Seanad Éireann debate -
Thursday, 30 Sep 1982

Vol. 99 No. 1

Economic Situation: Motion.

Mr. Ross

I move:

That Seanad Éireann expresses its deep concern at the continuing economic and social crisis, the unprecedented level of unemployment and inequitable cutbacks in the social services and hereby calls on the Government to initiate proposals as a matter of urgency to deal with the grave implications of the serious deterioration in the country's economy.

The recall of Seanad Éireann is an unprecedented move under a new Standing Order. I put it to you that the collection of these 30 signatures was done because we are facing an unprecedented situation in the economy and in the unemployment situation. It will be my thesis in this debate, in the short time available to me, that the economy of the country is now in a state of chaos and is out of control. Inflation is running at 17 per cent. We have 160,000 unemployed which is nearly double the figure for August 1979. We have a trade deficit of £1,000 million. We are running a current budget deficit of approximately £900 million to £1 billion. We have a foreign debt of £5 billion which is five-twelfths of the national income.

In agreeing to the recall of the House, Senator Brendan Ryan expressed the hope that my speech should not be the sort made by stockbrokers and accountants. I hope I shall not disappoint him. However, he will forgive me for wondering why those who make their living from dealing with figures should be unable to add up the terrifying statistics of our present crisis, or what pleasure they might derive from a collapse in the economy or the prospect of living in a country whose beggary, poverty and hardship are constant reproaches to simple human decency and compassion.

I yield to nobody, including Senator Ryan, in my commitment to this society and to the people who live in it. The majority of our people will see their income fall this year by 5 per cent. For some of them there is the voice of the trade union movement but who will speak for the poor, the unemployed and the homeless? To speak for these groups has long been a privilege of the minority Protestant radical tradition from which I spring. It is not possible to live on this island whatever your class or creed and not hear the poor and the homeless cry for justice and redress.

The Independents who initiated the recall of the Seanad have very differing views about the solutions to our problems. But nevertheless we share the same very deep concern and realisation about the problems which are facing us on the precipice on which we now stand. That is why the recall of the Seanad was the least and the most that we could do at this stage. I would personally much have preferred the Dáil to have been recalled but that was apparently impossible.

I should like to open the debate by asking everybody in this House, as far as is possible, to take a non-partisan, a non-party approach because this is not an occasion for adversary politics; this is not an occasion for the parties to start declaring war on each other. The situation is too serious. I for my part will not attribute blame to one side or the other in this House, or if I do so, I will probably attribute it equally. Having said that, I welcome very warmly the decision of the Taoiseach to come in here tomorrow. Because I will not get the chance to welcome him I would like to say that now. He is taking the debate seriously and his presence will be a boost to this House.

The economy, because of some of the figures which I have given you and because of the unemployment situation, is out of control. The reason is probably because of the political constraints which have attached to both this Government and the last one. The last Government undoubtedly had the political will to attack the problems but they found it impossible to solve them or to put their ideas into action. Similarly, this Government, I think, have now found the political will to do what is necessary but, unfortunately, I do not believe that they will be able to do so because of the political situation and because they have not actually got the political muscle to do what is necessary. The economy has been rather like a poisoned chalice, passing from one side to the other with none being able to provide a practical antidote.

As a result of the fact that we are incapable now, in the present situation and in the last situation, of solving our own problems on our own, it is time — and I regret to say this: it is a bullet that is difficult for any Government to bite — that we call for international help and by that I mean that we need to call in the International Monetary Fund or FECOM at this stage to help us solve our problems. It is not a decision which any Government like taking, but Governments have successively proved that they are unable to do it and I believe that this is the only alternative now open to us.

Another reason why the Seanad should be recalled is because of the major events which have occurred in this country since the Dáil and the Seanad went into recess. The unemployment figures alone of 160,000 announced last month were a good enough reason for both the Dáil and the Seanad to be sitting. But in July we had an announcement of Government cuts. We had an announcement on public service pay. This represented a total reversal in Government thinking. The Government had decided at that stage that they were over-spending and something would have to be done about it. Let me take this opportunity of applauding this reversal in Government thinking. They are right. We should not now blame them for the deeds of the past but we should urge them to continue on this course and encourage them.

I can think of nobody better to quote than Dr. Kenneth Whitaker — unfortunately no longer a Member — who said in his speech to the Association of Development Studies last week that our problem dates back to 1972. Pre-1972 the basis of borrowing money was purely for capital expenditure and the criterion used for that was that the productivity which came from the money borrowed would at least be enough to service the debt incurred. That criterion died in 1972. For no apparent reason in 1972 we decided that we could borrow money for current purposes. We have had since then a long litany of budgets which include deficit budgeting on a scale which is getting worse all the time, to the extent that in 1982 deficit budgeting is out of control. I will give as an example — and this is not a party political point, there will be others — the estimate in this budget that the deficit on current account will be £679 million. In fact, we now know that the deficit on current account will be in the region of £1 billion this year. How on earth, in six months can that sort of estimate be so haywire? How can these sums be 50 per cent out after only three-quarters of the year? I do not believe that the Government got their sums wrong. I do not believe that this was a deliberate ploy. One can allow, as one always does, for optimism on these figures. But nobody could get their sums wrong as badly as that unless the problem was a problem which they could not estimate and unless the problem was conclusively out of control. That is why we need the International Monetary Fund to pull us out of trouble.

As a result of all this deficit budgeting, as a result of overspending every year, our national expectations as a people have become too high. Everybody expects that their standard of living should improve by a certain amount every year, and over the last ten years most people's have. We have developed a mentality which expects that we should be able to get goods which we have not paid for. This is a myth. This is something which is unsustainable and which the Government and this House, I hope, will join in destroying. Living standards must come down — that is the painful truth of the matter — and living standards will come down. If we get nothing else out of this debate than to let the people know that living standards are going to come down and must come down, then that will be an achievement. The expectation of higher living standards will have to be killed for the next few years.

Over the last four years our trade deficit, on average, has been running at 10 per cent of our national income. That is £1,100 million for this year. The only way that a trade deficit can be funded is by foreign borrowing. We have to borrow abroad to pay this difference. There is a direct relationship between the current deficit to which I was referring and the trade deficit. According to the Central Bank £100 million of current deficit incurred is equal to approximately £80 million on the trade deficit. So, if we attack the current deficit and cut spending, we will automatically bring down the balance of payments and we will automatically bring down foreign borrowing. This is the only way of tackling this problem.

There are two ways of attacking the current deficit. One is extra taxation and the other is cutting spending. I believe, and apparently the present Government also believe that there is very little to be gained from any extra taxation, direct or indirect. One has only to point out the £45 million of buoyancy which was estimated for in the budget and which has turned out to be a non-starter. There cannot be revenue buoyancy unless there is a buoyancy in the economy, which we patently do not have. If we are not going to raise any more money from taxation — and I do not believe we will or can — there is only one way of doing it and that is by cutting public expenditure. In this sense I give the Government unqualified support for their stand on public service pay in July. But the 5 per cent postponement proposed on public service pay will raise only £27 million in the last quarter of this year.

I hope that tomorrow the Taoiseach will tell us whether the Government still stand behind their end of July statement. I feel they should go much further. I would prefer that the Government called for a total pay freeze on public service pay until the end of 1983 and that there should be no special pay or catching-up awards. That is very harsh, I know. It would save approximately £350 million. I do not want in any way to denigrate the work of public servants — and I include Senators and TDs in this freeze — I do not want to denigrate the work they do, which is excellent, but we have to accept that public servants are a very privileged group in this society. Public servants have well salaried jobs, on the whole. Their pay is much higher as a group than the average in industry, in agriculture or in private sector spheres. But they also have index-linked pensions, security of tenure, totally secure and well-paid jobs. It is only right that if sacrifices have to be made they will have to be made by those who can afford them. Those who have secure, well-paid jobs must be the first to take the bite on this bullet. Nevertheless, even if we do that we will have to impose more cuts in current expenditure.

I see no reason why cuts in current expenditure are socially unfair. Cuts in current expenditure need not be socially unfair. I believe, as I have said, as much as anybody of the need to protect the under-privileged, the poor, the unemployed. But there are other ways that you can cut public expenditure. It will be the middle classes who will have to take the brunt of this and it is only right that the middle classes should do so. As a university Senator — this may not be very popular in my constituency — I must say that we could start by making third level education be paid for on an economic basis. In other words, the vast subsidies which the Government give to universities should not apply in cases where those who can afford to pay economic fees should do so. I do not want in any way to deprive those who have the academic ability to take this education or that education; that will always apply and those who are capable and those who are able enough for it should take it. But where academic ability coincides with a fat bank balance then those people and candidates should be made to pay a totally economic amount. A means test could be applied to health insurance. The same principle could be applied to secondary education. In this way huge savings could be made, nobody would be deprived but those who have most money and have most wealth would be paying for what they are getting.

Mortgage subsidies, unfortunately, I think, should be scaled down and scaled out. There is no reason why those with higher incomes should be subsidised by the Government in buying their houses. I also believe that a means test should be introduced for those in council houses. There are, of course, many people in council houses who are on the poverty line and who should be paying minute rents. But there are many people in council houses who have very large incomes paying tiny rents and who can afford to pay an enormous amount more.

I would like to speak for a moment on the item of capital expenditure. I believe that in the future capital expenditure will have to be introduced on one criterion only, that is, that on any large items of capital expenditure it should be essential that they pay their way. We have, as a nation, for too long, for ten years certainly, been thinking too big. We do not have the resources of France or Great Britain or of most of the OECD countries. There is the story which some of you may know of an American economist coming here in 1981, examining the figures and, on seeing them, he could not believe them. After he had had a heart attack, he woke up and said: "Ah, I have it — you had a massive oil find in 1977". That was the only possible explanation he could come to of the way we were behaving. The fact is that we are behaving as if we have massive resources which we do not have. We do not have oil — we have less prospect of oil now than we had three or four years ago.

I believe modern appraisal, investment techniques, should be applied to semi-State bodies, that semi-State bodies should be run on a commercially economic basis. In terms of industry and semi-State bodies, there is a good case for helping them out if they have short-term liquidity difficulties. Indeed the State agency responsible for this has been doing a very good job, but we have too many cases of semi-State bodies running to Governments for money when they are not running commercially viable operations.

Aer Lingus look for £60 million when they are running a loss of £22 million on the North Atlantic route. That is indefensible. CIE have been running a deficit of £165 million. Knock Airport, the cost of which we still do not know, certainly will not be a viable commercial operation. I am sorry that the Government are looking for £5 million from the Regional Fund for it. NET received an injection of £50 million last year. One could refer to Whitegate. The liquidator of Clondalkin Mills must have been delighted that the Government voted £2 million the other day. We buy jumbo jets, nuclear power stations, Bombardier buses, with a total disregard for profitability.

I believe the whole semi-State sector needs pruning. It needs examining. Recently we had revelations about Bord na gCapall in which most of the money received, 65 per cent, was spent in administration and only 7 per cent on taking riders and horses abroad, and they are the window of horse breeding in Ireland. Directors appear to have been involved in spending more money on their junke-teering than on the purpose for which Bord na gCapall were set up. The IDA, the ESB, CTT, Bord Fáilte—all expect the State to bail them out because they all know they do not have to run commercially viable operations. They all should be put under pressure. Modern prestige status symbols should be abandoned. Those bodies should be put on a base from which they would pay their way. If private industry was run on the same basis it would be bankrupt. Therefore, public bodies should be run on this basis until we can afford to run them in any other way.

What I have been suggesting may be described as being deflationary. It is deflationary, but the effect of doing this would be to lower domestically generated inflation and to impose competitiveness on our industry. This in itself would help exports which in turn would have the effect of helping the unemployed. It would also have the effect of reducing the trade deficit because of reduced demand for imports. Therefore, I should like the Government to consider another suggestion: they should introduce import quotas or surcharges. In the short-term it would be an immediate solution to the problem. I know there are difficulties with the EEC, but the Italians did it and we are in a crisis situation as the Italians were and we need a short-term breather to set our house in order.

One of the difficulties about introducing import quotas is that 70 per cent of our imports are raw materials for reexport after manufacture here. Of course they cannot be subjected to import quotas or surcharges, but the other 30 per cent, which is consumer durable, which includes all sorts of items, like cars, which we could do without, or selectively choose, constitute £2,360 million which is 20 per cent of national income. That would have an immediate effect on the trade deficit. It is crude but it would be effective as a crisis measure. I remind the House that in the 1930s the biggest gain in manufacturing industry and the biggest gain in employment here were under a protection regime, according to the Cambridge School of Price Economics.

The effect of the above, which I have been talking about, the measures which I think are necessary on unemployment, is very important. Unemployment I attribute to four factors. One is the world recession. The world recession is being thrown out as the reason for all our ills, but it is indeed a reason for some of them and it is a large contributing factor. The second reason for unemployment is the high inflation rate and we must bring this down. The third is the severe competition which we are receiving from the Third World; and the fourth is modern technology, by far the most important one.

As a representative of a constituency of young people I understand the utter misery of the unemployed, the soul destroying effect it has on them. I believe that the unemployment problem, because it is a world phenomenon — we are not on our own obviously, it is going up in all the western countries — should be examined on a revolutionary basis and such fundamental thought should be given to it that we should not say: "Ah, 600 people are out of work there, put down a factory. If we do not buy Clondalkin Mills we will have 100 people out of work there. If we do not support this factory and that factory and this industry and that industry we will actually have more people out of work".

That is the wrong approach. What we need is a totally revolutionary approach to unemployment because, like it or not, I believe it will increase throughout the western world in the next few years. What we need is to think about what are people going to do with this leisure time. The advent of machinery will continue, there will be less need for people to work as they are replaced by machinery. I am disappointed that no Government have given any great thought to this. What happened to the declared National Youth Policy of this Government? The last Government introduced the Youth Employment Agency which was well intentioned but had no fundamental approach to the problem at all because the Youth Employment Agency and AnCO are training people for jobs which just do not exist. I suggest as a start that this Chamber, possibly, might like to think of taking two representatives from the unemployed as part of its membership because we represent here all sorts of pressure groups and people who are nominated by different groups and vocational bodies. The unemployed of 160,000 have no representation here and I think we would be more aware of the situation if they had.

I could blame the world recession, and the Government could blame the world recession and the last Government could blame the world recession, but if we look at any of the figures we will see that we are out of line with OECD countries. While our inflation rate runs at 17 per cent Britain's runs at about 8½, which is under half ours, and the average OECD rate runs at 7¾ per cent. On every yardstick our figures are worse relatively than the OECD countries.

That is our problem, and the warning I want to give to the Government here is not a hollow one: we only have to look at Mexico and what happened there—an oil producing country which has gone bankrupt. We only have to look at Poland, and we have borrowed 2½ times as much per head, and what happened there, or Argentina, and we only have to notice as a very serious warning sign that our credit recently slipped among the international banks. We have lived in a fool's paradise for far too long, the banks are beginning to realise that we have borrowed too much and they will pull the rug. The rate at which we borrowed is now three quarters of a per cent higher than it is for Burgerland to borrow from these banks, because they realise that our situation is totally and utterly chaotic.

I would like to summarise by saying, first of all, the priority of this Government should be to protect the under-privileged. That is absolutely essential and that is behind everything that I have said. But secondly, our attitudes must change: people must accept lower standards of living. We are thinking too big. We are not as yet a rich country. The current deficit must be phased out. The economy is uncontrollable, I believe, in the political situation. That is why we need outside help. That is why we should take in the International Monetary Fund. I would like to finish by appealing once again to the parties to take this debate seriously on a unified basis and not to indulge in any in-fighting at all.

Professor Murphy

I do not agree with either the diagnosis or the description which Senator Ross has outlined to us. I want to congratulate him warmly as the prime mover in the historic recall of Seanad Éireann. I am very glad to have been associated with him in the process. The reconvening of this House in unusual circumstances must enhance its image in the eyes of the public. Much more important, it dramatically underscores the present economic and social crisis. The move has the approval of great numbers of people who have no say in our proceedings, no say in the election of Members of this House but nevertheless one hopes that its proceedings will be more meaningful to them in future. I also agree with Senator Ross that the occasion is far too serious for any petty personal or party recriminations. I never intended that that should form part of the proceedings. I am confident that the debate will be conducted in a responsible spirit. I fully support Senator Ross's plea in that regard.

Since the middle fifties there has not been such a palpable mood of apprehension and depression in the country and no wonder. The magnitude of the economic and social crisis is beyond question. We have heard the dread statistics often enough and Senator Ross has spelt them out once again. Unemployment, borrowing, inflation — in all of these there are remorseless rises and they are not matched by any rising expectations among the people but, on the contrary, by plummeting standards of living among the poorest of our population. The curve in the inflation, budget deficit and Exchequer borrowing has now become a vertical one. When we look ahead we get no consolation from the experts. There are bleak forecasts from the Economic and Social Research Institute, from the OECD and from the European Economic Community.

To take but one chilling quotation, the ESRI Conference of October 1981 summed up the economy prospects as follows: "An economy of little change in living standards in the aggregate and of much hardship and poverty in the particular." The ESRI concluded that unemployment by 1990 could stand at 300,000. That means that eight years from now, as our teenage population enters its early twenties, one in four of them will not only have no job but will have no prospect of a job. One in four of the boys and girls sitting in our schoolrooms on this last day of September is marked for indefinite unemployment. We might borrow a celebrated phrase and say that the ESRI have seen the future and it does not work. Mark you, the ESRI while being a very reputable institution are also an Establishment institution and if they are prophesying that we may well have a due caution for the future. What they are actually saying is that the system does not work, that Irish capitalism is condemning our young men and women to indefinite unemployment and poverty. If that is so then we have to choose between the system and the people. It is the system surely that we must mark for extinction, not our young men and women.

I was going to take a rather different approach originally. I was going to consider the existing social-economic system and ask what can we do within the present framework to mitigate the crisis. There are, of course, things we could do in that regard. We could, for example, or a Government could, ensure that something be done to reverse the needs of the large proportion of building materials and components which are being imported. A Government could do something to guard against the failure of downstream industry from the Tara Mine at Navan, which is going to become another hole in the ground. The Government could tackle the tourist problem in the short-term because the mass tourist industry seems to have collapsed and nobody seems to care. The general attitude about tourism is: "If they come, well, we will get what we can off them and if they do not come we do not mind much." Certainly the fiscal policy in the tourist industry is designed to destroy it completely between that, VAT, transport costs and so on.

In the short term perhaps something could be done also to remedy the disparity in life styles, or at least the open and perceived disparity in life styles in this island which is a direct incitement to a rebellion of PAYE workers. These are all short term palliatives at best. As I said, that is the line I was going to take but I feel that the crisis goes much deeper than that and it is time that people faced it.

This country of ours has had, since the foundation of the State, a capitalist economy. That is not the way it was meant to be by the architects and philosophers of our independence. It was not the system that Pearse and Connolly wished to foist upon our people. It certainly was not the economic system of those who wrote the democratic programme of Dáil Éireann, but it is the system that was raised up in the arid years after the Treaty, the system which sent a million of our people into Britain and whose worst effects in recent years are only partly alleviated by the activities of productive State bodies and the activities of bodies like the Industrial Development Authority. Despite persistent propaganda to the contrary, it is not socialism or State capitalism that has given us an economy with unemployment rising, inflation rising, expenditure rising while we built fewer houses, fewer hospitals, fewer schools. It is not socialism but the property network that has marked one in four of our children for a life without hope.

From now on as this crisis becomes more acute and the discontent of our young people turns inevitably into action, I, for one, am not going to be propping up an archaic system of economic and social relations whose greatest achievement was to send a million people into exile, whose greatest job creation effort in any year of that false golden dawn of the sixties was between 6,000 and 7,000 new jobs.

Modern Ireland needs 40,000 new jobs a year. There is no room in it any longer for a system whose best achievement was 7,000 new jobs at the best of times. Something will have to change, as I said, and it is the system which must change. We are talking about flesh and blood, about the ordinary people of this country and, as Senator Ross has rightly said, no one in this House or anywhere else has a monoply of compassion for the poor, the unemployed and the homeless.

We must talk about the plight as well of the organised workers, the skilled men and women, the modern backbone of our country. Do we believe seriously that these workers who carry the burden of taxation on which our health, our housing and our social welfare policies all rest are going meekly to imitate their fathers and pass dutifully into oblivion? The House, the Dáil, the political parties, the Churches and those exerting authority—increasingly impotent authority on this island—must now begin to listen to old voices, voices which have been crying out virtually unheard since James Connolly's time and before, voices which have been demanding curbs on the private sector, voices demanding the industrialisation of agriculture, the unleashing of the productive powers of the State companies, the nationalisation of banks and the total mobilisation—this is the only thing which is going to turn around the economy—by the Government of the resources of the nation.

Let me pinpoint a particular instance of the general malaise and that is in the area of agriculture. Our balance of payments deficit this year runs at £1,100 million. Let us look at five agricultural imports during the past year: cattle, £40 million; pigs, £4½ million; horses, £20 million; meat and meat products, £43 million; dairy products, £41 million. In a country noted for its beef, horse and dairy products we imported £197 million worth of these products from abroad last year. That is only five categories from a long list which, incredibly, includes £45 million worth of conifer wood imports in a climate which the Almighty might well have designed for the growth of coniferous wood. Why? The answer is simple and stark. The private sector which owns the cattle, pigs, horses, meat, meat factories and the dairy products imported the very commodities in which they are supposed to create a surplus. Why no surplus in cattle, to take one example? It was because the private ownership of the beef barons — it would not be too harsh to call them the robber beef barons — enabled them to liquidate the national young cattle herd for high EEC profits over the past five years, and because the sacred laws of property do not allow the State, the housewife or the worker to lift a finger to prevent the destruction of the national cattle herd. Some Senators will recall that the sad outcome here was predicted by Dr. Raymond Crotty ten years ago. He correctly forecast what the impact would be of enticing financial prospects in the Common Market.

Is that £197 million lost to us not part of the very price we have to pay for the total private ownership of agriculture, our greatest natural resource? The disgraceful export of live cattle removes valuable raw materials from meat factories with resultant unemployment in what might be very profitable downstream industries. Agriculture is a symbol of the general economic crisis. The unpalatable fact of Irish agruculture is that it has low producitvity, it is irresponsible in the matter of downstream processing and it wastes one acre in two of arable land. All of this argues that in this vital sector, vital to any prospects of full employment, there must be fundamental scrutiny of the State's role. Agriculture must be industrialised, if necessary under State direction, for the common good.

The dominance of agriculture in any plan for full employment was raised by me briefly in a commemorative speech I gave at Béal na mBláth last month. There I referred to the fact that both Michael Collins and Éamon de Valera saw our agricultural resources as central to the revitalisation of our economy. Neither of them had a sufficiently penetrating analysis of the problem but at least put their finger on the right spot. Over the decades their attitude has been ridiculed and the achievements of Lemassian industrialisation exalted, but it is about time we went back again and looked at what they had to say. Agriculture is both a material substance and the symbol of all our problems in the field of reconstructing our economy. It is being held back as a resource by archaic notions of private ownership and private privilege. Those who own the land consume great sums by way of public subsidy but they do not pay back vast sums in terms of productivity. Those who own the land claim exemption from the tax burden shouldered by the PAYE workers and yet they claim the right to claim the very public subsidies created out of the taxes of the PAYE workers. This must stop. The land of Ireland belongs as much to the PAYE worker as it does to the speculator in Kildare or elsewhere. The great national aim of a national government should be to give back a true meaning to the phrase, "The land for the people", the meaning which it had for Michael Davitt and which was distorted 100 years ago this year when the great land movement turned in the wrong direction.

Why should agriculture not become the pivot of a great national industrial employment programme? The machinery and the men and women already exist who could carry out such a programme. The Agricultural Institute and the Institute for Industrial Research and Standards, all stand equipped for such work. The organisation is there, the IDA, the ICC, the Agricultural Credit Corporation. There are obstacles, of course, and the very first obstacle would be embodied in the question, "Will the banks finance such a programme"? We already know the answer to that question. Then we should know the answer to the answer to that question. Public support must be rallied for the public takeover of the banks in the interest of economic regeneration. The banks must be put to work in the right field, not in the field of profits but in the field of production, literally in the fields from which will spring the beef, the dairy products and the cereals which will be processed by the industrial work force in factories throughout the land.

Who can doubt that the failure to control the financial institutions has contributed substantially to our present crisis, financial institutions whose usurious interest rates of over 20 per cent have crippled business across the entire economy? The argument that high interest rates are necessary to keep capital invested in Ireland is total nonsense. It really boils down to this: do we have a sovereign government in Dublin or not? We are always using the phrase in the context of North-South relations and Anglo-Irish relations, but is the Government sufficiently sovereign to control the economy irrespective of external or internal forces? A sovereign government should take steps as sovereign governments have done elsewhere to stop any outflow of capital from this country, and it should do it without any prior notice.

Who would sell the products of a totally re-organised agricultural system? Córas Tráchtála stand ready for the task of actively searching out fresh markets among the hungry of the world for the industrial food products of one of the agriculturally richest countries in the world. That is the scenario I offer for consideration to the politicians of the major parties — a State agricultural company charged with the most sweeping powers to raise the productivity of agriculture, to sweep away archaic property relations when they are demonstrably inefficient, to mobilise without compensation financial institutions now dedicated to private profit, to integrate the State companies like the IDA, Bord na Móna and Córas Tráchtála into a ten-year plan for agricultural industry and with it to refurbish by housing, hospitals and public works the increasingly decrepit face of provincial Ireland.

What I am saying through this House today to the bosses of the IFA, the Confederation of Irish Industry and the Construction Industry Federation who have been bombarding us with their case in recent times, is this: we have seen your spokesmen and PR men reach very high levels in media productivity in recent months in hot pursuit of public sector workers, now if you really want the land to produce, if you really want to see factories on the land, if you really want to build houses for those workers in the factories, then subordinate your private ownership of those means of production for the common good. Needless to say, I do not think that these gentlemen will abandon either their attacks on the public sector or their profits in the private sector and we must face up to the political consequences of appealing over their heads to the people of Ireland who need the acres, the houses, the factories and the profits in order to live with dignity and hope. If it be objected that, apart from other considerations, the heavy emphasis in our Constitution is on private property and that that would be a major obstacle to any such changes I have been advocating, then why not change the Constitution in part or in whole? The Constitution should be there for the common good and the common good means the great mass of people without property and not the propertied few.

Let me puncture two more sedulously fostered myths. The first myth is that the national debt is a crippling burden because we pay wages to the public sector. In fact the national debt is a crippling burden because there are not enough men and women at work in the private and public sectors. How can you slash the wages of public sector workers and reduce their consumption without crippling our shops, factories and our fiscal system? Does it not stand to reason that increased public sector employment of the productive nature I have outlined would increase the capacity of the work force to pay the taxes necessary to service the national debt?

The second myth—and here I disagree intensely with Senator Ross — is that there is no scope for further taxation. Nothing brings home the injustice suffered by the PAYE workers so much as the question of taxation on profits and property. Let me give one simple statistic that might well account for the growing anger of public and private sector workers alike. In 1975 property taxes accounted for a mere 15 per cent of total taxation. By 1980 property taxes accounted for the incredibly low percentage of 5 per cent of total taxation. That is to say the rich, the speculators, the profiteers had their taxes slashed by one-third between 1975 and 1980. Even as property empires rose and fell, they were getting away with one-third less in taxation. Even if the rich were to be only taxed at the 1975 rate it would raise £300 million in revenue, almost one-third of the current budget deficit.

Let me draw attention to another piece of conventional wisdom that is both hypocritical and contradictory. It is that taxation of our entrepreneurs is undesirable because it would remove their incentive to work. But the same dread expectation apparently does not extend to the over-taxation of PAYE workers. I am not saying that the taxation of the propertied rich should be given back to the PAYE workers as hand-outs or rebates. No. Any national plan which would involve the trade union movement would see that the £300 million which I referred to should be handed back, not as a hand-out, but as jobs, roads, rail, plant, in a word, as infrastructure. We must have a national plan for full employment. We must not cut public expenditure on schools, hospitals, rail, road or infrastructure because that is the material substance of the industrial revolution which we so desperately need. We must cut vast public subsidies to private agricultural speculators if we do not get the productivity back from that public expenditure. If the State, that is to say the people, cannot direct agricultural policy, then they should not have to pay for agricultural profits. The ranchers cannot have it both ways. If they want free enterprise, they cannot come begging to the State when they have sold their herds.

We need a people's plan, not a plan for property. I believe, despite propaganda to the contrary, in the good sense and the patriotism of the workers and of the trade unions who represent them. I believe the trade union movement would settle for indexation of wages as a reasonable price for a planned economy which would enable them to grow old without the guilt of sending their sons and daughters to the dole queues.

Like Senator Ross, I welcome the Government's response to this debate and the Taoiseach's contribution to the debate tomorrow. Even more so I look forward to the unveiling of the Government's economic plan. I hope it will be a plan for the plain people of Ireland. If it is a good plan, it will be the most suitable way of commemorating, under a Fianna Fáil Government, the centenary of their founder.

Mr. E. Ryan

The proposer and seconder of this motion have been congratulating themselves on having achieved the recall of the Seanad at this time. Much as I value the contribution of the Members of this House and their views on the economic situation, I have to say that the right moment to have had this debate would have been following the publication of the Government's economic plan. Such a debate at that time would have had a constructive impact and it would have been a focus to which Members of this House could have directed their views.

The Seanad can be a very valuable area for producing a calm and reflective debate. For that reason I regret that the proposer of this motion, for reasons which I cannot help feeling were to some extent politically frivolous, should have organised or engineered the premature recall of the House despite the fact that there appeared to be no great enthusiasm for the recall from the Opposition benches.

I also regret, despite assertions to the contrary, that the proposers of this motion were not able to settle on a more constructive and objective motion and were unable to resist an attack on the cuts in Government expenditure, cuts which were absolutely essential. It is of note that the next suggestion in the motion talks about calling for steps to deal with the serious position in the country. I do not think anybody would deny that any steps taken at present to deal with the economic situation of the country would have to include some cuts in Government expenditure. To couple that with a call for proposals for rectifying the economy is inconsistent.

The world recession, which began in 1979, is in its fourth year and shows no sign of lifting. Unemployment is high and rising throughout the western world. Most Governments face difficult problems at present. It is foolish to pretend that we are peculiar in that respect or that Government mismanagement of this country is the cause of the present difficulties we face. Budget deficits have risen sharply in the last couple of years in many countries, including such rich countries as the United States, Belgium and Denmark. The Mitterand Government in France are taking very severe corrective measures at present. Our problems are not by any means unique.

In saying that, I do not want to deny that from 1973 onwards mistakes were made in the management of the economy in the sense that we did things which appeared at that time to be the correct approach but they did not turn out to be the proper solutions to the problems. The attempts that have been made to date our difficulties from 1977 are no more than political propaganda. The recession of 1974-75 led to much the same problems as we have today — big budget deficits, excessive borrowing and high unemployment. It is worth recalling that it was during that period, when Fianna Fáil were not in office, that the excessive borrowing for day to day purposes was first initiated. The recession in 1974-75 was a relatively short one. The present recession is the most severe and sustained since the thirties. The effects throughout the western world have been in many cases even more pronounced than in Ireland. Many of the countries which have suffered most are those which have the socialist economy which Senator Murphy seems to think so highly of.

The time has now come undoubtedly to formulate a firm plan covering the foreseeable circumstances of the next few years. We cannot continue to deal with the problems of unemployment, inflation and Government expenditure in isolation. The people need to have a clear picture of what we may be able to achieve if we go after certain identified objectives. Putting the economy back on a sound and sustainable basis is essential if we are to deal with the acute problems of youth unemployment and industrial closures. While unemployment has continued to rise in an alarming fashion it should not be overlooked that since coming into office the Government have made significant progress in other areas which in time can be expected to have an impact in halting the rise in unemployment. The level of inflation which soared to almost unprecedented levels last autumn following the July budget is slowly but surely coming down. Instead of resorting to another summer budget the Government have sought to balance revenue and expenditure through public expenditure cuts. It is estimated that the November to November inflation figure this year will be down to around 14 per cent as against 23½ per cent this time last year, in other words, a reduction of slightly more than a third. The mid-August figure of 2.1 per cent is the lowest since November 1978.

This reduction in inflation has been accompanied by a welcome fall in interest rates which rose steeply last autumn at the same time as inflation. The reduction in inflation has enabled us to keep our currency stable. There is little doubt in the light of the inflationary budget policies pursued by the former Government that the maintenance of the value of our currency would have been made very difficult indeed. This Government reorganised the budget to minimise inflation and in July announced public expenditure cuts rather than a supplementary budget. These will be very welcome developments as far as the productive sector of the economy is concerned, both in industry and agriculture. It is essential, however, that steady progress be made and continues to be made if our competitiveness is to be maintained let alone improved, because the rate of inflation is also coming down in many other countries.

It is encouraging that this year there has been a slight recovery in agricultural incomes and production. Measures have been taken by the Government to tackle some of the main problems of the industry: stocking levels, severe debt problems and the level of live exports. It is disappointing that the recovery in industrial production, which put us at the head of the EEC league in comparable terms in 1981, has apparently faltered to some extent. Many firms are in considerable difficulties and we are dangerously dependent on certain limited sectors for industrial growth. Undoubtedly a fundamental reappraisal of our industrial policy is overdue so that we can identify, promote and protect indigenous sources of employment.

Many of the State companies face considerable difficulties. The Government are committed to the State sector which provides in many cases industries and services that would not otherwise be available. At the same time, their capital requirements and the depressed nature of some of their businesses place a massive burden on the public finances. There are, of course, exceptions to this rule; those companies are doing very well and are certainly to be welcomed. We have probably reached the limit for the moment as far as sustainable public sector employment is concerned. The best encouragement we can give to private enterprise is to set the right parameters and to create a framework of confidence and hope for the future.

Current deficits—the level of Government borrowing — have to be reduced to more manageable and sustainable proportions. There are many examples around the world of countries that have not heeded the need for prudent management of their finances. With the falloff in revenue buoyancy, which means we have reached the limit of taxation, and because of the dangers of further increases in borrowing which are now widely recognised and accepted, the only option is to cut Government expenditure in as equitable a manner as possible. The Government's limited steps in July were essential and even with them there is likely to be a substantial overrun in the current budget deficit, although in real terms it ought to be somewhat below the level of last year, that is to say, 7½ per cent of GNP, rather than 8 per cent.

The Coalition parties gave us an enormous amount of rhetoric but took very little action. They had their own public expenditure commitments, some of them rather dubious priorities. In particular they allowed a public sector pay agreement to be negotiated which they themselves knew was more than the country could afford and which was, in fact, more than the trade unions were prepared to settle for. They have taken up the position now that the 5 per cent third phase ought to be paid this year. They seem entirely to have forgotten that they, for much the same reasons, were considered to have breached the previous national understanding when they barred all further special claims in 1981. The difference on that occasion was that Fianna Fáil in Opposition took a responsible attitude and at no stage gave encouragement to trade union militancy.

The tightening up of expenditure not merely concerns pay but applies across the board. I believe the country can see that this is the right approach. There is very little understanding for those who seem to argue that action on our problems can be postponed or put off. It is very difficult to understand how Fine Gael, after all the sermons about budget deficits, now oppose not merely the public service pay constraints but the health board cuts. It is difficult to understand some of their amendments to the 1982 Finance Bill which could have added several hundred millions to the deficit. The proposal to keep open the Fieldcrest factory, for instance, which was costing £10 million a year, did not make sense. The Government's approach was the more sensible one, of trying to find someone to take it over as a viable concern and that is now being done. If all Fine Gael suggestions over the past six months were carried out the budget deficit would be in excess of £1,200 million. I would like to hear from Fine Gael speakers, when they are speaking, if they would accept responsibility for such a deficit, and, if not, what is their solution to the problems which lie before us.

The Youth Employment Agency is being geared up to provide extra training places and schemes in addition to the 20,000 already in existence and a further 3,000 have been provided in the first year of the agency's operation. A further expansion of its activity will be necessary and is planned if the skills of our young people are to be utilised and developed. What it is no longer possible to gloss over is that excessive wage rises, because of their impact on our competitiveness, reduce the demand for labour and make it even more difficult for our young people to find employment. There was a severe haemorrhage of jobs in older industries in the seventies and we must take action to stop the rate of fall-out which is no longer maintained by the inflow of new jobs, and the inflow of new jobs has been very considerable indeed.

Job losses have been related not only to high wage rises but also to the lack of corresponding improvement in productivity. It is, of course, true that competitiveness is not just a question of wages but also of managerial skill, of technological innovation and of enterprise. Those in secure jobs will have to look beyond their own immediate self-interest and consider the effects of their actions on opportunities for young people. The resources of the community will have to be more equitably spread. I am sure that all of the partners will recognise their responsibilities in this regard.

If it is true that our unemployment figures in one respect underestimate the number of jobless because school leavers are not registered. This may be to a very considerable extent cancelled out by the unrecorded employment of those officially drawing the dole. Nearly all of us will be aware from personal knowledge that there is widespread abuse of the system. I welcome Government efforts to tighten this up as the community can only reasonably be expected to support those who are genuinely fully unemployed. Great improvements have been made in our social welfare system over the past few years, largely eliminating any differences between the two parts of the country. Fianna Fáil are proud of their achievements in this respect. However, scope for further real improvement in the social welfare system is likely to be limited in the present economic conditions. In this respect I would like to point out that even in present conditions substantial improvements could be made if the widespread abuses of the system could be eliminated. If only those who were genuinely entitled to social welfare received it, the amount voted for the social welfare system could be much more equitably and widely spread.

There has been a very considerable deterioration in law and order over the last few years. Problems like drugs, which were almost unknown here a few years ago, have assumed major proportions. I am glad the Government are concentrating resources on major problems such as this and that they are seriously considering ways in which the criminal law can be made more effective. The overcrowding in our prisons and the lack of sufficient facilities to deal with offenders must be a cause for concern, but considerable progress is being made on this problem and I hope more progress will be made in the future.

In many respects the economic difficulties north of the Border are even more severe than they are here, with nearly 40 per cent in some areas unemployed. It is difficult to see economic conditions improve while political instability persists. I welcome the many initiatives that the Government have taken to encourage North-South economic co-operation, such as the Dublin-Derry air services, the gas pipeline from Kinsale and the meetings of the Taoiseach with representatives from Harland and Wolff. It is clear that many of the difficulties on both sides of the Border could be eased, if not solved, if we worked more closely together.

The Government are doing a difficult job in extremely adverse circumstances. There is no serious alternative to the policies being pursued at present. The claim that a different team would do things better is certainly not borne out by recent experience. If progress is to be made in overcoming our problems we need a period of political stability and constructive Opposition. It is not a question of suspending their democratic policies but merely of having a greater sense of responsibility in exercising them. Oppositions should not oppose policies which they themselves would be carrying out in Government, or advocate measures that they would not themselves dream of putting into action. The country is tired of the politics of personality, the suggestion that one side or the other has wonder cures or miracle-working leaders, that one side is all to blame and the other always right. The public are sceptical of all such political claims and they want to see their politicians get on with the job and make a serious and responsible contribution whether they be in Government or in Opposition. This responsibility extends to us in the Seanad and I hope we will see it over the next couple of days.

Mr. P. Reynolds

I am probably correct in saying that this is the first time the Seanad has been recalled during the recess. Certainly it is the first time that I remember it being recalled. The fact that a sufficient number of Senators have been available to sign the order for recall is an indication of the seriousness of the situation in which the country now finds itself. All the economic indicators point to a most serious situation indeed in Ireland at the moment.

It is only appropriate that at the opening of this debate which is taking place in these unusual circumstances we should give some consideration to the criticisms brought about by our present predicament. The situation that we find ourselves in now did not happen by accident. Very few things in human existence happen by accident. Most of them are ordained by human activity. I have no doubt, and propose to show to the House, that our present position is not due to any accident or any outside circumstances, but is due largely to a mishandling of our affairs by those who were in charge in the last crucial five years.

This country first experienced a recession in 1973 with the oil crisis of that year. The behaviour of the Government between 1973 and 1977 and the policies pursued over those difficult years took us carefully and successfully out of that recession and in 1977 the economic indicators were set fair. Inflation was on the way to being reduced to a genuine single figure. Our growth rate was the highest in Europe. Our balance of payments was under control. The budget deficit was on the way to being eliminated and borrowing was at a manageable level.

In 1977 the Government changed; Fianna Fáil came back into office with the biggest majority in their history. It is now common case among the vast majority of the citizens of this country that the policies which brought that Government in in 1977 with such a huge majority were the cause of our present disastrous situation. Though totally unnecessary, the Government proposed huge borrowings when the country did not need the injection of those borrowings. Those borrowings had the effect of increasing consumer demand which in turn showed itself in VAT increases on imports and put our balance of payments out of line. It also had the effect of fuelling wage expectations which in the main was the cause of the rapid growth in inflation which took place then and from which we are suffering now. That is not the view of the people on this side of the House alone. It is shared widely by all independent economic commentators. The last person to express that view was the distinguished Dr. Whitaker, a former Member of this House, a former Secretary of the Department of Finance and a Governor of the Central Bank of Ireland, a person who had no political axe to grind and an expert in his field. As lately as last week he laid the blame for our present position fairly and squarely on the policies of 1977, coupled with the policies of defective budgeting. Some Fianna Fáil Deputies have said the same thing.

When we read parts of the manifesto prepared by the Fianna Fáil Party for the 1977 general election there is no doubt that that got us into the economic situation that we are in at present and, in my opinion, will be in for some time. We were just recovering from the recession of the early seventies when the promises of the manifesto had to be met and the Government found themselves elected with a hugh majority and their hands tied behind their backs to the commitment of the manifesto.

Unemployment is now running at 160,000 and still growing. Mr. Jack Lynch, when Taoiseach during the term of a Fianna Fáil Government, said that if the unemployment figure ever moved above 100,000 people he would resign. Of the 160,000 unemployed 20,000 are under 25 years of age and this figure will continue to grow as more school leavers come on to the job market. What are their chances? Nil. Every day we read in the newspapers of more companies going into receivership and liquidation, and one million children under 15 years of age are going to school here at the moment.

People in business are going through a very difficult period—people in the manufacturing, wholesale and retail businesses, hotel owners, publicans, every section of the business community are going through a difficult period. They are hanging on to very slim order books and in most cases are at the mercy of the banks and moneylending agencies. The demand to meet their repayments on these people who have borrowed money — and most have — is beyond description. I was interested in Senator Ryan's comments about inflation. Recent figures show that inflation has decreased from 20 per cent to 17 per cent. The Tánaiste has intimated that he sees signs of inflation dropping still further.

Inflation is a peculiar thing. When it hits, it hits hard. But everybody will admit that prices are still increasing as fast as ever before. In the past few weeks bread, flour, butter, sugar, beans, peas, fresh vegetables, soap and soap powders have all substantially increased, without mention of the increase in the price of clothes. The price of petrol increased last week and, if we are being informed correctly, will increase further. Inflation could come down for a wrong reason, which would be a dangerous situation. It could come down for the reason that interest rates have dropped nominally, or for other reasons — that the sales of goods were not moving at the expected rate. I am thinking here of the sale of goods carrying 30 per cent VAT — fridges, cookers, washing machines, most house equipment. If inflation is coming down because of non-sales, or reduction in interest rates, we are going to find ourselves in a very dangerous situation.

The English figure for inflation is down to 8 per cent, but, simultaneously, they have slightly over three million people unemployed. That is the highest figure on record. If our aim is to get it on paper that we brought inflation down and at the same time people fail to borrow because they cannot make their repayments and fail to buy necessary goods because they cannot afford to pay for them, more unemployment than ever will be created.

Our trade deficit in August of this year was £124 million, which has dashed our hopes of any improvement in 1982. All we can do is hope, for our nation's sake, that the August figure will not be repeated over the months ahead. The solution in past years was to borrow, but the years of borrowing have conned us into financial suicide. The housewife or the business person occasionally has to borrow money, but when borrowing they think of their repayments, of their commitment and of what they are going to do with the money they borrow. That is understandable, because interest rates are very high and the amount of money borrowed could be substantial.

The Government are handling the taxpayers' money — in some cases to use for their own needs, which can be dangerous. It is time that this Government learned that borrowing to pay current bills is madness, that borrowing for the day to day running of the country, for payments of wages or social welfare, is not, and cannot be, a healthy position. Borrowing for productive development could be prudent, provided we borrow within our capacity to repay and that we do not hurt people in making the repayments. We experienced all this before in the late fifties.

Last year our external debt reached £3,725 million on 31 December 1981. At the end of June that figure had moved to £4,713 million. At the moment it is costing £1,110 million to service our national debt. The yield from income tax was £1,589.8 million last year. It took 70 per cent of that money to service our national debt. With the increase of approximately £1 million at the end of June, the 70 per cent will not service it in the coming year; it will take much more.

There has been much talk about the civil service and its increase in numbers. This was the commitment in the manifesto. I was a member of a vocational education committee after the 1977 general election, and I recall writing to the then Minister for Education for permission to appoint a clerk typist. He wrote back that we could appoint three. We were on a spending spree, employing people in the civil service and local authorities, everywhere they could be employed, for no other reason than to fulfil promises in the famous manifesto. The civil service has grown from 26,000 in 1950 to 28,000 in 1960, to 36,000 in 1970, and now it is around 60,000. In the wider sector, 225,000 are employed. This figure increased by 25,000 in the period from 1977 to 1981, approximately four years. Again, this was fulfilling the promise made in the manifesto.

The public service agreement was a good agreement for the country if all sides were to keep to their bargain. It represented a 9 per cent wage increase, not far from the recommendations of the Three Wise Men at the time and it could certainly lessen the inflation rate. The Government tried to save £120 million in 1982, but were just postponing the paying of the bill to 1983. This money was included in the January budget, or is this another public relations exercise? If the Government have got into trouble with the public service unions, they asked for it. Everybody knows that we are in a recession, that we have hard times and will have hard times. We must now have the courage to lift ourselves out of it fast and the Government must give us the leadership. We are paying for the borrowing of the last decade and cannot give way to each and every demand from this group.

On the pay front, the most worrying aspect is the special claim. When a certain group go to the Labour Court and get an award in their favour, another group at the same wage level jump in and make the same claim, and then another group, and so on. It is hard to blame one group for comparing themselves with another, but few will disagree that, when the money ends up in their pay packets, inflation has changed the picture and the bread and butter still have to be put on the table.

There was a heavy shortfall in income from the last budget. On excise duties, taxes on beer, spirits, tobacco and numerous other things, the shortfall is £72.1 million. That is a very substantial shortfall. The reason for this is that the general election intervened after the first budget was announced. People who were blessed with enough money knew that the prices of tobacco, cigarettes and spirits would increase and they bought in a sufficient supply, prior to the budget, to keep them going for some time. That figure will not level out until some time next year. Another serious problem is the tremendous amount of spirits being smuggled over the Border, The loss in revenue here must be colossal. The shortfall in income tax was £64.5 million up to 17 September 1982. It is not hard to know what caused that shortfall. Fewer people are at work, Businesses are making smaller profits and will continue to do so. I can see that figure being reduced substantially again next year.

There is a shortfall in excise of £1.3 million. Understandably that can vary. There is a lower consumption of beer. There is a 5 per cent drop in the sale of Guinness draught stout and draught ale, the most popular drinks in the country. I collected figures from a local wholesale bottler. He told me his total ale sales for the year are down 15 per cent and his total stout sales are down 12 per cent. His lager sales increased by 3 per cent, but he has an overall drop of 11 per cent. If that pattern continues, the amount of revenue from excise duty will be very small.

I should like to mention value-added tax at the point of entry. Some firms had to borrow substantial sums of money to pay this tax, varying from £5,000 to £40,000 or £50,000. These people had to pay for this money. I have a note from a man who finds himself in all sorts of difficulty. The position prior to VAT being paid at the point of entry was much simpler. He says that recently they imported 50,000 spare parts from Brussels to Dublin by air. Aer Lingus informed them that it takes three days to prepare an entry, a week to ten days to go through the customs, and a further two to three days to deliver to Dublin whereas before the imposition of VAT at the point of entry the delay was approximately two days from customs clearance. Surface shipments are taking an extra ten days to clear because of customs regulations and VAT. Also customs clearance agents are charging an additional £7 and that puts a further charge on these people. They are paying much faster, and getting a worse service. There is an obligation on the Department of Finance or the Revenue Commissioners, who are responsible, to see that this matter is dealt with.

When the Coalition Government left office in June 1977 the total external Government debt outstanding was £1,039 million. At the end of 1981 it was £3,725 million. The budget deficit in 1976 was £201 million and in 1981 it was £802 million. At the end of 1982 this figure could reach either £900 million or £1 billion. That is far from the target of £679 million set in the last budget.

Senator Ryan was not correct when he said the Fine Gael Party bitterly opposed cutbacks. We realise the situation fully. The agricultural sector has been cut back by £3 million. We must remember that the prices of fertilisers, feedstuffs and ESB charges have increased. It is a difficult situation. I hope the cutbacks do not affect drainage, particularly western drainage. After making an application to have their land drained people have to wait two years before an inspector calls to them. Their costings on materials used in drainage and on wages paid are about three years out of date and require to be updated. The same can be said of farm buildings and land reclamation.

I would be failing in my duty if I did not make some reference to local authorities. I have been a member of a local authority for most of my life. Local authorities are going through a very rough period. We have only to refer to the finances of county councils to realise this. Since 1977 when rates on dwellings have been borne by the Exchequer, stringent controls have been imposed on local authorities. This shows in the conditions of our roads, in the employment in local authorities and the services they are expected to deliver.

Local authorities have been bearing the cutbacks for the past five years. They have not got out of line like so many other public bodies. In 1971 they spent over £130 million or about 6 per cent of the GNP. In 1980 the figure was still about 6 per cent. Although local authorities are under a great deal of financial pressure, they have been asked by Members of this House and the other House, and by the Government, to provide new services covering the fire service, pollution, malicious injuries, the cheap fuel scheme and a litter service. The members have no control over this problem. They are finding it very difficult. When local authority members come to an estimates meeting, the manager has prepared the cost of refuse collection, maintenance of water and sewerage service, house repairs, payments to committees that have to be paid on demand, such as library committees and agricultural committees. Whatever is left is put into roads. The reduction is only on the outside. Consequently, only those who are doing the hard work of making and maintaining the roads are affected. There is no reduction in office staff. The situation is becoming desperate. Much more money will have to be made available for local authorities.

I want to refer to the Minister for the Environment. As reported in yesterday's editions of the Irish Independent building importers are blamed for the loss of 10,000 jobs. I admit, and I mentioned it in this House on numerous occasions, that stuff was being imported which was being produced in the country. The Minister makes reference to timber being imported to the extent of £110 million. Timber has always been imported but there were other items which were not imported but that are now being imported. I mentioned this situation several years ago and I should like to know if the Minister did anything about it. We have had the situation of the importation of nails though nails are manufactured within the country. Also imported are plastic gutters while slates are being imported in a very big way from Belgium. The price of this commodity at the moment is £474 as against £547 for the Irish slate. Even at that, there should be some way that these industries could be protected. I do not know what the EEC regulations may prevent. Plastic sewer pipes, plastic slates and so on, are also being imported.

If this debate did nothing more than help to get rid of the present Government and to put back into the various sections of the community the confidence that was there before this Government got into power, we would be doing a good day's work. This Government are not prepared to stand up and to meet the problems that have to be met and to deal with them. This will leave us in a mess for a number of years. The Government may say that they have not got an overall majority. As I said earlier, the last time they were in power they had the highest overall majority any party ever had but they made a mess of things then and they are making a greater mess of them now.

Minister for Health and Minister for Social Welfare (Dr. Woods)

I rise to speak on this motion because part of the motion refers to what is termed the "inequitable cutbacks" in the social services. I will make a brief comment on what Senator Reynolds said because some of it impinges on this social area with which, naturally, I am very concerned. He talked particularly about prices and what he saw as an increasing problem in the price area. Indeed, he seemed to think that the problems we are facing at the moment would all have been resolved if the Fianna Fáil manifesto had not been introduced in 1977. Two figures come to my mind in that context. They are the increase in the price of oil in 1974 of the order of eight dollars a barrel and the increase in the late 1979 of 32 dollars a barrel. Even those two figures will indicate very clearly the magnitude of the change which took place in 1979. That change shook the major economies in this world. Ireland is not one of those major economies and naturally when they were shaken we felt that storm rippling over our small economy here. Indeed, some of the major economies were sent into reverse and have since not been able to recover.

This is just to put in perspective the circumstances we face at this point in time, without going into any more detail on the latter part of 1977 or indeed 1978. There is no need to panic in the present circumstances but there is a need to put our house in order. Indeed, at the end of his speech Senator Reynolds said that what needs to be done in effect is to put our house in order and he does not believe that this Government will do that or that they are prepared to do it. I would agree with him in relation to the need to put the house in order at this time. That is what we are setting about doing now.

The Senator also made reference to prices. On that point in particular it must be made quite clear that the consumer price index rose by just over 2 per cent in the quarter to mid-August 1982. This increase is the lowest since mid-November 1978. This is the most recent figure. It is for the most recent quarter. That brought the annual rate of inflation down from 21 per cent at mid-May to 17 per cent, the lowest annual rate since mid-February 1980. Other evidence of the decline in the underlying rate of inflation is provided by the trend in industrial output prices. The annual rate of increase in manufacturing output prices declined for seven successive months to June 1982 when it stood at 12.4 per cent. Wholesale price increases have also been decelerating for some time. These trends reflected the favourable impact of a rapid deceleration in the annual rate of increase of import prices from more than 22 per cent in July 1981 to less than 7 per cent by May 1982. It is particularly important to put this picture in relation to inflation on the record and not to go off with some other version of the situation because obviously inflation is particularly important especially to those who have to manage on the social services. The work of the Government in controlling inflation is paramount in that respect but if the Government are succeeding in this area, it is only fair that that be recognised. I do not claim that this is the end of the line. It is really only the beginning.

If we look at the consumer price index for year-on-year figures we find that CPI for 1981 was down to 17.1 per cent in mid-May but back up to 20 per cent in mid-August and to 23.3 per cent in mid-November. The cause of that increase at that time was the budget introduced by the former Government when they came in in July last year. That was the direct cause. There is no question about that. It is important to make that point because at this point in time we have an opposite effect. We have a mid-May figure of 21 per cent coming down to a year-on-year figure of 17 per cent. Why is that? Of course the reason is that we did not introduce either on 1 July or at mid-term a budget which would have resulted in pushing up prices all round. It is particularly important to keep that in perspective.

What have we been trying to do instead? We have been trying to deal with the expenditure side and by dealing with the expenditure side we reduce inflation and also reduce the demand subsequently for further taxation which again will have further beneficial effects on prices and inflation. Senator Reynolds made some remarks also about the application of VAT at the point of import. He was very perturbed about this. A very loose system operated prior to this change. I was very familiar with the situation being a north-side Dubliner and not far from dockland. Literally you could bring anything in and lose it in the mix. If we are concerned with having fair play within the country, then all these goods need to be identified from the outset. Certainly that is happening now. In fact I know of people who have said they never paid taxes on some of these things before in their lives. They are very upset because now they are into the net at the point of entry to the country.

I am quite confident that the amount of money which will come in there will exceed the estimates of the Department of Finance and the Revenue Commissioners at this time. That is from the little knowledge I have of the movement of goods. The figures will come later, but if you observe the goods and what is happending you get some indication of what is actually happening at the point of entry. Of course, needless to say, financing arrangements have been made for those who need them. Indeed, they are there to be availed of. But there is no doubt that this will remove what was a very distinct disadvantage to the Irish producer. The Irish manufacturer stood at a disadvantage compared to his foreign counterpart who manufactured imported products. Indeed, there are many instances of that coming to light now quite clearly on a factual basis. That is something also which will be seen more clearly when the figures have an opportunity to unfold themselves over the coming months.

I want to address myself particularly to the question of the social services with which I am concerned. Senators will be aware that the maintenance of adequate levels of essential health services within the constraints imposed by the funds that can be provided is one of the main challenges that I, as Minister for Health, face in the present difficult economic situation.

When I assumed office I found that the reaction from health agencies to the levels of allocations approved had been distinctly unfavourable. There was general agreement among health boards that, unless the allocations were increased, very serious consequences for the health services could not be avoided. It emerged that the overall allocation was nearly £60 million short of what was needed to maintain services this year at the 1981 levels. That was the position when I came into office earlier this year. The seriousness of the position was made clear at a meetting which I had with the chairmen and chief executive officers of the health boards on 2 April last. Among the more drastic measures which were considered to be necessary to contain expenditure within approved levels were the closure of hospital wards for protracted periods, significant reductions in numbers covered by medical cards, severe curtailment of vital community services, such as home help services and meals on wheels, and cutbacks in services for disadvantaged groups such as the mentally ill and the mentally handicapped. Unprecedented reductions in numbers employed would also have been required to secure the necessary savings. These were the considerations which were on the table when I came in earlier this year as Minister for Health in the present Government.

Despite the financial constraints imposed by the difficult economic situation the Government considered that it was necessary to provide extra funds to ensure that community based health services could at least be maintained at a reasonable level and that the measures which would undoubtedly be required to control expenditure on hospital services would not deprive people of essential hospital care. The Government, therefore, decided to provide an additional £28 million in the budget to ease the severe financial constraints in the health services. From a factual point of view I want to make that clear, that this Government, on coming into office, adjusted the Estimates of the beginning of the year and in that way provided an additional £28 million in the budget to ease the financial constraints. The effect of these extra funds, taken in conjunction with certain other economy measures, was to reduce the overall deficiency in the allocation for health services to about £20 million. However, it must be accepted by every person who contemplates the growth in recent years of total public expenditure, that in a time of severe world-wide economic recession there had to be cutbacks.

A service such as the health service — which was heading towards a gross expenditure of £1,000 million, or some 8 per cent of the gross national product — would naturally fall to be considered when cutbacks were being made. In the current year the percentage of the health services costs which have been cut represents about 4 per cent of total expenditure. From my series of talks with the chairmen of the health boards and their chief executives and the representatives of other health agencies, I am convinced that the savings can be achieved by a judicious combination of elimination of wasteful procedures, non-essential items, careful control of temporary employment and overtime and the imposition of nominal charges for services which those who can afford them can pay, so that the full range of essential health services for those who need them can continue to be provided.

Let me illustrate my approach. When it became necessary, because of the serious situation reflected in the mid-year economic indices — and this is where I come back to what I said in the first instance — at mid-year stage last year when the outturn of the figures was worse than anticipated a budget was brought in to meet that situation together with economies within the services. On this occasion it became necessary to reduce the allocations to the health agencies at the end of July last. I directed that there should be no reductions in the allocations to mental handicap agencies and that the cutbacks to be made generally should not be made in the area of community care services other than logical efficiencies where these could be applied, or those services which are necessary to sustain the most disadvantaged in our society.

On 21 September I met with the chairmen and chief executive officers of health boards to review the financial position. I referred to the extreme seriousness of the economic situation and stressed that it would not be possible to mitigate the funding problems of health agencies by providing extra assistance from the Exchequer in the current year.

I am very appreciative of the efforts already made by health boards and other agencies in curtailing expenditure and I am asking for their further co-operation in taking whatever steps are needed to avoid overruns in their 1982 allocations. Of necessity the curbing of public expenditure will be one of the main objectives of Government policy in 1983 and thus the carry-over financial benefit of cost reduction measures introduced in the current year will help to ease funding problems for the health services in 1983.

Because of the present difficult economic situation the Government have found it necessary to reduce employment in the health services. A 2 per cent reduction in the work force of 63,000 is to be achieved in 1983. Constraints in relation to employment apply not only to the health services but are of general application throughout the public service. In the present circumstances, therefore, it is of increasing importance to make the most effective use of our existing staff so as to enable essential improvements and developments to take place. It is important that there should be maximum flexibility in the deployment of personnel and posts in order to ensure that they are allocated to the best advantage.

My concentration, as Minister for Health, will always be on the protection of the poor and the disadvantaged, of the very young and the very old and of those who are seriously ill. Because of our unique population structure we are faced with particular problems in meeting these objectives. The percentage of the population in the dependent age groups, that is under 15 years of age or over 65 years of age, is important because it is from these age groups that the major demands are made on the health services. 41.3 per cent of the Irish population was in this category at the time of the 1979 population census. This, by international standards, is high. It is higher than the corresponding percentage for any other member state of the EEC.

The Irish birth rate continues to be, by far, the highest of the EEC member states. In 1981 the rate was 21.0 live births per 1,000 population, a total of 72,355 births. Less than 1 per cent of these births now takes place at home, which is one of the major changes that have occurred in recent years. It is very encouraging to report that infant mortality, which is accepted as one of the important indicators of the general state of health of a community, is continuing to decline in Ireland. In 1960 the rate was 29.3 infant deaths per 1,000 live births. By 1970 this rate had fallen to 19.5; in 1981 it was down to 10.6.

I have a special interest in the community-based health services. My aim has been, even in times of financial difficulties, to maintain these services at the level which they have achieved.

The community protection programme includes such elements as health education which aims to provide the means and opportunity for people to protect, maintain and improve their health; nutrition and the promotion of healthy lifestyles; the encouragement of a higher level of public awareness of hygiene and proper standards of cleanliness in all departments of living; the exercise of control over the safety and quality of medicines and the prevention of abuses of addictive drugs; the maintenance of a high level of immunity against the major infectious diseases: alerting people, particularly young people and those who are associated with them, to the considerable dangers in the abuse of alcohol, tobacco and other drugs.

In addition to the savings sought generally in the health services it was decided to effect reductions in the cost of the drugs, medicines and applicances provided free of charge under the general medical services, a scheme which will cost about £90 million this year. In considering how this could best be done the Government were careful to ensure that the highest possible standard of care should still be provided for persons covered by medical cards. All essential medicines should continue to be provided free of charge.

There was already available to me the Trident Report, a report by a firm of consultants who examined the whole question of the supply of drugs for the health services. They reported in 1981. One of their recommendations was that those preparations commonly known as over-the-counter items should be excluded from payment under the general medical service.

In addition details of the frequency and cost of prescribing in the GMS in recent years were given in the annual report of the GMS (Payments) Board, published at the end of June. May I mention just a few of these details? In the four years from 1977 to 1981 the numbers of persons covered by the scheme fell by about 6,500. In the same period the number of doctor visits increased by close to one million and the number of prescription items by almost 1¾ million.

Because of the circumstances we are living in at the moment, we are about to launch a national campaign to advise parents and children on the dangers of substance abuse, with particular reference to drug abuse. It may be remembered that I allocated an additional sum of £250,000 early this year for this purpose because we regarded it as a particularly important matter. Preparations have been made by the Health Education Bureau who are about to proceed, now that the schools are open again, with the whole programme. It has been tested in the meantime in some schools.

The cost of prescriptions in the GMS has received a great deal of attention in recent times. The cost of prescribed medicines, including dispensing fees, had increased in the same period from £19½ million to over £45 million. Clearly there was scope for economies.

Thus, one report helped to bring the cost of drugs into focus while the other suggested a way to reduce that cost. The decision to follow the Trident suggestion, however, required some further consideration. On the one hand, there are certain conditions which require expensive items, when the expense will be on-going and outside the capacity of a medical card holder. Stoma appliances and special foods for coeliacs and for children suffering from PKU fall into this category. On the other hand, there are certain conditions which require special consideration on what might be termed public health grounds. The preparations are not necessarily very expensive but the need is such that they should continue to be provided free of charge. In this category are items such as medication to deal with scabies and worm infection.

It is on this basis that a more extended short list was prepared of items such as medicines to deal with diarrhoea, antihistamine tablets, psoriasis, medicines effective for infants, iron and folic-acid tablets for expectant mothers, the provision of bandages and dressings when needed, particularly by doctors, and in some instances by public health nurses. A number of such items have been retained for what we consider to be very good reasons.

Therefore, provision was made for the continuation of the supply of medication for a limited range of conditions. Apart from these it was decided to exclude from the scheme those items which do not require a doctor's prescription. A list of the items now being excluded has been sent to each participating doctor and pharmacist. It contains almost 900 items. I have also had a list circulated showing the items which continue to be supplied. In addition, more than 3,500 items will still be available to medical card holders on prescription.

The exclusion of these items from the GMS means that in future if a medical card holder wants a specific cough bottle, or a medicated shampoo, or a particular toilet requirement, it will be open to him to purchase it. If a doctor feels that one of the excluded items is appropriate for his patient he can tell the patient so and the item may be purchased.

In order to assess what the effect of this would be I had a special examination made of the cost, in retail prices, of the items in question. Almost 60 per cent cost less than 50p per week, and an even higher proportion could reduce their cost to this level if they purchased modestly-priced alternatives to what they now use. Indeed, 80 per cent cost less than 75p per week. At the other end of the scale 1 per cent cost £2.50 per week or more, though again, but to a lesser degree, some patients could reduce the cost by changing to a less expensive product.

In making these changes patients would be well advised to seek advice from their doctor or pharmacist. For the majority of persons the cost of the change should not be of serious consequence, but for the few who may find that it creates hardship I expect to have arrangements to deal with the problem. However, the requirement of the exercise is to reduce the cost and this will not be achieved if it is merely transferred from the GMS to some other programme.

The projected savings from the present action is of the order of £8 million in a full year. I have arranged for extensive monitoring of this change over the coming weeks. While there may be some teething troubles I am endeavouring to ensure that the change is implemented with the least possible difficulty. This will require the co-operation of doctors and pharmacists and I would welcome that co-operation.

I will refer briefly to the National Community Development Agency. The causes of poverty in a community are many and complex but there is a familiar profile: high unemployment rates; lower than average incomes; high dependence on State benefits; poor health; poor housing; inadequate educational services; lack of community infrastructure; lack of knowledge and access to social and community service.

The Government are determined to tackle all of these problems in a positive, practical and co-ordinated manner. In our ten point election programme we attached special importance and significance to the task of implementing a much needed programme of social development.

We have already gone a considerable way in honouring that commitment. In July last the Government piloted through this House the National Community Development Agency Bill. That Bill is now an Act. The Government are at present considering the composition of membership of the agency, which I hope to announce shortly.

The establishment of the agency is an important component in the Government's overall strategy for the development of a comprehensive social policy. It represents the first attempt at the creation of a national policy on community development. Community development, of course, is not new. All Governments have an obvious commitment to community development in its broadest sense and every action of Government, directly or indirectly, is done in the common good and for the betterment of all. What is new is that we are beginning to consider community development in a structured way, to refine our ideas and to develop an agreed and acceptable strategy for the future.

The Government have also taken an important initiative at EEC level. As Senators may be aware, the EEC pilot scheme to combat poverty was wound up on 31 December 1980. with the withdrawal of the EEC funding, the activities of the Irish Advisory Committee on Pilot Schemes to Combat Poverty also ceased.

The Irish Government have been pressing for a further EEC programme to combat poverty. It was on our initiative that the EEC Council of Ministers of Social Affairs at its most recent meeting agreed to examine the report on the first pilot scheme with a view to deciding further EEC intervention in this area. I take particular satisfaction in this because at the meeting at which the combat poverty programme at EEC level was to be brought to an end, I managed to get a foot in the door to get the Ministers present, against strong representations from some countries, to keep the door open, to examine the reports of the pilot studies that had been done and to look at the lessons that might be learned from those studies for the future, to give countries an opportunity to bring in reports from these pilot studies and to indicate whether further action from the EEC would be desirable.

It was agreed at that time to do that and a small amount of money was allocated to keep that door open. There has been a follow-through to that development with a number of meetings since then. We have been pressing for a further EEC programme to combat poverty. It was on our initiative that the EEC Council of Ministers on Social Affairs at its most recent meeting agreed to examine the report on the first pilot scheme with a view to deciding further EEC intervention in this area. That report clearly illustrates that poverty in the community still exists and highlights the need for further action at national and community level.

As I have already pointed out, the Government have already undertaken a number of important measures at national level. There is a limit to the social progress a Government can make when acting alone. Moreover, it has been shown that as poverty springs from a wide range of causes, so measures to combat poverty must reach into a wide range of social and economic policies. We will continue to press strongly for a further and urgent programme at EEC level. I am hopeful that as a result of the Irish Government's initiatives in the matter concrete proposals will emerge from the forthcoming Council of Ministers' meeting.

This year we will be spending some £120 million on the psychiatric services. As with all other areas of the health services we have an obligation to ensure that the best use is made of that allocation and of available resources, both staff and buildings, to provide a quality of service compatible with the needs of the patients. My Department are at present carrying out an examination into the personnel resources in our psychiatric services. The aim is to draw up a document which will form the basis for discussions with the health boards and staff interests on the question of making the best use of the trained psychiatric nursing and other personnel with the twin aims of helping the staff to achieve their full potential as professionals and so to provide a high quality patient care.

The number of patients in psychiatric hospitals. I am glad to say, continues to decline. It has fallen from about 20,000 in 1963 to about 13,000 in 1981. On the other hand, the number of admissions to mental hospitals increased from about 20,000 in 1969 to 27,000 in 1979.

Dr. West

On a point of information while I do not want to interrupt the Minister in his very interesting speech, could he explain to the uninitiated like myself what is the difference between a mental hospital and a psychiatric hospital?

Dr. Woods

They are the same thing, a psychiatric hospital and an institution.

Dr. West

Yes, it is just that it appears that the entries to psychiatric hospitals have fallen by the same amount as the entry to mental hospitals has increased.

Dr. Woods

The total number who are there on a long-term basis is declining but the number coming in and out on the short-term basis is growing and that is the difference between the two figures. So you are getting more admissions but very quick re-entry to the community as distinct from the long-term patients. We have the feature of the very long-term psychiatric situation. That is being broken down.

In recent years alcoholism has emerged as the major single cause of admission. In 1979, this condition accounted for 26.2 per cent of all admissions. These figures reflect greater activity in the treatment of the mentally ill and the strengthening of services in the community for their care and rehabilitation, because, of course, patients would have been reluctant to go in very often. There is an increasing readiness to go in and to come back out very quickly and it is becoming a more normal part of hospital care, fortunately, because it means the care can be applied fairly readily then.

While certain works have been carried out over the years in an attempt to update the older mental hospital buildings. I fully accept that conditions are still not up to an acceptable standard in some of these buildings. This is particularly so for long-stay patients. For this reason, a special allocation of capital moneys has been made available this year with the specific purpose of improving the conditions for patients through various improvement schemes at district psychiatric hospitals. In this way, I would expect that real improvements will be effected in all public psychiatric hospitals in the country. I fully realise, of course, that this is just the first step in attempting to come to grips with a problem which has received far less than its fair share of resources in the past. It is this Government's firm intention to continue to allocate funds in the years to come for the continuation, on a planned basis, of such improvement schemes. Much remains to be done in the majority of our psychiatric hospitals before standards are brought to a uniform and acceptable level. We have, however, a clear and unequivocal duty to ensure that those who will continue to live in our psychiatric hospitals will have an opportunity to do so in conditions which are fully consistent with their human dignity. I would like to make it perfectly clear also that this necessary expenditure on our older hospitals will not be incurred at the expense of equally urgent investment which is also required in new alternative community facilities outside the hospital setting. In fact I am funding a number of such developments this year and will continue to do so in the years ahead.

I should also make it clear that the present Government are not inhibiting in any way necessary works of improvement in the capital infrastructure of the health services. In fact, the Government have determined a medium term allocation of capital resource at approximately the same level as that allocated for the current year — £49.2 million — updated for cost of living rises — for the period 1983-87 for the health services.

The programme will enable me to make provision for major hospital projects and for the continued phased improvement of long stay accommodation in psychiatric hospitals which was started this year, the replacement of geriatric in-patient facilities, the replacement of obsolete equipment in hospitals, and the continuation of work designed to lessen fire hazards.

These financial commitments which I have mentioned are a clear indication that the Government are fully committed to shifting resources within the health services to the most vulnerable groups. These are the actions of a caring and humane Government and it will be my intention to continue, in spite of the severe financial constraints, to protect the weak and the disabled from the burdens which our economic difficulties will inevitably place on the general population.

Clearly we must put our house in order. This applies to all agencies. We must identify and remove the flab in the system. There are no easy options. The wages bill now running at about £650 million cannot expand indefinitely. Apart from any national wages agreement, special claims will have the inevitable effect of reducing numbers since the overall resources are clearly limited. It may come as a surprise to many people to realise that unless extra funds are provided by the taxpayer every one per cent increase in the health services pay bill could lead to the loss of up to 600 jobs. This is clearly unacceptable. There are now indications that both management and staff in our health services appreciate the present difficulties and are prepared to co-operate in overcoming our problems. I am confident that with their professional and unselfish co-operation we can make the economies which the national financial position requires. This will enable us to advance our health services on the lines which we can all support but with greatly increased efficiency and relevance to genuine need.

So much for my responsibilities as Minister for Health. The scene so far as social welfare is concerned is somewhat different.

Mrs. Barnes

Through the Chair, again on a point of information, while the Minister spoke about psychiatric and mental institutions and also mentioned geriatric institutions I do not see any coverage of institutions for the mentally handicapped or has he in fact included them under some of those headings already inadvertently or otherwise?

Dr. Woods

Because of the time factor I had to cut back a bit, but mentally handicapped are a priority area in the services. In fact the services for the adult mentally handicapped are the highest priority. So the objective is to take the mentally handicapped out of the psychiatric institutions in so far as possible. Some of the mentally handicapped can develop psychiatric problems and you would have those problems remaining. I gave an instruction that mentally handicapped were not to be placed in psychiatric institutions so far as this was possible and our priority in relation to new units will be in the area of adult mentally handicapped.

Mrs. Barnes

I was anxious that it be recorded that we would, in fact, see the mentally handicapped section serving their own priorities and not, inadvertently or otherwise, being included under psychiatric or geriatric headings. For too long this has been the case.

Dr. Woods

I am sorry about that but there is a good deal more in that section that has been removed for brevity. The Senator can be clear about the fact that caring for the mentally handicapped is the priority in that area I fully recognise that.

It is, perhaps, in times of economic stringency such as we are now experiencing, when questions must be answered about the levels of expenditure in all areas of the economy and about the real effectiveness of that expenditure, that the Government's approach to social policy and the protection of the weaker sections of the community comes under close examination. By any reasonable criterion the record of the Government and, indeed, of Fianna Fáil Governments in similar situations down through the years has been enlightened and effective. If we go back to the thirties when the country was experiencing a deep economic crisis this party introduced the unemployment assistance scheme which greatly alleviated the effects of that crisis on working people. We introduced the widows and orphans pension scheme which, through familiarity, may now appear to be a commonplace and ordinary provision but whose merit can be judged adequately only in the context of the time.

Again, in the difficult years of World War II the social philosophy of Fianna Fáil was expressed in a positive manner despite the primary concentration on economic survival. This period saw, for example, the implementation of the children's allowances scheme which has become a vital and accepted part of our social welfare system and the improvement of which has been a particular concern of Fianna Fáil Governments over the years. Again during the fifties which was a period of considerable economic difficulty many initiatives were undertaken, the major one being the establishment of the unified scheme of social insurance and social assistance in 1952. The subsequent extension of this scheme, notably by the introduction of old age contributory pensions in 1960, and retirement and invalidity pensions in 1970, brought this country to the stage when it has a social security system which bears favourable comparison with the systems in other countries. I am referring to those earlier developments not out of a sense of nostalgia for the past but to place the record of the present Government in the context of the record of concern shown by successive Fianna Fáil Governments since the foundation of the State.

The economic difficulties of more recent years have not prevented the Government from providing for further major improvements to the social welfare system. The main effort has been devoted to improving the rates of social welfare payments and while this may not have had as spectacular an impact as the introduction of new schemes, it had just as important an effect and in terms of the levels of expenditure involved is just as significant. At a time when inflation has been rising and when the public consciousness is somewhat dulled by the constant reduction in the value of money, it is somewhat difficult to appreciate how significant the increase in social welfare payments has been and how the relative position of social welfare recipients has actually improved in real terms. As an illustration of what has been happening, the increase in social welfare pensions in each of the last three budgets has been 25 per cent while the increase in short-term payments was 20 per cent in 1980 and 1981 and 25 per cent in 1982. The overall percentage increase since 1978 in long-term payments has been over 140 per cent while the increase in short-term payments has been over 110 per cent. This compares with an increase of around 90 per cent in consumer prices over the period.

I might mention in relation to the increases in payments made last April that, while they were envisaged by the previous Government's budget last January, they were of considerably more benefit to those receiving them than the same level of benefits would have been if they had been awarded in the context of increased prices for food, clothing and footwear which would have resulted from the proposals of the previous Government to remove food subsidies and put VAT on clothing and footwear. In addition to the increase in rates of 25 per cent last April, provision was made for a double payment of child increases with weekly social welfare payments at the beginning of this month, September. This was to aid the needy in the going-back-to-school period and, in that sense, it was beneficial. That is a measure which was introduced at the beginning of September for the first time and it is intended to provide a similar increase in December.

To the person dependent on social welfare payments the important figure is, of course, the actual level of payment which he receives and I would invite Senators to take a closer look at the benefits provided by our social welfare system for individual recipients. For example, the rate of old age (contributory) pension for a married couple both over pensionable age, is £70.30 a week and if the pensioner is aged 80 or over the rate is £73.10. These rates represent 60 per cent of average industrial earnings and would be in addition to any occupational pension payable to the pensioner. In addition, old age pensioners may qualify for valuable benefits in kind such as free fuel, free travel, free electricity allowance, free TV licence, free telephone rental and they also have medical cards which entitle them to free medical care. The free fuel scheme is also an important additional benefit for many pensioners and those who have urgent or exceptional needs can be catered for under the supplementary welfare allowance scheme.

As far as short-term payments are concerned the amounts involved, when account is taken of pay-related benefits are quite substantial. For example a married man on average earnings of about £145 a week receives during the first six months of unemployment roughly £90 a week and where he has dependent children, the amount is higher.

In the past, the Irish social welfare system was regarded as underdeveloped in comparison with our European neighbours, particularly when compared with the level of services available in Great Britain and Northern Ireland. However, the real improvements which have been achieved in this country over recent years have closed and even eliminated any gap that existed and our social security system now compares favourably with those of more highly developed countries. The basic level of retirement pension payable here, IR£40.25, compares favourably with the rate payable in the United Kingdom, £29.60 Sterling, increased to £32.85 in November, even allowing for the currency differential. The Irish rate of basic unemployment benefit is now IR£31.65 as compared to the UK rate of £22.50, increasing to £25 in November. These examples give some idea of the progress which has been made here in the area of social welfare. These payments, notwithstanding the present economic difficulties, are still being met.

The economic effect of the increases given can perhaps best be illustrated by looking at the proportion of the gross domestic product of the country which goes on the social welfare services. The proportion has risen from about 9 per cent of gross domestic product in 1978 to an estimated 12.8 per cent in 1982, a staggering increase by any standards and significantly so in the present circumstances. It surely illustrates that the Government are a caring one and continue to have a wholehearted commitment to an enlightened social philosophy and a determination to follow through with the necessary policies and programmes. In this I feel that as a broadly based party with our roots stretching out widely and deeply into the national community we mirror accurately in our thinking and approach the feeling and the outlook of the people as a whole. We have been determined to establish a comprehensive and efficient welfare service which is a basic constituent of an enlightened modern society. In this we have learnt much from the experiences of other European countries.

At the same time as an essential part of our approach over the years we have always endeavoured to add the human touch, to introduce either universally or for a particular category some additional supplementary benefit which gives extra comfort and convenience. This feature of our system is particularly illustrated by the various supplementary schemes and has helped to create a flexible system which responds to individual needs in a caring way. Fianna Fáil Governments have never regarded it as sufficient to simply give out pension and allowance books to the elderly and disabled and hope that all the necessities of life would be provided by the weekly payments. Instead we have tried to provide these more vulnerable sections of the community with extra non-cash free services which not only provide additional comfort and convenience but enable the recipients to maintain their independence and dignity. These supplementary benefits for the old and disabled such as free travel, free electricity and TV licences and other measures of a similar nature, including the national fuel scheme introduced in 1980, have been widely welcomed and are valued very highly by those who benefit from them. Most recently we have set up a scheme to provide assistance to those who would suffer hardships as a result of the decontrol of rents.

The Government are determined that the social welfare system will continue to be improved and adapted to meet the emerging needs in a changing situation. At the same time we must recognise that we are now faced with a very difficult economic situation and with the need for very hard decisions which will affect all sections of the community. I feel that the community as a whole is prepared to accept these difficult decisions so that the economy can be set on a proper course and so that the depressing problem of unemployment allied with high inflation with its corrosive effect on the morale of young and old alike can be solved. Priority has to be given to policies and activities which contribute to the solution of these problems and we must accept the implications of this for public expenditure generally and social security in particular. Clearly when social welfare expenditure is running at the level which I have illustrated there is a greater need than ever to ensure that this expenditure is directed in an effective and efficient manner to those categories whose need is greatest. It is a fact of life that social welfare schemes must be paid for through general taxation or by employers and employees through social insurance contributions. Total expenditure this year will be in the region of £1,600 million, some 58 per cent of which will have to come from general taxation and some 42 per cent from contributions. The greatly increased level of expenditure illustrates the Government's commitment to protect social welfare recipients against the worst of the recession through which we have been passing but at the same time illustrates how difficult it is to provide for the cost of services. The impact of PRSI contributions which are now at a necessarily high level caused, as Senators are aware, considerable agitation earlier this year and the scope for further impositions is limited. At the same time those people who are lucky enough to have a job must and do accept the necessity to provide for those who are less fortunate.

Where social welfare expenditure is running at a high level there is also a particular need to ensure that where there is waste or abuse of social welfare schemes everything possible is done to ensure that such waste or abuse is not allowed to continue. There is no question of any dismantling of social security because of the financial difficulties or of undoing the major improvements which have been made to the system over the years. At the same time we must try to make the best possible use of the available means to improve the effectiveness of the social protection which is provided.

In consequence of the steady rise in the value of payments there has been a growing concern, reflected in a large volume of representations not only from employers but from all sections of the community, that in certain instances the level of payments is such as to encourage abuse or to constitute a disincentive to employment. This question arises particularly in relation to payments to workers during periods of sickness and unemployment. The Government, while they are firmly committed to ensuring that those unfortunate enough to suffer loss of earnings through sickness or unemployment receive adequate protection, are at the same time resolved to ensure that payments are not made to those not entitled to them and that they are not set at such a level as to discourage persons from resuming employment. The waste of resources which this would involve, particularly with the need for stringent control of public expenditure could not be allowed to continue unchecked. It places an unfair burden on the rest of the working population who support these benefits through their PRSI contributions and taxation and to some extent hinders the capacity of our society and economy to recover from our present difficulties and to start to generate new sustainable employment.

It must also be remembered that when resources are scarce, exploitation or abuse of the system by certain recipients means that there is less money available for those who are genuinely in need. While I accept the need to combat abuse, therefore, I am also concerned that at a time of high unemployment we must avoid attaching any degree of blame or suspicion to the vast majority of unemployed claimants. We must be sensitive to the special problems of the unemployed and we must not assume a punitive or policing attitude to those claimants, and they are in the great majority, who are genuinely seeking work. The measures I have introduced or plan to introduce in the future will be aimed only at those who are abusing the system — genuine claimants will have nothing to fear.

An interdepartmental committee has been examining the whole area of abuse of the social welfare system and has made a number of recommendations to improve administrative control measures under the sickness and unemployment payments schemes. Arising from this report I have already announced that stricter control measures are being introduced by my Department to ensure that persons receiving such payments are fully entitled to them. These measures include the strengthening of the Department's team of medical referees so that claimants can be referred more promptly for medical examination in appropriate cases and measures for closer examination of unemployment claims. There will be closer co-operation between my Department and the placement services of the National Manpower Service and increased efforts to ensure that job vacancies are brought to the attention of claimants. The outdoor staff of the Department are being strengthened with a view to detecting and preventing fraudulent claiming of benefits by persons who at the same time are working. This will put the Department in a better position to deal promptly with cases of abuse which are brought to its attention with sufficient details to enable an investigation to be made.

The effectiveness of efforts to control abuse of the social welfare system will, however, depend to a very large degree on the degree of co-operation which the Department receives from employers and the public generally. In the area of unemployment benefit the introduction of closer working arrangements between the local offices of my Department and the offices of the National Manpower Service will have a significant effect. However, the elimination of abuses against the unemployment payment scheme will depend in particular on the extent to which individual employers are prepared to avail of the services of the National Manpower Service in recruiting labour. Senators will be aware of recent newspaper articles which suggest that there is major abuse of the tax and social welfare system by a proportion of workers in the building industry. The fact is, however, that if there were no employers in the industry prepared to take on workers whom they know to be drawing unemployment benefit or assistance a significant volume of the abuse that exists at present would disappear.

Employers also have an important role in relation to absenteeism. I am, as I have said, taking measures to improve the system of referring persons on disability benefit for examination by medical referees. However, employers are often in the best position to assess whether there is unjustified absenteeism in their firms and to notify the Department where they know that the system is being abused. Many employers operate private sick pay arrangements for their employees with their own arrangements for medical examination of employees who go sick. I should like to see closer co-operation between employers and my Department in this area and indeed the question arises as to whether employers themselves should take over full responsibility for sickness payments in the early stages of illness. This is a matter which I will be examining but in the meantime I would emphasise the need for co-operation by all those involved in tackling the problem of abuse of social welfare benefits wherever it is known to exist.

Apart from the measures to improve the administration of the short-term benefit scheme I am also anxious that the levels of benefit themselves should not provide an incentive to exploitation or abuse. Various limits operate to ensure that the amount of benefit that can be received while sick or unemployed is not excessive relative to normal earnings and the effectiveness of these limits is under examination. One area of particular concern is payments of unemployment benefit and pay-related benefit to short-time workers who work for a part of a week and receive unemployment payments for the rest of the week. A worker on a three-day working week will normally receive three-fifths or 60 per cent of his basic pay for a five-day week. Because of reduced income tax and PRSI liability on his three-day pay — plus in some cases a tax rebate — his net pay in general is about 70 per cent of net pay while working a normal week. In addition to three days take-home pay he will also receive a half a week's unemployment benefit which is payable on the basis of a six-day week, giving one-sixth for each day's unemployment, including Saturday. Studies have shown that in many cases of short-time working workers can be better off than if they were working a full week. For example, a worker whose gross earnings full time would be £130 a week could, when he works three days and receives unemployment benefit and pay-related benefit for the remaining three days, get a total of 107 per cent to 120 per cent, depending on his family circumstances, of his net earnings when working full time. This is, clearly, undesirable from an economic as well as a social point of view and could undermine attempts to get back to full-time working when trading conditions improve. Measures to remedy this situation are under consideration.

In conclusion I want to emphasise again that the measures which are being taken to control expenditure and prevent abuse in the field of social welfare do not in any sense represent a change of mind on the Government's part on the commitment to a comprehensive and effective system of social protection which has been a feature of Fianna Fáil Governments over the years. All citizens are in principle both providers and beneficiaries of social services and benefits and citizens have a right to be assured that the resources they are providing through the social welfare system are being spent usefully to help persons actually in need and legally entitled. For this reason the control of fraud and abuse is a necessary function of a responsible Government but the pursuit of that objective will not be allowed to overshadow the primary purpose of the system which is to serve those persons in need and to ensure optimum allocation of the resources provided. Special care will be taken in developing and improving administrative procedures to control fraud and abuse, not to reduce in any way the accessibility of programmes to those legitimately entitled to benefit, especially those who are most in need and least able to pursue their rights.

I hope that from the points which I have raised in my speech in relation to health and social welfare services Senators will appreciate, notwithstanding the comments that will appear in the press from time to time when we try to deal with questions of abuse of the services or when we try to keep within the economic levels which the Government have requested, that our primary objective is the delivery in an effective and efficient way of the services to which people are entitled, and especially those in greatest need. That is my objective and it is the objective of the Government. Our present difficulties will not in any way take from our commitment to achieve that objective.

Mr. Ferris

As the first speaker from the Labour Party in this important debate, I wish to state that as a party we considered we had a duty to support the recall motion, even though the Leader of the House thinks it was untimely. As a democratic parliamentary party we have been expressing for some time our deep concern regarding the continuing economic and social crises which have befallen our country.

The Minister represents a Government whose party have been in power for many years since we attained our independence. It is true that some responsibility must lie on their shoulders because they have been in power and have had access to power for a long time. The reason we were concerned about the deterioration of the economy is that some of the decisions which have led to the crisis were taken by this Government outside the democratic institution of the Houses of the Oireachtas. These decisions were announced by civil servants on behalf of the Government, whose members at that time were either in exile or on holiday. The country was left to topple and to groan. There was an apparent lack of leadership on the part of a Government who were, as everyone knows, engaged in the mishandling of other important affairs affecting the image of our country at home and abroad.

An Cathaoirleach

In fairness, I do not think the Senator can make such a reference.

Dr. West

To what did he make a reference?

An Cathaoirleach

I am calling on Senator Ferris to continue.

Mr. Ferris

One of the movers of the motion dealt with cuts in public pay. I feel I must disagree with the diagnosis of Senator Murphy and what he described as his cure. I hope the Chair will allow me to be specific when I deal with where I think the blame should lie. I want to be constructive in my comments. In a motion of this kind I consider I have a responsibility to state where I think the blame should lie.

The Government had included in their budget estimates a figure that was sufficient to cover and honour a public pay award which was reached by agreement between the trade union movement and the then Minister for Labour, Deputy Kavanagh, in the previous Government. This was accepted by all responsible people, whether employers or employees, as a non-inflationary settlement. It was acknowledged by economists and others as being some 8 per cent less than the cost of living figures projected at that time. The figure was included in the budget estimates by the previous Government and it was repeated in the budget of Fianna Fáil earlier this year. It appears now that the Government cannot honour their agreement. In all seriousness I say to the Minister that there seems to have been political misappropriation of public funds voted by the Houses of the Oireachtas and used not to honour the pay agreement, as would be done by any good employer, but to fund other projects promised and agreed outside the democratic institutions of Parliament, which were geared towards electoral support in by-elections or temporary support in Dáil Eireann.

Mr. Killilea

For example?

Mr. Ferris

The examples are so blatantly clear to everyone that I will refuse to be tempted to respond to the interruptions which I hope, a Chathaoirleach, you will try to control in your own inimitable style. This political budgetary manoeuvring must stop. The public will no longer tolerate election promises, such as those included in the famous election manifesto of Fianna Fáil in 1977. In his contribution today the Minister tried to justify that manifesto but it was specifically condemned by the former Senator Whitaker. As has been said, he has no political axe to grind but has the good of the country at heart. Those kind of promises cannot be put forward as a panacea for all our ills. If the political stalemate in the past 12 months has done anything at all it has succeeded in educating the electorate that Governments, or those aspiring to Government, cannot put this country up for auction in the future.

The Labour Party do not like broken promises. I should like to quote from this month's publication Liberty issued by the trade union movement in which the following comment is made:

Why the Government should choose to engineer a crisis in this way one cannot say. Certainly in view of the Minister for Labour's previously stated desire to seek an improvement in the general climate of industrial relations it is difficult to understand the Government's logic in adopting a strategy which broke the most fundamental principle of good industrial relations practices and that was guaranteed to destroy the Government's credibility with the trade union movement at one stroke.

We defend the trade unions. We defend their right to have an honourable agreement upheld, as any employer and employee would try to do. I have no doubt that in their discussions with the Government the trade unions will prove they are a responsible body of people, representing as they do the vast majority of the workers. The economic life of the country depends to a large extent on their goodwill and co-operation.

I wish to deal briefly with what I consider to be inequitable cutbacks in the public service. I listened intently to the Minister for Health on this matter and I should like to deal with some of the areas he mentioned. I welcome his contribution because it is right that we have on the record of this House how the Minister considers he has approached the problem and how we on this side of the House consider he should have approached it.

All of us engaged in public life, irrespective of whichever political party we represent, agree, if we are consistent in, anything we have said in Government or out of Government, that economies are essential if any Government are to restrain themselves from further foreign borrowing for non-productive purposes. But economies are one thing and cutbacks in essential services indiscriminately applied are another. The Government stated when they initiated these cuts that in drawing up this package they had avoided cutting expenditure which would adversely affect the weaker sections of the community and expenditures which were essential to the generation of self-sustaining employment.

How can a Government speak on that line and then with a forked tongue go on to indicate to the various institutions in the country the levels of cutbacks and in the Minister's own Department particularly? He is responsible for the application of a service which affects the poorer, the weaker, the lonely, the people who are in need of constant care and attention whether it be through the Department of Health or the Department of Social Welfare. With a short two months to go in a budgeting year, this Minister expects us in the interest of economy to have a cutback of £12 million. The items which he says today he wants excluded were put before us by chief executive officers throughout the country and supported by political appointees of the Minister on the various health boards who said that there should be cutbacks in medical card holders' entitlement to adult dental and ophthalmic services and transport to clinics and workshops for mentally and physically handicapped people. There was to be a cutback in community nursing and also weekend nursing in hospitals, as if they were five-day institutions. People who become ill on Saturdays and Sundays must be looked after and need nurses, doctors and staff to treat them. A possible cutback in essential radiology and pathology services after hours was suggested. Who can determine what will happen after hours, whether there will be a major accident or a crisis in which it is necessary to provide this essential service?

We were asked to look at bed numbers in hospitals. In my region we have guarded and cherished bed numbers with our life because we know that people's lives depend on them. Cutting back bed numbers means one thing to the Minister but it also means a cut in staff numbers in a hospital which loses a bed. I want to put on the record of this House that the staff-patient ratio in my region is the lowest in the country. I ask the Minister to look at the staff-patient ratios in the South-Eastern Health Board and he will see that he is asking us to cut back by a compulsory figure of 2 per cent for the rest of this year and a possible 3 per cent to follow. He expects us to cut back on a level of service, in nursing particularly, because on the law of averages we will lose more nurses in these cutbacks. He is asking us not to fill vacancies in these areas in order to achieve his cutbacks in employment in the health boards, in an area which is understaffed. It has been accepted by the institutions in which these people serve, by management, programme managers and anybody involved in the health service that the levels of staffing at the moment are unacceptable. Yet we have a directive to cut them back.

What will that mean in a situation of continuing unemployment? People who are fully qualified in an essential service and educated at colossal expense to the State are deliberately being made redundant when we need them and more with them. If that is how the Minister wants his cutbacks to be applied, he should stop and rethink what his service is about and cease patting himself on the back about all he did or did not achieve or continues to achieve, while ignoring the fact that other things have been achieved by previous Ministers such as, for example, the EEC fund to combat poverty. Did he put on the record of this House that a Labour junior Minister was the first to gain for us the benefits of such a fund? Did he say in his speech, when he attributed all the credit to himself for psychiatric institutions for instance, that he had given a capital allocation this year for the first time to do something about these unfortunate people? Did he not admit that the previous Minister had a commitment to and announced those capital allocations? We must stop patting ourselves on the back because the public want to know what the existing Government are doing legitimately, and not just in continuing services or pointing to things of the past, nostalgically or otherwise.

Are we to create further unemployment by not filling these essential services and not staffing the new units which have been provided at colossal capital expenditure to the State? I do not want to bore you, a Chathaoirligh, with the details of the number of new units in my area completed to Government programmes with Government approval, such as welfare homes or institutions for people who suffer from mental or physical handicap. We are unable to open these major white elephants, as they are now, because we are prevented from proceeding by an embargo on staff. This is productive employment I am talking about, not wasteful employment and it has been agreed by this and previous Governments that these projects should proceed.

It has been suggested that charges could be applied to hospital services and prescriptions and in the meantime the Minister suggests that he has a list. With all due respect to the Minister for Health, I wonder on whose advice he compiled this famous list of items that could be withdrawn without creating problems in the community. A short time after publication of the list he had to concede that it was incorrect and to readjust the list to ensure that people with medical cards would not suffer hardship. In the same breath, without a request from anybody except an individual in another House to which I should not refer, the medical card system was extended at a cost of £7 million to old age pensioners irrespective of their means. Therefore, people with an income of £10,000 a year can now have a medical card because, coincidentally, they contributed to an OAP scheme. I would welcome the extension of any of these services, but when it is done at the expense of existing medical card holders who have to undergo the ignominy of a means test, the Minister needs to think again of where he can effect economies in his service. The Minister can effect economies in that service, but I suggest that he have consultations with the hospital administrators, matrons and consultants, at whose request the health boards are obliged to provide the service and the back-up service, to see if, through consultation with these consultants and otherwise, we can rationalise clinics in hospitals in cases where they are unnecessary and have been so declared by these consultants. That is an area of economy which could be effected without stopping a service to people who need it. For God's sake, let us stop giving a service that is not required by anybody, except perhaps where, without thinking, a surgeon says: "I want to see you next week or the week after" and the board must meet that. Then in other cases the Minister says we cannot afford it and we refuse a service to people who need it and cannot afford it.

The Minister mentioned the GMS as an area of real need for economies. What consultation has he had with anybody operating the GMS? Has he talked to doctors about their prescribing habits, about the possibility of prescription of non-essentials, placebos or otherwise, to justify clinic visits? What co-operation has he had for the generic prescription of drugs which are considered by all the experts in the field to be equally effective — many of them home-produced, or certainly home-packaged? Has he had any consultation with the pharmacists in the compilation of this famous list which has now left people, and even health boards, unaware of what people are entitled to in the community.

There should be proper consultation with the people who have the power and the professional knowledge to ensure that a service is delivered to the people who need it when they require it, not the holding up of a packet of Aspros on a television programme with the statement that these cost 29p and for the GMS they cost £4.25. That is a most unfair way to treat a profession which has given a valuable service over a long number of years. To suggest that somebody goes to a doctor for a prescription for aspirins and to a chemist to have it dispensed is ludicrous in the extreme. There is a lack of consultation with anybody who could achieve economies in a service, particularly because the health service is so sensitive an area and so many people are really in need of it. If there was consultation with the pharmacists on the drug refund scheme the present anomalies could be overcome and the administrative cost of refunds could be reduced considerably.

Hospital charges are a popular catchcry at the moment with many. We in the Labour Party have always held the view, confirmed in the 1976 Health Act, that all patients in their own interests are entitled to a hospital bed. They certainly are not entitled to a hospital consultant if they earn more than £9,500 and that has been discussed and negotiated. I want to put on the record that each PAYE worker who also contributes to PRSI has contributed to the privilege of this free hospital bed.

I will lay a charge here today before the Minister that the health boards have failed miserably to collect anything in the line of contributions towards the health service from any other section of the community, particularly the self-employed. We put our finger instantly on the people who are always paying the piper and we, as a party, will not stand by and allow that service to be charged for when these people pay for it through an insurance scheme. People paying VHI — and many people pay it for prestige nowadays — believe that it will entitle them to instant consultant attention and a better hospital bed, or better food. Whether they use a private ward or not, a contribution should be made from that VHI fund to assist the health boards in providing the service for those who cannot afford it.

I will deal quickly with the question of local government and the anomalies that have arisen because of a High Court decision which has now removed from local authorities a funding for which they had budgeted this year. Absolute chaos now is the order of the day in every county council, urban authority and corporation throughout this country. In my own area alone in County Tipperary, we are £2 million down on estimated income. We are living with bank interest and overdrafts — with no knowledge whatsoever of whether the Minister for the Environment is likely to take up any of the tabs for his actions in the interim period — to ensure the essential services which we have guaranteed the people, which they themselves have demanded and which is a vital necessity in the areas of housing, sanitary service, water supplies, fire services and the other services for which local authorities are responsible.

The Government have not acted to take us out of this dilemma. Admittedly, the rateable valuation system is so outmoded nowadays that the court case was expected by many and, indeed, many of us welcomed it because that system was inequitable and ignored people's ability to pay. But surely the Government should act, and act quickly, before a degree of bankruptcy enters into the local authority institutions of which many of us are members and which all of us in this House wish to protect as democratic with the local people electing their representatives to make decisions for them. They are prepared to pay if this Government will put up a plan for them.

We now have unemployed or redundant rate collectors who, if a proper plan were initiated, could be put to work usefully to collect contributions which could be rechannelled into the funding of local authorities. I do not have time here to outline some of the areas in which local authorities should make decisions about budgeting for their own local taxation, and the arranging of their own priorities, about dog licensing, the collecting of television licence fees, the retention of a proportion of that to take RTE out of their present dilemma, charging for many services that are accepted at the moment as being free, particularly by land speculators and others engaged in the use of local authority services without any recognition of the fact that local authorities have to provide these services with no monetary compensation from the Government.

I want to refer also to agriculture, which is mentioned in the Government cut-back. I admire the courageous contribution made by Senator Murphy. Agriculture is an industry which is on its knees because of the Government's prolonged lack of commitment to the most important economic sector in our community, an industry which has been suffering because of the disparity between increased input costs and decreased income. This has brought many farmers to bankruptcy and were it not for the packages which the EEC have agreed, agriculture would have closed down.

I am glad to see evidence now of an upturn. Whether we give the credit to the Minister or to God almighty for the weather he has given us, there is an improvement. In the coming weeks the Minister will be announcing his agricultural plan which will be included in the economic plan for the country. I will put on the record here that it is important to have at least ten or 12 points which will give farmers confidence in their industry. The Government must have a commitment to the indexation of the difference between input costs and output prices. The cost of borrowing for Irish farmers must be closely related to the cost for their neighbours in the EEC, and money must be available quickly to any institution to ensure that the productive programmes agreed by the ACOT advisers and others engaged in agriculture can be undertaken in the knowledge that there will be something at the end of the road for farmers.

We have got a commitment, but have not seen it in practice yet, for an updating of all costs involved in agriculture for grant purposes. We must make sure that there is proper compensation under the disease eradication programme. This has been agreed and approved by the bodies advising the Minister but, unfortunately, they have not come true.

An Leas-Chathaoirleach

The Senator has three minutes left.

Mr. Ferris

The possibilities of the restructuring of land and land mobility should be a top priority for this Government. I can say, in answer to Senator Murphy, that my party are prepared to enter into an all-party committee to look into the possibility, constitutional and otherwise, of having a proper land policy. We should approach this problem with a certain amount of courage and conviction. In other areas there have been cutbacks, such as in CIE. This involves the Bombardier buses, the hotels chain, the responsibility of CIE and the possible curtailment of an infrastructural service in my own region in the south east from Limerick Junction to Rosslare. Many experts have looked at the possibility of closing that kind of service. What about the demands which would be made on local authorities to provide alternative systems? There is no cost benefit to CIE. It is foolhardy to suggest that the whole infrastructure should be taken out of the region for economic reasons, on paper only, without understanding the social and employment significance of that move.

In the area of capital taxation this Government have been guilty of handing back capital taxes to the well-off five per cent of the population who are now looking for cutbacks. They handed back the income tax levied on discretionary trusts which were set up specifically to avoid contributing anything to the State.

The youth employment scheme has been referred to. We in the Labour Party are proud of it. We are proud of the fact that any Government considered it worth while to maintain it as some gesture towards solving the unemployment problem. It is only a beginning and it will not sort out the problem of 160,000 rising to 200,000 unemployed. A sum of £9 million will be available in 1983 under that fund and I am glad the Leader of this House agrees that it should be expanded and continued.

I await the publication of the economic plan, but if it does not have a proper incomes and prices policy it will not succeed. Unless it has the co-operation of the trade union movement, which has now been put in jeopardy by the action of the Government, it will not succeed. The National Development Corporation and other agencies must be made use of to ensure that the proper planned management of our economy can proceed and not be interrupted by indiscriminate cutbacks by any Government.

Mr. Killilea

When I first heard that the idea was being mooted that the Seanad should be recalled my immediate reaction was that if this should happen, as it now has happened, there would be Government bashing which we have not experienced in this House for a long time. Senator Ross opened the debate today with what I thought was a very constructive and very strong contribution. I thought I was wrong and that this would be a very constructive meeting of the Seanad. The seconder of the motion was Senator Murphy and when I heard his first few utterances I knew we were in for the finest piece of Government battering ever witnessed in this House and no one has done it better than Senator Ferris of the Labour Party.

Having said that, I should like to go back to Senator Murphy's point. The policies he suggested for our agricultural community and the farmers today could never in our wildest dreams be implemented. Our history would be nullified if that were to happen. On that aspect of his contribution, I felt I had not read or heard anything like it since I read a document about Lenin in Russia. That is saying quite a lot.

I read in the paper that tomorrow night, or some evening this week. Senator Murphy will speak on the greatness of Fianna Fáil's founder member, Eamon de Valera. I hope his contribution on that occasion — whoever gave him the forum for it — will not be as sticky as his contribution today on agriculture in Ireland.

At the beginning of this year every politician in the other House and many in this House agreed that we should have a deficit of £679 million in the budget. We applied direct taxes to the upper limit, to a limit which is very hurtful for the community to try to bear. That has gone to its maximum. This Government are left with the only option open to them, that is to make cuts in the public service. We may cry a lot about them, but they are in very protected employment, as Senator Ross has said. The politicians, particularly in Fine Gael, are making much about this but the people working in the public service have not cried out so loudly at all. They know we are not taking five per cent from them; it is just being postponed. That point seems to be lost in the debate. What amazed me and the people was the U-turn taken by the Leader of Fine Gael on that issue. On 18 December 1981, as reported in the Official Report, Volume 331, column 2920, the then Taoiseach said:

The economic decisions that we have to take, which carry with them no political bonus for us, are being taken only because they are objectively necessary to sustain employment, to prevent a massive drop in living standards and to save us from the long-term effects of a major disruption of our way of life. It is because the vital interests of our people are at stake that we are taking the minimum steps necessary to safeguard these interests, by doing what is necessary to safeguard the economic independence of this State.

Yet, six months later when the people of all political persuasions expected him to back the Government on this issue, for short term political gain as he then thought, the same man turned against it. It has caused him and the party untold trouble.

The Coalition Government depended on the public service but in every Department they had at least one highly-paid special adviser who was not a civil servant. In some Departments they had more than one, and in one Department they had five. In six months, with a newly designed policy. Fine Gael found that the public servants and the civil servants were the new holy people, having insulted them a few months earlier. This is what I could never comprehend.

So taking into account that people in the public service are in this unique position now, that they have guaranteed employment, that they have quite reasonable incomes and I am sure that they are prepared in the national interest to play a little part to help, then I think that the issue is not as serious as some people would like to make it out to be. We have great talk about the cuts in the public service. I listened to Senator Ferris just a few moments ago talk about this. He amazed me because when we talk about the cuts in health services, for instance, many people expected these cuts to be made even sooner. How many times have we as public representatives around our constituencies or around our counties heard about the wilful waste that was going on in the health services? How often did we read letters in the national newspapers stating that the abuse of the distribution of prescribed medicine was nothing less than a shame? It was true to a point when we consider that 53 per cent of the people who were availing of the medical services were using 82 per cent of prescribed medicine. Surely that indicates that there was something wrong.

The people have welcomed the change in attitude and the tightening up in the health services. I see abuse in our own county, in the Regional Hospital in Galway. In the casualty unit which is intended to cater for accidents or cases requiring urgent medical attention, one finds queues of people abusing the system by going into the casualty unit and availing of free medical services. It is time this was stopped. I believe the Western Health Board are going to make a charge on every person who cannot produce a medical card. It is about time, too. Only recently there was a demand that the staff operating the X-ray department in the hospital should have a day and night rota to give service to the casualty section at an enormous cost. That was beyond my comprehension completely. We always had a person on call but certainly not working right through the night in such a section. The Minister is right in allowing the Western Health Board and all the health boards to tighten up and stop this abuse. Indeed, the professional people who allowed it to happen have a lot to answer for, too. Apart from the financial situation in the country it is no harm that they be brought to their heels on this issue. Another area of abuse was that of the taxi service. I read a letter in The Irish Times about a woman who saw her next door neighbour's two sons going to the same disco in two separate cars while the following morning she noticed that the health board sent a taxi to collect the father to bring him to the hospital. No nation could stick that.

Professor Murphy

Farmers' sons?

Mr. Killilea

Is it not time that that sort of situation was corrected? We come to semi-State organisations. Aer Lingus have to tighten up, too. It is no harm that they should be asked to do that. There is much wanting in that body but I do not wish to go into it in depth. We have people in this House defending CIE. Where do the management of CIE believe that the Government can find £110 million this year to pay that company's deficit, not taking into account the amount of money they got by way of capital allocation? Do CIE think that the Government can just go down to the Government garden, shake the tree and find millions of pounds falling down? It is just not on. The company are not giving the service that they should give. We have several instances of it at home where they said they would provide a service but never did. However, I am delighted that at last we have a Government who are going to tackle CIE and CIE need to be tackled because they are overcrowded with management. When you go to ask a question, there are about five different types of managers whom you have to ask. We might as well say it here: half the passengers on the trains going up and down the country are CIE staff going to and from meetings in Dublin.

Mr. Byrne

That is not correct.

Mr. Killilea

I have not been on a train lately because it is too expensive to travel that way, but I know that a lot of fine people work in CIE. I know men who joined CIE with the intention of doing a good job for the country but, as one of them said to me, he was not allowed do that good job. The whole operation is tangled, tied up and confused. If some of the money is taken away from CIE they will have to shape up. The episode of the bus building project was scandalous. The Government gave them the money and they were pouring it out as if the Government had a magic wand when it came to money.

We defend the Government on the measures they are taking on those lines. I am prepared to stand on any public platform and say clearly and unequivocally that it is about time that those issues were dealt with adequately and correctly. Now is the time to do it. We may become a buoyant nation again, though listening to all the pessimists one gets the impression that we will never have a "bob" again. I do not believe that because in its own time this recession will pass. When our economy becomes buoyant again, as it has been for most of our lives, we will be able to spend our money correctly because we will have got rid of all these ugly little things.

I would not dare waste too long on the sugar industry because there is a fantastic saga connected with it. In my county I would say about 60 per cent of the cost of the company is wasted on administration. The company have their headquarters in St. Stephen's Green. In other words, the further away from the farmers they can get the better. That was their policy. They built seven or eight storeys of a monument over there and packed it with people. What they are doing I do not know. I could never understand it and I fail to understand it now. The wilful waste will make a woeful want and I hope that the right decisions will be made concerning that particular semi-State organisation.

Senator Ferris presumably speaks here for the Labour Party. He seems to be the major-general of this House as regards the Labour Party so I assume every word he speaks comes from the higher echelons of the party. However, what saddens me is that in a calm and positive way Senator Ferris made wild allegations about the misappropriation of State money. I do not think he realised what he was saying. I firmly believe it now that there is a group of people among us in this country, some of whom are in the national press and some of whom I am now totally convinced are in political life, who are absolutely pro-British——

Mr. Crowley

Hear, hear.

Mr. Killilea

——and who through their actions and through their work — and Senator Ferris reminded me of it when he got up to make a wild, scathing allegation without any facts; I am sure it will be jotted down by a certain number of reporters for tommorrow's national press——

Mr. Crowley

Bruce Arnold and company.

Mr. Killilea

Of course it will get the necessary headline but——

Mr. Byrne

An unfair attack on people who cannot defend themselves properly.

Mr. Killilea

Well, I did not make it, so Senator Byrne should not address his remarks to me.

An Leas-Chathaoirleach

The Chair would like to point out that persons outside of the House must not be named. Senator Killilea in possession.

Mr. Killilea

I want to make it very clear, a Leas-Chathaoirleach, that it was not I who named——

Mr. Crowley

It was I who named him, a Leas-Chathaoirleach and I hope everybody heard it because——

An Leas-Chathaoirleach

I hope the Senator will withdraw it because it is disorderly to name a person outside the House.

Mr. Crowley

I have no intention of withdrawing it. Well, what do you do a Leas-Chathaoirleach, when you see a reporter going around this House——

An Leas-Chathaoirleach

The Senator is being grossly disorderly by continuing interruptions of this sort.

Mr. Crowley

Would you explain to me, a Leas-Chathaoirleach, how I can describe an individual who goes around this House——

An Leas-Chathaoirleach

The Senator should not interrupt another colleague's speech. You will have an opportunity to speak.

Mr. Crowley

I will be speaking certainly.

An Leas-Chathaoirleach

The Chair would be obliged if Senator Killilea would be allowed to continue his speech.

Mr. Crowley

I have no intention whatsoever of stopping Senator Killilea from his excellent contribution but——

An Leas-Chathaoirleach

Senator Killilea has a limited time. The Chair must insist that each Senator gets the full allocation of time. I call Senator Killilea.

Mr. Killilea

I do not know exactly where I was when I was interrupted but I believe that I was trying to make the point that——

Mr. Crowley

The Senator was talking about press agents in this country.

Mr. Killilea

——there are people who by their actions and by their slanderous statements, unfounded in most instances, practically in all instances, make those statements, particularly against a Fianna Fáil Government, and get a certain amount of national and international press. What Senator Ferris said today reminded me of that allegation. I do not think he realises exactly what he said. He must have been programmed upstairs, run down here and read it out as if it did not matter. It does matter because we have a responsible Government elected by the people, elected by the second highest percentage vote ever given to the Fianna Fáil Party in the history of this country. People seem to forget that. Yet, there are those few, the select few, whom I have watched all through this summer. It was not really the silly season; it was a season of damage to the nation, of damage to the Government, of damage to the institutions of this State. Every day it flowed freely. Here again today we get a typical example of it. It should stop because the people down the country, the people out on the streets, the people at work and the poor unfortunate unemployed people are about fed up of all this sort of thing. What they are saying to us, certainly what they are saying to me, is: the time has come for you up there to do something about our plight and these wild and crazy allegations should stop. They should stop here. A Leas-Chathaoirligh, in future when Senators make such allegations you, the person who upholds the dignity of this House, should ask them to qualify them. I am not making that comment in any disparaging manner to you, a Leas-Chathaoirligh.

An Leas-Chathaoirleach

Is the Senator casting aspersions on the Chair?

Mr. Killilea

Not at all, I am only just making the suggestion.

An Leas-Chathaoirleach

Because I am only in for the——

Mr. Killilea

Well, it does not matter who it is in the Chair. I think it should be stopped. Again in this allegation Senator Ferris mentioned the misappropriation of funds. He kind of hinted that certain individuals in the Dáil got an amount of money — that is more or less what I would take from it — they got an amount of money in order to buy their votes. That is inescapable. If he had said that the Taoiseach had been favourable to an idea in order to help himself out of something I would not have minded, but it was the other thing he said. I will never forget. I was not too long in the other place; I was a lot longer here oddly enough. I hope I might be a good while here now too. However, I never saw in my life, until I went into the other House, a Taoiseach on his bended knees begging publicly for the vote of an individual.

Mr. Crowley

Who was he?

Mr. Killilea

I saw Deputy Garret FitzGerald, on the night of the budget last January, on his bended knees begging an individual to give him a vote. It was horrifying. I was horrified and I am sure he must have been horrified. But that is what was going on. Yet that man can turn around, do a U-turn in midsummer against a Government that he knows quite well have no other option but to effect the cutbacks in order to improve the economy. It was a disgrace that a man in his position had to do that in order to try to hold a Government together. It just shows the state this country is in. My time is coming to an end.

An Leas-Chathaoirleach

The Senator has five minutes remaining.

Mr. Killilea

Next year the Government must sit down and prepare their Estimates for the year. Whether we like it or not they cannot apply any more direct taxation. If we are to bring the budget deficit under control, the Government must continue with their present policies. It is difficult for any Government to go through with it. But this Government certainly have tackled the problem in that they sat together all through this summer, got all the advice they could from within the civil service to bring forth a programme which will benefit this nation. I look forward to that programme which is to be announced in the next couple of weeks. But if, for political expediency, the leader of Fine Gael and the leader of Labour, whoever it will be then, because we are not so sure——

Mr. Belton

Who will be the Fianna Fáil leader?

Mr. Killilea

He will be there; we do not change them like that at all. The Senator has it all wrong. If they purport to be leaders of a responsible Opposition then they must come with this Government and not resort to disgraceful tactics. I hope the document is a good one because this country needs it. The people who are unemployed, the people who are finding it very difficult these days to make ends meet certainly are not capable of taking any more direct taxation.

I know the other side will probably spend the rest of the evening Government bashing and that we will have a continuance of it tomorrow. I do not think that serves the purpose for which Senator Ross recalled the Seanad. But let that be upon the heads of those people who take that course. I think the people outside are looking to the Seanad for guidance, perhaps for a hope that there might emanate from this place one idea which would help the Government out of the financial depression they are in.

Mrs. Bulbulia

It is rather daunting to follow the inimitable histrionics of the last speaker. Perhaps he felt aggrieved because of the lack of publicity he received during the summer and he was determined to make up for it here today.

The gravity of the situation facing the country is underlined by the fact that we are meeting here today in order to give Senators an opportunity to voice their deep concern at the continuing economic and social crisis, the unprecedented level of unemployment and the inequitable cut-backs in health, social welfare and education, indeed in so many areas of Government expenditure. By meeting today we are giving public recognition to the private suffering being endured by the 160,000 out of work and their families, to business people who feel the pressures mounting daily and to the ordinary wage earners who are unable to cope with the cost of living.

Many of these people have stopped looking towards Leinster House for a solution or any kind of help. Given the extraordinary long recess of the Houses of the Oireachtas, they may even feel that no one cares about their very real and immediate problems. They want somebody to say out loud and in a public forum what they are saying to each other in private, in the kitchens of the country, in the pubs, in the buses, in the trains. Everybody is saying the same thing. They are all throwing up their hands and saying the situation is deplorable, that nobody cares, nobody seems to care, that the country is lacking guidance and direction.

Therefore, I hope Senators can be constructive. I take issue with the last speaker who deliberately heightened the emotional content of this debate in an effort to grab the headlines. I hope that constructive suggestions towards solving the grave situation will be brought forward and examined. The economy is on its knees. Our people are overcome with the enormity of the problem and the Government are seen to be floundering in a sea of uncertainty.

Doom-laden statistics which provide the back-drop to this catastrophic situation are all too easily assembled. This year Ireland will be so far into red that well over half of the entire proceeds of income tax will be needed simply to pay the interest on the country's escalating debts abroad. Gross investment has averaged a startling Japanese style 30 per cent of gross domestic product in the past four years but it produced only minuscule growth rates of barely 1.5 per cent in 1981 and 1982. An economy investing 30 per cent a year at the very least should expect an annual growth rate in excess of 5 per cent.

Two years ago all the talk was of the Irish economic miracle, with growth rates exceeding those of any other country in the EEC. That was largely based on the evidence of 1977, 1978 and 1979 when the economy expanded by 5.6 per cent, 6.5 per cent and 3.2 per cent. This is now seen as a result of an irresponsible fiscal stimulus imposed on the economy at a time when there was already an exportled upturn. This led to a sharp increase in domestic demand which sucked in imports and produced a deficit of £725 million on the current account of the balance of payments in 1979.

Such were the lags operating between the announcement of a policy and its consequences that no one really knew what had been happening until the damage was done. Now everybody recognises the problem: 160,000 unemployed feel its painful consequences and look to the Government of the day for an adequate response.

It is shocking to consider that for nearly a third of the population the labour exchange and the post office are the only points of contact with the wealth of Ireland. Because the national economic effort has been devoid of coherence and has not been concerned to promote growth based on wider employment, about 32 per cent are dependent on the life-support machine of social welfare which is becoming increasingly vulnerable to interference. These people look to the Government for an adequate response. The hard-pressed PAYE sector is in revolt and it, too, looks to the Government for a response.

Farmers reeling from body blows to agriculture look to the Government for a response. The public finances have suffered a major deterioration within less than six months of the budget speech. A new note of urgency is sounded when we realise that the planned budget deficit of £679 million will be exceeded. The Taoiseach has said: "It is not possible to be completely accurate but there are now indications that the excess could be substantial."

This is indeed a cause for concern and points up a fundamental flaw in the economic objectivity of the Irish budgetary process which repeatedly has presented an over-optimistic view of the economy. A major criticism of the Government in regard to the public finances is the complete lack of planning of taxation and expenditure decisions since taking office. Consequently, they have resorted to ad hoc decisions, stumbling now in one direction, now in another.

In the first place Deputy MacSharry's budget expressly disavowed the intention of eliminating the current budget deficit over a specified number of years. In his budget speech the Minister said:

The Government are, nevertheless, firmly committed to bringing the current deficit under control and gradually eliminating it, but our approach to that objective must be flexible and in time with underlying developments both at home and abroad.

This refusal to tackle the problem in a planned and carefully quantified way ran in the face of the best professional advice of the time and was also contrary to the intentions of the Coalition Government who responsibly committed themselves explicitly to eliminating the deficit over four years. A planned elimination of the current budget deficit over a specified number of years is an extremely important principle to establish and abide by. In the first place it would serve to maintain our credibility in the eyes of our creditors by demonstrating our seriousness to try to restore financial order. In this regard it is significant that signs are now emerging of an erosion in our international creditworthiness and it is not at all fanciful to suggest that this erosion of confidence is due, at least in part, to the unplanned and incoherent way in which the Exchequer finances are being managed at the moment.

Secondly, a planned approach specifying the time over which the deficit is to be eliminated set a headline for our community and a stable yardstick against which to measure our success in tackling the problems. In contrast, this flexible approach which the present Government have declared themselves in favour of, by virtue of its declared flexibility fails to concentrate the resolve of Government and provides only soft targets which in a period of flexibility can be breached, say, by individual Government Departments or by pressure groups, which are a feature of our time.

Thirdly, and most important, a planned approach sets a premium on the virtue of foresight in the levying and the making of expenditure decisions. A planned approach means in effect that we deal with this year's budget not as an isolated event which has implications only for this year but that the repercussions of this year's budgetary decisions for next year and the year after are carefully appraised and incorporated in the overall strategy.

The budgetary strategy of the present Government is directly in contravention of the planning principle, and in all its most important respects displays an absence of all the qualities associated with planning. Decisions have been made in an entirely ad-hoc way with scant foresight and have been inspired by the very dangerous illusion that it is only this year that matters. Now, all this was very evident at the outset in the main feature which distinguish Deputy Ray MacSharry's budget from that of Deputy John Bruton. In particular, I refer to the decisions to raise £140 million by imposing VAT on imports at the point of entry and to raise £36 million by bringing forward the date of payment of corporation tax. These decisions had enormously damaging implications: in the spirit of the this-year-only-matters syndrome they have a revenue increasing effect for 1982 alone and as such do nothing to bridge the gap between expenditure and revenue next year or subsequently in contrast to the Coalition budget measures which, sadly, they were destined to replace. Secondly, their imposition posed serious difficulties for the businesses bearing the brunt of their effect at a time when the business and industrial sector was extremely hard-pressed in any event.

Thirdly, the imposition of these additional tax obligations on business would appear to be having an effect of actually reducing the yields from other taxation such as PAYE and PRSI.

Fourthly, it has never been satisfactorily explained how £140 million is going to be raised through levying VAT on imports at the point of entry and considerable scepticism has been expressed about the credibility of this very figure. It is clear that in introducing these measures the Government displayed a total lack of foresight and consideration of how the measures would interact with other taxes and how they would influence business activity was simply not entertained when they set about devising these plans.

A similar lack of foresight and coherence was obvious in the Government's decision to concede £45 million worth of tax free allowances to PRSI charges in the budget. This was a telling reminder for all who cared to take note of exactly how flexible the Government intended to be in its resolve to eliminate the current budget deficit. It meant in effect that of the £238.8 million cost of the social welfare improvements introduced in the budget, employees would be required to contribute no more than £6.1 million, while the cost to the Exchequer would be £181.7 million. Moreover, whatever the damage done by this concession to the public finances in 1982, the damage done next year will be even greater; the concession will cost at least £60 million in 1983. So again, far from implementing a measure designed to operate to the benefit of the public finances, the Government saw fit to introduce a measure which will incur an ever-increasing cost to the Exchequer.

No party has been more consistent and vociferous in its concern with the incentive to work than the Fine Gael Party. On this account Fine Gael intends to pursue a policy of reform in the area of taxation and much of the findings of the first Commission on Taxation has been borne out by the thrust of policy of Fine Gael in the past and, hopefully, in the future. Existing taxation measures and other features of the tax transfer system which militate against the work ethic will be rigorously examined and, if seen to be at odds with the principles of social justice, they will be dismantled. In this connection we are determined to review and restructure the existing system of PRSI contributions. We feel that three basic principles must be observed in this exercise:

1. The restructured system must operate as a positive incentive to employment.

2. The resultant changes in the tax system must be broadly self-financing — in other words, there can be no question of cost-increasing concessions without off-setting revenue increasing measures; and

3. To the extent that the revamped system redistributes income it must do so downwards towards the lower paid. This is a basic principle of social justice and equity.

The Government's concession on the PRSI front does not satisfy either of the last two criteria. That concession was nothing less than a give-away, made all the more inexplicable in a year when the public finances have come under unprecedented pressure. It was made at a time of by-elections when promises which have now come to be totally disregarded by the Irish public were the order of the day. Moreover, to compound the inappropriateness of the decision, it favoured disproportionately the more highly paid, thus diluting whatever employment incentive effects it might otherwise have had. Like any other unplanned ad hoc response, it not only ignored the consequences for the future but was incoherent to the extent that its effects ran counter to other objectives of economic and social policy.

The recently announced expenditure cut-backs, totalling £75 million, provide another example of ad hoc decision-making which contravenes the principles which should inform a planned approach, and this is why we are objecting. We are not objecting in principle to the very idea of cuts. In fact, I would remind the other side of the House that we were the people who responsibly initiated the idea that cuts should be made. We did not preach boom and bloom. What we object to is the manner and the way in which this is being approached and the ad hoc measures that are being taken and the inequitable fashion and the non-consecutive approach which form the background to them.

The most damaging element in the package of cutbacks announced at the end of July and additional to the £75 million is, of course, the proposed deferment of the third phase of the public sector pay agreement. Again, the philosophy behind this move appears to be the this-year-only-matters syndrome which I referred to before. The Government in its attempt to save £27 million this year alone has risked jeopardising the whole framework of industrial relations and has alienated the goodwill of an important and valuable section of our community. Senator Killilea in his contribution seemed unable to realise that one must observe an agreement freely and honourably entered into and at the same time it is possible to express to the public that cuts and restraints are necessary. But our quibble is a large one — it is not really a quibble; it is a matter of enormous principle — that an agreement freely and honourably entered into must not be unilaterally welched upon. This is why we are indignant and this is why we are urging the Government to go ahead and to pay the 5 per cent which had been honourably and freely negotiated between the two parties.

Indeed, it must be borne in mind that the cost to the economy of a crippling wave of strikes, if the current public sector pay talks fail, will dwarf the relatively minor cost of paying the final phase of 5 per cent that is still being withheld by the Government. I urge the Government to honour the agreement by paying out the 5 per cent increase already budgeted for, rather than resort to an expedient which has cost-cutting implications for this year alone, and which if current grim expectations are realised, will have serious cost-increasing implications for next year and subsequent years.

It is vital that the Government give a high priority in their forthcoming economic plan to the reform of the public service. In 1969 the Devlin Committee presented a massive report to the Government on the subject. This called for legislation to introduce reform. Although the Government of the day accepted the Devlin Committee Report, no legislation has been introduced.

The public are aware that the compiling of these reports is a costly and time-consuming exercise. The notion of going to all that trouble, quietly and happily shelving these reports and allowing them gather dust and merely paying lip service to them will not do any longer. Since the Devlin Report no reform has taken place. An attempt has been made to reform the public service by persuasion, rather than by legislation. This is grossly inadequate and I call on the Government to introduce public service reform legislation as a matter of urgency. There must be major political efforts to reform our public service if the cost it generates is not to choke our economy in time.

I should like to refer to unemployment briefly. I am sure some of my Seanad colleagues will deal with it in detail. Since 1979 this problem has become worse so that it is now at a frightening level. A continuance of this rate of growth of unemployment will cripple us financially. The huge increase in PRSI happened because of the additional cost of unemployment benefit. Worse still, prolonged unemployment destroys the productive capacity and skill of our work force. The longer people are unemployed the harder it is ever to re-employ them. The social effects of the level of unemployment are reverberating throughout the very fabric of our society and the result of this area if not firmly and constructively tackled, will be one of blighted hopes, bitter frustration and eventual political anarchy.

I should like to turn my attention to the Government's forthcoming economic plan which I understand is in embryo. In fact, I gather it was promised at the beginning of September and one must have faith and hope that it will be coming before us shortly. At the outset I must state that I would welcome any coherent, well thought out and realisable blueprint which would lift us out of the present chaos and give our people the hope that they so desperately need. The scale of the problem needs to be defined. Specific objectives need to be set down and strategies set out for their attainment over a specified period. However, in order to enlist the co-operation necessary for the implementation of the plan I suggest that the following points must be incorporated:

1. To make any sense, the plan must provide for the Government to plan their own financial affairs properly. This must come before any attempt by them to preach to the rest of the economy effectively. I am asking the Government for a five year budget forecast. The cost of public expenditure and the yield of taxation must be projected in detail over the next five years.

2. That done, the Government plan should then state the extent to which they propose to reduce expenditure or increase taxation over that period, and the amount of spending cuts quantified honestly.

3. The plan should show the way to a re-launching of industrial and agricultural production. These should not be published separately and the Telesis Report on industrial policy should be published ahead of the plan to provide information with which to judge the adequacy of the Government's own proposals.

4. The underlying assumptions of the plan should also be clearly stated. Only if the assumptions are honestly stated can anyone say if the targets in the plan are realistic and realistic they must be. The plan should state explicit objectives for each programme of Government expenditure, such as the number of jobs to be created by money spent on industrial grant aid. I also advocate the establishment of an independent system for monitoring, first of all, the honesty of the plan's targets and then whether or not they were being achieved. This is necessary to satisfy public disquiet and the public feeling that has been growing in the past few months about the honesty, integrity and reliability of the political representatives.

In conclusion I should like to state that we are crying out for inspired and inspiring leadership. Squalid political deals, which, of course, have not been referred to by the other side of the House, devious ploys and stratagems should have no place in the scheme of things in Ireland of the eighties. They have led to disgust with and alienation from the entire political system and have contributed nothing to our growth and maturation as a nation. We have risked the annihilation of our independence and national pride which were so dearly won by those who went before us and have severely jeopardised the future for our children and grandchildren.

I appeal to the Government, not in a spirit of petty party point-scoring, not to let this happen. They should govern wisely, prudently and compassionately and if they cannot, which sadly appears to be the case, they should stand aside and allow those who can and will take up the challenge. Remember the words of Eamon de Valera who has been quoted liberally in today's debate, "political independence, without economic freedom has no value".

Mr. Fallon

This problem is obviously a very important and serious one for our country. The spirit of the motion, as I understood it, is that it should not be bandied about as a political football. I thought that those responsible for the motion had that in mind and I have also. I am disappointed that Senator Ferris was very political. To some extent the previous speaker was also political and that is a pity because it is not that type of subject, it is one for all of us to attempt to solve. Indeed, as Senator Killilea said, if we get one idea from this whole debate it will have been worth while. I intend to be as fair as possible. It is correct to say that when we mention this problem we cannot look at Ireland in isolation. We must look at the problems of other nations and we are aware that there is a wave of discontent in most countries. For example, in France there is a pretty hefty wage and prices freeze. In West Germany where there is an inflation rate of 5 per cent and an unemployment rate of 7 per cent they are thinking in next year's budget of cutting unemployment benefit, making pensioners pay more for their health insurance and asking the sick to pay more for their medicines and medical treatment. If we come closer to home, Great Britain, which has its own oil, a strong currency and is now talking about single figure for inflation, they too are talking about tough measures for next year. They are talking about replacing the national health service with private insurance schemes and so saving £3 billion or £4 billion. They are talking about increased charges for drugs and medical treatment. So we can see that the economic crisis is no respecter of nations. This is a world-wide recession and we, too, are feeling the pinch.

It has been said by Senator Ross and many other speakers both from the Government and Opposition sides that we have reached saturation point as far as taxation is concerned. If taxes are not to rise what can be done about the public finances? The obvious answer is to cut public spending. When we do that we should not, and will never, hit the poor, the underprivileged or the sick. Health and social welfare are big spending areas. There is some scope for cutbacks there, perhaps not as much as we imagine, but there are some. There are other types of public spending areas which are far more deserving of the axe.

I should like to refer to the Minister's speech this evening, in which I congratulate him. It was a well-informed address. He obviously gave it plenty of thought and I learned a lot from it. He referred to abuses of the social welfare system. During the year he made reference to a saving of £5 million. I hold the view that if this problem is tackled properly that figure could be £50 million or £55 million. The Minister made the point that the measures he plans to introduce in the future will be aimed only at those who are abusing the system. Genuine claimants will have nothing to fear. Further on in his address he referred to the National Manpower Service. This is a bogey of mine. I have been talking about it for years. I have always felt the need for greater liaison between the Department of Social Welfare and the National Manpower Service. The Minister said there will be closer co-operation between his Department and the placement services of the National Manpower Service and increased efforts to ensure that job vacancies are brought to the attention of claimants.

This is something I have advocated for years to different Ministers. It does not seem right that I can walk into the National Manpower Service, have one job, two or three jobs, put my name down with them and be sent for interview for a job in some department store or garage. Surely the criteria should be that if one goes to the National Manpower Service one is out of a job. I hope in future that when people register with the National Manpower Service they will look for letters from the local unemployment exchange saying the applicants are unemployed. I know people who are giving their names to the National Manpower Service who are in good jobs. They might like a change of job for some reason — they do not like the boss, the colour of his hair or whatever. Some people have two jobs and yet they are registered with the National Manpower Service. This is wrong. I am delighted that the Minister said this evening that there will be much greater liaison between his Department and the service.

As regards abuses in the Department of Health area, Senator Ferris made the point that the explanation the Minister gave on television was incorrect. The Minister made the point on television that by the time a packet of aspirin, which anybody can buy in a supermarket for 29p, goes through the general medical services the Department of Health end up by paying £4.25. Senator Ferris made the point that this was okay. I do not accept that. That kind of differential is wrong. If these abuses exist they should be examined and corrected.

There is a view abroad that the Government should take care of all of us and give more and better to all of us. We clearly have a responsibility to the poor, the aged, the under-privileged, the infirm and so on but not to every section and every person in the community. When we talk about crises we talk about two crises. One is a financial crisis. But there is a crisis of attitude in that people who have jobs are not content to work sufficiently hard and abuse the system by staying away from work on medical certificates. If everybody was prepared to work, because of the crisis we are in, an extra 15 minutes in the morning and in the afternoon without any pay, for one year, it would go a long way towards solving our problems. Something like this might emerge from a debate such as this. It would have the full backing of the Government, trade unions and everybody else. It might not happen but I throw it out as a suggestion.

The question of unemployment has been mentioned specifically in this motion. Senator Ross gave us four reasons why we have 160,000 people on the dole. He referred to the world recession, the high inflation rate, competition from other countries and modern technology. We would all have to agree with those points, but I suggest that there are other reasons why the figure is so high. In the past, if a person had no job he would emigrate to England. That is no longer the case. We must remember too that we now have an increased population. We must remember that we have more and more young people sitting for the leaving certificate examination. Leaving certificate classes are growing each year. More young people will be leaving school looking for jobs. I cannot help feeling that if massive corrective action is not taken the figure of 160,000 could double in four or five years' time.

We can refer to bad management as an excuse for factories going out of business. We can refer to bad trade union relationships with firms, as instanced by the Fer-enka dispute some years ago. These are other reasons along with the four mentioned by Senator Ross why jobs are lost. I cannot help feeling that through the years various Government Acts have not helped this situation. For example, one could say that the PRSI system or the Act dealing with unfair dismissals have not helped. Certainly one could say that the Employment Equality Act, 1977, has played a major role in leaving young people at home. It is a fact of life that banking, nursing, the civil service and local government generally as well as the teaching profession are positively loaded with married women. I am not saying there is anything wrong about that; it is none of my business whether it is right or wrong. I am stating the factual position, which is adding further to the dole queues.

The then Minister for Labour, Deputy O'Leary, introduced the legislation in 1977. Perhaps it is time to have a review of the situation. One could say that the legislation is guilty of discrimination. There was discrimination against women at the time and there was a considerable problem in that area but now the Act is positively and definitely discriminating against young people.

Other reasons can also be given. How many people have two or three jobs? How many people on pensions have jobs? How much overtime is involved? I should like some investigation into these areas. If sacrifices have to be made to solve the unemployment problem, everyone, and particularly the better-off sector, should make the effort. Let us go back to the question of the woman at work. I praise the young married woman who takes a job and works for a number of years to earn money for a home, for furniture and so on. I have sympathy for widows and those whose incomes are not high but there must be cases where huge sums of money are going into homes and where there are double salaries. I realise this is not a popular thing to say but it is my belief that a review should be carried out into this matter.

If young people do not get work what will happen? Near my own area recently 275 people applied for one teaching job. Deputy O.J. Flanagan spoke about some form of rebellion, of an Army takeover and so on. I do not see the situation as quite that bad but youngsters will become anti-social if they do not get work. One can imagine a young man leaving school and facing six or ten years without meaningful employment. He will become anti-social and lazy, possibly he will go on drugs. He will become apathetic, perhaps destructive and may even engage in serious crime. In my opinion these are the symptoms of despair and unless we do something about the matter the situation will get even worse. I believe the Government have the will and the power to tackle all these important matters.

The "Buy Irish" campaign is a matter that should be considered. It appears to me that the message is not coming across as effectively as it might. Many jobs could be created if we bought more Irish-made goods. It was suggested to me recently that the larger stores in towns could employ people to stand outside the stores with placards carrying the message to buy Irish goods. A slogan saying "Buy Irish and give me a job" might be more effective than advertisements on television and in newspapers.

There has been much talk of gloom and doom. We have had economic problems before. I hope and believe that the national patriotic spirit of the Irish people will be apparent in this instance. There are plenty of hopeful signs and we can be thankful for many things. For instance, the harvest was plenty this year, the falling interest rate will mean a major improvement in the financial outlook and the new national plan will, I believe, provide a platform not just for long-term planning of the public pay sector but for general economic recovery. There is a growing sense of realism among the public sector unions. All of these give us grounds for believing that the message of the Government is getting through. Our credit rating is not as bad as our own people want us to believe. Inflation is predicted to fall sharply in the coming year. Our balance of payments will continue to improve and we can borrow on the money market. I hope we will never have to go to the IMF.

Now is the time for firm and united action to save our country and all of us have a role to play. We must accept four or five years of tough measures. If we do not, the alternative is economic collapse with the consequences of poverty, hunger, violence and anarchy. The whole social and moral fabric of our society is threatened and we must face the facts. I do not think we can postpone it any longer. We have no alternative but to support our Government, who are active in this matter. It is not right to say now who is to blame or to ask how did it happen. That is irrelevant now. We cannot be under any illusion about the seriousness of our economic difficulties. I believe the Irish people will rally behind the Government of the day. No matter which Government are in power we will still have to face the problem. I hope the Irish people will give the Government the mandate to proceed to get us out of this very serious situation.

Mr. T. Conway

I welcome the recall of the Seanad to discuss the grave state of the Government's finances. The long queues outside the unemployment exchanges show us that the country is in a crisis. No town has escaped the terrible misery that accompanies unemployment. In this debate it has been mentioned that 160,000 people are unemployed. That represents about 400,000 people who are affected by unemployment. The unemployed have been silent for a long time and perhaps this is because of the sense of degradation that accompanies unemployment. If the great mass of unemployed was mobilised into one force it would present an irresistible force. An increase in long-term unemployment, however, could well spark off such an organisation. Young people have always been told that they have a right to a job, and now they cannot be facilitated. Fianna Fáil in their 1977 election manifesto said that the country was never so good; borrow, borrow, borrow was their theme, and the people did just that. That Government abolished rates and car tax. They gave something to everybody. They sowed, in effect, the wind of extravagance and now we reap the whirlwind of misery. The car tax which we were told would be abolished and would never be re-introduced is now re-introduced with a vengeance.

We cannot even pay interest on our borrowings. The real tragedy, however, for the unemployed is that what is required is a massive major productive investment programme which will reflate demand through a pump-priming exercise on the capital side, but because of the disastrous expenditure indulged in by Fianna Fáil in the implementation of their 1977 election manifesto we are in no position to do this on the scale required.

I come from County Kildare which has been declared by the IDA to be a disaster area. Newbridge, which is the chief town and was the prime manufacturing town in the county, now has roughly 800 manufacturing jobs and nearly 7,000 people. With 70 per cent of that population under the age of 25 years, the future is bleak for them. That town, 15 years ago had a population in the region of 4,000 and 2,000 manufacturing jobs. Therefore, nearly two out of every four people were employed in the town or came from the surrounding rural area. County Kildare has 3,600 people out of work which is a 170 per cent increase on the 1979 figure. The national average is 60 per cent, and so we see clearly the disastrous situation in Kildare. No town has escaped. In the Naas-Newbridge area 1,332 people are unemployed, which represents an increase of 200 per cent. In Athy 650 people are unemployed, which represents 120 per cent. In Maynooth 1,080 people are unemployed, an increase of 150 per cent; and in Kildare we have 690 people unemployed, which represents an increase of 170 per cent.

We have recently seen the IVI Foundry Limited going into the hands of the receiver with a loss of 120 jobs, despite the fact that the State through the IDA had a 40 per cent shareholding in this company. The staff were put on protective notice and one week later were dismissed by the receiver. The factory, which plays a most important role in the Irish economy, being the only company capable of producing high quality engineering castings, is essential for the supply of castings to Bord na Móna, the ESB and so on who will now have to import castings at a higher cost and lower quality. IVI were considered an essential back-up by the IDA when they were trying to attract new industries to the country. The workers are all local people and some of them had been with the company since 1935. They were given minimum notice. In some cases this would mean that in one to two months they would be dismissed. They were called in by the receiver on Friday morning and told to leave on Friday afternoon. They were not given any money but told that they were now regarded as a preferential creditor. This practice should be stopped at once. They should be treated, in effect, as under the redundancy payment scheme and if the company cannot pay them, they should be paid by the Government. As I have said, this industry is of national strategic importance and I call upon the Government to nationalise it and protect the jobs that have been there for so long.

Senator Murphy talked about nationalisation of the large agricultural ranches. I agree totally with him. The role that the IDA play in the provision of jobs and the vast amount of money spent by this organisation in the promotion of foreign business have not yielded the correct results. In Kildare, Polaroid, a company which cost thousands of pounds, was supposed to provide 1,500 jobs but now supplies only 180 jobs.

The work of the IDA has been productive in many cases, but they should look now at the smaller units because it is through such units that we have any hope of employment for the future. Many other companies in various ways have been given franchise by the Government to manufacture. These have in some cases ceased to manufacture in this country and instead are importing at higher cost and loss of employment. In our own town a footwear manufacturer who specialises in surgical footwear is backed by the IDA and employs local labour. The health boards in England were looking for cutbacks on surgical shoes and paying three times as much as they would pay to a home-based company. Those still out of work face an uncertain future. Resistence to taxation, which has to be raised if the cost of unemployment is to be met, is increasing. The old solutions have failed. The public service in the past could provide jobs. The legion of people therein and the whole public service should be examined to see if it can be streamlined.

The private sector has failed to create jobs. The VAT at the point of entry provision has increased the number of closures of companies. State projects tend to be under-capitalised and have very high administrative costs. Their location often depends on political advantage rather than good commercial sense.

This Government have learned too little too late with regard to the financial crisis. Boom and bloom was the cry of Fianna Fáil in the election campaign. The features of the 1980 budget introduced by Fianna Fáil were repeated in the March 1982 budget with £66 million corporation profits tax due in 1981 brought forward to 1982. The March 1982 budget attempted to provide £36 million from corporation profits tax, £140 million from VAT at point of entry and £45 million from revenue buoyancy. The money was to pay for VAT on clothing and footwear and the restoration of food subsidies. When the Government produced a deficit of £679 million they were doomed to failure. They gambled with the Irish economy and lost.

Mr. Crowley

Perhaps the Senator would tell the House where he will get the money to nationalise all the industries that he is going to nationalise.

Mr. T. Conway

You got money to nationalise the Clondalkin Paper Mills.

Mr. Crowley

Tell us where to get the money to do all this nationalisation.

Mr. T. Conway

I am talking about the strategic, important company that the IDA have put forward to attract industry. Now that the castings have to be purchased outside, they will cost more. It is sound commercial sense to make sure that that company does not leave Kildare.

Mr. Crowley

Tell us where to get the money.

Mr. T. Conway

The Government have also failed to appreciate that the budget did nothing for confidence in investment. It contained the hammer blow of £176 million additional taxation for business at a time when closures and redundancies were already accelerating due to the depressed state of the international and home markets. It is not surprising in the expenditure cuts of 30 July of £120 million that the Government proposed to take back exactly £45 million from the public service to pay the bill this year. Do the Government think that the trade unions could not see what was being attempted — the division of the private sector workers from the public sector worker?

The public service pay agreement which introduced pay restraint and moderation into the entire public service by negotiation — and I stress the word negotiation — was the main target of the Government in its panic response to the failure of its budget strategy. Yet, as late as May the Tánaiste and Minister for Finance was telling us that the budget target had been reached, even when the deficit for the first six months was announced at £692 million — more than the deficit for the entire year. We know now from reliable sources that the Government deficit for the year will be about £1,000 million.

Did the Government even consider taxation of the wealthy, including large farmers who are escaping the tax net, the immediate clampdown on tax evasion by companies and by the self-employed, taxing the £500 million which is held in discretionary trusts to avoid tax or that a surtax should be imposed on those earning £25,000 per annum plus measures to tax bank interest at source? These means have been used for widespread evasion of tax but no, the Government struck at the medical card holders, people who could not pay for medical services. There could be sympathy for a Government from the Opposition benches if a genuine attempt were made to tackle public finances in a fair and equitable manner. They could also expect some support if they showed an attempt to consult with the Opposition. At the very least they could have earned the respect of the public if they were prepared to introduce these measures in the Dáil and give a full explanation of what had gone wrong. Instead, we have seen Ministers heading for resorts in Europe, leaving civil servants behind them to brief the press on the mini-budget.

Mr. Crowley

Where did the Senator see that? Name it, when? I do not know who wrote your speech for you, but whoever wrote it is way out of touch.

Mr. T. Conway

Minister MacSharry went to America.

Mr. Crowley

He did not.

Mr. T. Conway

And Minister Reynolds to Europe.

Mr. Crowley

What did he go to America for?

Mr. T. Conway

Holidays, when Charlie told you to stay at home.

Mr. Crowley

Who told you that? Who told your author?

Mr. T. Conway

That is a fact.

Mr. Crowley

Who wrote the speech for you?

An Cathaoirleach

Order.

Mr. Crowley

The Tánaiste was in Canada at an IMF conference. If the Senator checked his statistics a little, we would pay attention to what he is saying.

Mr. T. Conway

We are in a crisis situation and it should be looked at as a crisis situation. All over Ireland we have heard the new gospel from Fianna Fáil. They chant "No more taxation, no more borrowing, but just cut expenditure". The Coalition Government established that people will accept belt-tightening if they are properly informed about the finances of the country, if there is equity and a moderate growth in living standards.

Labour in the manifesto in 1981, promised no reduction in the overall burden of taxation but a fairer distribution of the tax burden. We can criticise the 1982 budget for its harshness with regard to food subsidies and, to a degree, its foolishness with regard to the imposition of 18 per cent VAT on clothing and footwear. However, two factors should be noted — that the Coalition Government increased most social welfare benefits by 30 per cent while in office. This policy was accepted by Fianna Fáil after their election when they increased them by 25 per cent. No one can accuse the Coalition budget of being designed to keep the Coalition in office rather than to tackle the massive present problem. This Government's budgetary manoeuvres in the backroom deals that we have seen are inspired by a consistent aim to stay in power at all costs.

We have 162,000 people out of work. We will not accept anything less than the indexing of unemployment benefit and assistance in the next budget. The Labour Party have established the Youth Employment Agency which will receive over £9 million next year to provide training and job creation measures for young people. We stated that the National Development Corporation was necessary to stimulate existing home industry and revitalise the State sector enterprises. This process has been vindicated by the National Economic and Social Council's report recently published and now with the Government. The IDA grant-aiding of foreign industries is simply not sufficient to cope with the job requirements of an expanding labour force.

My party are committed to economic and social planning, with the establishment of a national planning board. It is through careful planning — this is accepted by the Government — that this country can come out of the terrible present situation. At a time when throughout the length and breadth of this country people are living in desperate conditions, with a breakdown of law and order, there is a danger of the coincidence of political and economic instability. Many of our young people are destined, as Senator Fallon said, to walk the streets to be fair game for drugs and drug-pushers in the society and get hooked on drugs as a means of escape. We have young families living in caravans with no water and sewerage on rat-invested sites. We have long queues at the exchanges, getting longer each day. What can we offer these people out of this debate? Can we produce one job, save one young person from despair, produce one house for an overcrowded family, or save one old person from starvation? If we can achieve this, then this debate would have been worthwhile.

In the economic plan that the Government are bringing out, the first priority should be the creation of employment, provision for the massive number of young people coming onto the register, equity in the tax system and the restoration of order to the public finances. We have in this debate explored the crisis. Senators are very worried about the situation in the country, and about our young people. I agree that in the fifties if you had no employment you could go to England. Young people have to stay at home now. We have massive problems, problems building up, and ones we do not know about. If this debate can achieve any better course than the one we are on, then it is worthwhile.

Mr. Crowley

Here, and in my office, I have been listening to the debate so far. If you were to award marks for cliches and shibboleths of every description, I would say you could award the debate so far, especially from the Opposition, 100 per cent. Has anybody ever heard such drivel being delivered here to a so-called Upper House since the House was established? Has anybody ever seen such insincerity propounded from the Opposition benches in any debate?

Of course this was inevitable, because the whole idea of bringing back the Seanad has proved to be still-born and was nothing more than a publicity gimmick by Senator Murphy and his cohorts. On local radio in Cork and in the local papers. Senator Murphy called special press conferences to show how altruistic he was in being so responsible as to recall the Seanad. He must think the people came down in the last shower, if he thinks they would fall for a line like that. What did he offer us, having brought us back and having put this country to the expense of bringing 60 Senators to Dublin? He offered as his only solution the nationalisation of the banks and of agriculture. Any young fellow who ever read Chairman Mao could have come up with that solution. Any student in his university history classes would be aware that this is one of the oldest catch cries in economic and political history.

We knew Senator Murphy and his cohorts were barren of any progressive thinking. They had no idea how our problems could be solved, but they made damned sure that they would cash in publicity-wise. I found it a very moving experience to hear a stockbroker from the stockbroker belt crying in this House for the poor of the country. The crocodile tears which have been shed, I hope, will be seen for what they are by the people. His call for bringing the IMF here is the usual we expect from the stockbroker belt. Poor old Paddy is unable to do the job; bring some foreigners in, perhaps from Threadneedle Street, to sort out his problems for him.

We can no longer allow to go unchallenged the publicity-mongering, the publicity-seeking by these Senators. We should show it for what it is, just publicity-seeking. They are successful in that. Reams and reams of pages and of type have gone into their every utterance, thought and idea. Yet the solutions these two eminent gentlemen have come up with are nearly as old as time itself. Call in somebody else to solve your financial problems and, on the other side, nationalise the land and the financial institutions. Those of us who have been in political life for any length of time — and there is wisdom in the Opposition and the Government benches we hope — will recognise this ploy for what it is, just a ploy without sincerity.

Is Senator Murphy aware of what the nationalisation of land achieved in Russia? Is he aware that, since the revolution, the Russian people have not been able to feed themselves in any two consecutive years and that on each and every occasion since that revolution they have had to buy in food from the so-called capitalist world? Is he also aware that, even in Soviet Russia, there is still some degree of free enterprise, in that .033 per cent of all the land in the country is owned in little plots by some of the people and that .033 per cent of the land produces 27 per cent of the vegetables of that country? In Senator Murphy's own heartland we have a stark example of private enterprise vis-a-vis nationalisation. One would think that when the word “Professor” is put before somebody's name one would get a bit more original thinking from him. Unfortunately we waited and waited in vain. We can only describe him as Dickens once described somebody: “In came a fiddler — and tuned like fifty bellyaches.”

We must face up to our economic situation and admit that we have problems. Having those problems, we must try to find solutions for them. We recognise that there is no easy way to find these solutions. We recognise that our people will have to take a drop in their standard of living in order to put this country back on its feet.

The previous speaker referred to the public service pay. Surely it is not asking too much of any group, especially those who are the most cossetted, the best looked after and the most secure section of our community, that they make some sacrifice. Perhaps even Senator Murphy himself, who I suppose could be described as being in the public service, may give up one of his jobs either in the Seanad or as professor of history in UCC in order to create a position for somebody else. That is the kind of hypocrisy that we have to listen to. It is painful to have to listen to it not alone in this House but on our local radio at home as well as reading it in our newspapers. Surely we cannot any longer tolerate a situation where a person is financially better off by not working than he is when working. What kind of a race are we going to produce if we are going to pay people more money, give them more benefits than accrue to those who have to go out to work for a living? We will have to have a very serious re-think in this country. We should no longer pay people for being idle. The time has come when we must call halt. Of course, those who cannot find work must be given some money but it is a different situation when people draw the dole and then go off and work for a half day perhaps. Most serious of all, perhaps, is the situation which we had in several factories lately where it was more in the interest of the worker that his factory closed down than that it should stay open. Surely this situation is cockeyed. There is not one of us here, I believe, no matter which side of the House we are on, bar the lunatic fringe which we will not take into account, could condone a situation like that. It is not doing the country any good. Surely legislation that will put an end to that kind of carry-on is urgently needed.

Mr. Killilea

On a point of information, do you not think that it would be appropriate at this time that either the proposer or the seconder of this great national motion that brought us all to this House on this auspicious occasion should at least have the courtesy to sit in the House and listen to the contributions?

An Leas-Chathaoirleach

The Chair would like to point out that the presence or absence of colleagues in the House is never referred to and that it is disorderly to do so. There are 30 signatories who are in effect proposers and seconders of the motion and there are a few around the place I am sure. Senator Crowley to continue.

Mr. Killilea

I would not dare question your ruling but there are specific people who had their public press conferences concerning this particular day, or these days and nights, and I think the least we should expect from them is that they would have the common courtesy to come into this House and listen to the contributions being made.

An Leas-Chathaoirleach

The Senator is being very unfair to his colleague. Senator Crowley is confined to 30 minutes. I would hope that Senator Crowley would continue without interruption.

Mr. Crowley

I would like to thank Senator Killilea for his very intelligent interruption and in bringing to our notice that this is an auspicious occasion.

Mr. Killilea

Allegedly.

Mr. Crowley

I suppose suspicious would be a far more accurate description of it because, as I was saying, the circumstances in which this Seanad was convened were doubtful to say the very least. But talking on the issue of the way we are going in this country, the type of economic and, if you like, political atmosphere that there is, it is not a time for shibboleths or cliches. It is a time for straight talking. It is a time for calling a spade a spade. Surely we cannot any longer put up with the abuse of our welfare system, the abuse of employment and indeed the rejection by so many people or by spokesmen on their behalf when they are asked to make a small sacrifice for their country. As I said earlier, the solutions being put forward by the proposer and seconder of the motion are nearly as old as time itself. But I think we should ignore these people. We should not take into account what their offerings have been because we know very well that Senator Murphy becomes increasingly intoxicated with his own voice every time he speaks in this House and that when he is not speaking he cannot bear to be here because he must go somewhere else to talk. Unfortunately — I do not know if you are aware of this — we may not have Senator Murphy with us tomorrow.

Mr. Killilea

Oh, Lord.

Mr. Crowley

Perhaps the greatest travesty of history will take place tomorrow evening when Senator John A. Murphy will be discussing the life and times of Éamon de Valera.

An Leas-Chathaoirleach

Would the Senator get back to the terms of the motion?

Mr. Crowley

It is important at the same time that we bring out the character of the seconder of the motion because if we do not know the kind of mind that is behind this folly we may even begin to take things a bit too seriously in this House.

I have no doubt whatsoever that the recall of the Seanad was not meant to be a helpful or indeed an educational exercise for the Government but that it was a calculated move, first, for publicity and, secondly, to use the situation, the time and the place for a bashing of the Government. I have no hesitation in saying that the intention of both Senators Ross and Murphy was to cause mischief and to gain further publicity for themselves. There was no real desire, as I have said, to help the Government and by an extension of the Government to help the nation in what has been probably its most difficult economic circumstance since we attained our freedom. But of course this move was calculated and the desire was to cause the maximum political embarrassment.

It is my belief that the Oireachtas should not interfere while delicate negotiations are going on between the Government and the trade unions. Everyone hopes it will be possible to reach agreement based on the realities of the situation. Everyone realises that there is much more at stake than the 5 per cent third phase. What is at stake is our whole way of life, our approach to our economic difficulties and the solutions we will be putting forward. Are we going to put off taking remedial action and let the situation get steadily worse until it is left to outside authorities with no democratic mandate from our people? That is my main criticism of Senator Ross's suggestion. We are the people who have the mandate to rectify our economic problems and not have an outside power dictate or tell us what should be done and when it should be done. God knows, for far too long we had that outside power dictating to us and telling us what we should be doing. Would it not help the situation enormously in our present, if you like hour of economic need, if we could somehow bring about a solution to our problems in the six north-eastern counties of our country? Surely everybody——

Mr. Killilea

On a point of order, I feel very deeply about this matter concerning the proposer and the seconder of the motion that brought all of us Senators to this House today at enormous expense to listen to a debate on a motion which they put down. The proposer and seconder of that motion should be present here. I am therefore calling for a quorum, expecting them to be present in this House to listen to this debate.

Notice taken that 12 Members were not present; House counted and 12 Members being present,

Acting Chairman (Mr. Howard)

We have a quorum now. Senator Crowley has eight minutes remaining.

Mr. Crowley

As I was suggesting earlier, if Senator Murphy gave up one of his jobs perhaps he could create a little more employment for the rest of the country. Of course, we know that Senator Murphy is not as altruistic as he would like the people to think.

It is important that we try to bring about a situation in which the occupying forces, the British forces, pull out of our country. Until such time as they either indicate their intention to do so or actually pull out, we will not have peace. The economic hardships that have had to be endured by our people on the industrial and tourist side of our economy are in great measure due to the troubles in the North. No matter how many whiz kids we bring in as economists, no matter how many university professors we have recalling the Seanad, I cannot foresee a situation in which we will be working to our full potential until such time——

Mr. Cregan

What about surgeons?

Acting Chairman

We cannot have interruptions.

Mr. Crowley

I would like to hear what Senator Cregan said. I cannot understand what——

Mr. Cregan

I understand that it was a surgeon who recalled the Seanad as well.

Mr. Crowley

Sergeants.

Mr. Cregan

Surgeons.

Mr. Crowley

I thank the Senator for the instant translation. But until such time as we have peace in our six north-eastern counties — and we will have peace only when the British occupying forces pull out — we cannot possibly have an effective and thriving economy. There is no doubt that, after agriculture, the greatest potential we have is our tourist industry. I am preaching here to the converted when I say that those of us who represent tourist areas will be very well aware of the crisis that there is in the tourist industry. That crisis is attributable directly to our troubles in the North. Outside of those troubles, outside of the potential loss in earnings in our tourist industry, there was also the allied cost of maintaining security on the Border. When one takes into account the cost of maintaining security on the Border and the loss to our tourist industry one can well imagine the huge amount of money involved and the impact that would make on our economy if we could ever get the situation right.

Indeed, on occasions like this, even questioning the circumstances in which this House was recalled, now that it has been recalled we should again call loudly and clearly for the British to get out of our country. I know that might not suit Senator Bulbulia, but we will never have peace between our peoples in this country until such time as that happens. When we are talking about the hundreds of millions of pounds lost in the tourist industry, the huge investment made by people in the west of Ireland, including my own constituency of south-west Cork and in Kerry, in modernising their farmhouses, getting everything up to date for the tourists, when we think of the cost of all that and the meagre return that has been brought about because of the troubles in our six north-eastern counties, I would go so far as to say that we could very easily finance our budget deficit by the amount of money that could be generated by that one act alone. I am sorry that those two most esteemed Senators, the professor and the stockbroker, are not with us to listen and to take account of the realities and not to be going on with absolute bull, like calling for the IMF to come in and for the nationalisation of our agricultural land and banks.

Mr. Killilea

Hear, hear.

Mr. Crowley

The proposer and seconder of the motion are not around and I do not suppose we will see them for the rest of the debate. It is a bit of a damp squib as far as they are concerned. They have achieved what they set out to do: they have got the maximum publicity. They have tried to embarrass the Government, but I think they have made fools of themselves and have put the country to great expense bringing 60 Senators here and keeping them overnight.

Mr. Killilea

What about the city Senators?

Mr. Crowley

I suppose there is the odd gentleman around. I am looking at Senator O'Connell over there, for instance.

Mr. O'Connell

On a point of order, am I to understand from Senator Crowley's contribution that he intends at some future date to have copies of his speech circulated in the major cities of the neighbouring island in order to improve our tourist trade?

Mr. Crowley

I have always found Senator Maurice O'Connell most amusing. I will go so far as to say that he probably is the best comedian to come into this House in a long time. We are very grateful for his lighthearted and jocose interventions.

Mr. McDonald

In supporting the motion I should like to point out that one of the lessons to be learned from a crisis is that however dark things seem at the moment the world goes on. The old must know it, those in employment must know it, the young must be told it. The unemployed must know it. Our country must have a future and we all must work as never before to ensure and to enhance that future. As a first step we must place our trust in the honesty of Deputy Garret FitzGerald and our hope in his ability to realise policies designed to rehabilitate the economy, to restore stability in the present sick economy.

This debate is taking place against a backdrop of fiscal crisis. It is different from the crisis we had last year because this year the deficit will be largely due to a shortfall in the revenue side rather than in expenditure. That makes the problem all the more insidious. Some months ago the Government promised us a grand plan. What kind of confidence can the people have in a plan which was immediately preceded by two series of cuts which were totally unco-ordinated? What kind of planning can we expect when the Government have been shown not to be able to plan even the introduction of the proposed grand plan properly?

The entire current budget deficit this year, even at the most optimistic estimate of £800 million, would have been knocked if it were not for debt service and additional public service costs added by Fianna Fáil between 1977 and 1981. I suggest that our economic independence has been sold because of all the borrowing during those years. If there was ever an anti-national policy, that was it. If Fianna Fáil had not added £5,000 million to the national debt in those years there would now be £5,500 million less debt to be serviced this year. The additional 25,000 public servants added £250 million to the pay bill for 1982.

It is necessary to reform both the tax and the social welfare codes and to streamline the public service. I hope that right through the debate — I am very happy that it was possible under Standing Orders to reconvene the House — Senators will send to the Government and the Departments a message about the urgency of reform because it is clear that in our present system our public services have failed our economy and our people. Practically all sectors of our economy are under extreme pressure.

In agriculture everybody tries to diagnose the problem. The ACC were established with the specific responsibility to finance and to fund agriculture. The chairman of that organisation in his annual report indicated clearly what is wrong but they do not do one damn thing about it. It is like modern Nero fiddling as Rome burns. It is extraordinary that everyone in the public service concerned with, or who ought to be concerned with the policies of this present time are seemingly incapable of making any contribution to assist those who want to make a solid contribution to society. Unfortunately, we still have low standards in high places. The most recent sordid affair in the Dalkey area, the recent Northern bombshell involving the Minister for Justice, the oil price increase farce——

Mr. Lanigan

I think that is a despicable remark for the Senator to make. I think that the House would reject totally the assertion that has been made by the Senator.

Mr. McDonald

The Government are extraordinarily unlucky in this or else they have some extraordinary bed fellows——

Mr. Lanigan

I would ask the Senator to withdraw totally the remarks he has made.

Acting Chairman

The Chair would prefer if the Senator would not refer to matters that are sub-judice.

Mr. McDonald

I bow to the ruling of the Chair. For instance, we had Minister Reynolds and Minister O'Malley blaming each other for the Whitegate oil price increase farce. We see how contemptously the Government are treating the consumer.

Mr. Lanigan

When somebody withdraws something he should either withdraw it or not. The Senator withdrew with a "but" and a "but" is not a withdrawal.

Acting Chairman

I would feel that the Whitegate situation is related to the economy and is allowable.

Mr. McDonald

I am sorry if I have offended the Senator's sensibilities. We are living in an era when we have a national crisis or a scandal per day. Every morning at 7.30 when one turns on the radio there is always something new and if it is not on that you can be darn sure that it is on the news bulletin at 1.30.

Mr. Lanigan

The mover of the motion expressed the wish that we would not get involved in a political wrangle but the Senator is seemingly trying to get involved.

Acting Chairman

Senator McDonald on the motion.

Mr. McDonald

I believe that the semi-State companies which have been described as white elephants by some speakers here this afternoon should be obliged to conform to ordinary commercial standards and must provide value for money, high quality services and competition in both the home and the international market place. Most of these firms and organisations show a callous disregard for their workers and for the future of the work force. If in a State industry or a semi-State or indeed a private industry the old fashioned concept of a trading profit at the end of the year is absent, then I believe that no job is safe in that workplace.

The external debt, which in 1974 was £360 million and in 1977 had risen to £1,038 million, was almost quadrupled in the following three years and now stands at £4,700 million which requires practically all of the PAYE taxes to meet the interest on it this year. I understand that this debt was increased by £1,000 million by the present Government in the short few months they are in office this year. This crazy policy of borrowing for current expenditure was introduced by Minister O'Donoghue and the Taoiseach in their zeal to postpone the evil day, which I submit is certainly here in no uncertain manner for so many people throughout the length and breadth of this country. The real problem in this country I believe started in 1977 with the Fianna Fáil manifesto which was designed to buy votes irrespective of the price. For instance, they abolished tax on cars which robbed the Road Fund of the revenue necessary to keep up the standard that they had achieved then. They abolished rates on houses without adequately compensating or thinking out compensatory finance for the local authorities who find themselves with serious cash flow difficulties even up to the present time. Councils right across the country have the great difficulty of maintaining employment for their staff but at the same time they are forced to reduce the quality and the type of service that they have been accustomed to giving.

In the last budget the Government's major initiative was in the taxation field. The big problem affecting people in the Midlands, especially those faced with the task of maintaining employment in the small industrial sector, I find in speaking to industrialists is the many frustrations this new VAT tax levy is causing so many of them. It is clear that 90 per cent of the industries in Laois and Offaly are adversely affected by VAT on raw materials at the point of entry and it is causing severe hardship to them. With your permission, a Chathaoirleach, I should like to quote from a few letters which I have received from a number of concerned industrialists in my county. Without mentioning their names, I think it would be in order if I quote:

We import a considerable part of our raw material and we are concerned with the delays experienced to date. Apart from the normal sea freight shipment we have recently had two air freight shipments which took two days to arrive in Dublin and eight days to clear customs in Dublin. If these delays are allowed to continue there will be employment problems as we only airfreight when a critical part such as for a machine breakdown is required.

There is another letter from a larger firm again speaking of the difficulties they are experiencing with VAT at point of entry and they state:

It is estimated that approximately £1 million of goods, mainly for the milk processing area, are purchased each year ... We also import substantial amounts of plant and equipment periodically. Based on the above imports we are presently paying a bank guarantee charge of £2,000 per annum. It is estimated that a month's delay would arise in regard to the VAT refunds resulting in a normal annual charge of approximately £2,500 plus a similar average amount in respect of plant and machinery. A special customs form has to be completed and forwarded to enable VAT refunds to be paid and this is resulting in special charges being levied by shipping agents and are estimated to cost £2,000 per annum. Additional administration and sundry costs are being incurred which are estimated at £1,000 each year. Therefore the total annual cost to our company is approximately £10,000 per annum apart from the additional cash flow involved in awaiting VAT refunds.

Another industrialist stated:

Our company has been severely hit by the recent imposition of VAT at point of entry. It has meant that we have had to find a further £400,000 to finance our business here in Ireland. As you are no doubt aware, money is a scarce commodity and the investment of our scarce capital in this manner has meant that we have to cut back on our investment programme. We have complained bitterly to the IDA both at home and in New York, where our parent company are situated.

We have not taken advantage of the ICC special provisions as these cost money. With the Irish economy inflating at an horrific 20 per cent per annum and the economy of our European customers at less than half this rate, we expect our Government here to tackle inflation and budgetary problems and not offer cosmetic schemes which only add to our cost of production and reduce our sales potential.

Those letters were from industrialists in two relatively small counties and they found difficulty and, indeed, hardship as a result of the imposition of the VAT at the point of entry.

In fairness I should like to point out that I also received out of about 47 letters two which were in favour. The following letter was from a company in Tullamore. That letter stated:

Our company warmly welcomed the imposition of VAT at the point of entry on imports. We are sure that it will go some way towards curbing cross-Border competition in counties Donegal, Sligo, Cavan, Monaghan and Louth, and that it will give a timely boost to employment prospects in our industry in those areas.

Hopefully this legislation will be strictly implemented and that all evasion attempts will be properly controlled.

The ratio of the industries who saw fit to inform me of their frustrations and their problems with the services was something like 45:2. In the main, many of them felt they were unable to continue providing employment and production. I mention those matters because in moving around my constituency I find that the big problem we have is to find a way of securing gainful employment for our young population. In the town of Portlaoise there are almost 900 people unemployed. The unemployment figure was never that high before in that town. In most other towns the figures are fairly high. I hope, therefore, that everyone in public life will over the next year or so make the provision of gainful employment for our young population the number one priority. The latest census figures show that a high proportion, almost 50 per cent of our population, are under 25 years. The Central Statistics Office tell us that a high proportion of the 164,000 unemployed are in the same age bracket. That is a frightening situation. Unfortunately, if one looks at the Government's order of priority — I do not want to be accused of bashing the Government because at this time we must look beyond that — one will see that it is not designed to tackle that problem. If one reads the speeches Ministers are making daily one will see that they are concerned with referenda, with Northern political problems or whatever but looking at the cuts that are necessary, or unnecessary depending on what way one looks at the matter one will see that the Government's priority is not to provide jobs for our youth. There have been savage cuts in the educational service, one which is designed to help youth. It is difficult to know in what direction the Government are going at present.

Never in the 21 years that I have had the privilege of being a Member of the Oireachtas have I come across such unease in the country. People in every walk of life are anxious about the future. It is my firm belief that the private sector are at the moment milked dry of whatever reserves they had accumulated over the years. The next few months will test many people in industry, agriculture and the private sector. We have an obligation to introduce whatever reforms we can. It is important we should do that. If the present system is not serving the public as it was designed to it has outlived its usefulness. We should be doing our utmost to find new ways and means of spending public finance in order to get a better return in the productive areas. There is no Department of State that could not do with a severe overhaul. We should have a clear-cut order of priorities.

It has become very fashionable lately to criticise politicians on all sides and criticise the inactivity of the Houses of the Oireachtas. We certainly need to reform the working day of both Houses. I have given much thought to this and I hope we will be able to take many leads from the way many of the world's parliaments operate. The House must be made more meaningful and more accountable to the population of the eighties. We must change our rules and procedures in order to achieve that. The other House is over-burdened with certain types of debates and procedures. We should look at those to ensure that they can play a stronger role and have an influence on the direction the country is going.

Tomorrow we start to celebrate the centenary of the birth of Eamon de Valera. He was a mathematician, politician and statesman. It is a sad fact that what he has handed down to the present generation of young Irish people is the worst Government we have ever had. One can judge that by any standard, economic, employment or by deficits. It is a sad reflection on a great organisation. Over the years I have maintained a very good working relationship with members of that party inside and outside the House and I respect them but, nevertheless, there appears to be a small number of people who insist on bringing the institutions into disrepute. I thank the Chair for its forebearance. I support the motion.

Mr. Lanigan

When I had a touch of an altercation with Senator McDonald it was not on a personal basis. Nobody under any circumstances should use personal abuse in trying to put forward a point. If personal abuse creeps into this House we might as well all go home now. I do not agree with it at all.

I welcome the opportunity to debate the problems that have arisen over the past number of years and to discuss in a reasonable manner how we might solve them. Listening to the debate so far, I feel we have lost a unique opportunity that has been given to us by the recall of the Seanad to give the people a certain amount of hope in the institutions of Government and, in particular, in the institution of the Seanad. Unfortunately, so far from the Opposition benches all we have heard is a rehash of Opposition statements without any attempt being made to suggest that this economic situation is not of our own making. Everybody must realise that Ireland does not exist in a vacuum and that we are all affected by circumstances outside the country over which we have no control. However, there are circumstances in the country which must be brought under control if we are to achieve a proper balance between social justice, employment and a fair return for either work done or for investment in economic activity.

The world today is in a state of economic chaos. We are in the worst financial crisis since the thirties. Some people say that the developed world has never seen such an economic crisis. Many world leaders have expressed the viewpoint that world economic order is on the verge of collapse. Pierre Trudeau expressed the point of view recently that the world is moving from crisis to catastrophe. MacCracken, who was the former chairman of the United States council of economic advisers, has stated that the economic world is balanced on a knife edge and that it could plunge into the chasm of international economic disintegration. But we must not forget either that there are historical precedents for the situation we have in the world today. During World War 1 we had massive borrowing by Britain, France and many other European countries. They borrowed massive sums of money in the United States to finance their war effort. At that stage they had repayment difficulties. After that, of countries who borrowed from the United States only Finland could repay what they borrowed. In the twenties the United States Secretary Mellor negotiated a series of agreements providing for payments of debts over many years. They were not repaid. The Europeans were unable to pay the money they had borrowed. Germany gave up making the reparation payments which they were supposed to make after World War 1.

The situation arose again in World War II but the hassle was in a sense got over by the United States at that stage selling their arms and munitions on a lend-lease basis. After the war we had a massive Marshall Plan to help out the nations who were in economic difficulties. Speaking about the sale of arms and munitions and the historical precedent, it must be stated categorically that many of the current major world problems are allied to the sale of arms by the United States. This is particularly so in the Middle East today. The problems of the Middle East in the last few weeks were created by virtue of the United States selling arms in increasing numbers to nations all over the world. They are creating hugh debt repayment problems. We have seen the appalling consequences of some of these arms supplies in the last couple of weeks. It would be wrong if this debate on economic and social matters did not allow us to express our total shock and abhorrence at the callous, brutal and inhuman massacres which occurred in Beirut over the last number of weeks because of the arms supply situation. The blame for these atrocities must be borne by the current leadership, both civil and military, in Israel who have worked in complete collusion with the so-called Christian militia in Beirut.

Acting Chairman

The Chair would like if the Senator would relate his remarks to the motion.

Mr. Lanigan

I have related my remarks to the motion to a degree. I can show, if I am allowed, in the next two minutes that I will relate totally to the motion. It is totally in line with the motion because of our social and economic problems. It must not be forgotten that the United States played a major part in that catastrophe by supplying arms, munitions and military training to the Israelis. We must try to ensure that the conditions which allowed these massacres to take place will not happen again. We must ensure that Israel withdraws totally from Lebanon. We must ensure that the Lebanese people are given every opportunity——

Mr. O'Connell

On a point of order, we have had many comments from Fianna Fáil speakers on the manner in which the debate has been handled on this side of the House and what they regard as irrelevancies. I go along very much with Senator Lanigan in saying that the world economic crisis and world order and disorder are important, but this seems to be developing into a totally different debate and a totally different subject. I do not think Senator Lanigan should be permitted to do this. If he wants to put down a motion for another time he should be allowed to do so. Let us get back to Irish problems.

Acting Chairman

The Chair has already asked Senator Lanigan to relate his remarks to the motion. The Chair feels that we have gone into the area of foreign affairs and the Chair is not satisfied.

Mr. Lanigan

The wording of the motion is very specific: that we look into the inadequacies, the social consequences and the unemployment situation. We cannot talk in isolation about Ireland. If we are talking about unemployment and social inequality we must bring the debate into the world forum. I will conclude my contribution in a short time. If the Chair will allow me some time I will show how it has a relationship to the Irish situation. If we are to have economic and social stability in Europe there must be economic and social stability in the Middle East. We must allow the Palestinian people the right to——

Mr. P. Reynolds

If the Chair allows this to go on I do not know where we will end up in this debate. This has nothing to do with the motion——

(Interruptions.)

Acting Chairman

The Chair intervened and requested the Senator to relate his comments to the motion before the House.

Mr. Lanigan

I intend to relate my comments to the debate. We did not set the parameters of this debate. The people who proposed and seconded the motion expressed political views that went right across the board and extended far beyond Ireland. I should like to offer our sympathy to the people of Lebanon on the massacres that took place and I should also like to place on record our sincere sympathy to the family of Commandant Nestor who was killed so tragically because of what happened in Lebanon.

People may say that to speak of the Middle East in the context of this debate is irrelevant but anyone who has an interest in seeing world economic order restored must agree that part of that recovery must come about by having peace in the world, and particularly peace in the Middle East. Many of our energy sources are in that area and possibly in this we can see some hope of growth of economic stability in this country as well as in the western economies as a whole.

There are more than 12 million people unemployed in Europe but we must realise there is no way we can trade our way out of that difficulty. The western European countries cannot take any more manufactured goods: they cannot afford to buy them. We must find markets for the products we are manufacturing here and the markets must also be found for the products made in western countries. There are three elements involved. There is the factor of unemployment in the industrial western world. There is the situation that countries in the Third World are crying out for economic development. They have a need for the economic resources we have in technology and in manufactured goods but they cannot afford to pay for them. They cannot pay for our expertise and they cannot pay for their own economic development.

In the Arab world some countries have enormous wealth but much of that wealth is stagnating because it is invested in banks in the United States. It is being used by them but not by the Third World and not in a way, that will create a stable world economy. To have a stable world economy we must try to siphon some of the Arab oil wealth out of banks in the United States and into economic investment in the Third World, thereby ensuring an increased market for our goods and for goods of other western countries.

If we trade with Third World countries we must ensure it is to their benefit as much as to ours. If that does not happen the world economic order could fail. Let us be quite clear about historical precedents. In the past hunger has followed war. If Third World countries are not helped by us and if we do not allow them to benefit by trading with us, there could be a reversal of that procedure and hunger could create war. In this House today the Arabs have been blamed for creating many of our economic problems because of increases in oil prices but I should like to state one simple fact. For the past 18 months oil prices on the world market have not increased. However, our oil costs have increased by more than 30 per cent because of the relationship between the Irish pound and the petro-dollar. The 30 per cent increase in oil costs has not been created by the Arabs but because of the high cost of the dollar. This has happened because of high interest rates in the United States and it is something that country will have to consider carefully. While the United States may be sustaining her own economy in the short-term, she is ruining her chances of export capability in the future.

Ireland is not alone in being financially disturbed. The Third World countries are in total disarray. Mexico, Zaire, Egypt, Indonesia, Brazil, Somaliland and others have all tried to reschedule their debts but at the moment global negotiations to try to do this have broken down completely. The less developed countries owe more than 500 billion dollars to banks in the United States. Why these banks allowed such debts to accumulate is very strange.

We must attempt to bring our economic situation back into line, even though the measures may be harsh. The Government have a responsibility to do this and have said it is their intention to take such measures. Instead of their carping criticism, the other side of the House should be supportive of everything that is being done to ensure the future of this country. I am delighted the Taoiseach will be here tomorrow to answer some of the queries raised by Members on the other side and also to give some indication of the national economic plan for the next five years. It is only after we hear about the plan that we can debate the situation in a reasonable manner.

Mr. P. Reynolds

Like the manifesto.

Mr. Lanigan

If the Senator would read the manifesto in total he would see that we fulfilled what we set out in that manifesto. However, some people did not want to read about economies that had to be made in public spending. All of this was set out in the manifesto. Mention was also made of other economies that would have to take place in order to achieve growth. People are inclined to read about the good news not about the bad news.

In Ireland today it is easy for academics to get up and talk about the social inequalities. They speak from just as privileged a position as the people in the public service, but for small businessmen down the country the social inequality can be seen across the board. No businessman in the country likes to put anybody on short time or on a three-day week. It is only when you are face to face with the person to whom you have to say that that you realise the social implications of people being put on short time. Only if we have the type of restraint being called for by the Government at present will we ensure that employers will not have to go to their employees with suggestions like these, that people will not have to queue up in bad conditions at labour exchanges.

I disagree totally with the remarks of Senator Murphy on nationalisation or socialisation in the agricultural field. He seems to think that socialisation or nationalisation of the land and resources of Ireland would be the panacea for all ills. We read in The Economist, The Christian Science Monitor, The Irish Times, or The Irish Press that China has completely reversed its policy on nationalisation of land and is now breaking up the big communes and going back into privatisation of the land. The very same thing has happened in Russia over the last couple of years. Russia, with its huge plains and magnificient land, if it is to survive the winter this year must import over 440 million tons of grain from the United States. This is what the socialisation of land has done in those countries whose land resources are just as good as ours and in many cases better. No “ism” will serve our people except the one “ism” that we all grew up with, and that is patriotism. Patriotism does not mean that you must go out with a gun. Patriotism today means that workers should work hard and get a fair return for the work that they do, and people who invest in industry should get a fair return. People out of a job should be treated as human beings and should not be thrown on the dung-heap.

It has been quite plain over the past years that we tried to keep an equitable social policy in regard to people who are out of work. Unfortunately now, when things are becoming difficult, the first carping you will hear from many people is that persons who are unemployed are getting too much. One would imagine that people would turn to the left, that a radical socialist or communist movement would take over. Unfortunately, in most countries in Europe and the western world people are turning to the right. People want to hammer the downtrodden and keep them down. The Government are trying to retain the equity needed between those who are working and those who are not working or unable to work, and in doing this problems will arise. Nobody wants a fall in the standard of living, but a look around the world at present reveals that the standard in every country in the world has been forced to drop. We will not be immune from that drop in living standards. If we accept that we can afford a drop in living standards to a small or greater degree, then the country has a chance of survival. Anybody with a fair mind will realise that the standard of living in this country has risen too fast over the past ten to 15 years.

I was surprised to hear Senator Murphy describe the decrepit conditions of rural Ireland. Anybody who drives through rural Ireland must agree that in recent years the standard of living and housing for the rural people has increased and in the cities, apart from a few glaring examples, there has been an improvement. Anybody who comes to Kilkenny must agree that Kilkenny — and it is not alone in this — has improved out of all proportion. People no longer have to live in hovels in back streets. The back streets are being maintained and very good standard houses are being built in the place of the hovels the people had to live in 25 years ago.

This country is not on its knees. Unfortunately, people need more from the Seanad than a rehash of what has been said. The people need a little uplift. They want confidence in the future. This House cannot in itself give that confidence but at least it might sow the seeds of confidence in this nation. We have a young, vibrant, educated people at present. They need inspiration. If we come in here and carp and tell them that there is no hope, is it any wonder that they are suggesting that politicians are a waste of time, that they are not worth what they are being paid and that they should be done away with? Only politicians can be blamed for the suggestion that nobody who leaves school will get a job. Senator Reynolds stated that one in four of those who will finish their education in the next two years will find themselves without work for the rest of their lives. That is an atrocious thing to say. I would not wish for that and it will not happen.

We are living in tough times in a tough world. We cannot overcome our problems on our own. We must look at the inequities that are abroad in the world and try to bring about an equality between the developed nations and the Third World countries. We must seek an economic order which will be peaceful, which will not be controlled by the mammoth nations such as the Americans or the Russians whose foreign policy is dictated by considerations of protectionism for themselves and for their type of economy. Why should the non-aligned world not have a say in what happens in the world? We as a small country have not been afraid in the past to express our opinion about what happens in the world and I sincerely hope we will not be afraid to do so in the future.

An Cathaoirleach

The Senator has two minutes in which the conclude.

Mr. Lanigan

I hope that this debate will continue in a fashion which will give hope to the people that the carping criticism that we have heard will be forgotten and that constructive suggestions will be made by the Opposition Senators. Parallel to their criticism they should suggest means of getting the Irish nation into the mood for development. Mood and optimism are lacking and the more we, as politicians, preach pessimism, the more pessimism will spread. This is not a country about which we need to be pessimistic. It is a country in which I have great faith and I wish that the Senators on the other side of the House would have similar faith.

Mr. Byrne

I would like, first of all, to compliment the Independent Senators who instigated the recall of the Seanad. I gladly, as a member of the Fine Gael Party, put my name to the motion recalling this House today. I would like to thank the Cathaoirleach for accepting the motion and allowing us an opportunity to debate the present very serious dilemma. It was inevitable, with this House being recalled during the summer recess, that there would be an element of attack, on the part of the members of Fine Gael and of the Labour Party, on the Government's handling of the economy. On the other hand, it was inevitable that there would be an element of defence or counter-attack on the part of the supporters of the Government. The Independent Members of this House gave themselves an opportunity to look at the state of the economy and to assess, from a non-political viewpoint, the situation and to make comments in due course.

This motion was put down and signed in all sincerity for no ulterior motive on the part of the Senators on this side of the House. I was very saddened to hear earlier in this debate insinuations about a lack of sincerity on the part of our Independent colleagues who had moved the motion. I thought that this House was above that type of abuse. I am sorry that Senator Lanigan was not present on those occasions, as I am quite sure that he, too, would have disagreed with the blatant attack made on the persons of two of our Independent colleagues.

Having said that much in the cause of the Independents, one thing that I resent is their trying to set the tone of this debate, in other words, telling us how we should speak and how we should command ourselves. It was politics — and politics in the most understood way — that has led this country in the present crisis. It is no harm at all to have a certain amount of the cut and thrust of politics because this is needed to bring both Government and Opposition to a realisation that we have a country to look after and to develop. For our part, on this side of the House, this is what we are attempting here today — to spur the Government on to action because, let there be no doubt about it and it has been conceded here today by some of the more responsible Members on the opposite side of the House, there is a crisis. This cannot be glossed over.

We have heard very little here today of the boom and bloom catch-cry of the last general election. This slogan was developed for the sole purpose of mesmerising the people into a false sense of security in order to regain power. Some six to eight months have now elapsed and the very dangers which the last Government, under Deputy FitzGerald, were pointing out have now come to pass. No longer will you find Government Ministers refusing to recognise the fact that there is a crisis. Having made that accusation, we should be delighted that, at last, the Government have come to realise that this crisis exists and that effective action must be taken.

A number of aspects of the crisis have been referred to during the course of this debate and it is no harm to refer to them again, because it is only by emphasising the real state of the economy that we will get the Government to take effective action to remedy the situation. A staggering 160,000 people are out of work. It can be checked out that 337 factories have closed down in the last five years, with the loss of over 20,000 jobs. We had quite a good lecture on world affairs from Senator Lanigan during the last half hour and I was amazed at his knowledge of affairs in Israel, China, Russia — even as far down as South Africa. He referred to our problems as related to the world situation, but our inflation rate is twice that of our partners in the EEC, 18 per cent against an average of 9 per cent. Our children and our children's children will have to repay a national debt of £11 billion. This a staggering sum. People on the opposite side of the House may say that we are only pretending, trying to intimidate the Government, trying to shame them. These are hard, solid facts, not drivel as Senator Crowley described them earlier.

As a member of a local authority I can say from my own knowledge that at present local authorities are nearly on the brink of bankruptcy. If the Minister of State, who I am glad is with us here this afternoon, thinks that I am speaking an untruth or exaggerating I will willingly invite him down to a meeting of Galway County Council on Monday week, when the state of the finances of Galway County Council will be debated. There is a very serious situation. Having spoken with councillors from other counties, I believe that the same situation pertains there. Is there any need for me to make any comment on our health boards, vis-a-vis the cutbacks in cash, in employment, in services? We have heard and read so much about these in the last few days.

At present, with funds scarce, our educational system is in stalemate. Parents and teachers are worried about reports threatening the reintroduction of fees, an increase in the pupil-teacher ratio and a deterioration in the school bus service. These points which I have raised are just some of the manifestations of the deep malaise that we are experiencing at present. We make no apology for referring to those points. We do not take any pleasure either in mentioning them, but we owe it to ourselves and to our country to get those facts over loud and clear so that action will be taken.

Since 1979 — and here I should like to refer to industrial employment — our competitiveness vis-a-vis our European partners has weakened. Over the past year — and this is more serious — our competitiveness vis-a-vis the United Kingdom has also worsened. This was brought about by a relatively high rate of inflation here. Admittedly the world recession has helped to create this situation. The action of the Government in imposing VAT at the point of import, and the once-off transfer of corporation tax have placed an additional burden on industry and, at a time when industry is struggling to survive, it is put in a very delicate situation. In order to survive it is forced to borrow money at a time when interests rates are high. The Government deserve no credit whatsoever for these two impositions. They could have done without them but they decided, for reasons we do not know, to impose VAT at the point of import and to bring about a change in the corporation tax situation.

Another area in the employment scene — and the former Minister for Finance, Deputy Bruton, attempted to bring this in but he was not listened to — is the question of taxing short-term social benefits. It is interesting to note that in the taxation report recently submitted to the Taoiseach one of the recommendations made by the committee is that short-term social welfare benefits should be subject to tax. It is atrocious, with money so scarce, that people out of work can bring home more money than they could if they were employed. This has come out loud and clear in a report also furnished to the Taoiseach in the past week, the PA Management Report which spelled out abuses in this area. This abuse creates a disincentive for workers. It also causes absenteeism in our factories and it is a source of worry in relation to the overall employment situation.

Over the past few weeks and months we have witnessed a series of severe cutbacks in the health services. Let there be no doubt about it — and this has been explained by speakers from this side of the House — that in Government we recognised the need for cutbacks. The manner in which these cutbacks have been made has aggravated the situation and has been unjust. The closing of hospital wards, the reduction of hospital beds, the trimming of social services, the laying-off of 4,000 workers — all this is imminent. I cannot understand why money cannot be transferred from the Department of Social Welfare to such bodies as local authorities and health boards to maintain employment rather than creating unemployment.

Taking into account the cost of social benefits and payments the latest cutback by the Government will mean a very small improvement in the financial purse. On the other hand, it will cause serious disruption and severe hardship. It is about time this situation was dealt with properly. The Government had no mandate from any group of people to make the cuts they have made. They got no mandate from the people in the last general election. They got no mandate from the Dáil. They made them on their own accord without consultation. They made them in a haphazard manner without due consultation with the people concerned. This is what has annoyed us most. In future if the Government are contemplating cuts in any other area they should have proper consultation with the people concerned.

Much has been said on this side of the House about the 5 per cent public pay increase. There is very little more I can add, other than to say this was unilateral action by the Government in failing to implement a moderate pay agreement entered into by Deputy Garret FitzGerald and the unions in 1981. Fine Gael in Government, and Deputy Garret FitzGerald in particular, were very conscious of the need to curb public expenditure. This, of necessity, also meant curtailing public service pay. This has been our policy and our concern. We believe that once an agreement has been entered into, it should be honoured. It has been conceded that money was provided to make these payments, but that money was squandered in the infamous Gregory deal made outside the Dáil. It will also be spent on promises, which have yet to be fulfilled, made prior to the by-elections held this year. On the resumption of the Dáil Fine Gael will oppose any repudiation by the Government of the obligation to pay the 5 per cent on the dates agreed to.

We are calling on the Government to show their concern for our present deep malaise in the knowledge that there is a widespread acceptance on the part of the vast majority of the people that something must be done to remedy the situation.

It is extraordinary that it has taken the Government so long to realise that something must be done, that our finances must be brought under control. But the manner in which they are now undertaking this task shows that they are ill-equipped and incapable of carrying out this job properly. Any day now — we got an inkling here from Senator Lanigan that it could be tomorrow evening — we will hear details of a new national plan. Those of us who have been in politics for some years will be able to recall famous economic plans, famous manifestoes of the past in which efforts were made to cajole the people into believing that the solution to all the ills of this country had been found.

I have no doubt that the Taoiseach may even use this national plan as a magic wand and try once more to mesmerise the people and seek a dissolution of the Dáil. He is quite entitled to do that, but I would like to warn that on this occasion the people will be more alert and will not be so easily fooled as they were in the past.

We hope that this motion will motivate the Government to set about the task which is so important. For our part on this side of the House it is no pleasure to be referring to ills, to be referring to the crisis in our economy, but we consider it our duty to do so. It is part of the political process and if we cross swords politically in the process, that is all to the better so far as the country is concerned. I am one of those who believe in a certain amount of the cut and thrust in politics and even in this House, where cut and thrust is not so common, I think the occasional thrust is good because this is what the people want together with progress, together with contributions which are constructive. I should hope that from all that has been said here a number of positive ideas will have emerged. But the main aim of this motion is not to tell the Government how to do their job but to spur them on. It is the Government's task to set this country right. If they are not prepared to do it and if they are not able to do it, let them hand over to a Government who showed during their brief term of office that they had the commitment and the will and who realised what was necessary to solve the financial problems of this country.

Mr. Wright

Like the rest of the Senators I have been reading the financial reports and economic forecasts from ERSI, the Central Bank, the stockbrokers and so on; but coming from a business family who have been dealing in the retail food business I have had first-hand knowledge of the problems that have been facing this economy of ours.

There are four objectives to be tackled. The first is to reduce inflation thereby enabling the Government to plan ahead on the basis of the forecasts for the future. This will give us price stability. The second task is to reduce the unit cost of the national output which will help us to compete more favourably with our competitors both at home and abroad. To increase output we will have to increase the national wealth. The last and probably the most important task is to put our people back to work again, to increase real jobs. The motion asks that the Government should take action. I believe that the Government are taking action. By attempting to control public sector expenditure, the Government have taken a real step in this direction. When one considers that the private sector which is the productive sector is now taxed to the limit, the only alternative the Government have is to reduce public expenditure. In 1972 public expenditure was 38 per cent of total GNP; now it is 58 per cent.

This debate would be more meaningful if we had had the opportunity to elucidate the Government's economic plan. The Government will announce in due course this detailed plan and I am sure that it will contain recognition of the problems which face the country. The plan will demonstrate the Government's ability to solve the economic and social problems which confront us.

The motion implies also that the Government have all the solutions. We are indeed fortunate that we have a Fianna Fáil Government here at the moment to tackle these problems and not a Coalition of opposing policies. One of the stories I have heard is that one of the most detrimental statements from a Finance Minister was from the last Minister, Deputy Bruton, when he compared Ireland's economy with that of Poland. Those Irish people who were trying to sell into Europe had one hell of a job after that. This Government by way of the Taoiseach going to New York and explaining to our friends in the States that things are not as bad over here as was made out on that occasion, have tried to undo the damage done by that statement from the then Minister. Inherent in this motion is a reversal to total dependency on central Government, people waiting for the cheque to be put through the letterbox. With the action of the Government backed up by the co-operation of the people, our economy will once more be put on a sound footing. People are the key and hard work is the answer. The Government must give a lead. Unlike the last speaker I am confident that the Government will give the necessary lead, that they have started to give that lead. I am confident also that the nation will respond as it has responded in the past. We know of the magnificent results during the emergency, for instance, that of compulsory tillage. The farmers were prepared to do their share. When there was flooding in the late forties, the Army and the city folk helped out with the harvest. In the sixties, when the British import levy was put on our products, the factories worked a free Saturday. It is up to the Government now to give the lead to the people and, as they have done in the past, they will respond now, too. Hard work is the real answer. The only way we as a nation will maintain our living standards is by working harder and more efficiently. Let us have regard to what has been done by some of our competitors. Some years ago the Swiss, for instance, voted not to reduce the 48-hour week. In the United States two weeks leave is considered the maximum. Also we deal with our Far Eastern competitors where two days leave is probably what they get.

With the right attitude we could become the Japan of Europe. But at present what have we got? Unfortunately we have in some service industries a 32-hour week and four to six weeks holidays is the norm. Absenteeism is one the greatest crimes of our country and now with Christmas on the way, which starts on December 1 and runs for six weeks, can we really believe that we will be productive in that period? I hardly think so.

All must work harder but recognise the limited work availability. Unreasonable levels of overtime are sometimes requested. This might seem like a bonanza for employers. But is is when employers carry their responsibilities and genuine profit is created that real jobs are created. When genuine profits are created worker participation in these profits should be an added incentive. These are all areas to which citizens can contribute. It is all part of a revival of the belief in work. In a caring society those who are unable to work or who cannot find work must be provided for. In that Fianna Fail's record is second to none. Social welfare benefits have been consistently increased. I appeal to all sectors — PAYE, the trade unions, the self-employed — to take the lead given by this Government to modify their demands and to live within their means. It is our people who will create the wealth that will get us out of this mess.

To conclude I might quote something said by a famous person: ask not what your country can do for you but what you can do for your country.

Mr. Howard

I welcome the opportunity of participating in this debate. I should like to put on record also my satisfaction at the fact that it was possible to recall this House to debate the very serious economic and social situation in which we find ourselves at present.

There is no doubt that the social and economic crisis with which we are confronted, the unemployment of 160,000, the cuts that have taken place recently in social services all affect a very high proportion of our people and call for positive and effective remedial action. At the end of this debate I hope it will emerge that the standing of this House has been enhanced by the debate, that Seanad Éireann will be seen as an Assembly concerned to take what action it is permitted to take in relation to rectifying the problems besetting our people. I hope this debate will have the effect of charting a course of effective action to create economic progress with positive results in respect of unemployment and of restoring the confidence of our people.

Before dealing with the substance of the motion, with your permission a Cathaoirleach, I should like to comment on the contributions of at least two Senators who have participated already and to whose contributions I have listened. The first comment I want to make is in relation to a statement by Senator Ross. As I understood him, he said — at least this is my interpretation of it — that the State should seriously reconsider the propping up of unprofitable operations in this country. He listed a number of bodies he felt deserved that classification. Among those he mentioned was a manufacturing company in my county. I have first-hand knowledge of the difficulties now confronting that company. I refer, as he did, to the Bombardier Bus Company. I want to say this — and I have checked this in the time since Senator Ross made his contribution — on the information I have received, which I regard as thorough and accurate, the Bombardier Bus Company do not deserve that classification. We have often been critical of certain parts of our industrial sector. We have often complained about poor productivity, about a failure to meet targets, about the failure of some of our companies or industies to buy the maximum amount of Irish-produced goods. Under these three headings the performance of Bombardier has left nothing to be desired. In the short period of their existence this company have shown that their productivity is top-class. They have not alone met their targets but exceeded them. Wherever possible they bought and used Irish raw materials. In the Shannon Industrial Estate they employ directly almost 400 people. There are a further 400 to 600 people employed in small industries — perhaps not all small; in fact Unidare and the Sugar Company supply components to that industry — but there are a number of small industries in that mid-western area employing two, three or up to a dozen people who depend on that company to market their product and the company has stood by them faithfully. We are talking of a total work force in Bombardier of perhaps 1,000 people. Unfortunately a threat hangs over the company at present. Circumstances may be such that that company would find they would have to cease production for an unspecified period. I gather that the sum required to ensure unbroken production there is in the region of £4 million. There is hassle at present between CIE and the Government as to whether the £4 million required was provided and where it has gone to.

I want to make this statement here this evening — first of all in reply to Senator Ross's comments — that the Bombardier Bus Company is not a loss-making operation and does not impose a burden on State finances. I want to make the point also that if the £4 million is not provided for the purchase of buses to keep that industry viable between now and March next, that figure of £4 million perhaps will be provided in another way. From the information I have received it would appear that if the industry continues in operation producing five buses per week as they are at present — on which £18,000 value-added tax is paid to the Government on each bus, plus £10,300 excise duty, plus £20,000 paid on PRSI and PAYE — that yields an income to the State of approximately £160,000 per week. If employment ceases there then one is talking of a work force of practically 800 people obtaining unemployment benefit of perhaps £100 per week, plus an income tax rebate. This could add anything up to £100,000 in costs to the State, plus loss of revenue of about £160,000. All this adds up to a State cost of approximately £250,000 a week. Therefore, in a 16 week period the £4 million now in question will be a cost to the State one way or another. I suggest that the wise course to pursue now is to provide the sum needed to have production continued there because otherwise there will be a loss of £4 million to the State. There will also be a depressing effect on spin-off industries in the area. I deplore Senator Ross's inclusion of this highly successful industry in his criticisms — the industry does not deserve his description, and I reject it.

I wish to refer to part of Senator Murphy's speech. I deplore the attack made on the farming community because I regard it as unjustified and irrational. I agree with the Senator on one point, that the incapacity of the agricultural industry to make a sufficient contribution towards the resolving of our economic problems is undoubted but I reject the methods he proposed for achieving that. In reality, what he was suggesting is the nationalisation and confiscation of Irish farm family land. As a professor of history the Senator should be well aware that in spite of centuries of effort, the greatest empire the world has ever known failed to confiscate the land of the Irish tenant farmers. We must realise that after religion, and perhaps even before it, the ownership of farm family land in Ireland is the most emotional issue we could talk about. Senator Murphy used the terms "ranchers" and "cattle barons" but he carefully forgot to define them. I am afraid he was attempting to brand with whatever contempt these terms convey the vast majority of Irish farmers who would not in any way ever qualify for such descriptions.

If land confiscation had been successful in any part of the world, why have we not been told about it and why were we not invited to go to see it? The one area of the world that I am aware of in which land confiscation has taken place is behind the Iron Curtain, and reports from that part of the world indicate that it has been an abject and total failure from the point of view of increased productivity. Targets are continuously not being met, there are food shortages annually and, therefore, why is it that when socialist theories are promoted we are never given the examples of where they have been successful and we have never been invited to go to see them? I will give one example. In 1980 in the Soviet Union the average wage earner spent 35 per cent of his income on food and it took 62 minutes of his working time to earn the price of a pound of beefsteak. In Ireland in 1980 the average wage earner spent 18 per cent of his income on food and he earned the price of a pound of beefsteak in 35 minutes.

Here, agriculture or industries depending on it provide employment for 520,000 people, Senator Murphy cited a figure in relation to imports of certain agricultural commodities. I think the figure was £190 million. However, he failed to tell us that in the year to which he applied that figure the total export value of live cattle, meat and dairy products came to £1,200 million. I do not know the type of products that were imported but perhaps the reason for the imports might be cited to the consumers here who reject Irish produced articles and who find great satisfaction in consuming the products of other countries. I hope I have made my position clear on that subject.

In the limited time I have available I should like to say that though I accept the desire of some of the people who signed the motion to avoid party politics in the debate — I respect their sentiments in that respect — I do not accept that people on the other side of the House should interpret the contributions made on this side as Government bashing. If this debate is to be objective and constructive, if at the end of it we will arrive at a course of action designed to restore confidence and progress, we cannot ignore mistakes and misjudgments made in the past. It would be wrong to pass over these mistakes and misjudgments without commenting on them, particularly some of those made for the purpose of gaining short-term popularity.

The nation is confronted with major problems, such as the 160,000 people unemployed, job shortages, factories being closed. We are dealing with an inflation rate which is twice the average of our EEC partners. There has been a major decline in the competitiveness of our industry. The high inflation rate and high interest rates have contributed to our declining industrial competitiveness in overseas markets.

In the past two years 100 industrial concerns, manufacturing firms included, have been closed resulting in the loss of 12,000 jobs. The home market has also contracted because of reduced consumer spending which has been caused by a high inflation rate and a crippling burden of taxation. The cost of living has been increasing and the result is that not alone are there no job prospects in manufacturing industries but the jobs that exist are continuously threatened by this unfortunate sequence of events. Private investment is stagnating, the return on investment has fallen because resources and incentives have not been made available for further investment. Urgent action is needed to deal with this problem. The causes must be eliminated. Failure to do so will prove disastrous.

I have referred to the reduction in consumer spending which in addition to our loss of competitiveness in outside markets is also affecting productivity here at home. The effects are everywhere. It is estimated that consumer spending will drop by about 3 per cent in this present year. The effects of this will be seen right across the entire scene. Perhaps it is already most evident in the drink, the tobacco and the motor industries. Crippling excise duties to the point of a diminishing return have resulted in predictions now being made that the March budget will be a least £100 million off target, £100 million in relation to exise duties from drink, tobacco and so forth.

I want to say in relation to the drink industry that 40,000 people obtain their livelihood from it. It has been burdened year in year out for some time past with an increased load of taxation. The effect is that the cost of drink — because of the tax element in it — is now far higher than that which applies in any other country on either side of the Atlantic. The same attitude has prevailed in regard to petrol. The result is — as both of these, drink and petrol are important factors in the cost of Irish holidays — that the tourist trade has been dealt a very severe blow.

I listened to Senator Crowley earlier this evening putting the blame for the drop in tourism on the problems that exist in Northern Ireland. I accept that is part of the problem. I accept that it was one of the initial factors in reducing the number of tourists coming to this country. But as a nation, and in that knowledge, the simple thing for us to do was to try to offset that by making holidaying in this country more effective. Instead of that we compounded the damage that was being done by increasing taxation on the very things that a tourist must purchase in this country. The result is that we have a situation now in which a holiday in Ireland is perhaps the most costly in Europe. A decade ago the tourism industry was growing and thriving. The revenue from it was helping our balance of payments and jobs were being provided. The people in the industry responded to the opportunity. They invested and they were prepared to go ahead. Tourism has an important role in our economy. Therefore, having recognised that to some degree the initial damage was caused by the problems in Northern Ireland, and as Senator Crowley is not here I do not want to comment further on what he said except to make the point that having accepted the source of the initial problem, the sensible and wise thing to do was to attempt to lessen that damage by better encouragement to get people to come to this country. Instead of that we compounded the damage by taxation. I do not want to be unnecessarily and brutally frank in relation to the tourist industry but there is one other factor that we should not ignore or sweep under the carpet: we knew in the earlier part of this year that we had the prospect of some marginal improvement, the first real improvement that would take place in the tourist industry, but the public posturing of our Government over a certain issue far from our shores ensured that the improvement would not take place.

I have spoken about the crippling burden of taxation. I have been critical of a number of issues and I want to say that what this country needs, perhaps more than anything else at the moment, is effective, positive leadership. It is a Government's job to govern. If a Government are not governing, then we can only expect disaster. I am afraid that the situation as we see it at the moment raises grave doubts as to the effectiveness of the governing the Government are doing at the moment.

I accept that the difficulties and the crisis we face are big enough, important enough to put a duty and responsibility on the rest of us. One thing we have all to accept is that if we are to overcome the difficulties that face us all, and that face this nation, sacrifices will be needed from practically everybody. The days of the soft option, as far as I am concerned, are gone for very many. It is very important to rekindle a spirit of patriotism in this country and among our people. It will take leadership to establish that.

There is one other thing that has not been referred to to any great extent here and which I regard as important. That is that for almost a generation we seem to have conspired to reduce the standing or the value of the belief in what I would describe as the work ethic in this country. We must get back to a point where the work ethic is established as something that is of value and is necessary. We have, among the countries of Europe, the highest proportion of young people in our population. I have always regarded this fact as one of the greatest assets that we could have as a nation, provided we apply ourselves effectively to deal with the problems that that situation can bring about. These young people have certain rights to expect, the right to an education, the right to a job here, and in due course, the right to a home in this country. The indications are, unfortunately, that we are failing to measure up to that situation. The work ethic has been downgraded for the greater part of a generation, and particularly in our schools it seems to have been ignored. The instinct for initiative and enterprise is not being encouraged in our educational scene to the degree that it should be. I believe that we are not preparing young people today: we are educating them, we are focussing their minds towards jobs that may not exist and at the same time the only alternative that we are providing is the dole which is nothing more than a miserable incentive for idleness. Education and environment ensure that school leavers in many cases are not trained to seek opportunitities that may exist. As a people we must face this issue, to give whatever is necessary to direct and to create the resources that are necessary to do this job and to make full use of existing resources and to make clear that no longer can the national cake of this country be divided according to the laws of the jungle, where the mighty can grab the most and the weak go under.

I want to conclude by repeating that we need leadership in this country, we need a spirit of patriotism and duty. If we have these I am satisfied that we can overcome the difficulties that face us. The awareness of our people is slowly coming to the point when the need for national action on these issues is being understood. That spark of patriotism and that sense of duty, the leadership that we require as a nation — if we can get these I am optimistic enough and positive enough in my approach to believing that we can overcome the problems. I am glad to support the motion.

Mr. Herbert

When I first read the motion under discussion I wondered if the authors were generally concerned with our economy or were using it and Seanad Éireann as a means of achieving personal publicity as a weapon to embarrass the Government. Nobody will disagree that our economy is in some difficulty but the same situation exists in all western European countries and the United States. Nobody will suggest that those economies are in a healthy state. We have an agriculturally oriented economy dependent on outside influences. Many of the products we purchase, especially oil, must be paid for in American dollars. The exchange rate of the American dollar, therefore, has an enormous influence on our balance of payments and our capacity to compete with other economies. When the National Coalition were in office between 1973 and 1977 they had to deal with an oil crisis that almost brought the country to its knees. Subsequently, successive Governments — all Fianna Fáil with the exception of a brief period — suffered as a result of oil crises. However, instead of moaning about that fact those successive Fianna Fáil Governments endeavoured to survive the storms and ride out the recession by judicious use of the resources at their disposal.

Fianna Fáil Governments never denied that we live in difficult times. However, they reserve the right given to them by our people within six months of the National Coalition assuming office to manage our economy in a realistic but non-penal fashion. The Government have taken brave steps to reduce public sector spending. I have no doubt that those unprecedented steps, with the goodwill of the trade unions, will succeed. The Government have curbed pay increases in the public and private sectors and imposed an embargo on recruitment. They have examined the problems in depth in consultation with all relevant personnel and it is their intention to publish an economic plan within a matter of weeks.

The Government have succeeded in reducing inflation to 17 per cent, a drop of 4 per cent, within a short space of time. Bank interest rates have fallen and mortgage rates will be reduced from 1 November. The record achieved by the Government in a matter of months is not one of an idle, unconcerned or tardy Government. It is the record of a Government who are intent on realistically rectifying our economic ills. Deputy MacSharry's budget, while making provision for recouping our deficiencies, could not be described as a monetarist one like that introduced by his predecessor, Deputy Bruton, which was an ill-conceived effort. That budget was rejected. In the budget introduced by Deputy MacSharry social welfare recipients received one of the highest increases in the history of the State. Tax proposals related to such payments were abolished and the effort to tax clothing and footwear was scrapped. That concern for the less well off section of society continues and the Government's approach in regard to the economy at all times includes consideration of provisions for that sector, unlike those who considered taxation on the allowances people require to survive.

With regard to unemployment if we look at the situation that exists in Britian, a major industrial power, we will realise that the efforts of the Government in difficult times, while not achieving possible desired targets, are nonetheless commendable. We have the youngest work force in Europe and that is borne out by EEC surveys but no longer do we have the overflow facility to the United States and Britain. Our population continues to increase but, through the IDA, National Manpower Service, AnCO and other placement and training institutions, we are managing to achieve success comparable to that being achieved in more industrialised countries. With regard to maintaining an acceptable employment level I should like to refer to what Dr. Kenneth Whitaker, a former Governor of the Central Bank and Member of this House, said in the issue of The Irish Times on Tuesday last. He said that the provision of adequate employment at acceptable remuneration for all who wish to work in Ireland was still an unrealised and tantalising objective but real gains had been made under difficult conditions.

While unemployment on any scale exists we will not be satisfied but even under the most difficult circumstances that have ever prevailed here I am confident the Government will continue to make gains. I am satisfied the Government are doing all in their power under present circumstances, and within their resources, to remedy the problems of the economy and the other matters referred to in the motion. I disagree with the motion.

Mrs. Barnes

I welcome the recall of the Seanad and I hope the debate will raise an awareness of the challenges and problems that face us. Hopefully it will mean that together we will come up with some of the solutions that are needed to improve our situation so as to ensure our survival. It is likely, unfortunately, that we will face a current budget deficit of £1 billion this year. It is difficult to understand a series of zeros and when one looks at them they do not make much sense. We are not accustomed to budget deficits of such magnitude but we are all aware that we cannot afford them. The reality of those figures is that they are reflected in the type of poverty we have. The tragedy is that up to now we have not come to grips with combating poverty effectively. One of the most serious and shameful aspects of the present crisis is that because of Government mishandling not alone are we not coming to grips with poverty and helping the underprivileged but we are exacerbating it. The cutbacks made daily are not part of a long-term plan that will take from the well-heeled, the affluent or those who can well afford the changes. Instead, right across the board cutbacks are being made in panic. As usual those cutbacks affect seriously and fundamentally the poor, the sick, the deprived and the handicapped. That is the reality of the personal suffering one can see behind the zeros. The trade deficit is likely to come out at around 10 per cent of gross national product and I expect to see for the year as a whole a balance of payments deficit of the order of £1.2 billion.

Debate adjourned.

The Seanad adjourned at 10 p.m. until 10.30 a.m. on Friday, 1 October, 1982.