Dáil Éireann debate -
Wednesday, 28 May 2003

Vol. 567 No. 6

National Economic and Social Development Office Bill 2002: Second Stage.

The Taoiseach

I move: "That the Bill be now read a Second Time."

The purpose of this Bill is to establish the National and Economic Social Development Office and, through it, give a statutory basis to its constituent bodies, the National Economic and Social Council, NESC, the National Economic and Social Forum, NESF, and the National Centre for Partnership and Performance, NCPP. The Programme for Prosperity and Fairness provided that the NESC, the NESF and the NCPP would be brought together within the National Economic and Social Development Office, and the Bill puts this commitment on a statutory basis.

Before dealing with the Bill, it is worth considering the social and economic climate in which it has been introduced. On the domestic front, economic growth has slowed this year, primarily as a consequence of the international downturn in continental Europe as well as the United States. Nevertheless, growth here is the strongest in the European Union, thereby continuing a pattern that has been evident for a sustained period. In relative terms, therefore, Ireland's overall economic performance remains impressive. It demonstrates a well developed resilience to offset the worst potential effects of sudden and persistent external shocks or downturns.

That said, one should not ignore the pressure points that currently exist. For example, the Exchequer situation has changed, which has implications both in terms of the choices at our disposal and the options that can be pursued. That was evident in the economic circumstances in which the recent discussions with the social partners took place. What we must do, first and foremost, is keep expectations and demands in line with fiscal conditions and outlooks. If we do that, competitiveness will be protected and employment secured. If we do not, the consequences are self-evident from our economic past, most notably the early and middle 1980s.

However, it must also be borne in mind the Government debt-GDP ratio is such that it has fallen from 65% at the end of 1997 to an estimated 34% at the end of last year. This means that, with the exception of Luxembourg, we have the lowest debt-GDP ratio in the European Union. On the inflation front there are indications that pressures are easing, but it is clear that continued diligence is required.

I addressed some of these issues in my recent speech to the IMI conference. I stressed that the issue of competitiveness is absolutely basic and that unless we are competitive, the economy will not thrive. The present situation holds some vulnerabilities. There is no doubt that we have lost some competitive ground through increased operating costs and slower productivity growth. It is vital, therefore, to underpin development efforts with a more competitive cost base.

The framework for injecting the necessary diligence, stability and certainty into economic and social policies has been social partnership. Born out of the serious fiscal crisis in the middle 1980s, it crystallised in 1987 in the form of the Programme for National Recovery, an agreed consensus between the Government, trade unions, business organisations and farming bodies on the tasks to be faced and the actions to be pursued. That first agreement has been succeeded by further agreements that have encompassed a wider economic and social agenda, focusing on such issues as unemployment, inequality and social exclusion as well as incomes policy.

The shared overall goal of the new agreement, Sustaining Progress, covering the period 2002 to 2005, is to continue progress towards the realisations of the NESC vision for Irish society in terms of economic inclusion based on full employment, consistent economic development that is socially and environmentally sustainable, social inclusion and a commitment to social justice and continuing adoption to change. This goal is in the context of the more medium-term goals set out in the recent NESC strategy report. It also reflects the reality of the fiscal environment, whereby current resource constraints have implications for priorities and timeframes across all policy areas and programmes. That is why the recently ratified social partnership agreement is so important. It promises stability in what will undoubtedly be an unpredictable economic environment and it will help to ensure that we maintain the industrial harmony that has characterised the economy over the past years.

I acknowledged the considerable effort and commitment by all those involved in the successful negotiations on Sustaining Progress. The series of agreements since 1987 have played a very significant role in the radical transformation of the country's economic and social fortunes. The social partnership process has engineered an unprecedented consistency across a range of policy areas, whether of a fiscal, monetary, social or equality nature. We cannot afford, however, to rest on past achievements although from time to time it can appear that familiarity with the social dialogue process leads us to undervalue it.

We know that we must keep striving for competitiveness in a fast changing world. We also know that while the products of economic growth are evident, for many people poverty remains a reality and deprivation a way of life. This reality presents an even greater challenge in an environment where growth has slowed down and the available resources must be managed in a more targeted and effective manner.

As a society we jointly face the challenge of securing our future well-being. By working together, the Government and the social partners have overcome major challenges, such as putting the public finances in order and successfully tackling unemployment. The issues confronting us today, whether in terms of competitiveness, social cohesion, environmental sustainability, agricultural change or financial market volatility, are no less complex and challenging and require a similar collective response.

As I have repeated on a number of occasions, there is a clear choice. We can choose between planning and working together or pursuing sectional interests, as we did at times before the social partnership agreements. Social partnership has demonstrated a strong capacity for adopting and evolving a response to current needs and concerns. It is the hope of the Government that with the successful outcome of Sustaining Progress, partnership will continue into the future.

The new office, the National Economic and Social Development Office, to be established by this legislation, is a framework to provide a statutory basis for the work of three separate bodies within the fabric of social partnership. The National Economic and Social Council was established in 1973 as an advisory body to the Government on the development of a national economy and the achievement of social justice. In this, its 30th anniversary year, the council continues to provide a forum in which views can be exchanged between those who have a common interest in the development of the economy and the pursuit of social justice.

The membership of the NESC is representative of the major economic and social interests in our society and that broad spectrum of talent has enabled the council to undertake innovative and pioneering work in a number of areas. In particular, its strategy reports have provided the framework for the negotiations of the national agreements between the Government and the social partners since 1987. The most recent strategy document provided the backdrop to the discussions on the recent talk on social partnership.

The National Economic and Social Forum was originally set up by the Government in 1993 for the purposes of widening the social partnership process and of achieving consensus on as wide a base as possible on major economic and social policy issues. Since 1998, the forum's work has been focused on evaluating the implementation of policies dealing with equality and social inclusion. In that period it has produced a number of reports which have drawn on the experience of a wide range of interests, especially the consumers of public services.

The third strand feeding into this National Economic and Social Development Office is the National Centre for Partnership and Performance, the NCCP. Launched in 2001 its purpose is to support and drive change in the work place. It will enable organisations in the private and public sectors, through partnership, to respond to change, to build capability and to improve performance. The NCCP has a mission to support and facilitate organisational change based on partnership to bring about improved performance and mutual gains. This contributes to national competitiveness, better public services, higher living standards, a better quality of work life and the development of the work place in the future.

The centre is practical in its approach. In addition to disseminating evidence and experience-based information on how partnership and change can contribute to productivity and competitiveness, it will also directly assist and support significant partnership initiatives. I commend the work of these three bodies and the major contribution made over the years by their members, including Members of this House and their excellent staff.

These are the distinct bodies that have been brought together to operate within the National Economic and Social Development Office. The roles of each body, however, are distinct yet complementary. This legislation will give statutory recognition to the important role of these partnership institutions, confirm their independence and provide a proper basis for the recruitment and employment of staff. The office will act as a resource base for the Government's advisory bodies on economic and social policy and partnership. Their co-operation with each other within the office will create the positive synergies that the Government believes are necessary in this area.

I will now deal with the Bill and its provisions. The Bill deals with the practical arrangements for the establishment of the National Economic and Social Development Office and for the benefit of the House I will touch on some of its main features. Section 6 sets out the establishment of the office and refers to its constituent parts as including the National Economic and Social Council, the National Economic and Social Forum and the National Centre for Partnership and Performance. It also states that the office in each body established under this section and section 7 shall have all such powers as are necessary for, or incidental to, the performance and functions under this Act.

In the interest of providing flexibility to address issues that may arise in the future, section 7 gives the Taoiseach the power, following consultation with the Minister for Finance and any other Minister, to establish by order any additional body within the office as considered appropriate to prepare advice and reports on any aspect of any matter regarding the functions of the office.

Section 8 states that the function of the office shall be to advise the Taoiseach on all strategic matters relevant to economic and social development in the State. It will do so by supporting the individual mandates of NESC, NESF and NCPP as set out in their own terms of reference, in particular by making the relevant staff available.

The functions of the council, the forum and the centre are set out in sections 9 to 11, respectively. The functions of the council shall be to analyse and report to the Taoiseach on strategic issues relating to the efficient development of the economy, the achievement of social justice and the development of a strategic framework for the conduct of relations and negotiations of agreement between the Government and the social partners. The functions of the forum are to monitor and analyse the implementation of specific measures and programmes identified in the context of social partnership, especially those concerned with the achievement of equality and social inclusion, a new function which will be reflected by a Government amendment in due course and to facilitate public consultation on policy matters referred to it by the Government from time to time. The functions of the National Centre for Partnership and Performance shall be to support and facilitate organisational change and innovation based on partnership in order to bring about improved performance and mutual gains and to contribute to national competitiveness, better public services, higher living standards, a better quality of life and the future development of the work place.

Section 13 sets out the composition of the office as being the chairpersons and deputy chairpersons of the council, the forum and the centre. Sections 14 to 16 explain the nominating procedures for the ordinary membership of each of the bodies. In all cases the members shall be appointed by the Taoiseach. Section 17 sets out the term of office of the chairperson and the ordinary member of any new body within the office and the conditions under which both will hold office. The section also calls for an equitable balance to be achieved between men and women in the composition of a body.

Section 19 outlines the conditions which apply to a member of the council, the forum, the centre, or a member of the staff of the bodies when they are nominated or elected to membership of either House of the Oireachtas or the European Parliament and thereupon cease to be a member or a member of staff of the particular body.

Sections 20 to 22 cover the establishment of committees and how they will function, the disclosure by members of the office, body and staff, of interests, and the prohibition on the disclosure of confidential information. Section 23 deals with the role of the chief officer of the office and indicates the duties assigned to him or her, the method of his or her appointment and removal by the Taoiseach and other conditions which apply to the post. Section 25 is about the staff of the office and how such staff are to be recruited. This will require consultation between the office and the director of the body concerned and must have the consent of the Taoiseach and the Minister for Finance. It also deals with the removal of any officer or employee who fails to perform his or her functions satisfactorily.

Sections 28, 30 and 31 cover the financial arrangements for the office and in particular the advancing to the office of moneys provided by the Oireachtas, and keeping of accounts and the conditions which apply to their submission to the Comptroller and Auditor General. The provision for the giving of evidence by the chief officer to the Dáil committee established to examine and report to Dáil Éireann on the appropriate accounts and reports of the Comptroller and Auditor General is also covered. Section 33 requires the office to report to the Taoiseach at the end of the financial year and the Taoiseach shall cause copies of the report to be laid before each House of the Oireachtas. The office shall be required under section 32 to prepare a strategic plan for approval by the Taoiseach not later than six months after the establishment day of the office and every three years from the submission of the first statement. Once approved, a copy of the plan will be laid before each House of the Oireachtas. In the interest of providing flexibility to cope with future developments while providing the benefit of a statutory body, section 34 allows the Taoiseach the right to dissolve the council, the forum, the centre and any other body established under section 7, following consultation with the office and any Minister who is represented on the body. The office will be included in the First Schedule to the Freedom of Information Act 1997 and thereby will be covered by its provisions. Section 35 sets this out.

The remaining sections of the Bill are to do with the dissolution of the existing non-statutory council, forum and centre on the establishment day of the new office, the transfer of rights and liabilities of the dissolved bodies, the drawing up of the accounts of the dissolved bodies, and of particular importance to the staff of the bodies, the conditions which apply to the transfer of the new statutory bodies. The Bill will put in place the structures referred to in the Programme for Prosperity and Fairness by combining the NCCP alongside the NESC and the NESF to ensure that their complementary roles are acknowledged and developed to support the economic and social fabric of our society. I am confident that the new office will achieve this and I wish it well in its important work. I commend this Bill to the House.

Mr. Kenny

This Bill will put a statutory foundation on the National Economic and Social Development Office which comprises three bodies, the National Economic and Social Council, the National Economic and Social Forum and the National Centre for Partnership and Performance, which are inextricably linked and underpin the social partnership process. The Bill is welcome in so far as it will provide some element of accountability to the Dáil. It is also to be welcomed that the practical arrangements for the establishment of the office, its functions, composition and membership, the nomination procedures and the terms of office of office holders will now be on a basis which is consistent with other statutory bodies. In that context, like the Taoiseach, I wish to thank all of those who contributed in any way to the valuable work of the committees, the reports they have produced over the years and the valuable information that was brought to light as a consequence.

It is, however, timely that when we are debating this Bill we should look at the process which the National Economic and Social Development Office has been established to underpin. It is not before time that social partnership was the subject of some searching analysis. The present structure of social partnership was precipitated by the economic disasters of the 1980s, when unemployment had reached 17.5 %. In five years emigration totalled 160,000 people, most of them young. Ireland was seen as a basket case with a debt ratio of 125% of GNP. Destructive conflicts between vested interests was feeding a wage price spiral in which everybody lost. Social partnership was founded on the realisation by key vested interests that a co-operative approach could yield better results. There was also a unifying vision of job creation in whose interests other demands would also be set aside.

The ingredients of the initial social partnership centres were quite simple: low "one size fits all" wage settlements; clear commitments to reduce tax; absolute priority for employment growth in all areas of policy; and avoiding sharply defined policies that might upset consensus. It is arguable that the model has paid dividends in supporting a policy of rapid employment growth, accompanied by real improvements in take home pay. It also gave a substantial influence over public policy to the social partners.

Surely now, nearly a decade and a half on from the first agreement of this type, it is time for us to look hard at this model. Many of the limitations of this model of partnership are being exposed. Before the current agreement, Sustaining Progress, was negotiated, there was very little questioning of its continued relevance. The failure to question the current model is one which we all share. Opposition parties like my own which should have been challenging conventional wisdom instead genuflected to the holy grail of consensus.

The world we live in today is very different from the world in which social partnership was conceived and reared. While we are seeing an increase in unemployment with more regular announcements of job losses, there is no enormous pool of Irish workers seeking employment. The traditional source of workers, unemployed people, returning immigrants and rising female participation, is drying up. The capacity for tax cutting has been exhausted if we wish to maintain a decent standard of public service. What we have seen from the Government is a range of stealth taxes which it is using to replenish the coffers which it has so wastefully emptied in recent years. The problems facing society now are more complex and challenging and they highlight the limitations of consensus policies. Consensus in a way is like being wrapped in cotton wool. Initially, it provides a warm glow, but ultimately it can suffocate politics and stifle the capacity of our society to confront new problems in a new way.

Many individual business people and working people have commented to me that at times they feel the social partnership agreements are more about the officials who represent IBEC and ICTU than they are about the members of those bodies and their real needs. Even on the wage front, the limitations of partnership have been exposed. Technology has transformed jobs that people do, but frozen wage relativity policies are hampering adjustment.

The benchmarking process, which should have been an open and transparent process for dealing with some of these problems with the public sector, was shrouded in secrecy. The report provided no detail about the job comparisons between the public and private sectors used to calculate the recommended increases. Given the extent of the bill being imposed on the taxpayer, ranging from between €1.2 billion to €1.3 billion, this lack of transparency was extraordinary and it left unanswered many legitimate questions about the rationale for the increases and has left public servants who are to receive lower increases very disgruntled. Better pay for public servants must translate into better service for the public. However, in the recent agreement, the Government put dates on the payments before negotiating the modernisation programme which the payment is meant to bring about. The limitations of the current partnership type agreement in wider spheres of policy are becoming even more obvious. It has given priority to the interest of producers over consumers, slowed down the pace of serious public sector service reform, shelved genuine devolution of power; distorted reform in key markets and blunted social accountability.

The partnership process has supported a position where the interests of producers have taken precedence over the interests of consumers. This is clearly the case in private sector bastions like banking and insurance. It is equally true in the public service, in public utilities like transport as well as services like health and education. As I pointed out this morning, the Forfás report pointed the finger of guilt and blame directly at Government and said that as a majority shareholder Government is responsible for significant increases in the inflation rate and inflationary conditions in the country. It set out two specific recommendations that Government should follow. The first of these is that Government should set a credible inflation target and thereafter should avoid increases in customs and excise duties, VAT and State sponsored price increases such as in education, health insurance and transport for the remainder of 2003 and 2004. If, as the Taoiseach said, we need increased value in public services, these are two recommendations made by a competent body to Government with which it should deal.

Serious efforts to benchmark our public service against best practice have been blunted by the partnership model. In recent years, we have seen a massive expansion in the number of persons employed in the public service, particularly in health, but we are not seeing a commensurate improvement in the delivery to patients. Last week's waiting list figures are an example of this, as are other figures indicating employment of unauthorised personnel and an obscene waste of money in other areas. While much lip service is paid to it, accountability remains a taboo subject to many in the public service. This not only undermines consumer interests, but it militates against the opportunities of genuine professional development in the longer term.

There are many within the public service who want to see the poor performance exposed and tackled and who want to see those who perform well properly rewarded, but the social partnership model we have used has hindered rather than helped to achieve that. Genuine devolution of power has been side-stepped continuously. Instead of reforming the big bureaucracies by devolving power and responsibility, the partnership process has developed new layers of partnership institutions. Some of these operate to good effect, but with limited budgets.

Partnership has also failed to give us reform of key markets. The model of privatisation which has developed has been flawed. In the current model, the general taxpayer hands over, free of charge, valuable shares to workers currently serving in the company. It ignores the contributions of pensioners who built up the asset over many years. Public interest gets scant attention. Ireland's loss of ground in the competitiveness of our telecommunications infrastructure is in no small part due to an ill-considered model of privatisation. It has now resulted in this key and national infrastructure being in the hands of companies which have expensive capital to repay and very little capacity to develop the infrastructure.

Competition in areas like public transport has been shunted into a siding, all in the name of partnership. The canvass of traditional partnership is built around the triangle of wages, employment and profits. This neglects many areas of policy that impact on the lives of our citizens.

Employers' responsibility to parents has been neglected. The crazy pattern of developer-led construction policies has put many lives on impossible treadmills. I am reminded of a woman in Lucan who spoke at a public meeting recently. She said that she and her husband have two young children, they get up at 6.15 a.m. every morning, drag the children out of bed, get them ready to go down to the crèche, spend 40 minutes on the motorway trying to get to work. She said that if the weather is bad or there is an accident life is not just difficult, it is an obstacle course. She said she was not speaking for herself, but for 600,000 more. The quality of life of many of our people has been hampered by bad planning, mismanagement and lack of attention within the partnership model.

Partnership with community is a vital concept in the building of new policies, but it is clear that in the current social partnership forum, there are some who are in the premiership and some who are very much in the lower divisions. The employers and unions are in the top league, whereas the wider community interests, representing the concerns of the environment, the consumer, the life-cycle pressure on the families caught in the backwash of economic progress, are relegated to lower leagues.

As politicians, we should be prepared to accept our share of culpability for allowing this model to develop in the way it has and not challenging it when we knew we should have. Perhaps the fragmentation of opposition in the Dáil over the years has stunted the quality of the political debate and added to the scepticism about the effectiveness of elected institutions.

The partnership process allows Government to shelter from strong political accountability. Typically when an attack comes, the Government wraps the flag of social partnership around itself. The Dáil has been emasculated as a forum where conflicts between competing interests in public policy can be worked out openly and transparently. In its place, a new pecking order of access to key decision makers has developed.

One of the lessons of the recent spate of tribunals must be the need to build strong and effective accountability. The fragmentation in politics undoubtedly shows that the public also senses the manner in which the consensus has failed to live up to the day-to-day pressures of people's lives. The current model of social partnership is top-down. It increasingly shows us that it is not capable of tackling our problems effectively. It has a great deal to offer, but it will fail if it develops within a cosy consensus of insiders. Many small businesses, rank and file union members, the employees of the 70% of companies which are not unionised and many voters feel left on the outside. There needs to be a much more robust public debate about the purpose and framework of partnership.

In the case of the most recent agreement, many business people say privately that a significant sector of industry agreed to it because it feared industrial relations anarchy with which it no longer has the structures to deal. This also applies to many unions. Overall, industry was split between those who needed a long pay pause and those for whom pay is a small part of their cost structure but maintaining production is vital. The majority was in between with the industrial relations factor predominant. For its part the Government needs the agreement to provide the platform for dealing with the public service unions and I understand that. Most participants are aware that the process is outmoded but do not have an alternative to offer.

The real challenge must be to make this a genuine people's partnership, not a partnership of vested interests, however widely defined. We must and should have a real debate about this model. The limitations of our current top-down social partnership model must be debated, scrutinised and questioned. Industrial peace is important and vital, but it should not be our only concern. Consensus has an important place but the challenges Ireland faces today need a much more robust airing inside and outside the House.

Ms Burton

We broadly welcome the Bill as a common sense measure. It is a sad reflection on the Government that it has taken so long to bring such simple legislation before the House. While it could be argued that the establishment of the National Centre for Partnership and Performance would have delayed the Bill, the centre has been up and running for more than 18 months. Although there may be points of detail to discuss on Committee Stage, on its first reading the Bill is simple legislation which has been promised for several years. That such straightforward legislation could be so long delayed is reflective of the malaise of indecision in even the simplest matters that characterises the Government's discussions.

That said, I welcome the basic idea behind the Bill. Social partnership has been an important part of economic governance in Ireland since 1987. We could argue that it has served the country well for the most part. As in other European countries, effective social partnership requires effective social partnership institutions. In particular, the success of partnership since 1987 has depended on the shared analysis of problems which the National Economic and Social Council and, later, the National Economic and Social Forum have facilitated. Similarly, the task of the National Centre for Partnership and Performance is a vital one. The successful development of partnership in the workplace is a necessary condition of continuing successful partnership at national level.

I want to go back to the original ideas of the National Economic and Social Forum which was established in 1993 when I was Minister of State in the then Department of Social Welfare dealing with issues of poverty and disadvantage and the Taoiseach was Minister for Finance. I recall that the two specific aims were to widen social partnership beyond a cosy world of the included and include representatives of the excluded, disadvantaged, unemployed, young people, women and so on, and to involve elected Members of the Oireachtas to bring a policy focus on the issue of disadvantage.

That wider concept of social partnership is effectively in tatters. The failure of the Minister for Finance to put real money on the table in the partnership deal, Sustaining Progress, to address disadvantage has meant that the third pillar of social partnership, namely, the community and voluntary sector and so on, is no longer really in place. Organisations such as the National Women's Council and the Simon Community were not prepared to put their imprimatur on a deal that, as far as real commitments to disadvantage were concerned, was a charade.

One of the valuable aspects of the NESF's work since its inception was a hotline into policymakers. The forum's path-breaking work on long-term unemployment in its influential report No. 4 played an important role in ensuring that practical solutions which had worked in places such as Coolock and Ballymun were adopted as Government policy. This is because the Government of the day established a task force on long-term unemployment to advance the proposals put forward by the NESF. I pushed for lone parents to be allowed to earn a certain amount of money. The Taoiseach will recall the discussions which allowed them do so on a pilot basis. This was critical in identifying a set of people who had been excluded. Unfortunately, the type of ground-breaking approach established then has not continued in recent times. One of the reasons is the change in the ideological complexion of the Government.

The evidence suggests the Government no longer listens to what the forum has to say, and I regret that. I am delighted the Taoiseach and a number of Ministers have spoken in recent days about a return to the debate on disadvantage. There are people in my constituency and that of the Taoiseach for whom this debate is critically important. Despite the Celtic tiger, many in our communities are still disadvantaged.

I draw the Taoiseach's attention to the number of reports that show how little progress has been made. In a report in 2000 on social and affordable housing, the NESF called for a target for eliminating housing waiting lists, a national housing authority to accelerate the provision of houses for the poorest and action on land prices where huge profits and windfall gains on land were being made at the expense of first-time buyers and hard-pressed local authorities. As a member of the old Dublin County Council in the worst days, I can say that both Fianna Fáil and Fine Gael disgraced themselves on many occasions in their decisions on certain types of land rezoning.

What has been the Government's response to this report? There is no target for people on housing waiting lists who have been largely left to rot. Such lists have increased by one quarter in the three years from 1999 to 2002. More families are on housing waiting lists now than there are full-time farmers. As the low rate of new local authority housing, built and bought, that came on stream last year was just under 3,000, it would take 16 years to clear current housing lists, even if not a single family were to apply for housing in the interim. Part V of the Planning and Development Act 2000 was abandoned and this made a mockery of targets for social and affordable housing and the notion of up to 20% of housing being reserved for those on low and modest incomes.

Since I returned to Fingal County Council in 1999, as the Labour Party leader on it and together with the other parties, I have made a point of facilitating the building of local authority social and affordable housing. The Taoiseach will know that Fingal is a model in terms of the numbers it has produced. All members of the council worked together and few other councils in the country can show this. It is regrettable that the Government abandoned this method that was producing results. Some 18,000 sites for social and affordable housing have been lost with the stroke of a pen. The big builders who control so much of the land, many of whom are contributors to the Taoiseach's party and, in many cases, provide good housing, have not been able to grasp the concept of allowing people on lower incomes or seeking social or affordable housing into their estates. This Government has been bad for this. The social partnership model should have facilitated, encouraged and strengthened this change. This is why the current social partnership model is failing so terribly.

There has been no action on building land. Instead, land speculators, many of whom are familiar figures from the tribunals, have been handed a bonus by the Minister's decision to permanently halve capital gains on development land. This is another serious mistake. There is still no sign of a national housing authority.

A NESF report published last April looked at the two-tier system of hospital care. It argued for a single system where medical need, not the depth of one's purse, should determine access to essential medical treatment. What was the Government's response? More beds have been closed in the public hospital system and this is driving more people towards private medicine. The two-tier structure of the system has not been addressed, rather it has been enhanced by last minute tax breaks for private hospitals. Last minute changes in the Finance Act 2001 were rushed in to benefit a handful of private hospital promoters at an estimated cost to taxpayers of at least €20 million. The State is paying 42% of the capital cost to these promoters through tax breaks on their incomes. What is the measly return? Public patients may be treated in 20% of the beds at 90% of the standard charge. This is a 2% return to a public that has provided 42% of the money. While I know this is a little PD idea, it does not represent value for money in our health system or to those on the waiting lists.

In last year's Finance Act, tax relief was extended to private promoters of sports injuries clinics. What market failure was that trying to address? This year's Finance Act saw another last minute change for promoters of private day hospitals at a cost of €9 million. One of these hospitals is located in the constituency of the Minister for Finance. This benefited one or two individuals while simultaneously copper-fastening the public-private divide in our hospital system.

The Government may talk the talk of social inclusion but it does not walk the walk. The record is one of cuts in services to the poor, whether it is community employment schemes, RAPID, programmes to address educational disadvantage and school dropouts, housing or the public hospital system. At the same time the tax system offers a parallel and thriving hidden welfare state for the well-off. Top earners can reduce their tax bills to almost zero by investing in specially favoured activities, including stud farms, holiday homes, multi-storey car parks, private hospitals, sports injury clinics or generous pensions. The Minister for Finance made great play in this year's Finance Act that he was ending some of these tax loopholes. Although in some cases the end-date was brought forward, the termination date was actually extended in the case of tax reliefs on town renewal projects and park and ride schemes.

In its statistical report, the Revenue Commissioners admit there are 33 tax breaks where it has no idea of the cost in tax forgone. We do not know how much tax relief on stallion fees costs the rest of us, we do not know the cost of giving tax relief for new holiday homes in seaside resorts and we do not know how much income is sheltered behind tax relief on income from foreign trusts. However, we know these tax breaks systematically benefit those who are best off in society. It is not done in the open like walking through the front door of UCD, Trinity or NUI, Galway. It is done behind closed doors where the parallel welfare state offered through tax breaks to the favoured few is not audited by the Comptroller and Auditor General, nor is it subject to proper scrutiny by either the Committee of Public Accounts or the finance committee.

The SSIA is another measure where the more one has the more one gets. The total cost this year of €500 million will accrue most to those who can afford to save at the expense of those who can barely survive from week to week. A recent survey conducted by the Vincentian partnership has shown that families on social welfare cannot afford the healthy diet recommended by the Department of Health and Children without running into debt if they buy fresh fruit and vegetables. The Minister's tenure in the Department of Finance saw him systematically redistributing the benefits of the boom upwards. It must be a comment on the nature of social partnership as it exists that the social partnership structure has not been able to address the redistribution of tax benefits and tax expenditures upwards to the most well off in society.

An analysis of what has been happening shows that more has been given back to those at the top of the pile than to those at the bottom. This is the same Minister for Finance I heard say that the abolition of third level fees was the most socially regressive step ever taken by an Irish Government. I know the Taoiseach has often visited and given great personal and political support to St. Vincent's on the Navan Road and Holy Angels in Knockmaroon. There is a failure at the heart of social partnership if we cannot work out a situation where a severely disabled girl approaching her 18th birthday, who has been in day care for all of her life, will not have day care service when she turns 18. What are her family and siblings to do? The Minister of State at the Department of Health and Children, Deputy Brian Lenihan, also attended the meeting and saw the distraught state the parents were in.

I see a particular benefit in bringing the three organisations together. It should enable the type of high-level strategic work in which the NESC is engaged to be informed by the information coming back from the workplace through the centre or working groups established by the NESF. Equally, the flow of information and analysis between all these groups that can come from being part of the new body can be positive for all concerned.

I welcome that the Bill provides for flexibility with respect to the configuration of social partnership institutions as time moves on and different bodies may need to be represented. Should it be deemed necessary in the future, further partnership institutions can be established under the auspices of the NESDO. Social partnership is constantly evolving and it is important that the institutions that support it can evolve with it. In saying that, institutions are not enough. The existence of the NESDO or of any social partnership agreements alone are not sufficient to guarantee the success of partnership. A genuine spirit of partnership is also required. This does not mean each of the social partners must drop their own views and identities and allow them to be subsumed into some general consensus, but there needs to be some genuine element of give and take on all sides if partnership is to succeed. That is why I believe partnership in Ireland is now in deep crisis. Whatever spirit of genuine partnership existed in the past has been replaced by the Government's insistence on a narrow right-wing agenda.

Much was written in the 1970s and 1980s by academics about what was called "social corporatism". For many of these writers, successful partnership in a range of European countries resulted from the presence in Government of social democratic parties. The Irish experience after 1987 was in this respect a surprising one, in that a right-wing party such as Fianna Fáil was apparently able to establish successful social partnership. This puzzling fact for academics could be explained by the fact that although it was on the right, Fianna Fáil's commitment to pragmatism enabled it to do business with the trade union movement. I acknowledge that the Taoiseach's contribution in that was significant. Since 1997, however, that has changed. Fianna Fáil has become an increasingly right-wing party. Its coalition with the Progressive Democrats is only part of what has driven this Government to the right. There are now more PD-thinking Fianna Fáil Ministers in Cabinet than there are Progressive Democrats proper. This shift to the right is increasingly incompatible with effective social partnership. This Government may have an agreement, but it does not have a partnership.

The Government's right-wing credentials have been hidden somewhat by the boom. With the country awash with money, and their determination to win the election at any cost, Ministers were able to trumpet their so-called achievements in increasing public spending in various areas. That they were able to do so was the result of an historic boom in the economy which was the creation of successive Governments – a boom which was badly managed in recent times and which this Government brought to a premature end. However, while they had money to splurge on getting re-elected, Ministers made sure to reduce the share of public spending on GNP and give tax breaks to the better off. Had they had any genuine interest in public services, they would have delivered resources in a sustained and sustainable way, matched by structural reform to ensure value for money to the taxpayer. Instead, we got stop-go economics, with an all-out assault on public services when times got a bit tougher.

I do not know how the Taoiseach will solve the problem of the administrative model of top-level management reform that his Government has created, which has resulted in the expansion of the numbers of top-level jobs in all the institutions. The old Eastern Health Board became the ERHA plus three subsidiary boards. They all have a management structure and middle management. It is like the man who got fat. These organisations would definitely be on Unislim if they were people. This has happened in local authorities and in a number of third level institutions. It is massively costly, with no visible value-for-money return in terms of services for the user, whether he or she is an individual taxpayer or a business person. The Government will need partnership to sort this out.

The Taoiseach

The Deputy is right. That is why I advised the Labour Party not to go ahead with the creation of the ERHA at the time, but it refused to listen.

Ms Burton

I do not know how the Taoiseach will sort it out. It would be quite a job for anyone. Social partnership might be one of the ways out of this; unfortunately, it has been systematically undermined. The Government's failure to tackle problems in infrastructure and public services placed increasing pressure on social partnership agreements under this Government. We also had the problem of under-investment, which undermined the quality of life in a booming economy. Further tax cuts were not a route to addressing these issues, but the Government has had no interest in being diverted from its ideological agenda, whatever the social partners might say. I do not blame IBEC or the trade unions for this, as some people choose to do. As employers and unions, it is their job to represent the interests of their members as they see fit. However, they must also live with the ideological complexities of the Government of the day. IBEC has made it clear where its political preferences lie, although I doubt that is something about which all of its members are happy.

A partnership agreement which is one-sided, and completely driven by a right-wing ideology, has little to offer. It may be important to preserve the institution of social partnership, but we cannot, as a country, expect to yield the same benefits from Sustaining Progress as we did from other partnership agreements. Those benefits – industrial peace, low-inflationary growth, relative certainty for investors and credibility for macro-economic policy – will not necessarily be preserved by this Government in the current agreement.

Despite all the talk we have heard in recent days about disadvantage, there is nothing of substance in this agreement to tackle disadvantage. I applaud the honesty of those community and voluntary groups who were prepared to say out loud that the emperor has no clothes. We know the Taoiseach does not like criticism. He does not like the illusion of a cosy world in which he is doing his best for everyone to be punctured by reality. The reality is that he does his bit for the rich and very little for the disadvantaged. He has made it clear that those groups who did not sign up to Sustaining Progress will feel the chill wind of his pique at their effrontery.

There is at present no National Economic and Social Council; the mandate of the previous council has expired. When the next council is appointed, it would be shameful for the Government to exclude those groups who did not sign up to Sustaining Progress. If there is to be any prospect of a return to genuine social partnership in the future, the solution is not to cut off dissenting voices, particularly those of the groups that left the partnership process unwillingly, driven out by the failure of Government to address their concerns after years of talking. If we ever want the partnership process to recapture its momentum – which I genuinely think the Taoiseach does – excluding these groups from the strategic considerations of the NESC would be counter-productive.

Mr. Connolly

I wish to share my time with Deputies Cowley, Boyle and Ó Caoláin.

Acting Chairman (Dr. Cowley)

Is that agreed? Agreed.

Mr. Kenny

Will Deputy Cowley speak from the Chair?

Mr. Connolly

This Bill proposes to amalgamate the National Economic and Social Council, the National Economic and Social Forum and the National Centre for Partnership and Performance, thereby creating a new streamlined body called the National Economic and Social Development Office. I welcome this development. However, can progress be made in the areas of poverty and unemployment? It was lovely to think, in the now dim and distant Celtic tiger era, that the poverty and unemployment traps would be eliminated. In fact, such aspirations could not have been said, in those heady days, to be beyond the bounds of possibility.

CORI has frequently pressed for some redistribution of the national fortune towards those who are in greatest need. The Government would put its money where its mouth is by thus constructing a fairer future, ensuring inclusiveness and ensuring that all benefit from future economic growth. Essential requirements would be a fundamental redesign of the tax and welfare system, effective targeting of all social exclusion, a focus on the social as well as the physical infrastructure and the recognition of the need to ensure that all development is economically, socially and environmentally sustainable.

The Celtic tiger has become virtually extinct. Marginalised people would not recognise the animal unless they had the wherewithal to visit Dublin Zoo or Fota Wildlife Park, where they could conceivably get a glimpse of it. The marginalised, poor and unemployed unfortunately do not have the same lobbying clout as organised groups such as farmers, teachers, nurses or consultants. Lip service has been constantly paid to those on the margins by successive Governments even though such Governments were generally in the happy position of being able to pay somewhat more than this. At budget time, various interest groups seek a slice of the action, quite justifiably in many cases.

Debate adjourned.

Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.Ceisteanna – Questions (Resumed).