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Seanad Éireann debate -
Thursday, 26 May 1977

Vol. 86 No. 14

Finance Bill, 1977 (Certified Money Bill): Second Stage.

Question proposed: "That the Bill now read a Second Time."

In discussing this Finance Bill it would be instructive to set our deliberations against the background of economic events over the last few years. It is in this way that the economic policy informing the Bill can best be appraised and the continuity of the Government's efforts to sustain economic growth and employment appreciated.

The world economy has just come through its most difficult period since the 1930s. During the past few years it has been hit by an unprecedented combination of inflation and recession, and throughout the Western world Governments have been fighting on many economic battle-fronts. Strategies had been developed to deal with one or more of the problems facing us, but it has proved immensely difficult to contend with the alliance of enemies which has confronted all of us since 1973.

Some would have us believe that these problems were peculiar to Ireland, but this is far from the truth. The recession in economic activity hit everybody, unemployment rose to postwar peaks throughout Europe, inflation accelerated worldwide, reaching crisis proportions in several economies, and the international monetary system was shaken to its foundations.

The primary aim of the Government's economic policies during this traumatic period has been to ensure that the Irish economy would achieve a reasonable rate of growth, and directly associated with this, provide the highest level of employment which was possible in these most difficult circumstances.

The chief weapon we have used to fight this battle was fiscal policy. Since the onset of the recent recession the Government pursued a policy of deficit financing in order to mitigate the deflationary impact of external developments on domestic growth and employment. Without such a policy domestic demand would have fallen well below the level actually achieved. This would have meant a drastic reduction in general living standards accompanied by wholesale unemployment with all the human misery which this would have implied. Our decision to seek to avoid such consequences by an active fiscal policy has been amply justified by events.

By these means we successfully prosecuted the battle for a reasonable rate of growth despite the depressed external climate. In 1975, the year of deepest gloom, national output was higher than in 1973—a distinction which eluded the mighty German and American economies, not to mention the European Community as a whole. In 1976, we were able to join the general movement out of recession, achieving a growth rate of over 3 per cent, which meant that Ireland had come through the crisis period with a better performance than the rest of the Community.

Those who wish to denigrate our achievements in the field of economic policy point to the current high level of unemployment as evidence of our alleged failure to manage the economy well. Yet, while comparing us to other countries on other counts, they conveniently neglect to do so in this instance. This is a universal problem —witness the massive rise in unemployment everywhere in the past three years. Indeed, the leaders of the major industrial economies meeting recently in London stated that their "most urgent task" was to reduce unemployment.

The fact, however, is that the unemployment rate here rose by less than in other countries, some of whom were able to export their unemployed whereas we, on the other hand, have ceased to do so. In fact, substantial progress has been made on the employment front. Industrial employment in December last was over 5,000 higher than a year earlier while unemployment is currently showing year-on-year declines for the first time in three years.

In tackling inflation we had to contend with unprecedented external inflationery forces which were exacerbated by the upheavals in the currency markets. These forces inevitably communicated themselves to us through our external trade. Yet we acted strongly on the domestic influences— on the incomes and fiscal fronts. Our constant discussions with the social partners have borne fruit in income moderation and we have made judicious use of consumer subsidies and reductions in taxation to slow the rate of price increase. These policies have produced concrete results in the significant reduction in price rises last year and in the encouraging trend which has emerged more recently.

On the budgetary front criticism has been voiced about the fact that the State's current account is still in the red. I make no apology for this because it resulted directly from our efforts to bolster growth and employment, a policy which I have already said has helped us weather the economic storm better than most. Indeed, it is relevant to ask here if the Exchequer would be in a better shape to-day if more cautious financial policies had been followed. Quite frankly, given the depressive effects which that would have had on economic activity generally, I doubt it.

This year we faced in many respects the same choice in formulating economic policy. We could have decided to concentrate on sharply reducing the budget deficit but this could have snuffed out the nascent buoyancy of the economy. Alternatively, we could have gone all out for expansion— based on profligate borrowing. This might have yielded a spectacular growth rate in the short-run but would have done irreparable damage to our medium-term prospects for increasing output and employment.

Neither of these two extreme courses, nor anything like them, would have been in keeping with the balanced approach which the Government have had to economic affairs since we assumed office. In earlier years we stepped in, in an endeavour to take up the slack when it appeared, and this year we deemed it necessary to reduce our direct involvement when the revival in economic activity at which our policies were directed began to emerge. But in the latter case we saw it as essential to do so in such a way that it reinforced the recovery and not stunted it. I think I can safely claim that the measures contained in the present Bill will do just that.

The tax concessions, both personal and corporate, will heighten the incentive to individual and collective effort. Together with the moderate wage agreement which they helped to secure and the job-creation measures which the budget provided for, they will contribute greately to increased output and employment. When combined with the higher public capital programme they will spark off the growth in investment which is essential to self-sustained expansion. Above all, however, they will help us recapture and renew our confidence in our own ability to generate the dynamic of economic progress, the confidence which was so rudely shattered by the recent slump.

Last year we shook ourselves out of the slough of despond into which we had been plunged. We managed to raise our national output very creditably, to cut the rate of inflation substantially and to turn the rising tide of unemployment. This year, with the spur of the measures enshrined in this Bill, we shall do even better.

I shall now deal briefly with some of the principal provisions in the Bill. As Senators are already in possession of an explanatory memorandum, it is scarcely necessary for me on this stage of the Bill to go into great detail.

Section 1 is concerned with the amount of the tax allowance given to a taxpayer in respect of a dependent relative. Heretofore it was usually necessary to provide every year that this allowance would not be reduced because of increases in the relative's non-contributory old age pension. Section 1 is designed to obviate such repetition by a general provision to the same effect.

Section 3 provides for an amendment of a purely technical nature to take account of the enactment of the Corporation Tax Act, 1976. In the absence of the provision made here solicitors would cease to enjoy the protection afforded to them by section 59 (3) of the Finance Act, 1974, which limited the information which could be required of them.

Section 4 provides for a deferment of two months of the date for payment of certain Schedule D tax. This change will be of help to individual traders and will also give more time for settlement of liabilities before they have to be paid.

Sections 5 and 6 contain the principal changes in the personal tax structure announced in the budget. These changes comprise substantial reductions in the rates of tax, together with changes in the bands of income to which the tax rates apply, and also significant increases in personal allowances. The new structure will benefit every individual taxpayer in the country. In addition, however, as foreshadowed in the budget, a special relief is proposed in section 7 of the Bill to improve still further the financial situation of some 10,000 of the least well-off pensioners. In fact the provision goes beyond what I announced at budget time. Section 7 accordingly provides that persons aged 65 years or over whose incomes are less than certain limits will not be liable to tax. These limits are £1,000 for single or widowed persons and £1,800 for married persons. The effect of these exemption limits is that a person entitled to age allowance will be free of tax if his only income is a social welfare pension or income of the same amount from a source other than social welfare. Moreover, as most social welfare pensions are less than the limits mentioned, many pensioners will be able to have some amount of other income without having to pay tax.

Pensioners with incomes slightly greater than the limits will qualify for "marginal relief" under the section. This will reduce the tax payable to one half of the excess of total income over the relevant exemption limit.

Senators will be aware of the changes in the farming taxation measures which I announced in the Dáil.

These modifications of the scheme announced in the budget concern the dates for payment of tax, the deduction for wages and the method of assessing the tax liability of traders and professional people who own farm land. The revised scheme is in keeping with the Government's aim of collecting a fair share of tax from farm profits without inhibiting the developing of farming. The dates for payment of tax will be 1st September and 1st January—as for other Schedule D taxpayers. This means that tax on farming profits will be paid in respect of the income tax year in two instalments, instead of in one as earlier proposed.

A deduction from notional income will be given, with a view to stimulating employment, in respect of wages paid to employees registered for PAYE and social welfare purposes. There has been some criticism of the small range of deductions allowed under the notional system. If further deductions were to be allowed the multiplier would have to be increased above its present level, which is only about three-quarters of what a full multiplier would be. The allowance of further deductions would also have the effect of complicating the system and giving scope for evasion. In any case, those farmers who are not satisfied with the notional assessment may appeal on the basis of accounts.

The farming profits of landholders who have another trade or profession will be assessed to tax in the same way as their trading or professional income, that is, on the basis of accounts related to the preceding year.

Only half of the proposed tax on farming profits will now be collectible in the calendar year 1977. The yield in 1977 is expected to be about £15 million to £16 million. The balance will be payable in the income tax year 1977-78. The ultimate revenue yield, less the £4 million cost of the labour concession, will be comparable to that originally envisaged.

Section 9 lowers the rateable valuation threshold for liability to income tax on farming profits from £100 to £75.

Section 10 removes the rateable valuation threshold of £50 which, since 1974, applied to landowners who also carry on a trade or profession. Landholders who carry on a trade or profession on a self-employed basis will now be liable for income tax on their farming profits, regardless of the rateable valuation of the land. An employee who owns land will not be affected by this section, which applies only to the self-employed.

Section 11 provides for marginal relief for farmers with rateable valuations between £75 and £84. A farmer who has a rateable valuation of £75 will pay only 1/10th of his full liability, with £76 RV 2/10ths and so on up to 10/10ths at £84 RV. About 3,000 farmers will benefit from marginal relief, out of 6,500 farmers becoming liable for the first time.

Section 12 provides that farmers— other than those who carry on another trade or profession—are to be charged to tax on the basis of a notional income calculated by applying a multiplier of 65 to each £1 of rateable valuation. Senators should note the fact that, allowing for the deductions from notional income, the full-value multiplier based on 1976 incomes would be about 88 and, based on 1977 incomes, would be in the region of 110. Deductions will be allowed from notional income in respect of rates on land and wages paid to employees who are registered for PAYE and social welfare purposes. The normal personal reliefs, including that for interest payments up to £2,000 will also apply. Taxpayers who opt for actual accounts will, of course, be entitled in due course to the deductions for higher interest payments and other business expenses if incurred. Section 12 also provides for appeals against the notional assessment. A farmer who appeals may present accounts related either to the preceding year or to the current year.

Section 13 outlines the procedure for appeals against the notional assessment. On 1st September, 1977, the amount payable will be one-half of the tax on farm profits as notionally assessed. If a taxpayer appeals against the notional assessment he may, in relation to the second instalment of tax payable on 1st January, 1978, specify the amount of tax he thinks should be payable on the basis of accounts and, pending determination of the appeal, pay only that amount. If the amount of tax paid in the two instalments is lower than the tax assessed but is 80 per cent or more of the amount determined on appeal, no interest charge will arise. If, on appeal, the taxpayer in question is shown to have paid too much tax, the excess will be refunded promptly with interest.

Section 14 provides for free depreciation of capital expenditure incurred on or after 6th April, 1977, on the construction of fences, roadways, holding yards or drains or on land reclamation. This provision applies where a farmer's income is determined on the basis of accounts.

Chapter III and IV deal with corporation tax.

The development of a favourable tax environment in which corporate enterprise can grow and prosper is the essence of the Government's corporate tax strategy. This year's budget not only continues for further periods generous existing industrial tax incentives but, notwithstanding the severe constraints on Exchequer resources, also adds substantial new reliefs in order to stimulate corporate growth in new ways. By such fiscal measures the Government are actively encouraging business activity towards the achievement of the overall national objectives of rapid and sustained economic growth.

Accordingly the Finance Bill provides that stock relief and accelerated capital allowances will be continued for a further period and, as well, provides for other modifications deemed desirable in order to boost corporate growth. Thus, the present Bill provides, in Chapter III of Part I, for a cut of 5 percentage points in all of the existing corporation tax rates and also raises the entry points at which small companies become liable at higher rates up to the top rate of corporation tax. This incidentally is the first reduction in the main rate of company taxation since its level was fixed at 50 per cent over a decade ago. In the case of small companies, the new top rate of 45 per cent entry point is a large increase in the level which was raised substantially as recently as last year on the introduction of corporation tax. These concessions are of general application and should have valuable stimulatory effects on enterprise. I have been gratified at the response which they have received from the business sector.

The Government gave special consideration to the motive potential of manufacturing industry which caters mainly for the home market. The desire to encourage early and major growth in this area is demonstrated by the provision, in Chapter IV of Part I of the Bill, of a special 25 per cent corporation tax rate for the three years 1977 to 1979 for manufacturing companies which meet specific growth targets by way of increased output and employment. In view of the growing volume of home market demand across wide ranges of manufactured goods and the high degree of import penetration in recent years with serious consequences for employment here, it is the Government's hope that a more favourable tax environment for home manufacturers will encourage them to go for growth, thereby increasing their output and employment. These are very worth-while opportunities. Export activity of course already benefits from major tax concessions.

The special 25 per cent corporation tax rate is a prize which can be obtained by any manufacturing company which makes the necessary efforts to win it. All qualifying companies will get the benefit of this special rate in respect of all of their income. The minimum targets which have been set for 1977—a 5 per cent increase in volume of sales and a 3 per cent increase in employment, both over 1976 levels—are modest ones in present circumstances and so we are confident that manufacturers will do their utmost to exceed them by bringing forward expansion plans for implementation this year so as to get the benefit of the 25 per cent corporation tax rate. As I have already indicated in the other House, no manufacturer who does so will be disadvantaged when the targets for 1978 and 1979 fall to be settled in due course.

Having given the most careful thought to representations on the matter, I proposed the relaxation of the "own manufacturing" requirement from the 95 per cent originally envisaged—and provided in the Bill as published—down to 90 per cent of trading income. This change was agreed to by Dáil Eireann and seems to be as far as one should reasonably go. Thus as the Bill now stands, a qualifying company must not have non-trading income of more than 5 per cent of its total income and must have income from own manufacture of at least 85½ per cent of its total income, leaving 9½ per cent of the total income instead of 5 per cent as originally intended for other trading income such as income from distribution, and so on.

While it is only reasonable to expect firms to have to go to some trouble to support their claims for the special new incentive, I can assure the House that the Revenue Commissioners will administer the incentive in a very reasonable manner.

The spin-off benefits of successful claims for the incentive will be farreaching both in the short term and in the longer term. By expanding their home market base as quickly as possible, the manufacturers concerned will of course also be able to press ahead more securely with developing export activity, thereby generating new funds for further expansion of home employment and investment. All other sectors of the economy will benefit as a result of success on this front.

Chapter V contains certain capital gains tax provisions which will reduce the liability to this tax of certain unit trusts and unit-holders. The concessions are aimed at avoiding any element of double taxation of such trusts.

The effect of sections 33 and 35 is to reduce from 26 per cent to 13 per cent the capital gains tax rate charged on gains made by a registered unit trust and to provide similarly for gains made by a unit-holder of that trust. Total tax will therefore be at the normal rate of 26 per cent. Section 34 exempts units held by an assurance company in a unit trust from capital gains tax, the tax being chargeable only on the gains made by the trust involved.

The grant of stock relief for a further year is provided for in section 43 and Part V of the First Schedule. This relief will not now be recoverable from beneficiaries except in cases where stock values decrease or where a trade ceases to be liable to Irish tax. Furthermore, in order to prevent abuse of the relief which is essentially of a simple nature it is necessary to provide certain safeguards. These safeguards include a measure to prevent the creation of artificial repayment claims through the interaction of various reliefs and they also counter claims to relief in respect of increased stock levels which have already been relieved.

Section 45 provides for the reduction of the rebate payable to brewers in respect of the use of Irish-processed cereals in beer manufacture, while section 46 provides that the rate of drawback on exported beer shall correspond to the level of the current rate of excise duty on beer, with effect from 1st September, 1977.

These adjustments arise out of our EEC Treaty obligations. With a view to offsetting as far as feasible the ensuing cost to domestic industry, the present scales of duty on brewers' licences which are related to annual outputs are being replaced by a flat rate of duty of £50 a year in accordance with the provisions of section 44. This new rate of duty is also being applied to distillers' licences.

Section 47 provides for the refund of the stamp duty paid on certain office building contracts if the office building is completed by 31st December, 1978, and will, it is hoped, help to promote activity and employment in this important branch of the construction industry.

Section 48 exempts from stamp duty transfers of property from Sir Alfred and Lady Beit to the Alfred Beit Foundation. Sir Alfred and Lady Beit deserve the thanks of the nation for the munificence in transferring to the foundation a gift of Russborough House, 250 acres of surrounding land and the proceeds of the sale of a further 340 acres of land. Indeed it is understood that Sir Alfred may provide further funds in order to get the foundation under way. In addition, the bulk of the contents of the house will be made available to the foundation on loan. The contents cover an art collection which is world-renowned and is regarded as one of the most valuable in private hands anywhere in the world.

Section 50 extends exemption from wealth tax to certain private non-trading companies which are holding companies for individuals who control trading companies. This provision is designed to exempt genuine commercial arrangements from the impact of wealth tax.

Section 51 will permit the grant of unilateral relief from double wealth taxation where double wealth taxation arrangements have not yet been concluded with other states.

Finally, I might refer to some provisions which relate to a number of taxes. Section 36 ensures that a child adopted under the Adoption Acts will be regarded as a "child" for all the purposes of tax legislation. Section 53 provides that visits to the State by an individual who donates property to the State and leaves the State to become resident elsewhere will be disregarded for tax purposes if the visits are to advise on the management of the property donated.

I commend the Bill to the House.

One would imagine one was talking in a sedate and easy armchair seminar type situation instead of in a parliamentary assembly. This country is facing the most traumatic period in its history. It is fighting for survival in the economic and political sense because, fundamentally, politics depends on economics. Unless this State is viable from the economic point of view and is economically independent and solid, there can be no real political progress towards the aspirations to which we all desire. What has happened here during the past four years was nothing short of traumatic in the sense that we have departed from being an economically viable State into a totally dependent State in regard to foreign borrowing and a State where that foreign borrowing has been misappropriated in the national sense, in that it has not been devoted towards productive employment within the State. We have had massive borrowings allied to inflation and unemployment. That combination is inexcusable. The one justification which I would make and which I would defend up to the hilt, for foreign borrowing, is when it will lead to productive employment at home. It has not done so. The foreign borrowing engaged in by the Government over the past four years has been devoted towards consumer expenditure by the Government in order to maintain the Administration and no more. It is gone, as far as any permanent contribution towards the economic welfare of this State is concerned.

The Irish Banking Review in March, 1977, in their last authoritative, independent assessment of the conduct of public finances and the deployment of such public finances in the interests of the economy, in page 4, of that review say:

Despite a doubling of total Government spending in the three years up to 1975, there had occurred no corresponding rise in employment and very little rise in the National Product.

These trends in the public finances over the period in question are insupportable in the light of the problems which have developed in the economy at large. The ostensible purpose of the massive rise in the public expenditure has been to protect employment and living standards against the impact of the world recession. The effect of the policy in achieving its avowed objectives has been minimal, if not actually negative. With the exception of 1976, real growth over the previous three years was negligible. Inflation rose at a considerably faster rate in Ireland than in other European countries. Employment showed no expansion, so that the anticipated effect on job protection was not achieved.

If I used those terms in the course of an election speech it would be regarded as electioneering but this comes from the sober personnel who write the Irish Banking Review. They say that the trends in public finances are insupportable. That is not an electioneering phrase. It is one from bankers. They say that the ostensible purpose of the massive rise in public expenditure has been to protect employment. Quite obviously they are saying that the Government have been engaged in a “con” job, that the fake purpose of the massive rise in public expenditure was to protect employment. The effect of all this policy has been minimal if not negative. The Government policies over the past four years have been counter-productive, they have done far more harm than good. That is what the Irish Banking Review says. Real growth was negligible over the past four years. Inflation rose higher here than in any other country in the world and employment showed no expansion.

It is rather strange to have this coming from the Irish Banking Review in conjunction with the Minister's statements about the highest level of employment that it was possible to achieve, a reasonable degree of growth and the general air of fake optimism. The Minister said that last year we shook ourselves out of the despondency into which we have been plunged and managed to raise our national output very creditably, to cut the rate of inflation substantially and to turn the rising tide of unemployment. What have we done? There are 114,000 people still unemployed. The figure has fallen from 118,000 to 114,000. We have cut the inflation rate from 20 per cent to 15 per cent even though the Taoiseach makes a lower claim. We still have the highest rate of inflation and the highest rate of unemployment in the European Economic Community. We still have problems that are not going to run away. The problems are basic to our economy. We are faced with a social and political revolution unless we deal with the basic economic illness or malaise that has beset our country. I am a firm believer in the basic entwinement between economics and politics.

Unless we get our economic situation right we are in for serious political trouble and no amount of recruitment by the Minister for Justice of gardaí or the recruitment by the Minister for Defence of Army personnel will deal with the problem of 60,000 school leavers, between last year's school leavers who went on for an extra year, or who went into training for an extra year, and this year's school leavers. At least 60,000 of these will be looking for gainful occupation within our economy, for which we are responsible, in a few months. That situation is repeated every year. The Minister is well aware that the forecast made by the Industrial Development Authority and the Economic, Social and Research Institute, emphasised that with the population explosion that exists in the Republic at the moment, where 50 per cent of our people are under 25 years of age, we are faced with a situation where 30,000 new jobs need to be provided each year over the next ten years. There is not even a line about this in the statement on the Finance Bill. The Finance Bill is the major piece of legislation designed to handle the economy in each year. There is not a single word about this basic social problem which is facing us now.

I have a very firm view that the main reason that we are facing a general election on the date chosen— June 16th—is because young people will be fully occupied doing their leaving certificate examination right up to that date. The main reason we are having an election campaign over the next three weeks is because these young people will be working hard for their examinations, will be doing their examinations, and will be unable to go out and record their emphatic protests about this Government and their lack of opportunity in regard to jobs and their future. If we had the election as was the Taoiseach's original intention in the autumn perhaps in September or October, the first flash of a real social revolution would be demonstrated very actively and volubly by these young people. The Government may think they are getting a breathing space by rushing the election so that the 18-year olds will not be able to participate fully but will be too involved.

The Government may think they are getting breathing space by rushing the election so that the 18 year olds will not be able to participate fully, that they will be too involved in their examination probems, but they are only postponing the day because nothing can beat the fire of youth and idealism when it gets frustrated. The Government are building up a massive degree of frustration among the young people at present. They are now taking a short term escape route by having the elections before these frustrations can be manifested in a positive democratic way through participation in an election. My information bears out what I say, that this was the final reason that the Government sought to get to the country fast before young people could express themselves and that this is the basic reason why we are having the election on 16th June. They will be able to vote but I would like to see them really campaigning, participating, marching and recording their protest loud and clear, carrying placards in an orderly manner to record their protest.

The future of this country resides with these people. It is the 50 per cent under 25 years who will decide how we are going to function as a civilised state in the years ahead. Above all, young people want an outlet, an avenue, an opening or opportunity to express themselves as best they can, having regard to the talents with which they were born and the education sharpens those talents for whatever trade, job, profession or line of business in which they wish to engage.

I should like to emphasise that particular aspect. The only barometer of how a Government function in an economy is how they handle employment and opportunities for young people. The purpose behind organised society is to so organise ourselves that there are outlets for as many people as possible, including the young. If a Government fail in that fundamental task then they have failed and there is no point in quoting world trends or anything of that kind. It is a Government's job in the particular society for which they are responsible to tackle this task and take all the decisions necessary and unpopular though they may be to take the decisions required.

It might be said that I have attacked the Government in this area of unemployment in regard to their handling of the economy and what do I offer on behalf of Fianna Fáil. I have a few suggestions in this area. The most basic suggestion is that we must gear our taxation and rates system entirely to incentive and enterprise. Basically, there is no way in which one can lift the economy and get investment going, with consequent employment, unless there is devised a tax system geared to incentive and enterprise rather than to mere collection of revenue. Collection of revenue is an important aspect of the tax system but it becomes negative and nugatory if it is the sole purpose of a tax system. There is a very delicate balance between the collection of revenue and the provision of incentive. No matter what type of State you have, whether democratic as ours or totalitarian, as in the United Union of Soviet Socialist Republics, in each case there is an incentive element geared to productivity, expansion and employment. The Soviets have a different way of doing it. Our way is to put as much money into people's pockets, workers or investors, as is possible related to the exigencies and needs of the revenue. That is what it is about as far as a free society or a mixed economy such as ours is concerned.

At a very late stage in this Bill some improvements are being effected but not anything like what is required. We must shift taxation towards indirect or expenditure tax away from personal income tax, rates on houses, all forms of regressive taxation and towards the area of taxation affecting progressive people least. I mention private dwellings here. That is why it is one of the major and positive aspects of our election programme to abolish rates on private dwellings because house owners represent a highly progressive element in our society. We say rates represent a regressive element in their case as far as taxation is concerned. Therefore, the rates should go.

Similarly we must have a drastic cut in personal income tax to encourage people who are working. This means a very substantial increase in the personal allowance and a substantial cut in the Exchequer's reliance on income tax as a means of yielding revenue. Quite clearly, this must be associated with a substantial rise in value-added tax on luxury items to compensate. We should be thinking in those terms and on cutting down luxury expenditure by taxing luxuries and non-essentials in the form of a value-added tax which can be applied across the board, linked, side by side, with substantial cuts in income tax, at personal, investor and company level. Therefore, we say: substantial income tax cuts; cut in rates on private houses and a substantial shift in taxation in our circumstances towards indirect taxation. That is the way thinking should be going. If such a policy obtained, there would be absolutely no difficulty about going to international agencies, banking or lending agencies or Governments to secure the required finance to fund budget deficits over the years ahead if such deficits were channelled into the productive areas I have mentioned. Had we a positive policy of encouraging enterprise and initiative, attracting investment if we were seen by the German or Swiss Government, their lending agencies, or by the European Investment Bank or World Bank to be definitely on an economic plan geared in the direction I have mentioned with substantial income tax cuts, substantial cuts as far as investment is concerned, retention of profits by companies without tax where such profits were put into investment-yielding employment; if there was a positive economic package of that kind offered by an Irish Government, any international agency or foreign Government would finance us having regard to the basic strength of the country.

At present, however, there is no plan or planning, no prospectus with which the Irish Government can go to any finance agency or foreign Government to raise the necessary finance. They will only get the required finance, and I am all for foreign borrowing in this area, by legitimate borrowing if it is seen to be geared to a plan that commands credibility and is seen by such lenders to be one that is geared to definite and positive objectives. The real tragedy of the past four years is that it has been a rake's progress. The borrowing has been made abroad; the taxpayer will have to pay for it, but the net result in terms of input into the economy has been negligible or negative—to use the phrase of the Irish Banking Review. All of this burden of debt has accrued from a doubling of foreign borrowing over the past four years. The accretion of debt that resulted from that is of no value to the economy either now or in the future and is negative in the sense that it represents a deadweight repayment interest that must be paid back year in and year out by the Irish taxpayer.

I am all for foreign borrowing if it is on the lines I mentioned and I have no doubt that such foreign borrowing is fully defensible if it is in accordance with a positive plan but no Government plan has emerged over the last four years. The whole operation of the economy has been on a day-to-day basis. There has been no forward thinking; no plotting of the course ahead. If there had been, then there would be no question that the necessary finance could be raised for a positive programme on the lines I have mentioned of tax incentives at personal and business levels, a redeployment of taxes towards indirect tax as against direct tax, plus a positive State capital programme geared to the areas that can give immediate employment. Here, again, the State itself has been grossly negligent in regard to its own State capital programme. In real terms last year it actually dropped and mainly fell by reason of the inadequate support given under the State capital programme to the local authorities of this country because at the moment development schemes for sanitary and road services in every county and corporation area are held up.

If we do not have serviced land rapidly in this country, if we do not have the drainage and sewerage and roads supplied adajcent to the urban areas this year, the whole housing programme is going to come to a standstill. Roadstone at the moment have let 400 people go and they are closing down one of their other plants very shortly. They are the main providers of building materials in the country, they are a major company and they are in a very serious situation. Building materials are not in demand at the moment because the construction industry is grinding to a halt. Quite simply the Minister and the Government have not made the necessary funds available to the road authorities, the county councils and corporations throughout the country, to fulfil their ordinary road maintenance programme let alone the construction of new roads.

The same applies to the provision of water and to the most important area of all as far as housing development is concerned, the provision of sewerage facilities. These areas, of course, take a long while to work out. The mills grind slowly and for the past four years what has happened is that the Government have built on the pool of development land that was there and provided years ago when there was planning in the Department of Local Government. There has been no planning in the past four years. There has been a drop in the capital allocation in the area I have mentioned and the result is that the wheel has turned full circle and from now on we are going to have a real problem in regard to the provision of houses. This, of course, is putting up the cost of housing as well.

The ideal would be to have the State, through the local authorities, provide sufficient serviced land so that houses could be built cheaply by private enterprise. Houses cannot be built cheaply because serviced land is not available. The State has fallen down in the provision of such serviced land; it is responsible because it provides the capital funds. That is the main area of neglect by the Government. It is part of what I might call the corruption of public relations.

It is not good enough anymore just to give things to the people because the Government may think they want them in the short term. It is a Government's fundamental duty to plan ahead and the provision of serviced land for building is something that you do now and it only produces results in four years' time. Therefore, it is not good electioneering. The building of schools is another example. The provision of post-primary facilities is something that you start now and it brings benefit in four years' time. There is a grave inadequacy of post-primary facilities in this country at the present time. There is grave overcrowding of students in primary schools. There is a grave under-supply of teachers. Why? Because sufficient funds were not given to the training colleges to take on trainee teachers four years ago. Sufficient capital under the capital budget was not allocated to the Department of Education. The Minister for Education apparently did not fight for the capital allocation for primary schools and for post-primary schools—there were not enough votes in education in the short term. Governments are not there to win votes; they are there to govern. That is a very fundamental lesson. That is what government is all about.

And the Opposition make promises.

You will not hear many promises from me. All you will hear from me is the promise of good government. Basically, that is what politics is all about and if politics becomes anything else it becomes a business of corruption. I do not mean corruption in the popular sense; I mean corruption in the real sense of the word. Far more serious corruption is the corruption of codding people and raising expectations, coating the pill with sugar every day of the week so that the patient thinks he is taking sugar but, in fact, he is taking a pill that is slowly killing him. What we have had in the past four years is the pill with sugar. We want some straight talk now about the state of the economy, about where we are going in regard to giving employment to school leavers, about what we are doing in regard to economic planning both in the provision of incentives at the private level and in the levelling-up of the capital programme by the State. We want some straight talking as to where the finances can be raised, about the planning and what sort of unpalatable decisions have to be taken by a Government in order to achieve this purpose.

I think the public at this stage are becoming disenchanted with a certain type of politics, politicians and electioneering. They are becoming disenchanted with the beguiling phrases and the easy way out. The only expansion area in the past four years within government administration has been the Government Information Services but that is not the sort of criteria that the people regard as serious today. Merely presenting politicians in government as angelic or honeyed or soothing is just not good enough any more. I think we have a high degree of sophistication in the Irish electorate today. I think the people themselves are subtle and intelligent. What they want to know above all else is the truth. There is no point in selling them the sort of speech that the Minister made here on the Finance Bill.

Everything is not well in the economy. There is no point in telling the public that everything is well. It is far better to say to them that things are not well in the economy, that there is high unemployment, high inflation, that the cost of living has gone up 100 per cent over the past four years and that there is a real problem in regard to school leavers and in regard to devising ways and means of getting them into gainful employment. Of course these problems are there. How do you tackle them? These are the issues that people want to know about at the moment.

As far as Fianna Fáil are concerned there are a few points that I wish to emphasise before I finish. We must have a re-birth of enterprise and a system of taxation which is loaded with incentive and geared towards enterprise and initiative. Unless our tax system is such that the worker sees in his take-home pay that it was worth-while to be at work that day, that what he has in his pay packet means something to him, and unless the incentive is there as far as the employer and the investor is concerned in regard to being able to deploy profits for further investment within the firm or its operations, then we will not get off at that level.

Secondly, we will not get off at the public investment level unless there is a substantial increase in public investment in the building and construction industry. That is the barometer of improvement in the country. It is the one area in which the State has a high degree of direct responsibility. There is justification for putting an extra £50 million into the building and construction industry at this moment. I include roads, bridges, drainage and sanitary services along with houses. This is one area in which in the morning if the Government did not have an ideological hang-up about the industry we could stimulate immediate progress.

Instead of having the falling away of 20,000 in employment in that industry one could start thinking about an immediate expansion in employment because it still is a high labour-content industry. It still is an industry that purchases 75 per cent home materials for its raw materials. There is very little inflationary element in it, very little element of foreign exchange or balance of payments problems involved. It is highly intensive in the employment sense and it also has the highest dependency ratio. It tends to be an industry employing mature men with families. It employs men who are rearing families. It is highly male intensive. It is highly labour intensive. Yet 20,000 fewer people are in that industry now compared to three years ago. That is because the Government have not pumped money into it via the local authorities to provide the serviced land to get the industry moving.

The final thing I want to mention is the question of confidence. Stimulating the private side and having the public sector geared to employment would create the confidence that is required in the economy at the moment. Confidence is a very subtle thing. It is like mercury, hard to pin down. We need a Government—I hope that soon it will be a Fianna Fáil Government, but I am considering only the good of the country at present— who are concerned about providing jobs and are prepared to take the necessary drastic measures to secure full employment. That is our policy, our target and nothing else but that——

Why did you not do that in 1972?

Let us keep away from party politics over the next three weeks and let us talk about the country.

(Interruptions.)

Debate through the Chair.

That is the way to create the climate of confidence. If you create the climate of confidence you get things moving. You will get the private man going if the tax system is geared to him; if the Government are positively on a policy of investment and employment he will move. There will be hundreds and thousands of individual investment decisions made by firms and people right across the board all over the country to do this and there will be that extension ranging from building an extra room to a house to building an extra shed to a factory. People will start moving again once the climate is created to have a national policy geared to investment and employment supported by a tax system that shows an earnest of good intention in that regard.

Similarly you would get the required finance. The finance is limitless that can be got from external sources to get this economy going again and for productive purposes. No finance will be available after the Government's rakes' progress over the past four years to keep a current budget going and to keep the Administration going. If that is the only purpose of raising money abroad it is entirely negative, counterproductive. If the race is being run in that respect the race is over. You can switch around quickly because there is plenty of finance there. You can switch around very quickly if you have a Government geared totally to productive investment and employment.

The climate of confidence is the last and most important thing. The whole thing is part of an economic package. In my view the production of the Government Green Paper on the economy last autumn was disastrous. If I were to pin the major failure of the Government it was the disastrous blow to the confidence of this country as a result of the production of that very very weak, painful to read document last autumn, a document that offered no hope, no future, no prospect, no real plan in regard to where we are going in the future.

Young people want leadership. They want something in which they can have confidence. It is the Government's duty not just to rely on the old clichés about law and order. We all know about those. That is a Government's job anyway. That is not an electioneering issue. I hope the Minister—I am giving him some advice now—realises that, that you will not win elections on law and order. That is at least a Government's duty. They do that automatically. That is what they are expected to do. That is what Governments are for. They do not boast or make big speeches about it or seek to threaten or dragoon people on that issue. A Government provide economic development that offers hope, in particular, to our young people in the future.

The previous speaker made quite a lot of varied points in his contribution to the Finance Bill. Before I put on record the parts that I disagree with I would like to agree with him on most of what he said about the building industry. Intrinsically the building industry is wrapped up in our economy as is agriculture. I have said on numerous occasions how important I consider the building industry to be.

I have always advocated and pressed for the extension of the employment premium scheme into that sector because I felt, as Senator Lenihan has said, that an in-put into that industry would produce things that are of economic benefit to the country. We cannot ignore the fact that the building industry has been very successful in the past four years. I am surprised that Senator Lenihan seems to be unaware of it. Perhaps he has been so busy in Europe that he has not seen the development in his own country. There has been tremendous benefit to the building industry, particularly in the area of housing. The Senator mentioned housing specifically and he referred to the drop in the number of people employed in housing. There is a drop but there are dramatic changes in the methods used in the production of housing. The end result is that in housing alone this Government have to their eternal credit built more than 100,000 houses in four years, an average of 25,000 houses per annum. That is some achievement and it cannot be denied us, it cannot be decried and it cannot be taken from the people who have benefited from these houses, whether they are private houses, grant-assisted houses, local authority houses or houses that are now assisted through the major scheme of the low-rise mortgage scheme which benefits people who are in need of houses and gives them the initiative to produce their own houses at an economic cost and to have their mortgage paid for in large terms by the Government over the initial periods when the greater strain is on their resources.

I am confident that the public appreciate—they are being told it often enough by Government speakers and reminded of it themselves at every level that they are involved in—this tremendous breakthrough that has happened in housing and indeed in sanitary services, sewerage schemes and all the other national schemes at local government level which have attracted the highest possible capital input by government. This Government have not been slow to take on themselves the responsibility of capital input.

The other area mentioned in particular was that of the unemployed youth and the fact that our predecessors— and this was a magnificent thing to do—provided free education for all our children. But without having a programme designed to employ those children as soon as their education is completed, whether it be second or third level education, we have produced a situation where many young people now leave school with a very high standard of education while, unfortunately, employment is not readily available for them. Our young children require and, indeed, demand and deserve the best possible jobs. They are no longer prepared to do the ordinary pick and shovel jobs that young people did before when they had to leave primary school at 12 and 14 years of age and go out and help the family budget by earning £1 or £2 doing these menial tasks. Our young people no longer want to do that type of work. They demand a better deal for themselves.

I accept that with the tremendous progress that has been made in the sphere of education and with the explosion in our population, this additional demand will be on every Government, not alone this year but over the next two decades until such time as we have geared ourselves to take account of this major shift in the outlook of people who have become educated and require jobs designed and suitable for the education they have received. The records in the Manpower Service will prove the point that many of these young people who have registered for employment have set themselves high ideals and high standards. We agree with that but unfortunately free trade, EEC membership and the changes in technology have brought about major changes in employment. That is one of the reasons our unemployment rate has reached its present limit.

In the days of previous Administrations an unemployment figure of 70,000 was an acceptable level— acceptable to the Government then but not ito us. Everyone was going great and things were never better and still we had 70,000 people unemployed and we had a massive drain of our young people who went to England at that time because Fianna Fáil produced nothing for them here. Because of that they found themselves having to take the emigrant ship to America or elsewhere where they contributed in no small way to the economic boom that occurred all over the world. Our young people who had to leave in those times were the people who set other countries on their feet.

We had nothing for them then and we are being accused of having nothing for them now. At least we have come to grips with the problem. We realise that urgent steps will have to be taken to deal with it and we realise also that people are now returning to our shores because other countries have been faced with the same unemployment and inflation problems as ours. We are subjected to the same economic trends as other countries are. Indeed, I would say that our economy is a mixed economy and is subject more to external pressures than any other country in Europe. We are not an industrial nation as such and because of that we are subjected to the more severe economic cold winds that blow elsewhere.

Our young people and families who are returning to us daily from England and elsewhere also demand that their native country should try to do something for them. The figures show that last year 11,000 people came back to our shores. This put demands on us as councillors and legislators for employment and housing. I will say that those who have come back from the rigours of working in England and elsewhere seem to have more of an incentive to look for work than those who remained here. This is regrettable but it is a fact that people who come home get out and about and ask employers and foremen for work. That is the method used in England. Unfortunately other people sit about and wait for something to happen. It will never happen if there is not some incentive for the people themselves to go and look where the action takes place.

I am quite sure that on many of the building sites all over the country —there is much building of schools, factories, advance factories and all other kinds of progressive development in progress—work would be readily available. I hear complaints from contractors and farmers that at times they are unable to get people to work for them. I do not know what standards are required but this is a problem which we are faced with and I draw the example that people who return from England and have faced unemployment in that country seem to have more of a mental attitude than those who have stayed at home to try to progress and get work for themselves.

Unemployment is, of course, intrinsically linked up with wages and inflation. Senator Lenihan referred to the amount of external borrowing that has been engaged in by this Government. If we did not have that external borrowing we would have had a major social revolution on our hands. We borrowed to the maximum to ensure that our people were cushioned during the tragic period of world inflation and we ensured also that the weaker sections of our community— widows, old age pensioners and so on, were protected. Various examples have been drawn between Government and Opposition speakers in this particular field. This is what leads to an area of disagreement regarding the question of whether the Opposition would cut social welfare but with the tax cuts they have promised, the amount of external borrowing they would reduce, the amount of indirect taxation they would reduce, I fail to see what will be used for money. Where will the money come from to inject this massive capital into the building industry? Without spreading the tax load more equitably across a larger section of the community I fail to see how it can be done.

Taxation in any form is regarded by most people as a disincentive to produce or work harder or longer hours, but there are people who work harder and longer hours and pay tax and have a national responsibility to do so. It is fair to say that all taxation is a disincentive. The people in the higher valuation bracket in farming who have been drawn into the tax net for the first time are privileged to have the option. No other section of the community may opt for an account system of taxation or a notional system of taxation.

The Minister accepted that there was an anomaly in the collecting of tax from the farming community in a period in which, notionally or factually, they had not earned it. I am glad that they have been included in schedule D and that therefore they can pay their income tax on whatever system they opt for in two instalments. Farming is a major industry. We must ensure that production in the industry is not hindered. The vast majority of farmers feel that a notional system allows them to increase production without having it taxed unnecessarily. The leaders of the various farming organisations have gone on record as saying they have no objection to paying a fair share of the tax burden. This yield of £15 million to £16 million from farming profits is not an unfair share. Experts in the institute and other places have put on record that it is no more and no less than a fair contribution from a section who have for years enjoyed the facilities of tax-free incomes. Despite that, employment in that industry has dropped drastically over a number of years.

I make a plea to farmer-employers to avail of the Government's tax-free incentive to employ people and have half the wages paid for them at the going rate. No other section of the community can enjoy that to the same extent because farm workers' wages are not as high as wages in other sectors. Twenty pounds is approximately half a farm worker's wages. With this scheme farmers should be able to make more use of labour on their farms, do tremendous work on their homesteads and obtain a higher percentage production in farming than is at present enjoyed. Recent figures produced by the new president of Macra na Feirme show that only 15 per cent of farming land is being effectively farmed from a production point of view. The price for farm land at the moment is £2,000 to £3,000 per acre. There are thousands of acres covered with bushes and briars for the want of employing a man to clear them away. There has been a tremendous boost to farming incomes as a result of our EEC membership. In our campaign to oppose EEC entry we accepted that farming would benefit as a result of EEC membership. I have no doubt that the farming community will use every means available to them to increase their production under this notional system without being unduly taxed.

Unemployment is intrinsically linked to wages, to the cost of living and to external causes. As a result of that the Government have been faced with the dilemma of deciding whether if price increases were allowed unemployment would result. We have set up democratically the National Prices Commission which includes different sectors of the community, the trade union movement, the Housewives' Association, industrialists and many others involved in the everyday life of our country. Their duty is to consider whether any price rise is justified. It is a system we have inherited and we have tried to improve on it. We tried to increase the number of prices inspectors to ensure that there were no unfair price increases. The amount of complaints received by the Commission indicate there were quite a number. Some 30,000 complaints about unfair price increases were received last year. It is a pity that this should be the case at a time when prices are at their peak and everyone is bending over backwards to make sure that the minimum of price increase is allowed.

The Government were elected on a promise to control prices. They did not promise to reduce prices, although they have done that by subsidisation. Price control and price reduction are two different things. We, as an open economy, were faced with a world boom which created its own inflationary situation. International interest rates to which we are linked and over which we have no control are set in London. We must face the downward float of the £ as a currency and the annual adjustments to food prices as determined through the revaluation of the green £. If we look at those as causes for price increases we must agree that unless there is to be further unemployment these price increases are justified. This is the problem the National Prices Commission and the Minister for Industry and Commerce are faced with. Unless these price increases are allowed, unless people are prepared to pay the cost for these items or do without them, there will be unemployment. Because of that prices have risen considerably.

Wages are a major factor in price increases. The trade union movement, whose role is to ensure the greatest possible benefit for their members, know that wages have increased in the region of 125 per cent. This has been possible in a free negotiating situation in which employers and workers around a table decided on levels of wage increases that would correspond not alone with price increases and inflation but would leave all our members basically better off than heretofore.

It cannot be denied that, despite inflation and price increases and the economic gale that has blown across the country from abroad, people generally, through the working of this Government and the policies initiated by the Labour input, the trade union input and the Fine Gael input are better off than ever they were. In a period when standards of living suffered and other countries suffered this is no mean achievement over four-and-a-half years.

Oil has increased unprecedentedly by 138 per cent. I heard a Christian sociologist saying recently that, as a comparatively wealthy nation, we should not complain about these things. For years the poorer countries survived on slave labour and produced the commodities whether oil, tea, coffee or whatever, that we must import or do without. We cashed in on them and bought at tremendously low prices. It is only now that we are paying what is looked on as the going price for the product. Other countries are prepared to pay these prices for these products. This Government have been conscious that food subsidisation is necessary in a country in which social welfare requirements are the weakest section and the one that is most likely to suffer as a result of price increases. In the January budget there are food subsidies in the region of £48 million. As a result of the recent green £ revaluation, a further £6 million has been added. This is a total of £54 million in food subsidies. This is the system of relief that the previous Government abolished. As soon as they took office. £54 million in food subsidies is approximately £8 per head of the population per annum. In an average family—husband, wife and three children—this is £90 a year, almost £2 a week. If the previous Government were still in office families would be paying £2 a week more for their food.

The previous Government, in their efforts to come to grips with inflation, initiated a wages standstill order. We have managed to increase wages, to take VAT off food and to give food subsidies. This Finance Bill is a further triumph in the record of this Government, on the basis of which they can confidently go to the people and ask for another mandate. There is an improvement of some £50 million for PAYE earners. In other words, the increases under the national wage agreement are tax free because of the improvements in the budget.

There has been very little talk about section 7 which deals with the weaker sections of the community. I would like the Minister to confirm in his reply that the tremendous improvements under the budget in relation to section 7 will be operative immediately this Bill becomes law, that is, the relief for old age pensioners from taxation. It has been part of my party's policy since 1975 that social welfare pensions would be exempt from tax. If a person had no other income he received the social welfare pension without deduction of tax. If he had some other small pension from the State, forestry, the county council and so on, the amount of his social welfare income was taken from the allowance. That meant that his total income from the other little pension was taxable. We always felt that there was an anomaly there. When the deductions, through superannuation, for these other pensions took place, they were allowed for tax purposes, but because these people's incomes were so small at the time they were paying the superannuation, this claim never cost the country anything nor benefited the people in the superannuation bracket to any extent. I am delighted that old age pensioners and social welfare recipients will now be free from tax and that their incomes from other sources will be ignored. They will be allowed to claim their full personal allowances from their other small incomes. It goes a bit further than the Minister said on budget day. I have a lot of experience of people in this bracket and they think this is one of the most important things that has ever happened to them. The second anomaly in last year's Finance Bill was that under which people with very small farms who were also employed in creameries or county councils suddenly had their income tax allowances halved because they had a small valuation. Now because they are only employees themselves, their income and valuation will be ignored.

I commend the Minister for Finance for the social conscience and awareness which he has shown during his term of office. In spite of such unfair criticism, the Minister has ensured that the people we represent have been protected. There has been a fair spread of the tax net so that the weaker sections will benefit. Food subsidies will continue, VAT will be taken off food, and the people on low incomes will be cushioned to some extent against external inflationary forces. I have no doubt that when our case is put to the electorate, they will show by their answer to the call that they are satisfied that, in this extraordinary period of inflation and world economic crisis, this Government managed to steer the ship of this country safely into port, from which we will set sail again shortly.

I do not believe that the expressed intentions of the Bill will materialise to the benefit of the people in the way that it is put across. The Minister states that the primary aim and policy of the Government are to help the economy and create employment. Without making a political speech—I am not a candidate in the election—and I would like to make my contribution as concise, direct and sincere as is possible—I fail to see that the Finance Bill and the budget have contributed anything to our economy, our hope or our confidence in the future. I find it hard to listen to Senator Ferris and understand how a man elected to this House can be so far out of touch with the realities of the day. We, as a party, have our priorities and the first is to create employment for the young people. I see this problem as one from which the Government, the Ministers and Members and the Government Departments, could find it very hard to escape. If one went out at midday any day during school break in rural Ireland, one would see the many young people there are with no hope of jobs. There is no incentive or encouragement in this Finance Bill. In June, after this term in school, the number on the unemployment register will rise drastically. That is not a great thing to have to say because we are all involved, not only the Government but the Opposition and the people of Ireland It is not a hopeful outlook that around the corner there is a massive increase in the number of unemployed. This is hitting our young people especially in rural Ireland and, in particular, in my county. In the west of Ireland there is no hope of employing young people. I do not want to make gloomy predictions. I want to be realistic but I cannot see any hope of the youth finding jobs.

I had hoped that the Government would have been more aggressive and more practical. I had hoped that they would have done something visible to provide an incentive for youth. I was anxious to see more positive action to provide jobs for young people, but no matter from which angle one looks, there is no incentive or provision for jobs. Any public representative who holds a clinic or an office once or twice a week, or whatever, will find that 70 per cent of all those who call —and I am not taking the school holiday period into consideration—if not a higher percentage ask that person in public life to find jobs for young boys or girls. I have been exploring all the traditional avenues where employment was found. Local authorities, the forestry and the Department of Posts and Telegraphs are cutting back on staff. Labourers are not required to assist in the engineering branch of that Department For young boys and girls there is no healthy future. Sad to say, I cannot see it and I am dealing with this problem, not in theory or from books, but in a practical way daily. Every week I meet and stare young people in the face and must say: "I am sorry, I will make the telephone calls, write the letters but I will find it hard to get the results because the jobs are not there." There are at least 100 applicants for every available job. That is the situation in which we now find ourselves after four years of mismanagement in government.

We have neglected the future of our young people. I credit the young people of today with intelligence and they will not be codded by Government spokesmen who say that we had a world recession from which we are just recovering; we are the first out of the swamp and the future is bright. Young people are not going to buy that at all. We have just had a reappraisal of our future in Government and our financial structure and the whole problem of providing jobs has been neglected. The young people are intelligent enough to see that they have been neglected, that there has been no encouragement, no jobs and no future. I hope that we will have a change of Government soon.

When Fianna Fáil get into Government again we will have a definite commitment to provide jobs for our youth. I hope that we will have an opportunity, not for political expedience, to solve the problem on the ground as it stands. I do not think the present Government—except there is a complete change of heart altogether—have any notion of providing jobs for our youth. It is the greatest cancer we have. I can see a disastrous future, regardless of what Government we have, if they are not going to pay attention to the young people on the street with no future. That will be a sad day for this country. The cancer has set in and the consequences will be disastrous.

I listened with interest to Senator Ferris talking about the Government's achievement in providing houses. He stated that during the last four years they provided 100,000 houses, 25,000 a year, and that the Government should be very proud of this. It is very hard for somebody who has been a member of a local authority for 15 years to listen to that. I want to tell the Minister and those listening that Senator Ferris does not know much about what is happening in part of his own country. I invite him to Donegal to see where we stand with regard to the 25,000 houses. I should like to quote a simple letter from J.D. Williams, Donegal county manager, dated 23rd May, 1977, in which he states that, having regard to the insufficiency of the council's capital allocation in the current year, it is not possible to say at this stage when Mr. X's house will be advertised for tender. That was in relation to a single cottage. I will pass the correspondence to the Minister. There is no hitch about the site or title. We, in County Donegal, have not got a single penny for one house at present. Our total allocation was £? million this year, regardless of what misleading figures the Minister for Local Government gives, regardless of what misleading figures are quoted here or in the other House in reply to every question about our programme of housing. Those figures are only rubbish and totally misleading. I invite the Minister and anybody who wants to accompany him to go to Donegal and find out the situation. We have a total allocation of £? million and that will build 49 houses. We have more than 1,000 today waiting in overcrowded flats in Donegal. We have a snowball situation about housing, and this Government are doing absolutely nothing about it. I can only assess the sincerity and the knowledge spoken here and apply it in a general way to the Government's performance. I know just how much out of touch they are.

I only hope that this type of complete bluff and propaganda will be seen by the voters—I have no doubt that it will be seen by the voters in my county and in the west of Ireland as complete false propaganda. It has made no contribution. I have enough evidence to prove that the housing problem in County Donegal is scandalous. I have written to the Minister for Local Government about this and I got back a reply telling me the amount of money made available to my local authority and, at the end of the letter, where the houses were built. The Minister cleverly evaded giving an answer about a particular house or housing scheme. He evades answering by saying it is a matter for the local authority to decide on their priorities. Is that a proper way of solving problems? It is not. It is total insincerity, total bluff, and the public will not buy it.

There is a housing problem all over the country. There is an acute housing problem in County Donegal. We have over 1,000 people waiting for houses. The county manager is afraid to sign the contract for even 49 houses until it is absolutely clear that the money will be there. We have had such problems over the past few years that the confidence of our county manager is completely gone. He will not sign a contract and an already difficult situation has been made even more acute.

Unfortunately, there is nothing in this Bill to help those involved in trying to educate youth. I am a member of the vocational education committee in County Donegal. I know at first hand what money has been provided to assist in the whole educational field. I know that there is a total inadequacy of capital under every heading. There is no expansion. We are at the point of collapse because we have not sufficient money, money which should have been provided in the budget, to repair and paint our schools. We have actually reached the stage where there are more prefabricated school buildings than there are permanent structures. The pattern is the same in every county because the Government have refused to take any practical decision in regard to expanding the educational programme. They have adopted piecemeal day-to-day assistance. Somebody produces plans to expand or re-build a school and it ends up in a prefabricated building. There are buildings piled up against each other with no grounds for recreational facilities. School grounds all over the country are dotted with prefabricated buildings, some of which are themselves dilapidated. Maintenance is out of the question.

The Minister can check the records in County Donegal. It is a sad situation largely brought about by the indecision of the Government. I know we have had a change of Minister. I know the Commissioner in Europe was not too interested in education and did little to encourage those who are deeply committed and involved in expanding education and helping youth. We do not have any money to do any expansion. We have a programme sitting for at least two years now in the Department of Education. There has been no sanction given and no progress made.

We have been waiting to build a school for the past five years. The Minister for Education at the time, Mr. Burke, came to Carndonagh to open a comprehensive or community school built by Fianna Fáil. At the opening of that school he made a promise to the local people that he would build a new school in Buncrana. Now, three years later, because of the election and the unrest of the Buncrana people, we are getting £42,000 to build one classroom in Buncrana—£42,000 for a school that should take at least £¼ million to build. The Department have made restrictions and we have to keep to a certain price per cubic foot.

Sadly, there is no improvement in this Finance Bill. There is no proper provision for house building and education. I cannot see any hope for a brighter future for those involved in and committed to education. If this Coalition Government is re-elected we will be stuck with this budget and this Finance Bill because this is what they will operate on for tht next year. The people in my county working on a shoe-string budget as far as education is concerned will have to survive on that shoe-string budget. I cannot understand how a Government, who preach so much about recovery and our bright future, could allow the whole educational system to grind to a halt.

The Minister for Education has allowed a dispute to go on with the TUI for the last two years. We have management boards which were set up in school centres throughout the country but they are not allowed to operate because the Minister has not come to grips with the problem. I could talk for a week about this miserable situation.

Another point I should like to make is about the tourist industry. My county is particularly interested in the tourist industry. I fail to see what this Government has done for that industry. Occasionally we are told, when the Minister goes abroad and when it it expedient for him to make speeches, what effect the problems of Northern Ireland and other problems are having on our tourist industry. We are told what our tourist industry is capable of from the point of view of helping our balance of payments. This Government have been recognised by those working in the tourist industry as a Government that have cared little and done nothing for the industry. Bord Fáilte has now confined its activities to marketing. Marketing is done for the people who are big enough and successful enough and they can control the destiny of any money provided for the tourist industry. It is little enough. There is no support for the small hotelier and the small guest-house keeper. There is no grant, support or encouragement provided for them. It is consistent with the Government's total neglect and disinterest in the tourist industry. Recognising the help the tourist industry has been to the balance of payments, we know this is bad policy and shows a lack of foresight. We are slowly reaching a situation where still more people will be unemployed.

The tourist industry could be an expanding industry. It could create jobs and employment. We should be training more people to go into the industry. That would help solve the unemployment problem by creating more jobs. Unfortunately, the Government have not given the assistance they should to this industry. It could be an expanding industry.

The people involved in industry see the Government as incapable of helping industry. Whether it is fishing, whether it is agriculture, or tourism it cannot survive if it does not have a Government actively aware of the needs of the industry and actively supporting the industry. All industry has got from the Government is lip-service. It has not got proper recognition. We have no one from Galway to Donegal represented on the tourist board.

You have representatives from Galway.

I said from Galway to Donegal. Would that help? I do not think it would at present because it is a Government problem and there is a lack of awareness of what the tourist industry could do. Even in the latest review of the finances of the country the Government do not seem to be any more aware of it today than they were when they took office.

There is nothing in the new Finance Bill which will help the building industry, an industry which could reduce the queues at the employment exchanges. Every day you see the queues outside the employment exchanges and the people who are redundant in the building industry at present form a large part of those queues. This is sad and it has reached the stage where there are so many building workers unemployed that it will not be an easy problem to solve because not only have you put the people out of jobs but you have blighted their whole future and their outlook on life. If a man is unemployed and drawing unemployment assistance for a while his attitude towards work and the future becomes one of gloom and sadness and he does not have enough confidence to face the future. The building industry is one which could have been a main contributor towards the relief of the unemployed. Some of our resources could have been wisely employed by the Government in expanding and helping the building industry. They have not done it and that is part of the cause of the inflation we have at present.

It is amusing to listen to some people giving reasons for our difficult financial problems which are all blamed on outside sources. In fact we have been doing this so successfully for so long that we forget to look at some of the inside causes of inflation and financial problems. It is time that any Government—this is what a Fianna Fáil Government would propose to do —began to look at themselves and consider where internal solutions for our problems can be found. There is no solution in blaming inflation and present world trends. The price has been paid for our total neglect and running down of the building industry and the results can be seen any day by anybody who goes out and looks at the queues at the employment exchanges. You can see that the building workers are there. I hope the day is not too far away when we will take them out of the queues for unemployment benefit and put them back to work. That is what this Government and this Finance Bill have failed to do.

Employment and the whole health structure of any country stem largely from the local authorities. This is a most worrying time for local authorities whose activities are nearly grinding to a standstill. We have hundreds of schemes in the Department of Local Government awaiting approval, water extensions, sanitary services and numerous other schemes which are normally undertaken by local authorities. They are not being provided for by the Government. There is nothing here to show us that the Government are more aware of the problems than they were over the past four years. This Bill does nothing to relieve the problems local authorities continue to have, shortage of money for housing, sanitary services, water supplies and all the other projects. This is bad economy. It creates the situation in which local authority activity come to a half. We have about 26 or 30 local authorities and all of them are costly to administer. We have engineering and office staffs, the planning section, sanitary services section, machinery yard and so on and the whole operation is an expensive one to run. We cannot dismiss these people as the money comes and goes. We must have local authority administrative staff and we have no money to enable them to do productive work. That is bad economy and the result comes out in the national economy. You pay thousands of pounds each week to keep a local authority in existence; you pay top executives for doing nothing and you have some 26 of these authorities throughout the country. We are bound to have a bad end result. There is a constant drain of weekly salaries for unproductive work. It is lack of foresight for the Government to strangle local authorities to keep them without finance which would enable them to provide a proper programme of work. This tends to have adverse effects and produce the kind of results we have today which puts people on the dole and causes lack of confidence in the future. You have higher taxation and prices and you are not getting the production. You are paying for top heavy administration which is unproductive. The same applies in Government, heavy administration costs and no production. You do not need to be an economist to know that some of the best statesmen and economists have said: "Increase your output slightly and you will help your balance of payments". Our Government have failed to see numerous ways in which we could have increased output at Government and local government levels. We have the overheads of keeping administration without finance to make them a healthy productive unit.

I am bitterly disappointed that this Bill has done nothing to improve housing grants, either the eligibility limits at which you can get a grant, the amount of the grant for a new house, or the reconstruction grant. This is consistent with the Government's lack of foresight in regard to ways of helping the economy. In Donegal, which is near Northern Ireland, an individual can get £200 to reconstruct his house. In County Tyrone you can get £2,000 without any difficulty. It is advertised on UTV.

An individual in County Donegal qualifies for a grant of £200 towards the cost of reconstructing his house, but an individual living in County Tyrone qualifies for a grant of £2,000 without any difficulty. This has been advertised on UTV. In County Donegal one can only get £200 and it takes a lot of trouble to get that amount. That grant ceiling has existed for ten years. It is time the Government recognised that their failure in regard to housing grants has caused a serious depletion in the house building programme. People are not given any incentive to repair their houses or to build new houses. The consequence of that is that fewer people are employed in the erection of private houses.

The Government recently made a lot of noise about the reduction they intended giving to ratepayers this year. I have been a member of a local authority for many years and I cannot see the benefit ratepayers will get. There is nothing in the Finance Bill which will make it any easier for hard-pressed ratepayers. The National Coalition, when they went before the electorate in 1973, announced that they would reduce rates over a four-year period, but it has taken them until 1977 to reduce the rates by 25 per cent. That has been done on paper but, daily, local authorities are being asked to contribute more towards the cost of the services in their counties. The result is that rates are climbing. In fact, in County Donegal ratepayers are paying more than £12 in the £.

The Finance Bill does not disclose any relief for ratepayers. Regardless of how the message is put across, ratepayers will not get any relief under this Government. If the Government state it is their intention to reduce rates, this is followed by a letter from a Department to the local authorities stating that certain grants are being reduced. Local authorities must then raise the money locally by adding the costs to rates. Local authorities are being advised daily to provide amenity schemes out of rates. In spite of that, the Government have carried out a publicity campaign telling the ratepayers of the relief they will get this year. A false and distorted picture has been presented by the Government in this regard. It is no wonder our people have no confidence in them.

It would take me all day to deal properly with the question of prices. I was surprised to hear Senator Ferris say that, but for the attention the Government gave to prices, a housewife would have to pay £90 per year or £2 per week more for household goods. I should like to bring Senator Ferris on a trip with a shopping basket to Sligo and Donegal and from there across the Border. He would then find out that across the Border butter is sold for 10p a lb. cheaper than it is here. I wonder why. Most people know the difference in price is due to the failure of the Government to negotiate properly in Europe. Our representatives did not put our case as forcefully as the British who worked also on behalf of Northern Ireland. Steak is 14p per lb cheaper in Northern Ireland than it is here, and there is also a big difference in the price of biscuits. A tin of biscuits which costs almost £2 here can be bought for less than £1 in Northern Ireland.

We are in the Common Market and food prices here are supposed to be on a par with those in other EEC countries. I do not have to go to the European mainland to see the difference. If I cross from Donegal to County Tyrone, I can see a 25 per cent difference in the cost of foodstuffs. That difference is due to the failure of the Government to negotiate properly in Brussels. Subsidies should not be paid to the British Government to assist the British housewife if they are not paid to assist housewives in Ireland. Housewives here find it as hard to get money as they do in England or anywhere else in Europe. The Government must be made aware that the price of food must be brought down.

We have been slow to learn of the advantages our membership of the EEC could bring us. Our negotiators were not aware of what was happening and we have learned too late to take advantage of the rules and regulations which suit the Germans and the French. The Government have done little to influence conditions in the EEC to improve the position at home. There are many examples of this. The farm modernisation policy which was drafted in Europe suits the Germans and the French, but not our farmers. I know of a farmer who had his application for a farm modernisation grant refused simply because he was 56 years of age. He was considered too old and his son of 15 years of age was considered too young. That farmer could not draw money from a European fund to which we contribute. The Departments of Agriculture and Finance are unaware of the conditions laid down in Europe.

I accept that the Minister for Finance is honest and sincere and would like to do his best to get a better package and programme, they are completely uninformed and out of touch. That is the only conclusion I can come to. No Minister for Finance and no Minister for Agriculture would accept conditions that were not possible to apply and to benefit our farming community. If I can show that they failed to negotiate a deal that was beneficial to our farmers then I must come to the conclusion that they failed to negotiate a deal that was to the benefit of our housewives, our food consumers, and that they have failed right across the board to influence conditions in the EEC that would be suitable to Irish conditions.

The influence that we have in the formulation of policy in the EEC is practically nil. That is well borne out by anybody who comes in touch with what is happening on the ground. We should not be misled by reports and glowing speeches of what we are doing, of our Minister being received and our Minister walking out. Our people can see that the schemes in the EEC are not practicable and they cannot take advantage of them. They are the people who count.

The end result is bad because we have a lack of confidence by the farming community and a lack of confidence by those people who have to live within a mile of a community across the Border who can buy foodstuffs about 25 per cent cheaper. The only conclusion I can come to is that we have forgotten completely to look at our internal problems that are causing the financial difficulties here. We are always ready to accept the external problems, the inflation, the oil price increases, the world trend, outside sources. "Everybody except me is wrong"—that is the attitude of the Government. They are completely ignorant and blind of the reality on the ground.

This Government, or some other Government, should find out what is wrong with their organisation, with their governing ability or what is wrong at home. They should start out with house building and help in building schools. They should start with a new approach to help in education, help in house building, road building and an expansion of the telephone service. I could talk on the latter for a long while. We are paying the highest levy in the world for our postal service and the worst telephone service. In my part of the country we are paying very dear for the telephone service. It is sad to think that tourists or visitors from Northern Ireland—men or women of 40 or 50 years of age—cannot use our telephones. We have the most expensive system in the world.

We could give employment by trying to match our telephone service with that in Europe. When a telephone exchange is opened the Minister is photographed dialling someone in Europe, in America, or on the Continent but that is no answer to the problem. The Finance Bill does nothing to create employment. There is nothing in it to bear out what the Minister said, that the primary aim of the Government's economic policy was a reasonable rate of growth. Sadly, I see no hope of a rate of growth. There has to be a complete change and I only hope the electorate will give this country a chance.

There is no will on behalf of the present Administration to come to grips with the problem. They blame outside influences continually while the country grinds to a halt and the unemployment queues grow longer and longer. The saddest feature of all is that those who are now working and have the obligation to work, whether they are working for somebody else or for themselves, are now at the point of stopping and saying: "Why the hell should I work?". Because there are so many unemployed the man who goes out to work contributes to education, hospitalisation and unemployment benefit. The principal of social welfare is right when masses are looking after the few but the whole structure has changed when the few are looking after the masses today. If we continue on the road we are on we are heading for a complete collapse because the few are not going to continue to look after the masses. They are getting fewer and fewer and those in jobs who are heavily taxed and are getting no incentive are going to get out from under the burden. It is a bad business to work today. That is the situation that has been brought about. Only fools work or worry about their business. Only fools worry about paying VAT, PAYE, rates and all the various charges. This country depends on small businesses. This Government have crucified those people who are practically out of business and on their knees.

I agree with the principle of social welfare that the masses look after those who are not so fortunate, the aged, the sick, the disabled and those who have to be hospitalised and cared for. I am 100 per cent for that and there is no danger that Fianna Fáil will cutback on a social welfare programme. Unfortunately, we have reached the stage now that a Fianna Fáil Government will have to have a complete change in attitude. We will have to discourage people from joining the dole queues and get them on to the work queues. That is a major task we will have to undertake. I am hoping that our youth will see that it is not a job that can be done by this Government or by this Finance Bill. There is nothing in the Finance Bill that will stop our youth from joining the dole queues. I hope that when we return here the outlook and the health of the country and the encouragement for youth will be better than what it is today.

Before Senator Ryan starts I should like to inquire whether it is intended to adjourn for lunch or not?

We should carry on for the moment.

As far as I am concerned, I will not be ten minutes and it will rest with the Minister after that. If the Minister intends taking any length of time to reply, those of us who will have to stay here would like a lunch break.

If the Minister could get in after Senator Ryan and report progress, we could break for a short while then.

My contribution will be very brief. I look on this performance today as a useless exercise. This is the first time in the history of this House that we have met after the other House had been dissolved for a general election. Anything we discuss today will have very little bearing later, because even if we could put in recommendations there is no other House to accept them. As far as the Finance Bill is concerned we can only talk about it. We cannot persuade the Minister to change it in any way. Any changes that could be made would have to be made in the other House. We have seen the Government's attitude in the other House when they guillotined the Bill and did not allow a full debate on it. Our party were accused of dragging out the Bill but that was not true. Our people were fully entitled to speak for as long as they liked, but they were prevented from doing so. This, in my opinion, is the fault of the Government.

The budget was introduced four months ago and it has taken four months for the Government to bring the Finance Bill to either House. When the budget was first announced it looked very good and people were inclined to say that "This is a good budget and the Government have done a good job." But as the months went by they thought otherwise. That is one of the reasons the Finance Bill has been delayed until now. The Government wanted to bring it in before the general election in the hope that it would revive all the promises made in the budget.

The Taoiseach in his speech at the Ard Fhéis last week referred to all the work that has been done in the last four years in both the Dáil and Seanad. He pointed out that the Dáil had met more often in the last four years than it had met in the history of any other Dáil since the formation of the State. He also went on to say that this House had met more often than ever before. That may be so, but today is the last day the Seanad will meet and on our Order Paper there are 32 motions which this House will never have an opportunity of discussing. Some of them have been on that Order Paper for four years, the lifetime of the Dáil. In my opinion the Taoiseach cannot boast about the service this House got from the Government. Time and time again we asked to have motions taken and were told "Sorry, there is no Minister available". I am quite sure that when we come back again that situation will be remedied not by the Coalition Government but by the Fianna Fáil Party.

This Bill is an example of what has been happening for the past three or four years. The other House was dissolved because of the general election. Sometimes we met almost on Christmas Eve, two or three days before Easter and in the month of August when everyone else was on holidays to discuss Bills and were told ‘We must get this Bill through in a day or two.' That action on the part of the Government was most unreasonable, especially as far as the Labour Party were concerned. When we were in office if we tried to hurry a Bill through the House they told us that they were entitled to speak and that we were trying to curtail free speech. We have heard no protests whatsoever from them over the last four-and-a-half years.

As far as the Finance Bill is concerned, the only thing I want to mention is the taxation of farmers. I am a small farmer and most farms in my area are small. We are not terribly worried about the £100 valuation farmer. We would all like to be in that bracket because our income would be much higher than it is at present. I am glad the Minister has decided not to compel farmers to pay half their income tax in September because it is only fair that they should be allowed to have their full year's income. As regards tillage farmers, their income from grain, and later from beet and other crops, does not come in until well into September.

I always felt that farmers, as well as every other section of the community, should pay income tax, but we must be fair to the farmer. No other section of the community has to work the same long hours as the farmer. The dairy farmer works seven days a week. During the summer months he works from 6 o'clock in the morning until 8 o'clock at night. If he was to be paid for the hours he worked at the same rate as other people get for the hours they work, his income would be far greater. An ordinary worker has to work from Monday until Friday. He certainly has no worries, apart from family worries, as an employer or an owner of property. The farmer has to contend with weather conditions, which vary from year to year, and this year is by no means a good year for the farmer. The tillage farmer is going to be severely hit because all grain and root crops have been sowed very late and as a result the yield is not going to be as high as it was other years. The dairy farmer has suffered severe losses already this year because of cattle deaths. Grass tetanus is a common ailment among cattle at this time of the year and to add to that this year a disease known as bloat has crept in. In my area nearly every dairy farmer has lost cattle this year. The loss of a cow today means a write-off of £400 or £500.

I am sorry the Minister saw fit to tax what are known as part-time farmers. "Part-time" is a wide term. There are those with fairly good farms in other jobs as well. On the other hand there are many small farmers with 20 acres or so of land who have to get a job in order to maintain a decent standard of living. Many have to travel 20 miles to a job in a factory. In my constituency many people have to travel to Limerick to get work in the Ferenka factory. They have to maintain a car and when they return home at night they often have to work on the farm for two or three hours. While some part-time farmers should be taxed there are a number who should not. The Minister has the difficulty of where to draw the line. I am sure there are many experts in the Department who could solve the problem of who should and should not be taxed.

A number of agricultural contractors employed as forage harvesters are also small farmers. They are now expected to pay tax on their earnings from work for other farmers. Many are now contemplating giving up their contract work with the result that farmers are finding themselves unable to get contractors. Whatever profit was made from the land a farmer would not be able to buy a forage harvester. It is unfair to expect these contractors to pay income tax. It is also unfair that some are selected to pay tax and others are not. It is not political, because I have had complaints from people from different parties.

The motorist has been badly hit. Car tax was increased considerably last year and car insurance is at an unreasonable rate. Young people have to pay very steep insurance costs, in many cases at least £200. A young person may buy his first car for a few hundred pounds, but the prohibitive cost of the insurance often results in him not insuring the car at all. If the car is not insured, it is not taxed. We are not helping the young people in any way when we expect them to pay insurance at the rate of £200. The Minister and the Government have not increased insurance rates but they should have some say in the matter and should do something to help the motorist.

During the past four years the price of petrol has steadily increased. It is now £1 per gallon. We were told that the Arabs were the cause of this. The Arabs only put 12p on it in the last four years while the Government has put on 60p. This is taking more money out of the motorist's pocket. A car is a necessity for a worker who has to travel a long distance to work. Perhaps if we had less duty to pay on petrol more people might be able to travel further to get work and this might reduce the unemployment numbers.

The official unemployment figure at present is 112,000 and we are told it is steadily declining. We have never been told what the unofficial figure is. The unofficial figure is about 150,000. There is no record of the number of school-leavers unemployed, because they have never registered at the employment exchange. I was amused, as were most people, to read the advertisements placed in the papers by the Minister for Labour. I believe the advertisements were for the purpose of advertising himself. I understand the Minister may have some difficulty in being elected for his constituency in the forthcoming election. The advertisement stated that an employer would receive £20 for every extra person employed. Even with that incentive not too many employers will take on men. If an employer wants a man he will pay whatever the man is worth. If he does not want a man he will not take him on because the Minister is offering him £20. As well as the £20 he will have to pay him a lot more. This is not a worth-while scheme. Perhaps 1,000 or so may be employed. It will give a certain amount of publicity to the Minister. He will not have to buy posters and put them on poles around Dublin North Central. The Government are advertising for him. I hope other Ministers will not take the same advantage between now and election day.

When speaking of farmers I forgot to mention that, under the notional system, I understand now that if farmers want to claim for members of their family working on the farm they must stamp a card. That is most unreasonable. A farmer's son or daughter should not be classed as a paid worker. A worker paid by a farmer works from Monday to Saturday, with a half-day on Saturday, a certain number of hours. The farmer's son or daughter is in a different position altogether, he or she would work maybe twice as long. We know they have to be paid for their labour, but in many cases they are not paid in cash but rather by having cattle of their own on their father's farm, having a few acres of tillage and so on. It is unfair to ask a farmer to stamp a card for his children or other relative.

Could I just interrupt the Senator because some people I think misunderstand the position? It will still be possible for a farmer to obtain full credit for any wages paid by him to any member of his family under the actual accounts system.

I understand that but, as the Minister knows, most farmers prefer to go for the notional system.

No, 80 per cent of farmers to date have gone for the accounts system.

I did not know that; I am glad to hear it. I do not intend saying much more about the Finance Bill. A general election has been declared. We have heard the Government tell us everything in the garden is rosy, the economy is improving and unemployment is declining. This amuses us because it is only a few months since the Taoiseach, the Minister and other Ministers were telling us of the terrible times ahead of us and how scarce money was. It is hard to understand where this money came from in a very short time.

At one time the Minister hinted that the school transport sysem would be changed. In case he might be thinking of doing away with school transport, I would appeal to him to give it very serious consideration. School buses are a vital necessity at present. It is not safe to allow children travel to school on their own. I do not agree at all with the present school transport system where children living within a mile or so of a school are not taken on the bus although it passes their house. It is hard to expect some children to walk to school whatever the weather and see their almost nextdoor neighbours being brought in a bus. Rather than the abolition of the school transport system it should be improved.

There will be no vote on this Bill because there is no need, it will not change things one way or the other. I hope, when the next Finance Bill comes before the House, we will be sitting on the other side.

The Minister thinks he will be about 20 minutes. He will either report progress or finish, whichever Senator Ryan would prefer.

It might be as well to finish.

I am most grateful to Senators for their contribution to this debate and for the reasoned tone of the comments which I heard. I am sorry I was not able to be here earlier because of some other obligations. I have been given a very full account of the debate which took, I suppose, a predictable form in regard to the atmosphere in which people are now discussing matters. I understand that Senator Lenihan was quite critical, as was Senator McGowan whom I heard. I would just like to throw in some facts because when the eaten bread, a lot of which has been forgotten, is remembered people will quickly recognise that a substantial amount of progress has been made by this Government.

The first thing that has to be remembered is that, although it may be monotonous to be repeating it, it is a fundamental truth that the world experienced in the last four years the worst recession since the early 1930s. It was more grievous in many respects than earlier recessions because in the meantime the world has become more interdependent. If there is an economic earthquake now thousands of miles away from us in Europe, it can nevertheless have a serious effect upon us. That is exactly what happened as a result of the increase in the price of oil, the quintupling of the price of oil. The simple arithmetic of that is not sufficiently appreciated. What it means is that we are paying in 1977 for roughly a similar quantity of oil about £250 million. That is the price of imported energy. A mere five years ago it was only £58 million. That is money taken out of Irish pockets and transferred to the fortunate owners and producers of oil. Before we can even stand still we have to produce over £200 million worth of goods and services to sell in order to pay for this increased price of oil.

We have done that very quickly. We had our peak of production in 1974. In mid-1974 this country was producing more than it ever did before. We have now outstripped that peak. We outstripped it in 1976 when our economy grew again by 3½ per cent. There is no other country in Europe that has rivalled us in the speed with which we recovered from the recession. That is not to say for a moment that we have not many problems and difficulties still; of course we have. It will take a long time for this economy and many others to recover from the traumatic effects of the economic crisis of the 1970s, but we are doing it extremely well. We are now well on the way towards achieving the target which must be achieved, if we are to cure unemployment, of 23,000 new net jobs a year.

We have seen massive industrial expansion in recent years, even in the depths of the recession. Therefore, the rate of new job creation and new industries in Ireland during the years of the recession was greater than it was in the last four years of the Administration we replaced in 1973. When we assumed power we found that no preparation had been made whatsoever for development of oil mining and gas extraction, still less any thoughts about having an Irish smelter. Now we have made major developments in the area of gas and mining and a smelter will be a reality by 1981, giving tremendous new and well-founded employment in Ireland and, with it, many spin-off jobs in allied industries.

We have not relied upon that direct and very positive employment programme alone but in order to help employers over the period of the recession, to encourage them to come out of their despondence—which, certainly, they experienced in Ireland just as people did in all other countries— we have provided special employment incentives so as to encourage them to take unemployed people, and particularly young unemployed, on to their payrolls.

On the fiscal and financial front, which is directly related to Finance Bills, we abolished death duties so not only can people now live happier in Ireland but they can die happier also. We want to keep them living happier than they were so we have also substantially reduced the taxation that has to be paid by the living. We have slashed the lower rates of income tax from 35 per cent to 20 per cent and the higher rates from 80 per cent to 60 per cent. Not since 1968 has the rate of income tax been as low as 60 per cent. In the 1968 budget the top rate was fixed at 58½ per cent. Since then the figure has risen to cover the difficulties of an international war, the necessity to finance growth after the war and the need to meet the problems of recession.

There was little or no indication from our predecessors when they were in office that they had even any conception of the desirability of reducing tax rates. For 11 years they were in power during which they made no improvement whatsoever in the tax-free allowance or in the rates of tax. If I said 1968 was the last year in which the rates of tax were as low as they are now, I apologise. I should have said 1938, before the war, when the figure was at 58½ per cent. So it is almost 40 years since we had income tax rates as low as they now are under this Government's policy of providing incentives for individuals and for industry, to leave people with more money in their own pockets so that they can make their own decisions, wise or otherwise, about how to spend it. We are sure that will lead our people, who are sensible, to spend their money wisely and to re-invest it with the objective of making more profit. That is one of the reasons we abolished that abomination of an additional charge in respect of so-called unearned income. A person who saves his money and invests it is making sacrifices in respect of that activity and he earns, and deserves to earn, profit on it. That is why we have not regarded such people as being less worthy of tax concessions than others.

We ended the scandal of giving tax exemption to profits from mining activities. If you go the length and breadth of the world you will not find any country so stupid as to have done what was done by the Fianna Fáil Administration, of allowing people to take out the natural wealth of a country and replace it with nothing but a hole and not make a contribution by way of taxation. We ended that ridiculous position and we did it just in time because very fortunately nobody had acted on foot of that proposal. We ended it and yet we have developing now one of the richest zinc and lead mines in the world with prospects of others coming onstream in the not-too-distant future.

We rejected the policy of our opponents, which is still their policy, to increase rates of central taxation in order to reduce rates on domestic dwellings. The sum of 14 pence in all income tax rates is what would be necessary under Fianna Fáil's proposals to abolish rates. I am referring to their own White Paper published in 1972. That was the figure then. If you take present rates into account, where non-Exchequer revenue relieved part of the rates by 211 per cent in recent years, you will find the figure is even higher, but I will be fair to them. I will leave them with their own figure. That is what they are proposing. With typical irresponsibility they talk about the easement and the reliefs they will give without spelling out the cost. But in this instance they have spelt out the cost and in fairness to them and the people who want to consider their proposals objectively, I want to remind them of Fianna Fáil's intention to increase income tax rates by 14 pence in order to enable them to fulfil their promise in relation to rates.

So far as the Government are concerned we have reduced rates not merely on domestic dwellings but on all properties by removing the health and housing charges from the rates, as a consequence of which rates—which we all dislike still particularly in relation to our domestic dwellings—are now £8.80 in the £ less than they would otherwise be. This year, as an added incentive to people to work, to leave them more money in their pockets, and also by way of a contribution towards reducing the rate of inflation—because by this measure we rave reduced the rate of inflation by .4 of 1 per cent—we have arranged to pay one-quarter of the rates bill from central funds.

We have had our element of inflation; we could not avoid it as long as we wanted to trade with the outside world and more than 90 per cent of what we buy or sell is involved in world trade. We are selling our commodities now at much higher prices, including our agricultural commodities. If we sell to others at higher prices unfortunately we must equal the higher prices obtained elsewhere if we are to have our own products at home which, of course, we want to do. The Government have helped the housewife by providing more than £100 million by way of subsidies for food, essentials and transport. That is very significant and very helpful, I am sure, to the average housewife. Some specific figures might be of assistance. Butter is now 53½ pence per pound. Were it not for the removal of Fianna Fáil's value-added tax on foodstuffs which we executed, and were it not for the subsidies which the Government are giving, the 53½ pence per pound would now be 89 pence. Milk which is now 8 pence a pint would be 12 pence. This is in earnest of the Government's very substantial contribution towards reducing inflation by all means which are within the power of the Government.

The Finance Bill this year is primarily a relieving measure, one which is giving incentives and encouragement to every sector in the community, including those who may be brought into the tax net for the first time in the interest of equity. The reality is that the farmers who have been brought into the tax net this year expected to be brought in. They have said so to me. They have always said that they were prepared to pay their fair share of tax.

I will conclude with the reminder that Dr. Sheehy of UCD pointed out recently that in his view the £35 million which the Government originally intended to take by way of farm taxation this year was a fair share, no more and no less. The Government are not even proposing now to collect that £35 million but are easing the burden even further, as has been acknowledged by Senator Ryan and other Senators, by providing that only half the amount need be paid next September. In every possible way the Government have tried to take account of the difficulties of our people. We believe that we are getting the right response because from all quarters has come an endorsement of the budgetary policy of 1977 and of the Finance Bill which is giving effect to those proposals. I therefore commend the Bill to the House.

Question put and agreed to.
Agreed to take remaining Stages today.
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