available for primary buildings in 1996 in the Supplementary Estimates voted by this House last December, will make a significant contribution to meeting the capital needs of primary schools.

This year also sees the introduction of a new grant scheme for minor works to primary school properties. This initiative is in keeping with the White Paper statement that "implementation of smaller projects and building maintenance will be developed to the relevant education board or school as appropriate". Once schools benefit from the investment in their capital programmes they will be given the wherewithal to maintain the buildings to the proper standard in which our children and our teachers are expected to work.

The 1997 Estimates also provide for the first full year costs of the Breaking the Cycle initiative which I launched in the autumn of 1996. This initiative, which is one of the most significant education interventions since the foundation of the State, targets resources to the disadvantaged in both urban and rural areas in a radically new approach. I hope Deputy Walsh will have the details of this initiative available to him because he has expressed concern about the need to intervene, particularly in rural areas of educational disadvantage. I have been taken aback by the horror stories of neglect in rural communities which have been systematically excluded from the benefit of education investment over many years, including schools on the western coast which are now qualifying in clusters to benefit from the Breaking the Cycle initiative. As I move steadily to eliminate substandard buildings it is obvious there has been criminal neglect of whole communities.

The allocation of funding to the Breaking the Cycle initiative is fully in accord with the strategy contained in Partnership 2000 which highlights the strong link between educational disadvantage and unemployment and social exclusion. The Partnership 2000 document states that "education policy will continue to be oriented in such a way as to give priority in the allocation of resources to those in greatest need". We are finally getting our priorities right.

As Minister, I have prioritised policies of intervention from pre-school through to adulthood with a strong focus on preventive strategies which will break the inter-generational cycle of poverty and disadvantage. Evidence of the success of the policies is already clearly to be seen. In the past five years, for example, the numbers staying to leaving certificate level have risen from 73 per cent to 82 per cent — well on target for 90 per cent by the year 2000.

There has been extensive curriculum reform at second level in recent years. The success of the transition year, the leaving certificate applied and the leaving certificate vocational programmes has been underpinned by increases in funding for them. The increased investment at second level is concentrating on ensuring that students remain in and benefit from education.

The increase in the number of schools involved in the transition year and the new leaving certificate programmes is encouraging and the take-up rate is a clear indication that schools are putting in place programmes which are responsive to the diversity of students' needs and abilities.

I fully recognise the importance of in-career development of teachers and programme support and we are calling on them to introduce such major curriculum reform. In addition to the specific financial provision for in-career development of teachers, there are significant expenditures in programme supports within the second level Vote through the various structures that have been put in place to help and support teachers and schools to implement these programmes.

I have recently announced the establishment of a steering group to draw up a recommended funding framework designed to ensure equal treatment for the different schools within the second level sector while taking account of the needs of the different schools. This framework will give effect to the commitment in the White Paper to apply common criteria and entitlements to the funding of schools at second level.

The increasing support of the involvement of parents as partners in education has also been prioritised during my term as Minister. This is evidenced in the increased level of support to the National Parents Councils at primary and post primary levels where the annual grant to each body has gone up from £25,000 in 1992 to its present decent level of £90,000.

Further recognition of the role of parents is given in the Education Bill which gives parents a statutory right to representation on school boards of management and to establish parent associations in schools. The legislation will give a statutory underpinning to a new partnership in education, a partnership which reflects the inalienable rights of parents under the Constitution.

I am conscious of the difficult task being undertaken by school principals. For this reason one of my objectives has been to improve the in-school management arrangements in schools. The proposals made to teachers following negotiations on the Programme for Competitiveness and Work involve, among other things, the provision of a substantial number of additional posts of responsibility. I have no doubt that the implementation of these proposals would greatly assist principal teachers in the running of their schools and ease the burden of their current workload.

I wish to comment on the provision for third level education. The 1997 Estimates provide for gross expenditure on the third level Vote for over £540 million. This is an increase of £33 million over the 1996 Estimates allocation. This level of funding will permit continued expansion of student numbers in third level education. There will be an estimated additional 21,000 students at third level in 1997 compared to 1992. This explosive growth in numbers has been matched by increased investment. The gross third level Vote allocation in 1992 was £349 million but in 1997 it will be £540 million; that represents an increase of 55 per cent.

Capital provision for the sector is particularly important in view of the growth in student numbers. In 1997 the capital provision for third level is in excess of £36.5 million. This provision will ensure the continuation of the ongoing rolling capital investment programme for the sector. The programme, which includes in particular the completion of the £120 million European Regional Development Fund programme and the £60 million Exchequer/private sector initiative, is geared towards the construction of new facilities and upgrading of existing infrastructure to facilitate a much needed expansion of the third level system; the development of a supply of highly skilled manpower with a view to meeting the skill needs of existing industry and to attract foreign investment; providing support for indigenous industry by generating the research capacity to introduce and disseminate state of the art technology to upgrade the quality of existing goods and services and to develop new products; strengthening the links between education institutions and researchers and industry in various fields; and improving remedial action to combat social and regional inequalities in participation at third level.

Among the more important developments which will be catered for under the 1997 provision will be the acquisition of a site for the proposed new regional technical college for Blanchardstown. The first phase of the college when completed will provide places for approximately an additional 1,000 students.

Another significant component of the 1997 provision is an allocation of £600,000 for the further development of the Castlebar campus of Galway regional technical college which currently has over 350 full-time students enrolled on a range of national certificate and diploma level courses.

I am confident that completion of these projects, which embrace most third level institutions, will ensure the continuing relevance of programmes to the needs of the individual in society and the economy as well as bringing about improved economic growth and job creation.

This budget shows the Government's continuing commitment to education — a commitment that is clearly shared by the social partners in the Programme 2000 document. The 1997 Education Estimates show targeted, prudent and productive investment in our people. The emphasis on quality in the education system, which is evident throughout the White Paper, Charting Our Education Future, and which is contained in the measures proposed in the Education Bill, will ensure that this investment will yield significant returns for the individual citizen and for our society.

The Government's financial and fiscal policies have led to a declining national debt burden, low inflation, low interest rates and there is a range of tax incentives to encourage employment. The success of these policies, and in particular our continued success in the environment of European Monetary Union, depends on a highly skilled, flexible and adaptable workforce ready to respond to change throughout their lives. It depends to a considerable degree on the investment that we as a people make in education.

Minister of State at the Department of Foreign Affairs (Ms Burton)

This year is the 75th anniversary of the signing of the Treaty of Independence. We can fairly claim to have finally come of age. We can take our place in the world with a sense of pride in our achievements and confidence in our future. We have created a growing economy and a highly competent workforce; we are in the process of creating a more caring society with greater equality of opportunity.

This budget is a further, major contribution to economic and social progress. In many countries economic growth has been achieved at the expense of social progress; we have managed to marry the two, let us keep it that way. In order to do so and to consolidate and advance the improvements made, the people need to look to the choices they will make about their future. The choices are clearcut. Do you want to continue our current economic and social progress or do you want to have the social agenda sacrificed on the altar of perceived economic correctness? That is the difference between what this Government has to offer and what a PD dominated Government would provide.

There is no Labour Party strategy to demonise individual members of the Progressive Democrats although it may well be a PD strategy to try to divert attention from their damaging policies by suggesting that this is the case. There is a Labour Party intention, however, to point out to the electorate what voting for a PD Government will mean. We intend to draw attention to the inconsistencies between the stated objectives and the actual performance in Government.

In 1992, Deputy Harney announced on RTE that that year's budget had the letters PD written all over it. It was, she said, a liberation budget for taxpayers. The Progressive Democrats are distinctly coy on policy details. Like Salome, they prefer to reveal all little by little. We can take Deputy Harney at her word, however, that 1992 gives us an indicator of how the Progressive Democrats in a future Government will manage the economy.

Alas for Deputy Harney, the budget which she hailed as a liberation for taxpayers does not stand up to scrutiny some five years later. It did nothing for job creation. Unemployment rose that year with an average of 47 extra people on the dole for every day Deputy O'Malley reigned over industry. Emigration rose and interest rates for home owners and small businesses reached crippling levels. Some 25p in every tax pound went to service the debt. The economy stagnated. The notorious "dirty dozen" cuts were introduced in social welfare, and the tax burden as a share of national income was higher than it is now.

Later that fateful year the Fianna Fáil-PD Government collapsed in ignominy. They left behind a woeful economic mess. Today, the PD Deputies prefer to draw a veil over that year and its unhappy memories but voters have the right to remember and to ask if those policies have changed. The plain fact is they have not.

Most revealing of all is the PD attitude to the current economic boom. They have sought repeatedly to deny its existence. On numerous occasions PD Deputies have spoken of our current economic success as illusory and this word crops up in their speeches again and again. PD leaders have to be challenged on this point. Are the construction cranes throughout the country an illusion? Are the numerous pages of job advertisements in all our national papers week after week illusory? Over Christmas a leading US computer firm placed a jobs advertisement urging emigrants to come home and take up job opportunities on offer to skilled workers here. Was this real or an illusion?

None of this happened while a PD Minister presided over the Department of Employment. Obviously, PD Deputies are in what psychiatrists call a state of denial over the stunning success of our economy under the stewardship of a Labour Minister for Finance. They simply refuse to believe it.

Deputy Harney constantly sneers that the current jobs growth is only in part-time, low paid jobs. Only last week, however, detailed research for the Labour Force Survey bluntly contradicted this. The vast bulk of new jobs created in recent years are full time. The Progressive Democrats are out of touch with the real economy. They do not believe what is happening and resort to ideological blinkers to deny the success our country is now enjoying. Our economy could never be safe in the hands of people who even refuse to believe what is happening all around them.

Another repeated mantra is that the boom has not lifted all boats. This is false and exhaustive recent ESRI research disputes this suggestion. In 1987 about 20 per cent of the population had below half the national average income; by 1994 this had fallen to 8 per cent.

Of course we have a critical problem with longterm unemployment which requires resources and public investment. We have many excluded communities with desperate drug and crime problems, but in general all communities have shared in our current prosperity. The huge increase in the numbers at work is the most direct sign of this. There is increased investment in education at every level along with targeted emphasis on disadvantage.

Ironically, Deputy O'Donnell of the Progressive Democrats actually denounced this Labour emphasis on disadvantage in a recent RTE television interview. Why did Deputy Harney not rush to disassociate herself from these outrageous remarks by Deputy O'Donnell? We must conclude that her party will cancel the resources devoted to eliminate educational disadvantage if the Progressive Democrats get into office.

Deputy McDowell is anxious to reassure us that his party will implement Partnership 2000, but there is no conviction in his statement because his party has always set its face against social partnership. Not too long ago Deputy Harney offered us the low wage economy of Hong Kong as a realistic model to imitate, saying: "They are not rich but they are happy". Does she still hold to that view even though our own model is as successful as any other and is obviously able to attract international blue chip companies to locate here? The Progressive Democrats claim to be the party of enterprise but it is this Government which has reduced tax on small businesses from 40 per cent to 28 per cent.

Consistently, here as elsewhere, attitude surveys highlight employment, education and health care as priorities way above taxation in the minds of voters. There is a deep consciousness that social investment is a vital ingredient of prosperity. It is a lesson that President Clinton learned and from it he sculpted his famous comeback. His pollsters told him that the current generation is in a "we" mood as distinct from a "me" one.

The 1997 election will be fought on the same theme. Labour's commitment will be to economic growth and a fair distribution of its fruits. The Progressive Democrats, true to type, will reject this social emphasis and as voters recognise this the first wrinkles will appear on the smooth face they present to the country.

Deputy Harney complains of Labour scaremongering. The truth, of course, is that Labour has been far too timid in facing up to the relentless flow of PD venom for years on end. It is neither scaremongering nor a personal attack to point out the mess left behind in 1992 by a PD dominated Government. It is politically reasonable and valid to subject the stated PD policies to scrutiny as to their effects and the likelihood of being implemented in view of their record in office.

While Deputy Harney is enjoying something of a charmed existence at the moment, that has not exempted her from making some quite spectacular errors of judgment. For two or three years now she has gone on a magical mystery tour to the four corners of the planet in search of a model economy to imitate. She started in New Zealand, full of enthusiasm for the measures introduced there. You will remember the New Zealand model. This turned sour a few months ago when voters there delivered a sharp rebuff to the Government that brought in her favoured policies. The prime minister survived, but only in a coalition committed to reverse those policies. So there was no joy there. She went on to Hong Kong and South Korea, the Asian Tigers. At her party conference, Deputy Harney said: "People there are not rich, but they are happy". Nowadays she is not so sure. The television pictures of armed soldiers breaking strikes by Korean workers does not fit the happy image she sketched in her speech.

Last week Deputy Harney came closer to home for her model but, as before, she got it spectacularly wrong. In the Dáil last Thursday, she heaped mountains of praise on Tony Blair. New Labour in the UK is her latest fashion, all the more if this allows her to sketch Irish Labour as the old Labour model. The trouble is that Tony Blair and his colleagues and advisers have spent much time looking at Irish Labour's experience in Government for the past four years, and they regularly indicate how much they want to repeat our mixture of sustained growth, low inflation, social partnership and record job creation. I am sure Gordon Brown would give his eye teeth to be able to repeat for British voters the achievements of our Minister for Finance, Deputy Quinn.

In the Dáil Deputy Harney went to great pains to praise Tony Blair's efforts to reshape the welfare state. She spoke in awe of a speech Mr. Blair was to make in Amsterdam on Friday that would face up to the vexed issue of lone parents. Since then Tony Blair has made this speech. Alas, there is not much joy in it for Deputy Harney because the policies he set out, radical indeed, are very similar to those we in Ireland introduced, initially when I was in the Department of Social Welfare.

Like Tony Blair we took our cue from a valuable Australian project called JET — Jobs, Education, Training. This policy is to break the dependence of lone parents on welfare by specific incentives to seek work with state support for child care. New Labour in the UK is following us, but Deputy Harney is deliberately blind to the reforms we have already introduced.

I resent her crude allegation that Labour wants to keep people in a mindless state of public dependency. It is a cheap slogan and it is a lie which does her no honour. Nothing creates dependency so much as unemployment. The Minister for Finance, Deputy Quinn got 100,000 more people into the workforce in his two years in the Department of Finance.

We are implementing policies that ease the transition from welfare to work by allowing the retention for a period of certain medical card and other benefits and by major reductions in payroll taxes. The back to work allowance scheme has been a fantastic success. Small businesses are enjoying incentives and tax breaks from a Labour Minister such as they never experienced before. Research published last week shows that the bulk of the new jobs of recent years have been full time and emigrants, exiled by the failures of the last Fianna Fáil-Progressive Democrats Government, are returning home.

I can appreciate how galling it is for Deputy Harney to recognise Labour's successes. Our Finance Minister has managed to reduce the national debt, reduce interest payments from 27 pence in the tax pound to 16 pence, meet the Maastricht guidelines and, to cap it all, pioneer a Europewide stability pact to copperfasten fiscal prudence for years to come.

The PD tax and spend mantra is hollow. Labour has lived comfortably with the international guidelines, more so than many governments of the same political colour as Deputy Harney. We can live with the stability pact and we can accept a defined public spending target as a share of GNP on a par with international practice.

Our policy aims can be met inside those targets. It is the share-out of national wealth that brings us into conflict with Deputy Harney and her party. In America they talk of the "we" generation that has supplanted the "me" generation. That is the difference between Labour and the Progressive Democrats, and it will never change.

Turning briefly to my own area of responsibility, I am heartened to hear that Fianna Fáil has responded to my call last year for an all-party consensus on increasing Overseas Development Assistance. It must be remembered, however, that in their one opportunity in the past four years to draw up the Book of Estimates on their own, Fianna Fáil spectacularly failed to have regard to this policy. However, I welcome the statement by Deputy Ahern yesterday.

I now ask what the PD policy on ODA is — are they going to support and implement the objective of increasing ODA each year, as set out by Deputy Ahern yesterday? I will be delighted if they do, but I remain sceptical. I greatly fear that in their enthusiasm for cutting back on expenditure they will target the most needy of all.

As Deputy Cullen, the Fianna Fáil spokesman is here, let me query an item about which I have been puzzled for the past week but about which I have not had an opportunity to ask Deputy O'Rourke. On the "Vincent Brown Show" on the eve of the budget, Deputy O'Rourke argued cogently against reductions in taxes and particularly against reductions in the rates of income tax. The subsequent comments by Deputy McCreevy and others on the Fianna Fáil side gave me a sense of a party which was calling for more tax cuts. I am still confused as to whether it was the late hour of the evening or the charm of Vincent Brown, but I certainly heard Deputy O'Rourke arguing vehemently against further tax cuts. Perhaps Deputy Cullen can enlighten me on this broadening of Fianna Fáil policy.

Mr. Deenihan

No doubt the PD influence is being brought to bear.

Mr. Cullen

I bring my own philosophy to bear when I speak. I would like to correct something which has been trotted out at national and local level over recent weeks by Labour Ministers and backbenchers, that the Minister for Finance, Deputy Quinn, achieved something that nobody else achieved by reducing the national debt. He did no such thing. Since the Minister came into office the national debt has risen. What happened in the last few months of 1996 was through a glitch in the rising figure of the national debt under the Minister — £100 million came back off the total debt. The reality is that since Deputy Quinn took office the national debt has gone up substantially, and I wish the Labour Party and its various Ministers, backbenchers and spokespersons would stop announcing to all and sundry that the national debt has come down under the present Government because it has not.

The budget delivered last Wednesday by the Minister for Finance, Deputy Ruairí Quinn, is not the budget he would have delivered if he had been given an unfettered hand to do what he knew was essential for the continued growth of the economy. The direct interference by his party leader and Tánaiste, Deputy Spring, in the concluding stages of the Partnership 2000 programme seriously undermined the authority of the Minister for Finance both within the Government and with the social partners.

The interference by the Tánaiste was regrettable and unnecessary but demonstrates once again how the dead hand of the Tánaiste seems to take centre stage when trouble arises within coalition Governments. However, on this occasion the Tánaiste chose as his target his own Deputy Leader and Minister for Finance, Deputy Quinn. In this the Tánaiste is consistent in that he always puts his own personal agenda above that of party or good government. What the Tánaiste wants the Tánaiste gets is Deputy Spring's simple maxim.

However, time is running out for him. He must face the electorate in 1997 whether he likes it or not, and the sooner this election takes place the better, not alone for the people but for the economy. The Tánaiste cannot be trusted now by his Deputy Leader and Minister for Finance. I wonder how strong the bonds are now to Fine Gael, and if the Taoiseach would not agree that a general election is very much in the national interest, to quote that much abused cliché.

In dealing with the 1997 budget, it seems extraordinary that a Minister for Finance who is supposedly giving away £650 millions could fail so miserably to achieve a positive response right across the nation. In truth, the budget has created no more excitement than the ripples created by a pebble thrown into an ocean. After three budgets that have seen an explosion in public expenditure at a time of unprecedented economic growth, the Minister's contribution to taxpayers has been a paltry one penny. He rightly receives no applause for reducing the base rate of tax by 1 per cent with no adjustment in the higher 48 per cent rate.

It is almost painful to think what other countries would have achieved with the levels of economic growth that are now taken for granted in Ireland. Countries which have nothing approaching Ireland's economic growth rates are thinking in terms of tax rates of which we can seemingly only dream. When we further position the Minister's opportunities against the difficulties of the late 1980s and early 1990s, which still saw real dedication by Fianna Fáil led Governments to lowering tax rates, his performance almost beggars belief.

It is a simple truth that you cannot have high spending and low taxes — the two are incompatible. If one thing has been the hallmark of the Labour Party's involvement in Government in the 1970s, the 1980s and now the 1990s, it has been their failure to recognise the need for lower taxes combined with tightly controlled public expenditure.

Countries throughout the world have come to recognise that there is a relationship between creating incentives for work and enterprise culture and lowering tax rates. Nobody likes to pay tax and everybody can accept a reasonable level of tax taken from their gross income. Ireland still has a strong black economy which solely exists on the premise that tax rates which are penal are not worth paying and, therefore, it is better to risk deceiving the system than be caught in one that demands more than its fair share.

I believe the Minister for Finance understands this but he was unable to win the argument at Government level. I have no doubt that Minister Quinn's stewardship of office will be remembered as the years of lost opportunity, when so much could have been achieved for taxpayers but was squandered by a desire to increase public expenditure to levels which we will simply not be able to afford in the future.

The reduction in Structural Funds after 1999 and the inevitable downturn in the economic cycle will see public expenditure levels which we will not be able to sustain. In my view the Minister should have reduced the lower and upper rates of tax by 2 pence in each case or at least gone for reducing the lower rate of tax by 2 per cent and widening the tax band substantially. Unfortunately, the Minister took neither of these options. Giving a paltry one penny back to taxpayers after three years of budgeting with no reductions in tax is an inexcusable failure.

I have made the point over a number of weeks that if the Minister in his previous two budgets had kept the practice of reducing the lower rate of tax by at least 1 per cent in each year, he would have been comfortably in a position this year to have reached a tax base of 22 or 23 per cent. That would have been considered as real progress by all who live and work in this country.

Unfortunately, no effort to achieve these levels was made by the Government and, as we head towards the end of the decade and a run down of support under the Structural and Cohesion Funds, the opportunities for such reductions continue to diminish. Surely the basis of an enterprise culture is rooted in lower taxes which are an incentive to productivity, increase net earnings and also encourage those who are in the black economy to legitimise themselves by paying what they would consider to be reasonable rates of tax on income earned.

The Minister's budgetary figures for 1997 show that from income tax alone the Minister will take in an extra £364 millions. As we already know, that is roughly an increase of £1 million per day from the PAYE sector. If the Minister was seriously interested in tackling the tax wedge, he surely could have used much of this money to target the lower paid. This could have made a considerable contribution to making work at lower wage rates much more attractive than depending on the State to survive. It would also have given a real incentive to take up employment because people could have seen a real opportunity of improving their living standards.

The Minister for Finance made much in his budget speech of the current budget surplus of £193 million. He presented this as if he was the first Irish politician to have found the Holy Grail. The Minister appears to have a very short memory. When he inherited the Department of Finance from my party leader and then Minister for Finance, Deputy Bertie Ahern, he was handed the first current budget surplus in 25 years. Of course he quickly ignored this fact and proceeded to produce two further budgets which contained current budget deficits. I give no credit to the Minister for achieving a current budget surplus in his 1997 budget when the reality is he should have had a current budget surplus in his previous two budgets or at a minimum a neutral current situation.

The Minister made little of the fact that he would have an Exchequer borrowing requirement in 1997 of some £637 million. This is an absurdly high figure which leaves him very little room to manoeuvre if any unexpected problems arise within the economy. If the Minister had achieved his spending targets in his previous two budgets, he would be bringing in a very small Exchequer borrowing requirement or no Exchequer borrowing requirement at all.

To make matters worse the Minister is also indicating significant Exchequer borrowing over the next two years, bringing his total for 1997-99 to somewhere in the region of £2.2 billion. This is financial lunacy which takes no account of the changing financial circumstances in which we will find ourselves post-1999. I support the view gaining wide-ranging support that we should collectively cap borrowing at the level of £30 billion. There is no reason in a buoyant economy, with the levels of economic growth and revenue increases which this country is achieving and is likely to achieve for the next couple of years, to borrow another £2.2 billion. One can have some excuse for borrowing money when the economy needs to be primed. There are various difficulties which require borrowing to the levels which the Minister is proposing over the next three years. I cannot understand the logic of continuing to receive largesse from the PAYE sector and all taxpayers and at the same time having a requirement to borrow millions. We should be focusing now on stabilising the national debt and ensuring it does not rise further, but the choices that brings for the Government are not palatable to the Labour Party and Democratic Left. The tragedy is that Fine Gael has abdicated all responsibilities with regard to fiscal policy. Some of Minister Yates's speeches as Opposition spokesperson on Finance make interesting reading and the policies which he claimed so vehemently would be brought to Government by the Fine Gael Party have been abandoned.

None of the spending targets which the Government set since it took office has been achieved. Indeed, all have been handsomely exceeded. Taking account of targets the Minister set over the last couple of years which have been grossly exceeded with great aplomb and little concern by the Government, it is likely that current year borrowing requirements may well be exceeded again.

It was very interesting to note the response to the budget of the main players in the social partnership, in particular the muted response from IBEC which only offered token concern about the level of public expenditure. This was very much out of kilter with the rather trenchant and correct views they have consistently expressed over many years about the levels of public expenditure.

Of course, the agreement in Partnership 2000 seems to override most of those concerns. As we approach the end of the millennium it is fair to ask who controls public expenditure. Is it the elected Government of the day or the social partners, aided and abetted by some high level civil servants? There is no question that the social partners have, with the Government of the day, played a central role since 1987 in turning around the fortunes of this country. However, the fiscal policy must rest with the Government and any abdication of that responsibility will eventually lead to a policy which will be in disarray. I do not believe a hands on political role was played which was central to the Partnership 2000 agreement. It seemed to me as if all involved were told by the politicians in Government to put an agreement together and whatever that agreement was, so long as they all signed up for it, the Government would endorse it. Clearly this is not the way to design, formulate and implement fiscal policy.

The success or failure of any programme may involve many parties and when successful all will share in that success. When it fails there will be only the Government of the day to blame. No Government can concede its right to set down the nation's fiscal policy. We are dangerously close to getting the balance between the parties to social partnership and the Government wrong.

Lest I be misquoted, I am not against the idea of social partnership which can lay down the national strategy for a number of years. As I have already acknowledged, much of our economic growth and new found prosperity is due to such programmes which have been put together since 1987. However, when they are successful there is a tendency to become blasé about the content of such programmes. The danger is that agreement becomes more important than the substance of the document. This does not make for good Government.

For many years I have been a proponent of major changes in our corporation tax law. I was one of the first to congratulate the Minister when he began to make changes in this area. However, this year the Minister has got the balance wrong. He is more aware than anybody that the bulk of the jobs in the services sector are being created by small and medium enterprises, and while his initial rate of 30 per cent corporation tax was welcome combined with a threshold of £50,000, he was wrong in the way he made the changes for 1997.

The Minister should have targeted the lower rate and should have reduced the 30 per cent to 27 per cent at least and doubled the income band from £50,000 to £100,000. This would have had a more significant benefit within the economy and particularly for employment than the approach the Minister has taken. In general the budget gave scant reward to this huge sector of our economy. The small and medium enterprises are very much part of the engine room which has been driving economic growth over the past number of years.

One would have to look very hard at the Minister's speech to identify any consistent theme which recognises that fact. For the future, small and medium enterprises will be the sector we will look to most for growing employment, therefore, I would have expected a greater influence on the Minister's fiscal strategy aimed at this sector. Instead he seems to have largely ignored it.

The approach taken by the Minister for Social Welfare to those who are most at risk and socially disadvantaged in society has not been the targeted one that is so vitally necessary. It is particularly nauseating to look at the plight of those on old age pensions — people who have made a substantial contribution to society, who have raised their families, worked most of their lives and are now trying to survive on a minimal State pension. Surely there has been an opportunity in the past two years to significantly boost the lot of those receiving old age pensions. The Minister's contribution over three budgets to such people does not amount to the price of a bag of coal. So much for the substance behind the image of the Minister for Social Welfare.

To suggest that those in receipt of social welfare, in all its different forms, should be treated the same is to seriously misunderstand what the welfare system is about and what it is trying to achieve. Clearly there are sectors within the social welfare system that are far more disadvantaged than others. These sectors should have got the attention they required. What we got from the Minister for Social Welfare was a spread across the whole system without any real thought given to the advantages that can be achieved by targeting aspects of the welfare system with a view to encouraging people to make a contribution to society.

When we consider our social welfare system and those in it who are capable of and eligible for work or who are working in the black economy and drawing from the system and those who are trapped within the system who have no incentive to take up a low paid job, we will see that something radical is needed. On many occasions I have stated the time was well past when the integration of our social welfare and revenue systems was long overdue. My colleague, Deputy McCreevy, who served as Minister for Social Welfare, has often spoken about this and has emphasised that, with modern technology, we have the capacity to integrate both systems, yet no such move seems to be afoot. Indeed the way in which we ring fence many issues in Departments, such as separating social welfare, employment and tax into individual boxes, is almost unworkable in a modern economy. The systems in place mitigate against those who at times would want to move freely between employment, part-time employment, receive some support from the State and then return to employment, yet the ivory towers of power that exist within each department are such that they want to protect what they see as their own patch rather than develop a modern system which may result in some of the power blocks being removed.

The Strategic Management Initiative, launched with such fanfare by the Government over 18 months ago, has almost died in a watery grave. If memory serves me correctly, the Minister's speech on introducing the debate in the Dáil is still not completed. We can no longer afford this type of approach in a fast changing world. Change is an ongoing process, it must be managed but it never stops. We should not have to reach a point again where we realise that systems are outdated, outmoded and unworkable. That was the curse of Ireland in past decades and modern Ireland should continually manage change and ensure we are at the cutting edge of technology in all we do and achieve.

I am pleased that at last we seem to be getting some level of debate with regard to economic and monetary union and the advent of the euro. I have long been a supporter of monetary union and from all I have read and heard recently nothing substantive vis-à-vis Ireland's position has arisen which makes me change my mind.

I believe we will meet the Maastricht criteria, albeit just barely as the Government has pushed our room to manoeuvre to the upper limits of what is required. The only serious outstanding argument against Ireland's entry is whether the United Kingdom will enter in the first round. It is most unfortunate that much of the political debate in the UK has been of a rather nationalistic nature and there has been no serious debate about the real effects of monetary union within the UK. Indeed, debate across the water seems to centre on monetary union not occurring at all.

It has, however, become much more difficult politically to deliver monetary union from either the Tory's or the Labour Party's point of view. Because of this it is probably likely that the UK will not be members in the first round of monetary union. Clearly this poses difficulties for Ireland because of the size of our trade with the UK and the fact that a substantial portion of that trade comes from high employment sectors within the agriculture and food areas. Nevertheless it would be dangerous and foolish to become exclusively entangled in this one issue debate in an Irish context to the exclusion of all other possibilities and our prospects within monetary union.

I have noted recently that certain economists attached to our main banks are beginning to change their line and have become more sceptical about monetary union. Clearly a large portion of the bank's income will be lost when monetary union is achieved. This is a singular, vested interest point of view which puts their own narrow banking interests very much ahead of the Irish economy.

I would find it almost amusing if it were not so serious when I hear people say we could survive outside economic and monetary union and float as a currency akin to sterling. This is absolute rubbish and nonsense. If the Irish pound was to remain outside a new Euro system it would be subject to attack from whoever would like to make a quick killing. Even when Ireland was part of the old ERM our partners were unable to protect us when the Irish pound came under severe attack and eventually had to be devalued.

Can one imagine a situation where, although we qualified for monetary union, we decided not to move with our partners in Europe and remained outside just because sterling was not going to be party to the new system for reasons——

Debate adjourned.