I move:
That Seanad Éireann takes note of the Government's White Paper on National Development, 1977-1980.
White Paper on National Development: Motion.
Since the purpose of this motion is to provide the Seanad with an opportunity of debating the Government's White Paper on National Development, 1977-1980, it is not my intention to make a lengthy statement at this juncture. However at the conclusion of the discussion I will endeavour to deal with any matters upon which Senators might wish me to comment at greater length.
At this juncture a number of brief remarks regarding the purpose and content of the White Paper and of the planning process may be useful reference points for your discussion.
The White Paper was mainly concerned with elaborating on the economic and social issues confronting the Government on assuming office and on how those issues could be tackled. It was prepared in direct response to the statutory obligation placed on me and on my Department to identify the policies necessary for general economic and social development and to draw together in a unified and cohesive framework the plans and activities of the various Government Departments. It does not pretend to be a complete blueprint for the future development of our society nor for the resolution of all the issues with which we are faced. It does aim to state clearly our most pressing economic and social problems and to indicate a way of tackling those problems which is based on the belief that society is prepared and has the capacity to take the measures needed to solve these problems. In doing so it responds to the desire of the community and gives expression to the Government's willingness to take control of economic forces to the limits of our ability, and to manage these forces to the advantage of our society.
The major economic and social aims with which the White Paper is concerned are: increasing employment, curbing the rate of inflation, increasing living standards, extending the productive base of the economy and promoting efficiency in the economic system. It is our view that these aims can best be pursued in a climate of rapid economic growth and we have set the ambitious target of a 7 per cent annual rate of growth of GNP for the period 1977-1980. The scope for achieving this target as well as the most likely constraints are also set out. To realise this ambitious target it will be necessary to generate even more expansion in industry, in agriculture and in service activities, and it will also be necessary to have a greatly increased volume of investment to underpin this expansion.
As soon as possible after coming into office the Government took steps to aid the development of industry and agriculture. The White Paper sets out further action proposed in these and other areas and indicates the Government's determination to establish and maintain an economic climate conducive to attaining the high level of growth needed to achieve national aims. The paper also indicates the contribution which future developments in areas such as incomes policy, manpower policy, industrial relations, and the reform of the public service could make to achieving these aims.
The most likely external constraints on attaining the White Paper targets are the sluggish growth in world trade, and the possibility of unacceptable balance of payments deficits. In the domestic sphere there is the need both to generate the extra funds to finance greater investment, and to contain the Government's borrowing level in future years.
As I have stated, the White Paper is not intended to be a detailed plan. This plan will emerge from a planning cycle which the Government intend to introduce from February to October of each year from now on. I do not wish to anticipate the forthcoming Green Paper but it might be helpful if I were to elaborate a little on its role. The Green Paper dealing with the next steps in this development process is already being prepared for early publication and this will be followed by a more detailed White Paper to be published in the latter half of the year.
The Green Paper will form the basis for discussion with the social partners and other relevant groups, and is designed to promote greater understanding and support for the policy measures to be taken. Following these consultations the White Paper as mentioned will be decided upon and published in the autumn. Apart from reviewing progress made during the year and assessing the effectiveness of the action already taken, this latter document will set out the additional new measures to be initiated and any revisions envisaged by the Government in their policies for reaching national economic and social goals.
The sequence of systematically reviewing existing programmes and of discussing proposals for their revision with the social partners will be developed in future years. The White Paper we are discussing today is thus the start of a new and statutorily based planning process in Ireland.
I have dealt with these aspects rather than with the various detailed projections given in the White Paper, because these are the important issues. There is no profit and little pleasure from empty debates about arithmetic. What is important and what can change the course of our progress is the nature of the policies we adopt and the choice of methods which we use to translate those policies into action. It is our firm belief that passivity and ad hoc responses to economic events allowed unemployment to reach intolerable levels of social waste and individual misery, and to dangerously imperil the economic and social fabric of our society. To escape from this morass we must be prepared to mould events rather than simply respond to them. The planning process provides an opportunity for deciding our course of action in a coherent and disciplined manner and for identifying the path of fastest progress towards our chosen goals. This White Paper marks the first step along that path.
We welcome the opportunity to debate this motion. It is a pity it was not delayed until the Green Paper had been published so that we could have had a fuller debate. There have been developments in the economy since the White Paper was published and certain trends are beginning to show themselves. It would have been interesting to see the Green Paper and its reaction to these developments and the views it might have with regard to these particular trends. I note that the Minister in his opening speech has not gone into detail. He has merely thrown in the ball and is anxious to hear what we have to say. It is a good system that he will, in effect, deal with any queries we may have with regard to the White Paper and the economic policy generally.
The White Paper is the pre-election manifesto in more detail. The overall strategy was to take the economy as it then was—and it then was in an improving condition coming out of a recession, in a situation of growth with inflation coming down. The economic wind was set fair. But for reasons which were a mixture of political and economic, and no fault to them on the first score—that is what we all are here by profession—it was decided that the progress of the economy at that stage needed to be jolted and the strategy was to give it a very severe jolt. The expectation and the hope of us all is that in giving it that severe jolt we do not at the same time damage some of its more delicate internal balancing systems. The motivation is impeccable too. The main objective, and we would all share this, was to reduce unemployment quickly and substantially. The main thrust of the strategy was that with this intense jolt, this explosion of demand, the economy would react, the demand would be supplied and there would be an immense number of jobs created.
Very ambitious targets were set. The target was a reduction of unemployment in the first year by 5,000 and a reduction in this year by 20,000. I must emphasise to the Minister that his targets are reductions, not providing jobs of that magnitude. I have heard him on a number of occasions on the radio talk about targets being achieved, about 5,000 new jobs having been created, or "We expect to get 20,000 new jobs this year and we will achieve the manifesto target". It cannot be said too often that the manifesto targets are reductions in unemployment of those levels. Again, in deciding whether they are being met, there is a tendency to stray to economic semantics as to what is an unemployed person and how the unemployed are to be counted. As far as I am aware, and I am an amateur in this field, there is only one objective list available to anybody who wants to inquire how many people are unemployed, and that is the live register. The live register has enabled us to compare like with like and one period with another. On 1 July 1977, the live register had 109,338 people on it. I would take that as being the unemployment figure, the figure that was to be reduced by 5,000 by the end of 1977. On 30 December 1977, that figure had gone up to 111,763. As I said, I am a simple man and if I want to know what the unemployment figure is I can only look at the official statistic. As far as I am aware this is the only hard official statistic available to me. By that reckoning, unemployment increased in 1977. It is dropping now and stands at the moment at 106,000. That is 3,000 down on July 1977 which I take as the commencement date, the date the economy was handed over to Fianna Fáil to get the jolt to which I have referred. It is on the figure of 109,000 that I expect at the end of this year to see the reduction effected. I expect to see that 109,000 reduced by 25,000 to meet the promise of the manifesto. It is important that the promise be met because, apart from the economic and social need to have people at work, it is important for the credibility of politics that the promise which was made so firmly would not be interpreted by the unemployed people involved as merely being an exercise in political cynicism—that something was being promised which was incapable of fulfilment and that those who promised it should have known, and had to know, that it was incapable of fulfilment and that it was a cynical political promise. I hope it can be fulfilled even to avoid that consequence because that harms the political coin in the country. That has to be said because the whole raison d'être for the strategy that was to be deployed was to make massive inroads on our unemployment problem.
I would not blame the Government if they failed to do it, except in so far as they should have known that their failure was going to ensue, because there are factors relating to the problem of unemployment which are worldwide at the moment. It is a problem that appears to be intractable not merely in Irish or European terms, but even farther afield, and we should recognise that. Nevertheless, the strategy has been embarked on and we have to see how it is going to work. The White Paper refers, and the Minister in his speech referred, to a number of constraints which could affect it. The first mentioned in the White Paper is the question of the investments needed to sustain this strategy and the financing of that investment.
In 1978 that investment is to be found by a vast increase in Government borrowing and in direct Government investment. That of course cannot be maintained indefinitely; it cannot be maintained any longer than this year, and even to do it for this year must raise question marks with orthodox bankers and economists. Nevertheless, because the Government saw an emergency situation they decided on an emergency answer and one can go along with it on that ground.
The problem is: how is the rate of investment to be continued? The White Paper puts great reliance on the private sector to sustain that rate of investment in the years to come to bring the strategy to its fulfilment in 1980 and thereafter. I have grave doubts about the capacity of private investment to maintain investment at the rate that has been commenced. If it is not sustained, there is always the danger of a comparative recession. I have doubts because, firstly, we have to consider the return to private business of a sufficiently large degree to enable them to continue to invest at the degree required. Secondly, will the private investment coming from abroad be maintained at the rate we need? This in turn will be affected by another possible constraint, a constraint to which the Minister referred both in his speech and in his White Paper, that is, the rate of growth in world trade. If there is going to be a certain sluggishness in world trade— and it seems to be common case that there are signs of it, if not its actual presence, in many areas of world trade—it is difficult to see how we can expect private investment from that sluggish sector to compensate for the investment we need and which cannot be continued by the State at the 1978 rate.
The public sector deficit, too, is obviously a constraint and is something which has to be eliminated. Borrowing has to be reduced to 10.5 per cent of GNP in 1979 and to 8 per cent in 1980. This is, of course, an immense task in itself but it is necessary for our credibility that it be done. As I say, it has to be done and to some extent substituted by private investment. The current budget deficit has also to be ultimately eliminated and substantially reduced next year. It is at a very high figure in this year's budget. The last Central Bank Report indicates that the Central Bank are prepared on a once-off basis to make £100 million available to the Government for their capital programme, and they do that on a number of conditions which will have a constraining effect on the intended growth of the economy.
Making £100 million available to the Government this year is a highly unusual step for the bank and one which their colleagues in other central banks throughout the world might be inclined to frown on but might be inclined to forgive as an idiosyncrasy of life on this island but hardly orthodox procedure for a central bank. Nevertheless the bank, for what I think are good reasons, did it this year. They have stated very explicitly in their 1978 annual report that they took into consideration the Government's commitment—and that is not a word which I am sure is used lightly—to reduce the borrowing requirements, exceptionally high this year, to 10.5 per cent of GNP in 1979 and 8 per cent in 1980 and to reduce drastically the current budget deficit through revenue buoyancy. We should examine "revenue buoyancy" in the context used in the Central Bank's report. I do not think it means buoyancy as we normally use the term in relation to whatever lift a budget gets at the end of a year when something extra comes into the Exchequer over and above what was estimated. When used here I think it means the Central Bank expect a taxation policy which will produce extra taxation revenue into the Exchequer.
If this is a commitment given by the Government, it is a constraint that is going to be at variance with the policy in the White Paper, because the White Paper—on page 46 under the heading "Taxation" section 8, paragraph 8 (6) and thereafter—speaks of the need to maintain what I would sense to be a benign climate of taxation. The reasons for that are justifiable. They want to ensure that the private sector remains strong and healthy and capable of reinvesting. There seems to be a potential conflict between the proposed taxation policy in the White Paper and the commitment which the Government would appear to have given to the Central Bank. One of the weapons to be used to reduce drastically the current budget deficit—again "drastically" is a serious word—is revenue buoyancy. I interpret that as meaning not just the lift that comes into the Exchequer receipts but a positive taxation approach, if necessary, to increase the income into the Exchequer.
The other commitments the Government have given are to restrain public spending and to introduce a reassessment of public expenditure priorities. Both of these items are not in conflict with what is in the White Paper. Here again I regret the absence of the Green Paper, because from what I have read I think one might see in the Green Paper, the thinking of the Government as to the areas where public spending will be restrained and the areas where public spending is going to be reassessed. For a debate in the political forum this would be very interesting intelligence indeed.
From the speech made by the Taoiseach to the Confederation of Irish Industry there are signs that there is going to be a cut-back in the non-economic ministries—Social Welfare, Education, Health and any others that come into that general category. Obviously if there is going to be a reduction in borrowing, this will have to be compensated for in some way. The White Paper avoids increasing taxation, so there is only one other avenue left for the Government to go down, and that is to cut back on what might be termed non-economic or non-essential services to make the lesser funds go farther in the productive areas.
I would be interested to hear the Minister's views on this question of what level of restraint he foresees in public spending, the areas in which he sees the need for this restraint and what reassessment of public expenditure priorities is taking place. I would also ask him to deal in his reply with the other hint in the White Paper— that from now on the Exchequer is going to have to give consideration to increasing receipts for the provision of certain services so that a greater proportion of the costs will be borne by those who benefit directly. I ask him to spell out how he thinks that is going to be implemented in practice. What services does he think are going to be charged, what will be the level of charge and how is it going to be collected administratively? I would also ask him to spell out in greater detail what his views are with regard to the social services.
The White Paper mentions that the NESC are considering alternative strategies of universal as against selective provision of these services here. They talked about the increase in the Exchequer's current expenditure as a proportion of the GNP on these services. As these services are so important to so many people, both for their personal welfare and for the social stability of the country, they are not things which can be interfered with drastically or dramatically but obviously it is an area in which cuts are going to be made or restraints imposed. It is important at this stage to know how the Minister sees that scene developing.
The Minister also mentions the balance of payment as another possible constraint and this is something which is echoed by the Central Bank in their report. It is not a problem at the moment because our reserves are adequate to sustain a serious deficit in that regard but, as the bank points out, many of our reserves are as a result of our borrowing requirements and even if we recycle some of these, they are going to have to be paid back. Our strength in that regard will be weakened. If we see our reserves weakened our balance of payments position becomes difficult after that problems being absent for a number of years. That would be a very serious constraint on our economic growth. Would the Minister say whether he thinks there is a problem ahead in the area of balance of payments and, in particular, comment on the views of the Central Bank as to the likely state of our reserves in a few years to enable us to stem a deficit in balance of payments.
The other matter of constraint which is mentioned is the rate of growth in world trade and that is something over which none of us has any control; we must hope that the western world and the market economy, as we know it, will pull out of its difficulties and that there will be a healthy economic activity among all our trading partners which will bring us along on its coat tail, so to speak.
These are some points on the White Paper which puzzle me and on which I would like to have amplification from the Minister.
There are just two other points I would like to raise for consideration. First, the strategy is almost totally dependent in the industrial sphere on the activity of the private sector. The private industrialist can be encouraged by this benign tax climate to which I have referred to play his part but he cannot be forced. I would like the Minister to deal in more detail with the excessive reliance on the private sector to do the job which needs to be done. It is a fault in the White Paper that the role of the State, either alone or in partnership with private industry, was not dealt with at all. This is a serious omission. For a small country such as ours with a history of successful State participation in the economic enterprises of this State, it is a pity that we did not continue with that trend in our present policies. I have some doubt as to the capacity of the private sector to expand at all or fast enough to do the investment job and do what is needed to be done to expand the economy or continue the expansion to solve our economic problems. It has been expanding for some time now and I wonder if it is able to expand any more. Are there any signs that the rate of growth in our private industry is beginning to taper off? Even if it does have the capacity or the energy or the individual expertise to expand further is there going to be a long time lag that could prove fatal to the total economic strategy? These are possibilities and they could be to some extent hedged by greater involvement of the State by itself in selective areas or in partnership with private industry in other areas. I would criticise the White Paper for not paying proper attention to the role of the State in the growth of the economy.
Finally I wish to express my disappointment that the White Paper is so scarce in its references to the agricultural industry. It says, and I quote:
In terms of employment and output agriculture is of greater relative importance to the Irish economy than to that of any other EEC member state.
There is no doubt at all about that. I made this point speaking on the Appropriation Bill earlier this year and I think that our salvation lies in our agricultural sector. We have all the benefits bestowed by nature. We have a skilled workforce and we are producing a product that the world needs and will continue to need in ever-increasing amounts. Europe will continue to need it because of the growth in population and the increased standards and there will be a greater demand for food. The Far East, as we have seen by the recent large pork contract for Japan, will be an expanding market for our food. The standard of living in the Third World is going to rise and we can expect, not perhaps in the immediate future, but in the mid-term future, a large demand for food products there. There is no country better geared by nature than Ireland to be the larder for a considerable part of the world. I am disappointed that the White Paper is comparatively silent on this area of immense potential for this nation.
When speaking here before I referred to the study published by NESC on proposed changes in trends in agricultural growth. While emphasising that it was just a feasibility study, nevertheless it provided figures that were so attractive that one would wonder why they were not followed up with the most tremendous sense of urgency. They indicated that if the present trend in agricultural growth continued the factory jobs in the 11-year period from 1974 to 1985 would increase by just 567 and that there would be a loss of on-farm jobs of 52,000 in all. They indicated what they saw as the feasible new trends which our agricultural industry could take. It was their deduction that if these trends were introduced into our agricultural economy factory jobs in that 11-year period could be increased by the startling figure of 23,200 and that 15,000 on-farm jobs could be saved. In other words, the rush away from the land could be slowed and 15,000 jobs could be saved there and these jobs could produce another 38,000 jobs on the one-for-one basis, that service jobs are supposed to follow wealth-creating jobs. That is a tremendously attractive target to achieve in a comparatively short period. Within that idea must lie the secret of success and the future of this country.
Nature has ordained us to be essentially an agricultural country. At this stage the opportunities for that industry are so world-wide that there must be a parallel thrust of Government policy towards agriculture to see if these targets can be met. The targets are so attractive that they demand the serious attention of the Government. That attention could be given in conjunction with the economic policy on the industrial front. I would be glad to hear the Minister's views on the relative importance of agriculture. Does he think that it has the fantastic potential that these agricultural economists indicated in their recent NESC publication?
I conclude by repeating that I welcome the opportunity to have this debate and look forward to hearing the views of the Minister and the other Members.
The first point which I would like to make is that the White Paper targets are the minimum requirement which is necessary for this country if a satisfactory reduction in unemployment and in inflation is to be achieved within a reasonable time. These minimum targets have been criticised as being over-ambitious. However, I believe that if we reflect on these we can very easily refute this criticism. I would like to dwell a little on this for the moment. First, most Members of the House agree that if one does not aim at a sufficiently high level of growth then the natural increasein the labour force cannot be absorbed. Secondly, inflation must be reduced to the level of 5 per cent by 1980 if we are to provide employment on the scale which is envisaged in the White Paper. Thirdly, what we are doing is directly in line with international prescription. We are stimulating the economy to the maximum degree possible. Our policy is, therefore, completely in line with EEC policy and with EEC strategy generally. Fourthly, the temporary increase in the public sector which it is necessary to incur is not in my view an extreme measure. It is not in any way crowding out the private sector. It is consistent with the high savings ratio in the economy and it is supporting a high level of public investment. It is also supporting the IDA investment through capital transfer.
The next point which I would like to make is that there is no real alternative to the present Government strategy laid out in the White Paper. The budgetary measures of February last were no mardi gras but they were a deliberate and timely set of measures to encourage investment in this country, to restore confidence and to give an initial boost to the public employment programme which aims to create some 22,000 jobs by the end of 1978.
The Government's strategy is succeding very well. The economy has lifted off. One does not need to be an economist to know that. Just stop anybody in the street and ask him if this country has got off its knees since the general election and you will be told quite bluntly "yes". Exports are up; inflation is nearly half what it was.
They were up before.
Inflation is well under control; the live register is down 7,000. I make the point from a non-economic point of view. Just stop somebody in the street and ask him if the economy has improved.
Ask him if he has a job.
There are 7,700 off the unemployment register, Senator, and you know that. The Central Bank have not denied that the unemployment figures which we have laid out in the paper on the creation of employment are attainable. The reduction in inflation has been quite dramatic. It has been the fastest rate in the EEC. There is no danger in my view on the balance of payments front. The 1978 figures show an improvement on the 1976 and on the 1977 figures.
The next point I would like to make relates to the years 1979 and 1980. We must ensure that the necessary changes in policy will be forthcoming to support the growth in private investment which is now occurring. I am sure everybody in this House looks forward to the Green Paper for a discussion on all the broader issues which are facing the economy. No matter what uncertainties we face I am confident that the process of a Green Paper discussion followed by the national plan which the Minister is now following is the necessary disciplined approach. It is the sensible approach to adopt in order to identify the problem in the economy, to discuss them openly and to make any changes that are necessary in the light of developments.
The Government are squarely facing the tragic situation in which this economy found itself. They are putting their facts and figures and, indeed, their necks on the line. That is very important. A challenge will also have to be faced on the income policy to be pursued by the trade unions and by the general acceptance in the community that all will share the riches of the community and help those who are less fortunate.
I welcome the White Paper for its honest reappraisal of all the problems facing this county and its acceptance of the challenge. I welcome it because it has changed the traditional and time worn approach to the solution of our problems. All looks well for the Green Paper which is to come. I feel that we have come a long way in national thinking and in national confidence from the time not so long ago when we were told by the then Government that we were like a cork bobbing around in the ocean, that we could not plan in times of uncertainty, that we might have a plan next summer or we might not. We have come a long way in national confidence and determination to a day when we are building up to a specific time table. White Paper, Green Paper and national plan are based on the manifesto which we put forward in the election.
It is also appropriate for me to remind my Opposition colleagues that the new Department under the Minister, Deputy O'Donoghue, which is monitoring these figures is now spearheading the production and the monitoring of the national plan. Under that heading it might be appropriate for me to mention this because I remember quite clearly after the 1973 election every time Fianna Fáil tackled the Government on their plans the answer that came back from the Government benches was "Where is your plan? Where is your approach to these problems? What are your answers to these problems?"
The Government's plans are clearly laid out in the manifesto endorsed by the people in the White Paper, on to the Green Paper, emerging in the national plan. The economy is growing. In welcoming this White Paper as a change in national mentality I issues this challenge to the Opposition: Join us in these plans to take the people off the unemployment list. Join us to make this country one with fewer economic problems or else let us have your economic plan. Let us have your specific proposals to solve the problems. We do not want a short quick list of solutions or any 13 or 14-point plans. Let us have clear, concise answers.
I do not think that anybody disregards the benefit of plans in his own time but what is amazing me is the leisured, even if somewhat measured, pace in which this whole process of planning is being undertaken by the Government. It reminds me of the old biblical stories where so-and-so begat so-and-so and it went on and on. We now have the situation where the White Paper of January 1978 will begat a Green Paper some time in the summer of 1978, which will begat a White Paper in the autumn of 1978 and so on, and so on into the future years. Of course in all of this process time is going by while the basic problems of unemployment still remain, principally unemployment among a population of which 50 per cent is under 25 years of age. In all of this process of begatting —and the first great begatter, of course, was the Fianna Fáil manifesto of May 1977——
The first real attempt at planning.
We must compare what was said in that manifesto with what later appeared when that same party found themselves in office and came within the constraints of the civil service in publishing this White Paper. It is no harm to give a few examples: page 6 of the manifesto promised a crash programme on the job front; on page 10 of the manifesto we were told that there are tens of thousands of secure jobs only waiting to be created and on page 24 of that same manifesto we are told that Fianna Fáil will initiate immediately simple employment schemes for school leavers and other young people. If words mean anything, crash programme, tens of thousands of jobs only waiting to be created, and immediate suitable employment schemes for school leavers and young people, mean to me only one thing. Yet we find ourselves, almost one year after Fianna Fáil going into office, still talking about the White Paper being succeeded in some months time by a Green Paper which will begin, mind you from the Minister's speech, only then to form the basis for discussion with the social partners and is intended to promote greater understanding and support for policy measures to be taken. All of this could well lead us into 1979 and 1980. So much for crash programmes and so on.
The whole leisurely pace of this planning process is rather sickening to me when there is so much unemployment around us and when again there are people having to emigrate to find jobs. Let nobody start talking about whether the rate of emigration is or is not greater or lesser than what it was. It is a fact of life that we meet when speaking to the man in the street, as Senator Brennan so phrased it in his contribution, that emigration is again in progress in this country. Recently I visited a house where the mother told me that two of her children had only the previous month gone to England seeking work.
I have nothing against planning but one is all the time staggered to find in the case of the White Paper the difference and the contrast between it and what Fianna Fáil promised before resuming office. To illustrate further in regard to that contrast I will give a few more quotations. On pages 17 and 68 of the White Paper there are very definite hints at cut-backs in the social spending areas. We did not have to wait for the Taoiseach last week to mention that these were in the pipeline. We were told on page 17 last January:
public resources will nevertheless be under tight constraint. Increasing attention will therefore I have to be given to cost effectiveness in public social expenditure....
On page 68 we are told that two main issues need examination and resolution. The first is the
reorientation and containment of the growth of public expenditure... the main public expenditure programmes will be reviewed so as to identify spending areas where the economic and social advantages gained are no longer commensurate with the cost and where restructuring of policy would be justified.
Never a word about that in the manifesto, the first begatter of all of these White Papers and Green Papers.
I wonder when the same White Paper and when every Government statement calls for unanimity between the social partners, did the Government for one moment anticipate what the likely reaction is going to be amongst the workers to any cut-back in earnings or public spending. The same manifesto made no reference to the functioning of the social partners in this whole business of economic planning. Yet the White Paper was continuously painted with conditional assumptions and continuous references to the part that the social partners would have to play in any breakthrough in seeking the objectives as laid down in the White Paper.
I do not want to dwell too long on these contrasts between the White Paper and the manifesto. I just mentioned them to point out what it is like to say something when out of office and what it is like within the constraints of a Department when one assumes office. Senator Brennan said that the target in the White Paper should be regarded as being a minimum requirement. I certainly do so as well but I have at the same time grave reservations as to those minimum targets being attained. The Central Bank in its latest review states:
The risks associated with continuing large scale expansion are evident.
It goes on to say:
The expansionary thrust of policy this year combined with the ambitious growth targets for 1979 and 1980, raise questions about prospective developments in the balance of payments and the official external reserves.
If the balance of payments situation deteriorates, if the reserves prove not as adequate as they would need to be to meet the problems, then we are in for trouble and we are in for serious cut-backs. And all the while, the objectives that the Government set out in their manifesto of a reduction in unemployment by 20,000, which I believe would mean the creation of possibly 32,000 to 35,000 new jobs in 1978, do not seem to be attainable. If my information is correct I think that the private sector's contribution to the attainment of that objective will not be as satisfactory as the Government envisaged. I know that the Industrial Development Authority recently held a number of regional conferences to which they invited industrialists in those regions. The feedback, I am told, was that they were not very confident that the private sector would be able to meet the targets set out. The reason for that is a simple one, I believe. It is that a private industrialist is naturally reluctant in the face of any world slowdown in economic growth to take risks either by investing money or by taking on additional labour. The Irish Banking Review at the beginning of this year raised very positive reservations about what the Government were doing in excessive increases in public expenditure in non-productive projects. It said that “these expenditures could provide only a very limited and temporary easement and could provide only a limited rise in the employment figures”. It also said that “public expenditure is no permanent solution to our current employment problems and will deter growth by incurring severe budgetary financing problems”. All the risks associated with high public expenditure by the Government since they resumed office are being enunciated each successive week by the Central Bank and other responsible authorities.
It is not easy for anybody to stand up here and criticise the White Paper. I do not criticise its objectives which are desirable and necessary. I criticise the people who are responsible for that White Paper, in the context of what they said only six months before its publication. The Government are in a dilemma. They have to raise moneys from places they did not anticipate they would have to resort to. While they want to cut back on public expenditure that would be an unpopular thing to do. That is the Government's dilemma. They got themselves into that problem and will have to get out of it. This White Paper is in its own way a responsible document. It has been drawn up largely by the officials of the Departments, who, I have no doubt chastened the Government party.
The Senator should not refer to the officials. The Minister takes full responsibility for his own officials.
The Minister, following consultation with the officials of his Department and other Departments, drew up the White Paper. If that were not the position, I am quite certain that we would have a White Paper more in line with the manifesto, which was both irresponsible and shortsighted in its objectives.
I welcome this opportunity for a debate on the White Paper, but without the Green Paper which will finally get down to the question of having to make decisions and choices between the various alternatives for public expenditure and Government action, it is not easy to say whether this White Paper is a success or not. I do not know how Senator Brennan could say that what is in this has been proved to be successful. It is only in its very early infancy and until we have the Green Paper before us to weigh the actions of the Government after a year in office with the factual situation in regard to employment, we will not be able to see if this whole planning process will be satisfactory.
I welcome this opportunity, even though it is rather belated, to discuss the White Paper as such. It is right for the Government to have the views of both Houses of the Oireachtas on the White Paper before putting the finishing touches to the Green Paper. As will be apparent from my remarks later, I consider that the process of consultation in regard to planning is just as important for the effective working of democracy and for economic and social order, as anything the plan itself may contain. I hope the Minister will be able to assure us that the Green Paper will also be discussed in both Houses.
When we were discussing the Appropriation Act on 24 and 25 January, I referred to the disquieting trends in recent years in public spending and borrowing, and to the enormous difficulties which would be faced in correcting these trends in 1979 and 1980 as envisaged in the White Paper so as to reduce the tax ratio and release investment resources for the private sector. The year 1978 has been confirmed by the budget to be what I called an Augustinian year with, as expected, a borrowing requirement of between £800 million and £850 million, of which it has been noted the Central Bank will provide £100 million, and a current deficit about double the £200 million of 1977.
On that occasion my remarks provoked a rather pained reaction from Senator Mulcahy who accused me of undermining public confidence and of a lack of concern for the unemployed youth of the country. I doubt if the Senator really intended to go that far and, as things turned out, he proved himself to be more politically sensitive than either the Minister for Finance or the Taoiseach. The Tánaiste in concluding that same debate claimed that he had inherited the public finances in an "appalling state"—ironically, the Minister went on a few days later to make them worse, at least temporarily—while the Taoiseach in the budget debate in the Dáil on 2 February frankly admitted that serious risks were being taken regarding the high level of public expenditure, borrowing and the balance of payments. As has been remarked here, the Taoiseach has recently reaffirmed the Government's intention to conduct a critical review of public expenditure with a view to containing it, a task which I suspect will be made somewhat more difficult by the delay in reaching the 7 per cent growth target. The Taoiseach claimed, in his speech on the budget, that the economic and financial risks which were being taken were justified and this is the real issue on which a more qualified view might legitimately be held and expressed.
Let me first make it clear, however, should that conceivably be necessary, that I am not against planning in the sense of a comprehensive and coherent programme of development. Indeed, I had been complaining for years about the absence of a plan and I warmly welcome the early restoration of planning by the present Government. The question of what Department should be in charge of planning has now been resolved and I have no more to say about that. A much deeper question remains to trouble us all—whether we have the kind of society in which planning is relevant—and I shall be coming back to that again.
Although we have a plan at last I fear it is still too much a mirror-image of the pre-election manifesto. I say that in a non-political way. Government planning has yet to develop its own personality, to shake itself free of the manifesto and be more adaptable to the changing realities. The complexity of the employment problem, for instance, has been brought to public notice by various reports and discussions, including those recently in Killarney, since the White Paper was published. No doubt this process of adapting planning to changing realities will be advanced by the Green Paper and by the subsequent discussions with representative organisations. It is nevertheless a pity that the White Paper had to appear before any consultations, before any of this necessary reshaping of the manifesto, could take place. The result is that we have objectives which are rightly ambitious but which depend for their achievement on a set of highly optimistic assumptions. The prospect of a high rate of increase in consumption standards is held out. There is however no allowance for contingencies. There are no alternative scenarios based on less favourable assumptions. There is inadequate discussion of the stringent conditions necessary to attain the objectives. There is no precaution against the disruption of confidence by failure to achieve targets fully.
Twenty years ago we were warning in "Economic Development" against the danger of setting targets that were too high since failure to reach them could plunge the community back into despondency. I have also expressed the view many times over the intervening years that consideration by the Government and the social partners of alternative growth rates, of the conditions necessary to achieve them, and of the proper allocation of the resources so made available as between private and public uses, was an educational process which might help to modify purely sectional interests and secure a greater commitment towards realising the conditions essential to the highest rate of national progress. In other words, I saw this consultation as a possible means of making our society less unruly, more co-operative, more committed to ordered and rational progress. Much of this has been foregone, perhaps unavoidably, in the first shortcut to planning represented by the White Paper and there is regretfully a consequential loss of understanding of the need for discipline and effort even to attain, and then to maintain, the unprecedented growth rate of 7 per cent per annum set in the White Paper. This is to be seen in the nonacceptance of the 5 per cent wage increase which was a basic condition of attaining the employment objectives of the White Paper.
I am also concerned that what is presented as a plan is incomplete from a planning standpoint. If we are asked to accept major risks in an effort to achieve important social objectives we should be convinced that, this having been done, we will be on the path of stable progress. It is, however, an unsatisfactory feature of the White Paper that, even if all its assumptions and objectives are realised, there will still after 1980 be a very large State borrowing requirement and big current budget deficits and heavy external borrowing will be needed to finance balance of payments deficits. The threat that these will pose to our development and employment prospects has been emphasised in the recent Central Bank Report. No reassuring indications have yet been given of how, allowing a further reasonable term of years, these deficits and imbalances will be reduced to levels compatible with a continued rise in employment and with security of progress. These "loose ends", as I call them, must obviously be tied up in the Green Paper and subsequent planning documents if a firm substratum of confidence is to be laid and the psychological factor, which I have always considered to be one of the most powerful factors of production, is to be brought fully into play. The risks which are being taken, and I agree that risks must be taken, should be such as can be widely accepted as reasonable, well calculated risks.
I will not repeat the points I made on 24 January about the financial problems posed by the White Paper's aims, in particular the extremely stringent curbing of current public expenditure involved in 1979 and 1980 if the private sector is to have the investment resources needed to create lasting employment. I would prefer to concentrate my comments on the general policy of the White Paper, which is to rely on expansion of demand, even at a time of abnormally high economic growth, to raise output and employment further.
It was four years ago that the Central Bank Report contained this warning:
An expansionary policy can lead only to disaster if it is pursued to the point of accelerating the relative increase in domestic costs and prices by unduly straining productive capacity, of which skilled labour is an important element, and if it requires an inordinate volume of external indebtedness to finance it.
This warning still applies and the Government is obviously conscious of the dangers involved. It is because of them that the campaign to turn 3 per cent of consumption from imports to domestic products, about which we had a debate here some weeks ago, is so important and so deserving of public support. Without it the expansion of demand risks boosting imports rather than home output and jobs. Even if the campaign is fully successful, the balance of payments deficit is expected to be over £500 million in 1980. Indeed, so great are the risks of "leakage" of demand by way of imports that it would seem to be strongly advisable to use selective measures to increase investment and employment rather than rely too heavily on general demand expansion. I am urging, therefore, in the context of the Green Paper, that, rather than rely so much on general demand expansion, we should make sure that in cost and quality our goods and services have a competitive edge which will gear them into world demand. This would be a much stronger and safer base for a full employment policy than relying too much on generating extra spending power at home—inflating on our own —at the expense of large external deficits. General demand expansion is also exposed to the risk of being made partly or even largely ineffective in terms of employment creation by those already at work insisting on too high a rate of real income increase.
I have suggested that among the selective measures, as distinct from global demand expansion, a way should be found of absorbing some of the large numbers of unemployed in useful public works. Even if the White Paper is fully successful there will still be some 70,000 unemployed at the end of 1980. To say that £110 million is an enormous amount of money to spend on the dole, particularly in a developing country still needing many public facilities; to say that it would be for the good of individuals able and willing to work and of the community to which they belong if they were employed on useful public works is to expose oneself to misunderstanding and even personal vilification. Nothing daunted, I will continue to say it. I have had some support in principle from the Taoiseach who in Killarney referred to the contradiction between unemployment in the construction industry and the shortcomings of our infrastructure. The Taoiseach commented adversely on the quality of our houses, the congestion of our urban roads, the dereliction which afflicts the hearts of many of our cities and towns and the inadequacy, even in normal circumstances, of our telephone and communications systems. The Taoiseach referred at the same time to the cost of public works and to the huge capital programme already in being. At the same conference Professor Brendan Walsh made the point that there is an obvious gain from putting people to work on socially valuable projects rather than supporting them on unemployment benefit.
I share the reservations expressed by the Taoiseach and by Professor Walsh about adding to public expenditure to support transient and perhaps not too efficient work, but in this case the net addition to public expenditure need not be very great in relation to the job content and the social value obtainable. While insisting that priority must always be given to the generation of productive self-sustaining employment, one can still admit that there may be circumstances in which it is appropriate to create employment directly. Such circumstances exist at present. Years ago the Central Bank pointed out that while the social security system was a good way of dealing with the short-term unemployment associated with the business cycle, it was not the best response to the longer-term unemployment associated with a prolonged economic setback such as we have experienced. Even if there were no question of morale involved, does it make sense to spend over £110 million compensating so many for being out of work when there is so much useful work to be done, so many infrastructural facilities still lacking, and so much cleaning and tidying up to be done all round us? Can local authorities and State bodies not identify and organise useful employment opportunities on a scale that would absorb considerable numbers of the unemployed at a cost not much greater than the community has to bear in unemployment benefit and assistance—in other words, without any substantial addition to total demand? The scope of operations of the youth employment task force is not wide enough in this context. I want to encourage the Government to see whether more useful work could be provided directly as a means of reducing the unemployment level without adding substantially to total national expenditure. Despite the substantial increases in capital expenditure provided for in the budget the returns of outlay so far this year seem to show that expenditure is lagging behind.
I emphasise that special measures of the kind I have advocated must take second place to the generation of wider opportunities of permanent employment. This objective is dependent on the acceptance of a moderate rate of increase in wages and salaries. Even the great Keynes did not profess to be able to bring back full employment after a recession unless workers were prepared at the outset to accept no improvement, indeed, preferably a reduction in real wages, through not keeping up with prices. The important recent research paper by Professor Brendan Walsh on the unemployment problem says amongst its conclusions that the unanimous opinion of economists is that a rapid rate of growth of real earnings in the face of higher unemployment reduces the rate at which the economy can absorb job seekers into employment and that this trend can be reversed by willingness on the part of the employed and organised workforce to accept lower rates of increase in real income.
The message put so succinctly by Dr. Kieran Kennedy of the Economic and Social Research Institute three years ago has not yet got across: "the market price of labour is too high to permit full employment". Professor Brendan Walsh virtually repeated this in his recent report when he referred to "the inappropriately high real wage in Ireland". It still pays too well and too widely to replace labour even by expensive machinery. As Dr. Kennedy pointed out a slower growth in real pay would encourage relatively greater use of labour in the production of both tradeable and non-tradeable goods. Dr. Kennedy has said, rightly, that in a small open economy with a fixed exchange rate the importance of pay restraint lies primarily in its effect on employment by reducing production costs and enhancing the incentive to invest, particularly in labour-using activities. For years the Central Bank has been stressing that, even if import prices are determined by the sterling exchange rate, the level of activity and employment here depends critically on something under our own control, namely, the rate at which we let our costs, particularly labour costs, rise, and so restrict the competitiveness of our products in relation to world demand. Is the bringing nearer of full employment not worth the acceptance, for a time, of a slower growth per head in real income, so that more people, particularly more of the rising numbers of young people, can actively participate in working for national development?
Amongst some of those fortunate to be at work one gets the impression at times, because of the frequency and trivial causes of unofficial strikes, for example, that there is not enough appreciation of how scarce a thing a job is. Too many in relatively secure employment show a most discouraging lack of concern for the country's welfare. Too many are more concerned about bettering their own pay and conditions than about full employment.
I am very dubious about the economic merits of clawing-back excessive increases in incomes, as mentioned in paragraph 8 (8) of the White Paper, and, indeed, as proposed in another context by Professor Walsh. The basic harm is done once the excessive incomes are granted and no general corrective measures can subsequently undo the rise in costs, the reduced competitiveness, the loss of exports and employment. All that fiscal clawing-back can do is to try to reduce global demand and hope that this will affect imports rather than sales of home-produced goods and services. It is not even certain to be effective in reducing total demand. Taxation increases may themselves raise costs or provoke further demands for wage increases. So, this clawing-back is akin to locking the stable door when the horse has gone. It is much better to secure him in good time.
Given that we should be taking great care to stay fully geared into international demand rather than rely on boosting home demand, it is particularly important that the services which support the market sector of our economy be highly efficient. Some of these services are, of their nature, less exposed to international competition and cost increases can take place in them with less initial resistance. The service industries include transport, tele-communications, building and construction, and we need to keep costs down and efficiency up in these industries if we are to have that competitive edge in the market-exposed sectors on which we depend to win a bigger share of world demand, a world demand which, on present indications, may not be very buoyant in the years ahead, though it will be expanding. We can, however, as we have already done, gain a disproportionately high share of the increase in world trade.
Specific measures, as distinct from general expansion of demand, include those intended to promote industrial investment of which, commendably, there were a number in the recent budget. There could well be a more pronounced titling of fiscal and grant incentives towards employment creation rather than capital intensification provided productivity is being increased so as to maintain competitiveness.
Recently, at the IMI Conference in Killarney, some speakers conjured up a vision of machines taking over from men, of automation creating redundancy and unemployment on a vast scale. Admittedly, as technology advances, labour productivity increases and, unless world demand expands enough to absorb all the new output, men may be displaced by machines. This process may be accelerated locally by too fast a rate of increase in real wages, or by other discouraging additions to the cost of employing people, or by directing fiscal incentives excessively towards capital intensification. The technological advance itself, which repeats what happened during the early stages of the Industrial Revolution in the mid-eighteenth century, need not frighten the wits out of us. After all, it is a phantom of plenty we are conjuring up, a situation in which the community need not work so hard or so long in order to be much better-off materially. We need not fear that all work will become unnecessary or that our talents will not find satisfactory outlets. Machines by themselves are not likely to mind and teach our children, to look after us in hospital, to give us the hair styles we prefer or to create the houses, the environment, the gardens and the works of art we would like to live with.
To come down from the fanciful, we in Ireland, and vast millions even more so in the less developed world, are very far from saturation of our needs, even basic needs, despite the improvements in technology. If ever we did reach a situation in which it was necessary for only some to work to satisfy our human needs, we would have to ensure that, whether the machines were private or State-owned, our political and social system was such as to distribute the net product fairly as between those who worked by choice or necessity and those who happily need work for pay no longer. In other words, we should welcome rather than fear the affluence produced by technological advance and have the good sense to devise means of sharing it. Keeping in the van of progress, moving up the scale in terms of value-added, of quality and distinctiveness, is, as I emphasised in the Guaranteed Irish debate, of critical importance if we are to increase our saleable output and the number of jobs in Ireland.
Tax reliefs for individuals, no less than for corporations, also have their place in promoting initiative and effort, though the fortunate amongst us who benefited from Deputy Richie Ryan's reduction of the top rate of income tax from 77 per cent to 60 per cent could well have soldiered on without the further net relief we gained this year. I know it may be only those who share my distaste for the enlargement of the current budget deficit who would rather not have any personal gain at the cost of additional Government borrowing but in those circumstances I, at least, would prefer to be the little boy that Santa Claus forgot. I do not expect to enjoy the tax relief for very long.
On other fronts, there is scope for expanding saleable output and, therefore, the overall job requirement— scope for raising productivity and making our products and services more competitive—without incurring the risks associated with the global expansion of demand. Apart from being reduced by strikes and absenteeism, output is cut down unnecessarily by inefficient organisation. Incidentally, not everyone is aware that absences ascribed to illness are a big multiple of the days lost through stoppages, official and unofficial, but most people know that not all the illnesses, even if medically certified, are genuine. Absenteeism tends to hide under the medical umbrella and it causes much more lost industrial output than strikes. In the general look which is being taken at industrial relations, I hope special attention will be given to the more attractive organisation of work processes and improvement of the work environment. I am sure there is much national benefit to be gained in these directions.
We should also be looking at the possible influence on industrial relations and, therefore, on output of the present reward system. Are we giving too much of our pay increases uniformly across the board and not enough as a reward for genuine productivity increases? Does the social welfare system have an influence on industrial relations, whether for good or ill? What would be the effect on industrial relations and output of various forms of industrial democracy or of extending industrial ownership? What would be the effect of introducing profit or value-added sharing schemes? I hope all these problems, these possibilities of getting more value from our work, will be looked into.
We rightly do not wish to have to turn again on any large scale to emigration as an escape route. The sluggish state of the British economy has narrowed the opportunities there and the escape route is open on the Continent only to those with linguistic and other special skills, though we should acknowledge that membership of the Community implies acceptance, in principle at any rate, of mobility of persons as well as goods.
There is however, one form of working abroad for a time which should not be disdained as it may provide an increasingly welcome and important easement of domestic job scarcity. I refer to work associated with the building, consultancy, training and service contracts which are being won by Irish public enterprises, like the ESB and Aer Lingus, and by a growing number of private enterprises. These contracts may be connected with development aid programmes in the Third World or with capital investments projects in the wealthy Arab countries. It should be possible to provide continuously a large number of jobs, running into thousands, perhaps, for Irish professional and skilled personnel in this way.
I have said enough by way of general comment on the White Paper which I regard, I am afraid, as a rather too faithful elaboration of the economic elements in the pre-election manifesto. The idealism, and in some respects, the excessive optimism of the manifesto have not been adequately tempered by realism nor has the process of educating the public, and particularly organised labour, as to the intimate link between incomes restraint and job creation, yet been effectively undertaken.
I have tried to be constructive and not merely critical. As I said at the outset, I welcome the return to planning because it involves a rational assessment of potential resources, human and physical, the conditions for realising fully this potential and the polices needed to promote the best community response. One must always be modest in expressing views on issues as complex as those covered by the White Paper, with their social and political as well as economic aspects. One must avoid over-estimating the manageability of an economy while at the same time not taking too depressed a view as to whether planning is relevant at all in such an unruly world.
The process of public consultation, education and persuasion needs to be strengthened, more particularly as Governments everywhere still tend to exaggerate their capacity on their own to direct and manage an economy. I hope that through the Green Paper, and the accompanying consultations, the national interest will be edged above sectional interests and more guidance given as to the need for sustained discipline, effort and acceptance of moderate improvements in personal and social standards if we are to reach full employment within a reasonable period or indeed ever.
There is obviously so much amiss with the course of events for some years past, and so much demographic and other change ahead, that an intelligent and far-reaching action programme is an essential basis for phased recovery and orderly progress. Inflating demand will, undoubtedly, stimulate activity and employment in the short run but it is not a tenable long-term policy and must be supplemented and, before long, replaced by measures which will ensure self-supporting progress.
I would like to see policy consultations extend beyond representative and organised groupings to individual economists who have given deep thought to our development problems. I understand, and I welcome this, that the Department of Economic Planning and Development have had the wisdom to enlist the aid of a chosen group of extremely able economists on a continuing consultative basis.
Finally, I hope the Green Paper will attempt to tie up the major loose ends I mentioned earlier and that it will place diminished reliance on global demand expansion in favour of more selective approaches, especially those directed towards making our costs more competitive in labour-intensive industry. I see this as being necessary to instil greater confidence in Government planning and to enhance the prospects of the success in promoting employment and living standards for which we all wish.
I feel excessively humble at following the economic guru of this House but, however, I will soldier on. We are told on the first page that this document sets out to outline the Government's thinking on the crucial issues of economic and social development and the measures proposed to deal with them. Thousands of words later and 69 pages on, we find the statement that "the present paper does not seek to be a comprehensive statement of Government policy on economic and social progress". Apart from the fact that that seems to be a contradiction it also seems to be the understatement of 1978.
As a basis for a submission to the EEC, which this document is described as, I find it extremely alarming because of its major omissions. Those omissions show how extremely narrowly this Government and, indeed, every other Government of this State, interprets the expression, "social development". I do not feel that the Government or the people who prepared this White Paper, are at all in touch with reality or, indeed, are the slightest bit sincere when they drag in remarks about social policy, remarks which seem to occur as an afterthought throughout this paper.
For example, in the section which is headed in heavy black, Economic and Social Aims of Government Action, there is only one short section—it is the last of six—on areas of social concern. Are we to understand by that that the Government cannot see any important areas of social concern? The best they have to offer is that there will have to be constraint in social expenditure and better cost effectiveness, hardly a major outlining of policy in areas of social concern. It is interesting that in, for example, sections on housing once again we have this old story of bricks and mortar and numbers of houses. Any woman in this House could tell us that bricks and mortar do not make a home.
Yesterday, we had an example of social planning as regards housing. There is a large new housing estate development in Ballybrack. Right down, bang slap through the middle of all these little houses runs an enormous dual carriageway. They are all new houses with young people in them and the number of children to each house has been worked out at an average of four or five. The first section of this dual carriageway was opened yesterday without a traffic warden, traffic lights, an underpass or an overpass or any walls. There was a grand-sized wall, 3½ feet high, just the right size for children to climb over and get killed. The mothers rightly got out, sat on the road and stopped the traffic. There has been a great climb down.
That dual carriageway was planned over two years. The people who live in that development and who got the houses over the last two years are not the kind of people who know how to get public relations officers or sort themselves out and mount a big campaign. All they could do was sit down on the road yesterday. That is not social planning and numbers of houses is not what housing is about. Governments or local authorities are not house developers and should not be in the business of building houses. I will not develop that too much because I do not want to keep the House too long.
There is an expression which frequently occurs in the White Paper and which is bandied about by all people who discuss it and that is the expression "social partners". Indeed, we always hear Britain and every other country talk about "social partners". It is an extraordinary expression because it is most inaccurate since it leaves out the largest single group of contributors to society who are, in fact, the wives, mothers and homemakers. Numerically they are the largest workforce. Senator Whitaker spoke earlier about consultation and stressed twice that he was very keen on consultation at all stages. The women of this country have never been consulted on White Papers, Green Papers or any other kind of papers, despite the fact that they are the largest workforce here. But, of course, they are unpaid and they do not merit a place at the table, apparently. We should consider the implications of leaving them out. The White Paper tells us that the success of the Government strategy will depends very much on the response of the social partners but since they are not regarded as a social partner apparently the Government considered that the co-operation of this very large workforce may be taken for granted and/or that it does not matter. Yet, the Constitution solemnly assures us, and I quote:
by her life within the home, woman gives to the State a support without which the common good cannot be achieved.
If a national development plan over a couple of years is not trying to achieve the common good I should like to know what it is trying to achieve.
I should like to divert for a moment. In Britain recently a life assurance company warned young married men that they should take out insurance on their wives' lives as a matter of urgency since it was reckoned that it would cost nearly £200 a week to pay for the services of a nurse, cook, laundress, secretary, child-minder, not to mention the marital love and devotion of the wife. That is considerably more than a TD earns. Yet, the children's allowances here, the only direct payment to the women by the State, were not increased. Therefore, they effectively decreased in this budget and the budget was referred to very often in the White Paper.
In that budget which is, again, made much of, married men were given a 57 per cent increase in tax free allowances because, presumably, the Minister for Finance believed that every married man is a just and generous employer of his wife who will share this increased prosperity with her. A visit to the AIM group workers, the free legal advice centres, the battered wives refuges and the unemployment assistance exchanges here might do him a little good. Such a visit would open some people's eyes.
The White Paper stresses that all sections of the community must make their contributions to achieving success and it is very obvious that they do not mean the women. I have heard time and time again that no trade unionist would work in the conditions of legal and financial insecurity which face every full time homemaker here but when she goes out to work she is considered to be doing so for pin money and is paid and taxed accordingly. On that, I should like to mention that married working women contribute to the State £20 million a year over and above the ordinary PAYE which they would pay if they were single. That is nearly three times as much as all farmers paid in tax last year. Senator Brennan said that if one stopped anyone in the street one would be told that things were going fine. If he stopped a poor married woman in the street he would get his answer fairly rapidly. If he stopped a young woman who has never had a job and cannot get a job but does not count as a person in the unemployment exchange, he would get his answer fairly quickly. She is going to become a person, I understand, in October. That has taken a long time.
Women are getting the message. There are small points which occur again and again. Some people consider them hair-splitting and making a fuss but they are worth mentioning. The very name of the employment agency set up by the State, Manpower, is indicative of the way of thinking. Senator Whitaker referred often to the replacement of men by machines but he could refer to the replacement of people by machines. Those are small points but they are indicative of a certain way of thinking.
I should like to talk about the unemployment figures. I am not going to talk about their size or whether the live register is the one we should or should not go by. The live register does not take account of a great many people who are not considered as people for the purposes of the live register, such as, as I have just mentioned, the women who have never had a job, who cannot get a job and who will not be considered eligible for unemployment help because they never had a job and never had any stamps.
The married woman who loses her job goes to some official behind a glass partition who tells her that she is not available for work, despite the fact that she has had a job and has had children and has been working. This nameless official is empowered to tell her, and to decide, whether or not she is available for a job. That is the kind of situation which makes a nonsense of the unemployment statistic about which we are all talking? I do not know how many court actions will be needed to get this kind of thing stopped but it seems a pity that we must do it that way.
The unemployment figures do not include the great number of married women who would work were it not for the fact that it is made so extremely difficult for them because there are no child-minding facilities and because they are taxed so heavily. I do not accept the kind of figures spoken about with regard to unemployment.
I should like to mention another matter which seems to have been avoided. In the White Paper mention is made once again of our situation regarding unemployment in the long-term and youth unemployment is a particularly difficult problem in the long-term. We have here, of course, a higher birth rate than EEC countries and it would appear that this will exacerbate the long-term unemployment problem. Dr. Brendan Walsh, to whom Senator Whitaker referred earlier, also mentioned something at the IMI Conferter ence in Killarney which seems to have been glossed over, that perhaps we should have a commission of inquiry into our high birth rate. It certainly is a feature of economic and social planning. I would say to the Government that they should have a commission of inquiry into our high birth rate. The Minister for Health, Deputy Haughey, spoke about bringing in a Family Planning Bill but between the time Fianna Fáil were elected and the time we actually get the Bill thousands of women could not only have had one baby but two.
It is time something was done about this. Perhaps a day will come when one of the signs of patriotism will be the smallness of your family. That will not be a popular statement to make in the Oireachtas, which has a higher than national average size of family. It is interesting that when Charles de Gaulle was worried about falling population in France he dished out enormous children's allowances in the hope that that would encourage women to have bigger families. Unfortunately it did not work. I think there is an interesting study to be made of why Irish people have larger families without any inducements at all. It is quite amazing.
I find it difficult to study seriously a document like this which is supposed to be a blueprint for national development and which leaves out the serious problems facing half of the population. Forward planning going into the eighties must take into account the major shift in society structures which will be caused by the changing role of women. I was glad to hear Senator Whitaker talking about the restructuring of employment or a changing attitude towards full employment, because no plan should have been published without a study of the ways of spreading around limited jobs among men and women, boys and girls. Full employment of the type we used to know, it seems to me, is a pipe dream. Seventy thousand remain unemployed, according to Senator Whitaker. Is he counting all the women I have referred to who do not appear on the live register?
I do not think a plan can be called a plan without that kind of investigation. I was rather pleased to hear Senator Whitaker suggesting that one of the new things people might do who will not have full-time jobs is to start minding their children. That is a remarkably optimistic statement, and I hope I heard correctly.
We hear talk about a Green Paper to be issued soon. I have to confess that I wait for the Green Paper with the utmost foreboding. I hope that if and when we have to discuss such a document here there will be far more included in it which will show that the Minister and his Department are in touch with reality and that these wonderful economists who are to help them will include some people who know how the other half lives.
The two major problems facing us in practical economic terms today are unemployment and inflation, the combination known to economists as stagflation, problems which many countries have found intractable, difficult to deal with. In no way would I underestimate the difficulties which lie ahead of us if we are going to deal effectively with unemployment and at the same time cope with inflation. To some extent they might seem to be almost contradictory aims.
Now we have a plan. We have an indication from this side of the House of specific intentions on the part of the Government. We have some framework on which we may work, and this in itself is the first essential. For too long matters were just allowed to drift while unemployment increased and prices went up. There has to be some definite decision taken. We are now in the process of taking them, but it will be a long and difficult road. We have in the plan a very clear indication of what public expenditure is intended by this Government to be about and that the first priority is specifically towards enlarging employment, but also we have to be very careful to try to maintain the employment that we have and we must increase the proportion of productive investment.
Senator Whitaker has made a valid contribution and given some significant warnings of which we must take full note and heed. Far be it from me to have the temerity to attempt in any sense to cross swords with such a distinguished economist, but there are a few points which I hope he will forgive me as a non-economist if I query them slightly. There is some criticism here of the national plan being a mirror image of our pre-election manifesto and perhaps relying too much on idealism and setting too high objectives.
First of all, we put forward a manifesto and we will stick to it. Secondly, in this country we need a little more idealism—we need to set our objectives high rather than low. Senator Whitaker commented on the desired unprecedented growth rate of 7 per cent, and of course this is indeed a very high growth rate for this country by any standards. Yet if we are to break out of the sort of vicious circle that we have been in of failure to develop—it has occurred several times since we got our independence—we must aim for a high growth rate. Those few countries which managed to pull themselves up virtually by their boot straps and become relatively wealthy—one thinks of such countries as Japan and more recently South Korea and Singapore— have shown this very high growth rate. Admittedly also they have had a very high investment in modern technology and admittedly and quite correctly they have tended to have relatively low incomes in the earlier stages. I fully agree with Senator Whitaker that there is no way in which we can go on paying ourselves inordinate wage increases and at the same time think that somehow or other our economy will come right. In our manifesto and subsequent statements we have made this quite clear.
I agree with his comments on consultation with all the parties concerned. In two countries which have really developed since 1945 consultation has been a major aspect of their economic development. The two that come to mind are Germany and Japan in which you had this very close relationship between business and industry, the government and the banks. They talked together, they planned together, they worked together. As well as that they had very close consultation with the work force involved, particularly in Germany where they are only now beginning to catch up with their ideas for workers on the boards, workers taking their rightful place and responsibility in relation to the business or industry in which they happen to be working.
Senator Whitaker worried about current budget deficits, and I have no doubt that this is absolutely correct. However, I do not think that our first priority, and I am sure Senator Whitaker is not suggesting this, should be at the moment attempting to balance the budget. Quite clearly at some stage this has to come about— one cannot go on running a huge budget deficit indefinitely. Nevertheless, and I hope Senator Whitaker will forgive me, I read many years ago a book written by Senator Whitaker, admittedly before the Senator became so vitally involved in our previous national economic plans. This is from Financing by Credit Creation page 64, paragraph, 2, line 11:
Only the State by itself intervening as borrower can guarantee an expansion of credit on the basis of additional reserves supplied by central banks.
Further on the same page, paragraph 3, he stated:
All other aspects of cheap money policy must be regarded as subordinate to the primary objective of assisting in the maintenance of incomes and employment.
Senator Whitaker in that book correctly and rightly covers himself with certain cautionary sentences, but I would hope that this positive optimistic approach is the one which we should tend to emphasise. We have perhaps too often erred on the side of conservatism, on the side of caution. Quite frankly, our young people today will not stand for that approach.
The White Paper comments on taxation policy, and there is a particularly important paragraph at page 65 which refers to the burden of "total taxation measured as a percentage of the national income remaining stable at around 40 to 41 per cent from 1970 to 1975 and then in 1976 it was increased to over 46 per cent". That was a very marked sudden increase in taxation, and this is something we have got to be very careful of so that we do not overtax ourselves or tax ourselves out of jobs because, as the White Paper so well puts it in the previous paragraph, the basic function of taxation is to finance in an equitable way the provision of such public services as are regarded as necessary in the light of economic and social objectives and needs of the country. The Government recognise the value of a favourable tax regime as a stimulus to initiative and investment which maintains or generates employment.
We must be careful here not to get into the situation in which we confuse, for example, profits and employment as though there was a choice—we will either have profits or we will have employment. If we do not have sufficient profits coming into the country, we will not have the employment. We will not have the cake to divide for the many deserving people in the the country.
There are, as Senator Whitaker has emphasised and as I would again emphasise, many difficulties in our path. One of them, which is almost entirely outside our control, is of course the rate of growth of world trade. If world trade turns downwards then it will be as much as we can do as to maintain some sort of mild prosperity. World trade is something outside our control, except that I would be just a little hesitant, though fully supporting the Buy Irish drive, of an attitude which suggests to me a certain degree of protectionism. Basically this country has to export. If everyone else takes the attitude of buying only their own goods it will be more difficult for our exports, and to some extent we are already experiencing this in the United States. I would hope that the Minister for Foreign Affairs and Finance when abroad will in general support increased world trade and be against protectionism, because we in this country have far more to gain and indeed our prosperity is very largely based on developing our exports, important though the home market may be.
A second important aspect is, of course, maintaining our balance of payments, and here perhaps we do not fully realise the enormous sums we expend on energy, something now approaching £400 million per annum. Any steps that we can take in that direction would make a very marked difference to our balance of payments, although I gather that by OECD standards for 1978 our total official reserves were relatively high at the end of 1977.
Another aspect, one touched on by Senator Whitaker, is industrial relations. He mentioned, quite rightly, the educational job which is necessary here. If we are to have constant strikes, particularly in vital industries, there is just no way that any Government can hope to bring prosperity to this country. We have to work out some form of mechanism whereby all those involved in industry and in essential services can co-operate for the general good.
And let us not assume that all the blame lies on the side of the workers or the industry, or indeed the Government for that matter. We have all got to have a good hard look at our attitudes in this matter and try to work out some sort of rationale whereby these very damaging strikes, which are not just a personal inconvenience to us but which are very severely affecting our exports, can be avoided. The telecommunications strike had and appalling effect on our exports. Any such strikes are very serious for this country. Therefore, our industrial relations must be looked at, and not on the basis of recrimination but on the basis of working out some form of agreed system whereby the situations can be avoided or ameliorated and agreement reached without having to use this bludgeon of the strike.
The level of productivity is another aspect which is very important, and as the White Paper points out, our level of productivity is low. But let us not think that it is excessively low. This is far from being the case. It is low compared with countries such as Germany and Japan, but despite all the difficulties our level of productivity has increased in the last ten years and we have exceeded the rate of increase not only of the United Kingdom but of countries which are also rapidly developing, such as France and Italy. We have made considerable gains in productivity, but it is desperately important to realise that unless we have high productivity we cannot hope to compete effectively.
One other aspect of which we are really not conscious at all is our increase in population. To me it was regrettable that a census was not held. I am glad to see that census is being held. I do not wish to make party capital out of this, I just regard it as one of those regrettable things which happened. It is estimated by the OECD that our population is now 3,162,000. There is another very significant change in our population. Instead of having to complain of the relatively high proportion of old people in our population we are now in a situation in which we are faced with a relatively high proportion of young people. The pendulum has very much swung.
This presents enormous difficulties, but it also presents enormous possibilities. In most of those countries which have gone ahead effectively it has been in conjunction with a rising population, a rising young population. We should therefore look on this as an opportunity. In no way would I agree with Senator Hussey, though I have great sympathy with many of the views she put forward, in no way would I sympathise or agree with the suggestion that our families should be in any sense limited unless the individuals themselves so wished to do. I think we need this growing population. We are relatively under-inhabited or uninhabited by the standards of the vast majority of our EEC partners despite the fact that we have basically a fertile and I think ultimately the possibility of a prosperous country and society.
In general, I think we should take, and the White Paper takes, a positive attitude, an optimistic attitude in this respect and I sincerely hope and believe that this positive attitude, this optimistic attitude will be justified for all our sakes. To take a negative pessimistic attitude would be self-destructive. This is one of the terrible things we have had in this country, a lack of confidence in ourselves. It is something which is going away. In the last ten years there has been a very marked change in this. People are willing now to criticise in a much more constructive manner and in a much more real and less emotional manner, and people are much more willing to seek out opportunities, to set up the various centres, whether they be in farming, in industry or whatever, which previously they tended only to do when they went overseas. Now people are willing to try to do things in this country even if on occasion they do not succeed. The attitude in general is optimistic and positive and good. This is something we should welcome generally on all sides of the House.
The White Paper emphasises that we must try to increase manufacturing output, and clearly this is a major aspect of our development. But let us reiterate the fact that as distinct from an economy such as the US economy which is virtually a domestic economy, our economy is much closer to an economy such as that of Singapore, Hong Kong, Taiwan, in other words, an economy in which you have a relatively small domestic market, which concentrates on exports. Apart from the question of people, though I think people in this country have an enormous potential, our opportunities, our resources, are far better than those of countries I have mentioned, and if we continue the excellent work we have done in exports, then the future is very bright indeed.
We have a small domestic economy of three million people. The EEC has many hundreds of millions of people and certainly will have with the inclusion of the proposed new members. If we can get even a small share of the exports to the EEC and have a share of world markets, then the prospects are very bright, and gloomy though we may be and sad though it may be—it is sad that so many of our people are unemployed—the deficit is not that large by world standards and I hope that some day we will find ourselves in a situation in which our problem will not be one of unemployment but of finding people for jobs. It seems a long time away, but things can change very rapidly.
There is one element which is very necessary for that, and that is that as far as possible our industries and developments should be based on those types of technology which will increase in the future. There is no use our finding ourselves with out-of-date, outmoded industrial concerns and then finding ourselves trying to prop up the sort of dying industries which the British Government of the moment are so desperately endeavouring to subsidise. It then becomes purely a question of social subsidies to an industry which might be applied to one industry but which end up by dragging down the entire economy.
Where possible, our industries should be based on products or resources available in the country. It is admittedly far better that we have an export industry which imports 95 per cent of its needs from outside rather than not have that industry at all, but if we can have one which has 95 per cent of its requirements produced in this country it is infinitely better and also far more likely in the long term to show permanent success.
I agree that agriculture is tremendously important. We still basically are an agricultural country, for all our talk about industry, and it is a simple fact that recently our agricultural product was valued something in the region of £1,000 million and that of that, 65.8 per cent or so was exported. Therefore, in no way should we neglect agriculture; it is something in which we have a marked natural advantage and we must continue to support it, particularly food processing industries derived from agriculture.
One other group of industries which we have tended to neglect and of which our neighbours across the water are first-class exponents are the service industries. We have a great opportunity to develop service industries but this is something the IDA should look at and certainly not limit. Perhaps the Government have tended perhaps to concentrate on the engineering type of service industry. We could expand this to a far greater extent. It is exceptionally profitable, exceptionally revenue-producing and, of course, it is all foreign exchange that comes from the service industry, and the extra cost is minimal. We have neglected this to a rather serious extent, and I should have hoped the White Paper would place more emphasis on this aspect.
Another aspect on which we should place greater emphasis relates to a natural resource, forestry, something which perhaps we have lost the tradition of. Perhaps we never really had it, but as the White Paper points out, our forests cover about 5 per cent compared with the EEC average of 20 per cent, and I have to congratulate the Forestry Division for the work they are doing. I think that an annual plantting of 25,000 acres could be increased substantially. It would have the benefit of being in due course capital productive. In the meantime it would be an effective labour intensive industry. I know there are difficulties—they are mentioned in the White Paper—from the point of view of processed pulp and so on, but the basic market there is excellent, one which we should put a great deal more emphasis on.
We have in this country, indeed, a Leas-Chathaoirleach, in your county and in my own next door to it, probably the best land for the growing of timber certainly in western Europe and among the best in the world. I believe that foresters have had to employ a new measure for the effectiveness, rapid rate of growth and at the same time good quality of the timber grown— this is timber grown on land which is not really suitable for agricultural purposes. This is something which we should press forward with a great deal more enthusiasm and emphasis.
Another aspect which is perhaps part of our being an ex-colonial possession is a failure to develop our marine resources. Some of the students I have are from Norway and it is a sort of constant thing each year when one is talking to them that they ask how is it that Ireland, which is in a far better position than Norway, which has equal facilities as regards harbours and so on, much better than Europe, does not have any shipping. It is very hard to explain to them and they regard it as one of the Irish puzzles. When they leave five or six years later they still do not understand it.
I know we have made certain efforts —I should like to pay tribute to Irish Shipping and Mr. O'Neill, the excellent General Manager and also to the people in B & I and Irish shippers generally—but there is an appalling situation as regards shipping at the moment. This is an area in which we once had a great tradition but we have lost it. We are an Island State and whether we like it or not, no matter how well Aer Lingus do or what high cost products are carried by Aer Lingus apart from people, the basic fact is that virtually all our significant exports and all our significant imports are carried by sea. The second basic fact is that very little of it is carried in Irish ships. There is very little excuse for this in my opinion.
Our fisheries could be developed a lot further. There has been a massive increase of 50 per cent in employment in fishing in the decade 1966-76. There could be a lot more. Admittedly there is a vicious circle here, that if you do not have sufficient fish for processing you do not have a fish processing industry, and if you do not have a fish processing industry it is not worth while developing fishing. Bord Iascaigh Mhara have done a lot to try to break out of this situation. I think we can do a lot more.
Senator Hussey commented on the social aspect of the plan. She is right to comment on the social aspect—at the end of the day, I suppose, it is what we are all concerned with—but if you have not got the cake you cannot divide it and what we have to consider first is producing that cake, producing that prosperity. On both sides of the House we all can think of excellent ways of spending money on socially desirable projects. The whole difficulty is in choice. Are we to give more to schools, to pensioners, are we to give more to this group or that group. With few exceptions on either side of the House we could find common cause on this, but there is no way in which we can go into this sort of spending. Unfortunately we have, perhaps, tended to think of other far wealthier countries nearer home and to say that if they have this we should have this. It is not really appropriate because, first of all, we must get the economy sorted out. With our relatively small overall population, despite the very welcome increase in it, we could very quickly turn from a situation in which we are relatively badly off into one in which we are relatively well off and in which it would be possible for an older people and other deserving people to be given a greater share of the cake.
Debate adjourned.