I move:
That Seanad Éireann notes the supply services and purposes to which sums have been appropriated in the Appropriation Act, 1983.
Appropriation Act, 1983: Motion.
The House passed the Appropriation Bill before Christmas and on that occasion it was agreed that there would be further debate in order to give the House the opportunity of examining the matters covered in the Act and of having a wider economic debate. The Act is the one which gives statutory effect to the individual Estimates for the supply services for each year and the passing of the Appropriation Bill is the final stamp of approval given by the Oireachtas to the expenditures of public funds through the various Votes during the year.
The 1983 Appropriation Act is the last one which will include major expenditures in relation to the day-to-day running of the postal services. I mention this because it creates a new situation reflected in our treatment of the outturn for 1983 and in the figures as they will be presented for 1984. I would like to outline briefly to the House the main features of that change and the way in which it has come about. This year, with the establishment of An Post and Bord Telecom Éireann as State-sponsored bodies, most of the expenditure formerly incurred in the Department of Posts and Telegraphs will take place under the aegis of these two new bodies and will, therefore, not come into the Exchequer accounts. In addition, of course, there will be a reduction in Exchequer revenues with the income arising from the activities of those two bodies also passing out of the Exchequer, rather than being included in it as was the case up to the end of 1983. These changes have substantial implications for the budgetary arithmetic and will entail substantial changes in the Exchequer aggregates and in budgetary balances. For that reason I take this opportunity of outlining what those changes are and their effect on the total balance and on the aggregate figures in the outturn for 1983.
The 1983 outturn as it will be shown and as it has been shown by the Government is adjusted to show the position which would have applied had the vesting of the new bodies gone ahead from the beginning of 1983. In that way when we compare the 1984 figures with the 1983 figures we are comparing like with like. In 1983, therefore, the outturn for current expenditure was adjusted downwards by some £330 million, the amount of the expenditure that normally went through the Department of Posts and Telegraphs in respect of those services. The revenue outturn had to be similarly adjusted and the adjustment there was downwards about £450 million. The net effect of the two is an upward adjustment in the current budget deficit in the order of £120 million. Allowing for adjustments on the capital side the overall Exchequer borrowing requirement is adjusted upwards by about £100 million. Those are the main movements in the Exchequer aggregates and the main changes in the balances at the end of the year, and those changes have now been incorporated in the 1983 figures to make them comparable with the figures as they will turn out for 1984.
Turning to the overall level of revenue and expenditure during 1984, I would point out to the House that total expenditure on supply services in 1983 was very close to the original budget targets. A number of factors would have pushed the outturn significantly ahead of the budget targets if action had not been taken in July to ensure that expenditure stayed broadly within the limits that had been fixed. Among those factors were the new public service pay agreement, the 5 per cent increase last October in payments to the long-term unemployed, payment of a double week to pensioners and to other social welfare recipients at Christmas and other social welfare costs falling on the Exchequer, including a shortfall in PRSI receipts. Between them, all of those would have added over £100 million to the Government's target for non-capital supply services. However, because of the action taken by the Government in midyear, the outturn on supply services was only £8 million higher than the budgeted estimate. Because of revenue shortfalls, the current budget deficit turned out about £60 million higher than the original budget estimate. In the capital account, a number of savings emerged and the outturn on the Exchequer borrowing requirement was only some £30 million above the original budget target.
When we take account of the fact that taking total expenditures together a gross total of some £10 billion of expenditure enters into the budgetary arithmetic, the fact that the outturn was so close to target represents, in my view, a very considerable achievement. It demonstrates clearly that we have a situation in which the Government are firmly in control of public expenditure, and they can direct the course of Government expenditure and can be confident that expenditure plans will turn out as targeted. That is a rather novel situation compared to the experience of recent years and it is one all of us should be happy to see. It means that we can be confident again that we can consciously direct the course of public expenditure in order to give us the results the Government and the Oireachtas agreed from time to time during the course of the year.
Looking at the general picture as regards the economy during 1983, we can point to a small rise in GDP, principally as a result of favourable developments in external trade that more than offset a further fall in domestic demand. The balance of payments deficit fell quite dramatically during the course of 1983 to about 2½ per cent of GDP compared to a figure of more than 8 per cent in 1982. This improvement was due mainly to a very strong development in industrial exports, a modest recovery in agricultural exports and weak import demand. In addition, the terms of trade improved, giving us a further benefit in relation to our balance of payments.
Associated with the growth in industrial exports was a volume increase of about 5 per cent in the output of manufactured goods. Those two factors, taken separately, are extremely encouraging. They mean that we produced a substantial increase in the volume of industrial exports in a year when international trade, although beginning to pick up again, still remains relatively sluggish, in a year when most of our competitor countries had more favourable experiences than we had, particularly in relation to their rates of inflation. It has shown a capacity in Irish exporting industry to gain a new market share and we should not under-estimate that. We had a substantial gain in industrial exports in what was a fairly difficult year in the context of world trade. We can be confident that at least we have the capacity to take advantage of a pick-up in world trade which is gathering momentum and that we will continue to see progress in that area during the coming year.
I have referred also to a volume increase in the output of manufactured goods of some 5 per cent in the 12 months to last November. I remember earlier in the year I had the temerity to forecast that we would have a volume increase somewhat of that order for the year and it was said to me by those who claim not to be merchants of gloom and doom but rather the contrary that I was being over-optimistic and that we could not achieve that kind of growth in output. The fact is that we have achieved that kind of growth and it must be an encouraging sign to see that in a fairly difficult year in the economy generally Irish industry has the capacity to expand manufacturing output and to achieve a volume expansion of 5 per cent in the kind of year through which we have lived. That gives me a degree of confidence in our ability as a community to take greater advantage of the beginning of the recovery which I expect will continue during 1984.
There are hopeful signs for 1984. I hope we can continue that kind of performance both in relation to manufacturing output and industrial exports and that as a community we will decide to take the benefit of the further progress we can make in those areas in the form of increased employment in the year to come and for as long as we can make that development last thereafter.
During the course of 1983 the inflation rate fell from about 17 per cent in 1982 to about 10½ per cent for 1983 as a whole. Again, that can be viewed as a very favourable development. As we know, the inflation rate has a profound influence on many aspects of economic life, on production costs and on living costs. Now the rate of inflation is falling and that element of pressure on the family, on the ordinary worker, on business and on farms is beginning to moderate. The reduction from 17 per cent to 10½ per cent in one year represents substantial progress on this front. We can continue with that if we decide ourselves to take the kind of action that is needed to sustain the momentum we have developed in relation to the control of the inflation rate.
Those are three positive aspects of our economic experience in 1983 to which we should pay some attention if only because in 1984 we should learn the lesson and get the profit of those experiences and resolve to build further on them in a way that will have an effect on our level of employment. That is probably the most important decision we can make in our differing capacities, whether as Members of this House, in business or as workers. The fundamental decision we need to make in 1984 is to continue the progress in output and exports and reducing the rate of inflation and to turn it into new jobs. That is the most effective way to turn that development in our economy to our advantage not only on the economic side but also on the social side.
Our need to do this is dramatically underlined by the fact that we still have a growing unemployment problem. At the end of December some 208,000 people were registered as being out of work. That is almost one in six in our labour force. A number of European economies, including the UK and Germany, are also showing signs of growth. There is a prospect for potential markets for our products in those countries and others and there is extra leeway there which, if we capitalise on it properly, can make a very substantial contribution to growth in our economy. The degree to which that comes about, of course, depends very largely on our own actions. During 1984 we must give a very substantial place to the maintenance or indeed improvement of competitiveness in our economy so that we can turn the extra markets we have shown we can gain into extra jobs. That is the only way we can get a lasting benefit from those developments.
I do not intend to say much more about the prospects for 1984 as it is not relevant to what we are discussing at present, the situation in relation to 1983. In looking at the figures for Exchequer expenditure, we must give full importance in 1984 to restoring a situation in which we as legislators know that the expenditure we approve during the course of the year will be pretty well on target and that we will not, as happened in 1983, have to come back later in the year and make further provision for unexpected contingencies. That is extremely important so that the decisions we make during the course of the year in discussing the various aspects of economic policy and approving allocations for expenditure services which we think are desirable, will turn out in the way we have intended.
I should like to welcome the Minister to the House. No doubt it is a welcome break for him from the task he has in trying to produce a budget next week. The Minister mentioned that we had a 5 per cent volume increase in output of industrial goods over 1982 but the industrial output figures for the last number of years have been as follows — in 1977 we had a 7.6 per cent increase over 1976, in 1978 we had a 7.7 per cent increase over 1977, in 1979 we had a 6.7 per cent increase over 1978, and 5 per cent is now mentioned as being a very good outturn for last year in difficult times. Of course it is good that we had a volume increase but we must see how far this volume increase is due to Government action or inaction. How much greater would it have been if Government policies had been different during the year?
If we take the 5 per cent increase in volume output and relate it to the decrease in the number of people employed, one can see that a 7.6 per cent increase in 1977 gave an employment plus factor of 3 per cent but we have an employment minus factor of 5 per cent as there are 208,000 people unemployed. Therefore, we have not got the benefits that we were getting in the past from a volume output increase.
We must give credit to the people in the manufacturing industry who have, in a difficult world situation, increased their exports. How much greater would these exports have been were it not for the inhibiting factors in the Irish economy? We have benefited largely in a number of countries because our currency has been relatively weak in terms of the dollar and because our main customer has been Britain. We were able to cash in on that benefit purely and simply because we were competitive as a result of a difference in exchange rates.
The Minister said that we formally approved the passing of the Appropriation Bill before Christmas and in the passing of that approved the expenditure by the Government in the service area. We cannot really approve because we will not get the Comptroller and Auditor General's audit figures until later on in the year. He said in his preamble to the Appropriation Accounts of 1982 that it was impossible for him to delve into the accounts as he would like because of cutbacks in staffing in the Comptroller and Auditor General's office. It is essential to have enough staff in that office if we are going to be credible in the exercise of looking after Government expenditure. Whatever the Minister's perception is we are here to give expression to the public's perception of what happened last year and their perception is different from the Government's perception.
I do not think there is any area that we can look into where there has not been a significant decline on the issues of taxation, job losses, education, farm income, local authority breakdowns, law and order, health, social welfare and foreign affairs. I come to the conclusion that 1983 has been one of the most catastrophic in the history of this State.
The unemployment factor has the greatest social implications for this country. Much has been made of the problems of young people in their attempt to find jobs. We know that there are 5 million people under the age of 25 in the EEC unemployed. The majority of them have never had a job. There are large numbers of young people in this country who have left school and are still not able to get jobs.
There is another area in which there has not been enough concentration by Government agencies and that is where people of 35 years of age and over have lost their jobs. Whatever chance the younger people have who are better able to concentrate their adaptable minds to the technological changes that are taking place, if we are serious at all about the provision of job opportunities we must equally look at the problems of people aged 35 and over. Generally speaking, these people have been let go from traditional industries. In many cases they come from an industrial background where they have followed in the footsteps of their fathers and possibly their grandfathers and suddenly they find they are on the job dung-heap. There is no way out for these people and there is no attempt being made to solve their problems. This is the case in industry, but it is equally to be seen where, because of economic difficulties, farmers have had to give up their land and tried to readjust themselves to another form of enterprise and we are not succeeding in helping them.
During the past year the European Ministers for Labour got together to formulate plans for employment creation and suggested that we train people for real jobs. In this country we have a number of agencies looking into the problems created by people who cannot get jobs when they leave school. The Youth Employment Agency have set up many worthwhile projects, but I am afraid that in general the projects financed by that agency are not worthwhile. To give a well educated young person a brush and have him walk up and down a street day after day for six months and to suggest that that is job creation is a myth, because it does nothing for the economy or for that young person; however, it does get somebody off the unemployment register for six months. I am not suggesting that a person employed in the cleaning department of any local authority is doing an unimportant job, because if that is his job, fair enough; but if a young person is put into that job for six months as part of a Youth Employment Agency training course, that is money down the drain.
In fairness to one Government Department, an attempt is being made to get away from total dependence on Government agencies to provide employment. We must get down to local initiative and help people in the local community who can see job opportunities. A local agency should be able to process new ideas without outside interference. There should be more local agencies. The levies being taken from the wage packets of every PRSI and PAYE employee are not being used to the best advantage.
In the last year the Government have not looked at our prime industry, agriculture, in their attempt to create jobs, not jobs which will last for six or 12 months but permanent jobs which will help the economy and provide much-needed foreign investment potential. The easiest way to look at that section of the agricultural industry is to take one particular group and see the intake, output and Exchequer funds involved in that company. Let us look at the Avonmore group, based in Kilkenny, and consider the effects the super-levy if introduced would have on that industry. In 1981 there was 101 million gallons of milk brought into Avonmore Dairies. The intake in 1984 will be 138 million gallons. The cost of the levy at 70p a gallon for that co-op alone would be £25 million. Let us break those statistics down a little further. Six thousand farmers send them milk, which would mean an income drop of £4,200 per farmer in that one co-op area. From the economic viewpoint, let us show how that industry is supporting the country, and what can be done if the agricultural industry is worked properly. Last year they paid out £13.871 million and the Government took back £3.7 million in taxes from the employees. Their export sales over the last five years have been £360 million. They have spent £36 million on capital improvements and they have 1,396 employees. That industry plays a vital role in the economic structure of the Kilkenny, Carlow, south Tipperary and south Laois area. In my view, the Government are not looking at the agricultural industry because if they looked at individual firms such as Avonmore and saw how beneficial they were for the economy, a lot more planning would go into the agricultural side of our infrastructure.
Mention was made of the world economic upsurge and our prospects of floating along with that upsurge. Our biggest job in the next 12 months will be to try to bring back into our work force a small number of the very large number who are unemployed at present. I am afraid new industrial concerns are not creating new jobs and successful exporting firms are not increasing their work force. Even though there is an economic upsurge in America and Germany employment figures there have not been increasing at anything like the rate the economic upsurge would lead us to believe. It is increasingly more noticeable that high technology is taking over from the large work forces we used to have in factories. The president of the Hong Kong Chamber of Commerce said the other day that they had done very well out of high technology in the areas of office and sales administration, but now they were losing out. It was no longer any use to have cheap labour in factories; they had to modernise and computerise their factories or they would not be able to compete on the world market with newer economies, such as South Korea and Taiwan.
There are a number of factors inhibiting growth in employment, and one is our very high rate of employment tax. To the employer it is 11.61 per cent of the gross cost of each employee, a tax which is crippling Irish industry. Unless that burden is taken away we will remain in the doldrums as far as new employment is concerned. More and more people are looking towards technology to reduce the number of employees, and one of the reasons for this is this very high 11.61 per cent tax.
Our tax is ludicrous. Our taxation levels are the eighth highest in the OECD which consists of 23 countries, while our income level is only the twentieth highest in those 23 countries. We are in the top eight in terms of taxation, and we are in the bottom three in terms of income. When this level of taxation is being levied the nixer industry and the black economy flourish, as we have seen on a personal basis in the motor trade.
We must compliment the Minister on his efforts during the year to bring the penal rate of 23 per cent VAT on sales to workshops down to 5 per cent. Even though that has not seemed to give the maximum benefits we thought it would, nevertheless it has slowed down the drift from the recognised motor industry. But for it, more and more garages would have gone out of business during the year. The Minister must now look at other sectors of the Irish economy and see where he can bring down the very high VAT rate, and thereby encourage people to come back into the tax-paying economy, and do away with the nixers and the illegal importation of lower VAT rated goods from across the Border and across the Irish Sea.
There is no doubt that the very high rate of personal taxation has reduced people's incentive to work. It has taken from them the incentive to do a hard day's work and, if overtime is available, to take advantage of it. Between 1978 and 1983 tax as a proportion of GDP has risen from 33 per cent to 41.3 per cent. In 1973-74, 8,000 taxpayers were liable at the higher rate and in 1983-84, 363,000 people are in that higher tax band. That would be all right if salaries had increased hugely during this period in terms of purchasing power but, unfortunately this is not the case. The tax take is increasing, and there is a reduction in spending power.
The income tax bands at present are so low as to be ludicrous. The level at which a single man or a single woman gets into the tax band is incredible and the tax-free allowances are equally incredible. We were promised by this Government that there would be a major review of the total tax system, and much was made of the Report of the Commission on Taxation. Not one single recommendation in that report has been implemented. We must take a serious look at the commission's report to see how best we can run our economy by taking tax but leaving people with enough to live on and to enable companies to continue to exist.
Over the past 12 months we have been preached at about the need to cut the level of the public service. Nobody would deny that there is waste in the public service but there is no point in saying willy-nilly that three jobs out of five will be replaced. If you had somebody in a particular job creating wealth for the nation and you do not replace him but leave that job vacant — a doctor in a hospital, a nurse on a corridor, or an engineer doing essential work — you will have problems. Problems are being created by a willy-nilly approach to replacements in public sector jobs.
Over the past 12 months we have seen an approach to local government financing which is not giving the local authorities the necessary money to run efficiently the local services under their control. Last year there was not one county in Ireland which had not problems, or one local authority which had not problems in maintaining employment and services. We had the introduction during the year of charges on a large number of items. This year in the budget programme practically the same amount of money is being allocated for use by local authorities as last year. In fact there is a drop.
If the rate of inflation is 10 per cent or 8 per cent, that is an effective drop purely and simply because of inflation, and there will be other factors which will increase costs throughout the year apart from inflation. Local authorities will not be able to carry on without the extra taxation they will have to impose at local level. These charges are taxes and whether they will be paid is another matter. They were levied last year for water and sewage disposal in certain areas, for cleaning and work in other areas, and for the various services that the local authorities have to provide. These are taxes at local level on top of a taxation system which is penal in its attitude towards income and in its attitude towards spending. Unless something is done to give back to the local authorities some of the real power they need to assess what is needed to run their counties, I am afraid that, as the Lord Mayor of Waterford said yesterday, many counties and cities will be bankrupt.
We have chaos in the area of law and order. Around the country there is a perception that not enough gardaí are employed, that in many cases they are deployed in the wrong way, that they are not given enough training to do the job they have to do if we are to maintain a peaceful society. The cutbacks in the public service have created problems in this area as well as in every other area. Considering the conditions they are working under, the Garda are doing a fantastic job. But how are they going to continue to work? Looking again at the programme of expenditure for this year, I do not see anything down for replacement of such things as radios or two-way systems. I do not see anything down for replacement of motor vehicles. When one looks at some of the motor vehicles the Garda are supposed to be using to try to combat crime, with fewer staff in country areas, it is going to be virtually impossible for them to do it in the future. We owe it to the Garda to give them every assistance possible.
The approrpiation accounts show that in the past year, in spite of huge expenditure, we have had more unemployment and worse services. There is no prospect of services becoming any better. I hope that our young people can look to next week's budget for some encouragement to stay in this country. The EEC have lost heart, as shown by their suggestion in relation to youth employment that children should be taught more foreign languages. If the EEC intend to concentrate on the teaching of foreign languages, it is obvious that they must expect the people of the EEC to leave the Community because there will not be any future in it. Whether a foreign language is beneficial depends on where one is going. The three main aims of the EEC are help in the transition from school to work, the teaching of foreign languages and the training of foreign workers.
The past year has been disastrous in regard to every aspect of Irish life. The prospects of our people have not been helped by Government policy and I hope that next week's budget will give some benefits, whether in relation to taxation, employment or aids to companies to stay in business in these difficult times.
I welcome this opportunity of noting the supply services and purposes to which sums have been appropriated in the Appropriation Act, 1983. I remember very well the other occasions on which we had an opportunity of discussing an item like this and the sympathy I had for the Minister for Finance of the day and his deputy in listening to the complaints of successive Members concerning matters contained within the Appropriation Act. This debate has traditionally been used in this House as an opportunity of expressing views on all sorts of areas of Government expenditure, even though these areas of expenditure may not come within the personal control of the Minister for Finance. Much of what we have to say is not specifically directed at the Minister for Finance but is directed at the administration whose representative the Minister is.
The Minister was correct in setting down the background to this motion and it is the duty of early speakers in this debate to lay down the background so that subsequent discussion can take place in regard to the fuller picture. The Minister informed the House concerning the financial and economic circumstances which culminated in the 1983 Act. The Minister's analysis of the problems of the country is agreed not only by the members of his own party but across a wide spectrum of society. The problem arises in the determination and implementation of the policies necessary to cure the defects which he has so correctly analysed.
My main purpose in speaking today is to request the Government not to be deflected from their task by the various interest groups who express viewpoints which, though legitimate in themselves, do not form an overall picture. The maintenance of a disciplined approach towards our financial affairs is in our interests and the interests of our children. Governments of all political hues in my lifetime have been subject to representations from various interest groups. These representations have been vigorous, especially in the late sixties when certain farming organisations put their point of view to the Government. By and large the Government of the day took this viewpoint into account but did not capitulate. The seventies was a bad time for the development of democracy and interest groups got the upper hand throughout that period and in the early part of the eighties. Much of the public expenditure which was included in the Appropriation Acts arose because interest groups were not treated with the necessary mixture of respect and scepticism in regard to their submissions.
At the end of my contribution I, too, will deal with some parochial matters but I will certainly accept that my viewpoint may not necessarily be conceded. I am satisfied as long as the decision is arrived at in a sensible and rational fashion and as long as there is a public explanation of the reasons that certain actions are not possible. All of us have individual interests to put forward but we must expect a rejection of a substantial number of the points we put forward in the common good. Where we are personally involved we are often not good judges of where the common good lies.
I intend to deal briefly with a number of specific areas of Government expenditure and to indicate to the Minister where he might consider making reductions in public expenditure. I intend to make specific suggestions, although the Minister might have some difficulty in persuading his colleagues as to the importance of some of these suggestions where they do not relate to his own Department.
The whole question of Government expenditure, as the Opposition spokesman has said must be set against the background of the now absolutely vital need to reduce taxation, in particular in the area of personal taxation. Our present personal taxation system is absolutely appalling. It is not so much the level of taxation to which we are subjected, but the accelerating rate of that taxation, both in terms of the increasing percentage deducted from people's incomes year by year and of the marginal rates of income tax which apply at a very low level. It is important that the Minister strive to change the taxation system, if necessary by eliminating certain allowances, so that the marginal rate of tax would not apply at such a low level. He will be well aware of the calculations which can be made which will show that the top rate of taxation of 65 per cent plus the various levies will apply, theoretically at any rate, to a single person very early on in his or her income at around £7,000 or £8,000. That is a very serious situation.
Obviously, people do engage in various tax minimisation schemes, some legitimate and some not. The Minister will be conscious of the need to ensure that these tax minimisation schemes whether of the legal or the illegal kind are not abused. The elimination of the illegal kind is necessary for the proper distribution of taxation burden throughout all the citizens and restriction of the growth of the legal kind of tax evasion is necessary, otherwise it will become part of the economic life of the country and will be very difficult to shift at a later date. I can give many examples of concessions to industries and individuals, which concessions were widely used to minimise taxation and are now very difficult to withdraw. This applies to capital allowances, to section 84, to concessions to building societies. All these things which have been used, legitimately in many cases, to minimise taxation are now getting to the stage where their size in relation to the rest of the economy constitutes an abuse even though the particular scheme is not an abuse. We must be very careful to ensure that the taxation system is fair and that these concessions are not encouraged to grow beyond what is reasonable.
The Minister will have noted the various interest groups who are at present suggesting a reduction of taxation. The hotel group are very vigorous and, no doubt very sincere in what they are saying with regard to the effect on their industry, particularly with regard to the sale of apartments, of the present level of VAT. We all have been circularised with a petition which we were encouraged to send to the Minister for Finance. I intend sending it to the Minister for Finance but slightly changed to request that VAT on theatre tickets be retained. While removal of VAT might be important to the theatre, it would reduce our tax base and is not in the general public interest.
Licensed vintners are another group legitimately saying that their VAT rates are very high and they are also seeking some amelioration of their position. I would recommend that the Minister, while trying to reduce VAT levels in general, would not make an exception of these groups. The same applies to the motor trade. Whether concerning cars or petrol, no additional concession should be made there.
Keep going.
I shall not keep going, firstly, because it would be boring if I listed out everybody and, secondly, because I do not have the time to go through each individual case.
We are prepared to give the Senator time.
I suppose Senator Smith is. That is the kind of attitude to politics which has brought Ireland to where it is today. I would expect a lot more from the Senator than that. That attitude would mean that in order to succeed, if necessary one should say the popular thing, subject oneself and be at the beck and call of every interest group and there would be no hope for the country.
The Senator must not misinterpret me.
The Senator will be able to reply afterwards. What the leader of his group has said concerning the future of the country might well come about if we are not careful and do not stand up to the various interest groups who put pressure on us all from time to time.
Reduction of taxation is an aim towards which we should be striving, but I recommend that the Minister be resolute and resist any idea that there is a magical way of reducing taxation. This would include the notion of the self-financing subsidy — that taxation can be reduced in some magical way, which reduction will generate sufficient economic growth to increase overall taxation.
That economic argument might well apply in other countries, but as applied to this country with its very open economy it was effectively jettisoned after the 1977 General Election. I am sorry that Senator O'Donoghue is not here to hear me say it. It might apply and be worth while in other economies where the percentage of the gross national products, which are importing and exporting, might be 9 or 10 per cent; but here, where we are talking about imports and exports of about 50 per cent of our gross national product, it does not make any sense artifically to boost private spending in the expectation that that will lead to an improvement of an internal domestic situation.
I have a number of specific points to make along the general theme, they having been brought to my attention by the various interest groups at present on the rampage. Very significant among these is the building industry, a very well organised group. They have an excellent organisation, the Construction Industry Federation. The investment in the building industry is reflected, as Members will no doubt note, in the Vote for Environment and elsewhere. The Vote for Environment includes quite an amount of subsidies and grants of one kind or another and, of course, the general level of State capital expenditure is the subject of examination and criticism by the Construction Industry Federation as representatives of the building industry.
The Construction Industry Federation are requesting the Minister to do two things. They are requesting, first of all, that the Minister reduce taxation. Of all the groups in society, the Construction Industry Federation are probably the most monetarist in their aproach to the economy. They want to see a lower level of taxation and in that I share their point of view. That is one aspect of the presentation of their philosophy to the public. The other aspect is that they want increased Government expenditure, particularly in the capital area, and these two things are not reconcilable. A substantial amount of the expenditure connected with the building industry is theoretically of a capital nature, but really of a current nature. A lot of capital investment is really expenditure of a current nature masquerading as capital expenditure by reason of the traditional definition of capital expenditure which was introduced in the fifties. Before then the idea of the capital budget was not at all prevalent in this country. It was only in the mid-fifties that it was introduced by the then Minister for Finance to attempt to show the difference between the day-to-day expenditure of the nation and the capital expenditure. If one looks at capital expenditure and the capital budget with which we have been provided in the last few days one will see that a substantial number of the investments we have been invited to consider as capital really should be of a current nature. Those who represent the building industry would seek to encourage the Minister to increase public expenditure and, in some mystical way also, the reduce taxation. That is contradictory. It is about time the construction industry got its act together, decided whether they are monetarists or socialists, what is their politcal philosophy, putting a coherent philosophy with regard to their industry to the Government which could then be considered on its merits.
The message we are at present getting from the construction industry is not a coherent one. It contains inherent contradictions. For that reason I am very conscious of the necessity for the Construction Industry Federation to mend their ways in this regard and not be calling on the Minister to solve all of their problems. Some of the problems within the construction industry are caused by the decision of the Government to cut back on public expenditure. That decision is not necessarily a wrong one merely because it causes some embarrassment, some reduction of volume, or some unemployment in the building industry; it is not automatically a wrong decision. More selective calls from those in the building industry, particularly on the employers' side, are necessary so that a more rational approach to taxation and expenditure policy would be developed by the organisation which represents the construction industry in making representations and lobbying Members of this and the other House.
In the Department of the Environment, in the area of housing finance and charges in general there is one matter in particular which I should like to bring to the attention of the Minister and which is capable of saving money. At a time of considerable inflation in the late seventies or early eighties — I think it commenced under the Coalition Government who were in power from 1973 to 1977 and was developed by the Fianna Fáil Government which came to power in 1977 — there was introduced a system of certificates of reasonable value with regard to domestic dwellings. While it is not a legislative provision the situation is that no house can be built and financed by a loan unless there is issued in respect of it a certifiate of reasonable value from the Department of the Environment. This means that the sale price of a given house may not exceed the figure shown on the certificate of reasonable value or, if it should, it will not be eligible for any grants or for a building society or other type loan.
That performed a useful function when the general tendency in building prices was upwards and when it had a dampening effect on building prices. The reserved power to have such a scheme should be retained but at present it performs no function whatsoever. Every builder is selling houses at many thousands of pounds less then the figures shown on certificates of reasonable value he obtains in respect of his houses. Therefore the Department produce certificates which are pieces of paper only and to which nobody refers. I will tell the House its total cost and that of another similar type exercise later. But at present this fulfils no useful function whatsoever. It is merely maintaining a number of people in the Department in employment. I am not suggesting that they should not be in employment but they might well be reallocated elsewhere relieving the burdens and strains which the reduction of numbers in the public service is causing in other areas, whether within that Department or elsewhere. It is ridiculous to have certificates of reasonable value being issued on properties which are approximately £5,000 or £6,000 in excess of the current market values of such properties; it makes no sense whatsoever. The authority to operate such a scheme should be retained but should be eliminated for the present. If circumstances change at any time in the future and an upward movement in house prices resumes it can then be reintroduced.
The second matter which should be examined within the Department of the Environment is the necessity for the National House Building Guarantee Scheme. This is a scheme under which the structure of a house is guaranteed against any defects which might arise over a period of time for payment of a fee. This scheme, operated by a division of the Construction Industry Federation, is implemented in conjunction with the Department of the Environment who perform some of the inspection tasks necessary in its implementation. This scheme was necessary to ensure that if there was a major defect in a house a purchaser had some redress and that such structural defect would be corrected. It does not apply to anything other than a major structural defect, but because of the considerable fees that have been earned, a substantial fund has been built up.
I do not see any reason that additional money should be made available until that fund has been exhausted. On the basis of the number of pay-outs, the fund, if properly invested, would never be exhausted. Therefore why impose these additional costs on people.
The cost of these two schemes in respect of an average three bedroomed, semi-detached house in the Cork area at present, costing between £25,000 and £30,000 — operated wholly in one case or partly in another by the Department of the Environment — is of the order of £100 per house which is added to the price of the house. In my opinion such schemes are performing no useful function whatsoever. This constitutes an area of public expenditure which should be cut and which would have beneficial effects for house buyers. At this stage the status of such schemes should be reduced to that of reserved powers rather than schemes actually costing the punter money at present.
With regard to the general question of reduction of Government expenditure I should say it is very difficult to do so but it must be done on a programme by programme basis. I gave the example in the Department of the Environment earlier merely as an example. Whole programmes should be eliminated. It is very difficult to reduce an existing scheme by, say, 5 per cent. For example, attempts have been made to reduce the school transport scheme. It is very difficult to alter a system while in operation. One can drop a scheme completely in a given area or maintain it. Very often there is very little else one can do; one can have it or one need not have it. We have been much too reluctant to drop programmes within the public sector. There should be an examination in depth of each programme to ascertain whether it is performing a useful function. For example, it should be ascertained whether a programme under which grants are given by the IDA, Údarás na Gaeltachta or SFADCo give fair value for money or a commensurate return. It should also be ascertained whether there are ways in which they could be reduced without reducing the attractiveness of this country as a base for industrial investment. Are we getting a proper return on the money we invest in say, animal disease eradication? If we are not is the answer to throw more money in to correct mistakes of the past or merely stop doing so and place the burden on someone else to do so?
These are very difficult problems but ones which must be faced by this or any other Government in the future. In this regard I might bring to the attention of the House a recent publication of the Department of Finance entitled "The Comprehensive Public Expenditure Programmes". This publication was the result of a pilot development undertaken by the Department of Finance, published in the latter half of 1983 and circulated to Senators. Not every programme is covered by this analysis as it is a pilot programme but it goes through a selected number of programmes, having first of all decided on the various ways in which public expenditure could be analysed. It is interesting and informative for a Member of the House of the Oireachtas to see the examination of a problem such as the grants given to industry all being brought together and examined under one heading. I commend the Minister on this publication and I hope the pilot scheme will be followed by a comprehensive document covering all areas of Government expenditure in respect of the 1984 Budget Estimates. It has substantial benefit in respect of matters such as transport, where we see in context such items as the subsidy to CIE. We set that against our total expenditure on road and rail transport.
It is interesting to see the amount of money which CIE have received. It calls into question the way in which public transportation will be funded in the future and the way in which the problem of the lack of control which CIE have in respect of their costs should be tackled in the public interest. This is one of the most significant publications we have had. It brings these matters into our area of influence in a meaningful way as distinct from the gobbledegook way in which we have in the appropriation accounts where there is so much detail that one cannot find anything. If you want people to manage, you give them the important things. You do not give them notes to say that there is an increase in the wages under the report of the Comptroller and Auditor General because a secretary of the Department was missing for two months between November 1982 and January 1983. I am not using that as an example. It is imaginary rather than real but they are the kind of notes that are on the Appropriation Accounts and on the report of the Comptroller and Auditor General — all very interesting but not capable of sensible analysis by the Members of the House who are more interested in the overall picture. For that reason the concentration of our minds and effort towards the comprehensive public expenditure programme-type document is much more beneficial to Members.
There are other examples of programmes which require considerable examination, such as the relative costs of agriculture, of industry or of employment, matters of economic importance which can be judged only if we see in its proper context the amount of State aid which each of these areas of the economy are receiving whether by way of direct or indirect aid. This document is a most important contribution towards the task of reducing Government expenditure.
Any area of Government expenditure which needs examination must include the relative cost of wages. The Estimates for the Public Services for 1984, which I use because it includes the rest of the figures for 1983 which are the ones under discussion, show a table on page VII in respect of each year from 1980 to 1984 the total net current supply services expenditure. Public service pay which is included in that figure is running at approximately 46 per cent of expenditure, making adjustments for at least some of the payments which would have very little public service pay element in it — for example, pensions of one kind or another which are not included in the public service pay area, the percentage would be over 50. Any success in tackling the problem of public expenditure can only be successful by reducing the amount of money being paid to public servants in one way or another. It is not practical nor reasonable to reduce salaries. In the circumstances we have to continue on the road which both this Government and the last Government had decided: to freeze for all practical purposes the creation of new posts in the public service and to reduce the number of existing posts by a process of natural wastage. That is a policy which should be vigorously pursued and which should receive support and encouragement from all Members of the House. By doing that we are making a positive contribution towards increasing the efficiency within the public service and also making a positive contribution to reducing our own taxation and the taxation of the people we represent. I support the continuing efforts of the Government in that regard and I congratulate the Government for the measure of success they have had in this area so far and I hope they will continue to have a careful look at this area.
Another area which should be considered, though it is a very sensitive area and one on which it is difficult to make a statement which would not be misinterpreted — is that of the considerable percentage of public expenditure which is being paid in public service pensions. The type and quality of the pensions of Irish public servants are far better than those which apply in other countries. In those circumstances consideration should be given as to how in respect of future generations this burden could be alleviated. I recognise that people who are already retired and perhaps people now serving in the public service are entitled as a matter of legal rights to such pensions, but because the benefit may not be seen for some 20, 30 or 40 years is no reason for our continuing to employ people in the public service on the same basis as we are now employing them. We should make a decision which will be beneficial to future generations. The creation of an automatically graduation pension scheme is a mistake. Something else could be done to protect pensioners against inflation. Attempts should be made to change the situation where a substantial lump sum is available to public service pensioners. They need such money at an earlier age but not when they are 65. However, the situation cannot be changed in respect of existing civil servants but we should plan for the future. That is what we are here for. The Government should consider their responsibility in this regard. The decision is not one which should be made today or tomorrow but, like so many decisions in Ireland today, one that can be made with the approval of a wide spectrum of our political life. If we make long-term solutions which have not all party support, they stand no possibility of success because they will be changed at the first change of Government. That problem has arisen in Britain and it will arise there again if there is a change of Government. I do not think we suffer from the same ideological barriers and all parties should be a lot bigger in the way they are willing to enter into commitments of a long-term nature in the common interest.
I should like to refer to three specific projects in the context of the area of Government expenditure. I recognise that the Minister has a limited budget but I am merely emphasising that, in my opinion, these are important projects. The Minister will have to make his own decision in the common good. The projects refer to the Cork area. I should like to refer to the necessity for the development of Cork harbour by the provision of a deep-water berth at Ringaskiddy. Cork Harbour Commissioners have shortchanged themselves in this regard and it is understandable why this has happened. This occurred because with the development by the Industrial Development Authority of a substantial area in lower Cork Harbour it was accepted by everybody that the IDA would arrange with the Government in due course to provide a deep-water berth for the Cork area, the use of which would be shared between the IDA and the Cork Harbour Commissioners. Consequently, the Cork Harbour Commissioners did not make representations about their own need for a deep-water berth. Therefore, when a deep-water berth was provided for other areas, such as Foynes — and correctly so — no representations for or against that were made in respect of the Cork area because it was felt it would come automatically. The Government have, understandably, come to the conclusion that the deep-water berth can be built simultaneously with any major industrial user in the Cork area. That was a correct and proper decision, but by doing that they are now placing the Cork Harbour Commissioners in the position where until a significant industry comes to the IDA, over which the Cork Harbour Commissioners have no control, there will be no deep-water facilities available to Cork Harbour with the resultant loss of a considerable amount of trade. That trade will be lost not only to other ports in Ireland, whether it is Foynes or Dublin where there are deep-water facilities, but will be lost to the country as a whole. A re-examination of that project is necessary because of that problem and consideration.
Two other projects I should like to mention require a certain amount of consideration by the Government. It is common knowledge that the Government have requested certain information from Nítrigin Éireann Teoranta and, as so far as I am aware, NET have made that information available. The restructuring of that company is vital. If, as a result of that restructuring and the proper amount of money being invested by the Government, NET are able to pay the proper price for natural gas the company should remain open. There is some doubt. The company seem to suggest that they would be in a position to pay the proper price for natural gas, while other people suggest that they might not be in a position to so do. It is strategically necessary, as I mentioned before in this House, that Irish Steel be restructured on a capital basis and that certain investment of a capital nature be made there in order to ensure the survival of our only steel making plant.
I do not think it is within the ambit of this debate to mention semi-State bodies who are not getting subventions from the State. Obviously, if a State body is getting a subvention from the State, it can be referred to within the ambit of the Appropriation Bill debate and that was why I mentioned CIE. I was pleased to see that the ESB were among the groups to get State subventions in respect of rural electrification. I do not want to go into any great detail about the rural electrification programme but the ESB are getting the subvention under Vote 49 of the Estimate for Industry and Energy. The industrial problems we have affect not only the industries and employment, to which Senator Lanigan referred, but also the cash which goes to the Government by way of receipts from taxes of various kinds. They are vitally affected by the manner in which the ESB are going to manage their affairs, the way in which they are going to structure their charges and reduce costs for the benefit of industry. It is one of the most significant and serious problems which face us today. Only some industries require a large quantity of electricity but if one asks any industrialist who uses a substantial amount of electricity whether he would prefer a reduction of electricity costs or a reduction in taxation, I guarantee he will say he would prefer a reduction of electricity costs. This is vital for the future of Government finances and the future of employment of so many of our people which will be necessary with our increasing population.
I support this Bill. I hope the Government will remain undeterred by their many problems, and the many problems of the country. I hope they will take heart from the improvement in the economic climate which has already been referred to in this debate and which has manifested itself in the United States and is beginning to manifest itself in Europe. From my contacts with industry I am aware that the improvement is beginning to manifest itself here. The Government should take heart from that and should be — I do not like to use the word "resolute" because Margaret Thatcher uses that word a lot, but it is a good word — consistent. They should try to ensure the continuance of the good start they have made towards the establishment of a new economic order in Ireland which will combine our tradition of economic fairness and reasonable distribution of wealth between our people with an economic success of which all of us in this country can be proud. That is a possible outcome of a consistent approach by the Government and a resistance by them of any dilution of their economic message over the next 12 months.
While acknowledging the need for certain cuts in public expenditure I will focus on a few areas where Government economies have either been short-sighted or even just plain wrong. There are two areas under the Department of Justice to which I wish to refer. There is no doubt that one of the more serious problems facing the community at present is the breakdown in law and order. In particular, house breaking and car stealing are gravely disturbing. They affect the lives of thousands of citizens. In Dublin during 1983, 87,000 homes were robbed. Even worse, that figure is expected to increase by 20 per cent in 1984. Of course, the problem is not confined to Dublin. All too often house breaking and car stealing are becoming common in other areas. The point I want to make, specifically in the context of expenditure in the Department of Justice, is that good community policing is essential to counteract these criminals.
What have the Government done? They have welched on Garda recruitment figures for 1983 which fall well short of the specific commitments they had already made. All this at a time when crime is reaching outrageous proportions. Citizens are entitled to the safety of their property and their persons. In terms of essential Garda recruitment, the people have got a wholly inadequate and shabby response from the Government.
On the same theme of justice, I want to refer to the Government's very short-sighted approach to the shambles that constitutes prison accommodation. There is an urgent need, as we all know, for more prison space. The course of justice is being obstructed precisely because of this accommodation shortage. Prisoners are being released before serving their full sentences. The pressure on prison officers in Mountjoy, for example, has been particularly acute. Over a 12-month period, between admissions and discharges prison officers handle up to ten times the capacity of the prison. It is this pressure that causes the big overtime bill. The Government's response to this has been postponement of the construction of the new prison at Clondalkin. I am aware of the intention to go ahead with this project, but a valuable year has been lost. Surely this was false economy.
I want to refer to a highly topical matter in the context of Government expenditure cuts. It concerns the student medical card. My remarks are not in defence of recent student behaviour in this respect. The Minister for Health announced recently that he intends to apply the means test to students of 16 years and over for the purpose of saving money. I can readily understand the principle of getting families who do not hold medical cards to pay for student medical services, but I object strongly to the manner in which the Minister for Health has handled this decision. He did not inform or consult any of the parties involved. He did not inform or consult with the health boards, with the students or those who staff the medical services in our second and third level institutions. This highhanded approach is unacceptable. He did not leave sufficient time to reorganise the services before the deadline of 1 January 1984.
On another aspect of the same issue, the Minister is on record as saying that he hopes to save £2.5 million. I wonder how this figure has been calculated. I doubt very much whether £2.5 million will be saved. Indeed, I suggest that the administrative costs of withdrawing and then issuing new medical cards after processing the means test requirement will either greatly reduce the expected saving or cancel out altogether the sum which the Minister hopes to save. I wish to put on record that there is no history of student abuse of the health card services. Indeed they avail of medical cards only about one-fifth as often as other users.
Turning to the field of education, I want to highlight a problem of inequity and injustice in the educational system. The gap between the socially advantaged and the socially disadvantaged is widening all the time. In the case of primary education, precisely where funds are needed most, that is, in poorer parishes, there is less money available to run primary schools. The increase in capitation grants in this year's Estimate is a step in the right direction but it will not go anywhere near solving the ever-widening gulf between the advantaged and disadvantaged. Schools, and their pupils in poorer parishes, continue to get worse off. In a nutshell, equal opportunity in primary education does not exist in disadvantaged areas.
I now wish to refer to the teacher/pupil ratio in primary schools. This is relevant to Government expenditure policy as it relates to the appointment of primary teachers. We still have too many classes of 40 or more pupils. Indeed, there are 70,000 pupils in classes of this size. This is a serious problem for all pupils but it is especially acute for pupils in disadvantaged areas with disadvantaged backgrounds. Not alone is the quality of education adversely affected by overcrowded classes but, for the socially deprived, it is more serious because many of them will receive little or no second level education. There is a serious problem of inequity in the distribution of educational resources. Early school leavers in the main come from families whose parents also left school early. Such parents are on very low incomes, some of them on unemployment assistance. Not alone do their children miss out educationally but they miss out later also in the matter of access to training and to the Manpower services.
I have a specific recommendation to put to the Minister. There should be a programme of positive discrimination in favour of disadvantaged young people. Far from having overcrowded classes in these areas there should be special staffing ratios for disadvantaged children. I know that this would cost money. We live in an era of information technology — indeed, as the Minister said in his opening statement, one of the most encouraging signs in Ireland has been the increased exports of modern technological equipment. That same technology could be put into effect as a teaching tool to liberate those young people by, for example, allocating microcomputers to the junior cycle and primary schools which those disadvantaged children attend.
Getting back to Government action on expenditure, as a consequence of Government policy there are several hundred trained primary teachers unemployed and there are fewer teachers in the training colleges. This at a time when there are 70,000 primary school pupils in classes of 40 or more and when there is a glaring, unjust gulf between the socially advantaged and socially disadvantaged. I put it to the Minister that the Government must do more now to ensure justice in the primary school system.
I will refer briefly to cutbacks in third level education. I refer specifically to the position in UCD of which I have first hand knowledge, being a staff member there. The inadequate UCD budget has forced the college to cut back on staff. At present there are more than 100 unfilled vacancies on the staff of the college. Only one-in-three vacant positions are being filled under the present budgetary regime. In the case of unfilled academic posts this trend will lead to a curtailment of services and it will mean that people with special knowledge and expertise who retire or resign are not being replaced except under the one-in-three formula. The 1984 Estimates are not encouraging because they indicate an increase of only 1 per cent in university grants which will undoubtedly aggravate the situation further. Indeed, it will mean that the college will be seriously short of the funds required for 1984.
Previous speakers referred to the embargo on recruitment to the public service. Just before Christmas, when the Minister for Finance was in the House, I raised the question of this embargo and he pointed out that there were exceptions, giving the Revenue Commissioners and the Department of Social Welfare as examples. I gave the example of Córas Tráchtála, a State-sponsored body which is 10 per cent understaffed due to the embargo. The Minister laid great emphasis on the importance of exports for the future of the economy in his opening address today. I thoroughly agree with him. How, then, can be reconcile this 10 per cent reduction in staff when Córas Tráchtála play a vital role in increasing our exports? I understand the rationale behind the embargo but I am concerned that some parts of the public service, like CTT, which should be exempt from the embargo are not so exempt. I should like to ask the Minister if there is an on-going review to assess the staffing needs of the public service so that where the embargo is rigid and inappropriate remedial action will be taken.
I am very glad to have the opportunity to contribute to this debate in relation to the Appropriation Act, 1983, and the associated document released by the Department of Finance, the Appropriation Accounts, 1982, which are of concern to Members. My opening remarks will be on the optimistic note that was emphasised by the Minister for Finance when he spoke in the House a short time ago. He spoke about the rise in exports, 12 per cent increase in capital equipment last year and the very welcome reduction in the level of inflation. We are all very much aware of the rise in unemployment, now reaching 208,000. However, there is an air of optimism about that the country with all its difficulties is getting good government at present and that the Government during their period in office will be able to manage our affairs and bring us back into a more normal and expanding economy.
There are a number of aspects of the Appropriation Accounts, 1982, which I will deal with in some detail. The first relates to the very understandable objective of every Member of the House and of the community at large that the level of taxation be brought down at the most opportune time. Perhaps the Government could manage this year to hold down the level of taxation. I look forward in the budget of 1985 to measures to ease taxation and do something about the burden on the PAYE sector. We have the job of protecting the taxpayer.
Reading the Appropriation Accounts, 1982, I am concerned about the unsatisfactory way in which we have managed our affairs in recent years. I welcome the recent moves by the Government to abolish the practice which has been carried on for some years of giving letters of comfort to semi-State companies — the illustrated example in these accounts is Irish Steel Holdings who were given temporary finance of £25 million in 1982. It is very welcome to hear that companies will have to bear with the grant-in-aid they are given at the beginning of the year.
The Minister for Transport made a submission in this House in relation to CIE just prior to Christmas which will come up for a full two day debate later in the month. CIE are being asked to bear in mind the fact that there is a limit to what the State will provide for them. This will be associated with the fact that one-third of their activities are social in that they provide transport to outlying areas. From now on CIE will have to manage their affairs on a more economic and cost efficient basis. The grant-in-aid to the company will be reduced by 12 per cent in the years ahead. They must come up with plans to make that possible. They will not be financed over and above that. It is a welcome development to ask State companies to provide for how they will operate in years to come and keep to the grant-in-aid given to them.
I notice from recent Government statements that capital committees are being formed in various Departments to look at projects of a building nature which consume millions of pounds every year. These projects will be monitored from day to day to ensure that none will be undertaken in the way some projects have been in recent years. We have the example of Howth Harbour which, when originally approved in 1978, was at a cost of £2.8 million. In late 1982 the project had amounted to £10.3 million, an unexplained figure with which the Comptroller and Auditor General is trying to come to terms. The Industrial Research and Standards project in 1978 was to have cost £2.8 million. In 1982 it had amounted to £4.9 million. These are two projects in which the initial contract and approval were at a cost of approximately £6 million. Now £15 million has been borne by the taxpayer in relation to them. This is unacceptable. On the "Late Late Show" some months before Christmas there was a debate on issues of this kind and there is great concern in the community to come to terms with them.
I now turn to the Office of Public Works and the provision of accommodation for the public service. There are some revealing figures in these accounts which will stimulate everyone who is concerned for the country into ensuring that there is a strict observance of the rules under which money is spent on behalf of the taxpayer and that the Office of Public Works has better organisation and method. We have the example of the Garda Síochána taking new offices in Harcourt Street. Two office blocks were taken in that centre by way of contract on 1 June 1981 at an annual rent of £494,912. That centre was unoccupied until the latter part of 1983. The reasons for the delay are of concern to the Comptroller and Auditor General. They must also be of concern to every Member of the House.
It is proper that we look at other services. The annual rental of the Dublin office block for which the Department of Posts and Telegraphs contracted in 1977 was £277,000. That office block was still unoccupied some three years later. The report of the Comptroller and Auditor General from which I am reading gives examples of a selection of cases indicating lengthy delays. For example, leased premises on which rents became payable in September and October 1981 and January 1982 were £240,000, £237,000 and £758,000 per annum. These buildings were unoccupied at 31 December 1982. I am talking of buildings that were taken by this State some 15 months earlier and were still unoccupied at the end of 1982, as were six other premises on which rents ranging from £14,500 to £143,500 per annum had been paid for periods ranging from nine months to three years.
Another reference to the Department of Posts and Telegraphs concerns the original design of some 32 telephone building projects which had to be replanned due mainly to the changeover to digital equipment for which more buildings were required. As stated in the Appropriation Accounts, a further sum of £85,500 for professional fees had to be coughed up by the State to deal with the redesign question. In relation to the prison service total fees amounting to £4.8 million have been paid to architects, consultant engineers and quantity surveyors in respect of four projects and at the end of the design the Department decided they were going no further with them and all four projects were sent back for redesign. In addition some projects for the provision of additional facilities and the improvement of existing facilities for the prison service have been receding in recent years. The original contract sums and expenditure to 31 December 1982 in two cases examined in the year were as follows: in September 1980 the contract date, £3,148,000, expenditure to December 1982 £5,891,000; the other project with the contract date December 1978, the amount was £567,000 and in December 1982 was £2,273,619.
This sort of behaviour is highly reprehensible and must lead very quickly to a review of the operations and to the taking of a more modern approach to the operations of the OPW.
We must examine the reasons why this has happened, why millions of pounds of taxpayers' money had been spent on the involvement of professional teams in projects which have not gone through to fruition and why in instances millions of pounds have been spent on rents over periods ranging as long as three years before buildings have been occupied, presumably during a period of fitting out, furnishing and satisfying the service that is to occupy the building. There seems to be a great lack of understanding on the part of those involved not alone in the OPW but equally in the civil service generally of the need to speed up the procedures and not to treat the public finances of this State as irresponsibly as they have been treated.
In this city major assets are held by the OPW in State lands, in particular lands held by the Defence Forces, which have never really been examined to see which alternative uses these lands could be put to. I urge the Minister that this matter be brought before the Minister for Finance at an appropriate time and that a survey of all State lands and property and of the functions of the Board of Works be carried out. As part and parcel of that survey that arm of the State should be asked to smarten up its operation and come to terms with how it can project into the future in relation to the needs of the service and do something to eliminate from our Appropriation Accounts in future years, the overspending on professional fees and design and the kind of periods that have elapsed.
This matter did not come up suddenly in 1982. In my professional life I have known the operation of the OPW over a much longer period. The delays that have occurred in occupying buildings over the last ten to 15 years are scandalous and only this account brings the matter to a head. This must mean the resolve of the Minister and the Government in general to act in relation to that service and get much more value for money in regard to the needs of providing space for the service. I understand that steps have already been taken in relation to the capital committees in each of the Departments and I am certain that this news is welcome to every Member of this House, but we must also look into the building operation of the State which is run mainly by the OPW and demand of them much more response to the interests of the taxpayer and much greater explanation of these totally ridiculous delays which have cost many millions of pounds.
A few moments ago I mentioned the IIRS and the operations going on at Howth Harbour which cost over £5 million more than originally projected. This lack of concern for the interests of the taxpayer and the way in which we operate our affairs must end. I hope that we will have that survey of State lands and buildings which could lead to a much more definite plan for the future and a much more precise operation in the undertaking of these activities.
In considering the state of the national economy it is appropriate that we should deal in particular with the Appropriation Act today. That Act is of relevance because there is now general agreement in regard to our national finances that taxation limits have been reached and that in order to close the public sector deficit and reduce Exchequer borrowing requirements the approach must be to expenditure. Expenditure must be controlled and reduced if we are to achieve the objective in regard to our national finances. It must be acknowledged that some progress was made in the last year, that there has been a marginal improvement in the current account deficit as a percentage of GNP. That there has been some improvement is all that one can say. The Minister in opening this debate was too optimistic when he said that the position in regard to our national finances was that they were now under control. That is a very dangerous statement to make. They may appear to be under control now, but the Minister may have to eat his words in a year's time or two years' time, if he is still there, because national finances have a way of getting out of control very quickly and unexpectedly. However, the position has shown improvement and I hope that this progress will be continued and that the deficit will be ultimately eliminated in the period which has been talked about, three to four years. It must be said again and again that this must not be regarded as an unrealistic objective but as something that is vitally necessary. We must remember that up to 1973 this was the norm, that borrowing for current account was simply not done and, because of that, our national finances were in a far more healthy condition than they are at the moment.
The balance of payments has improved considerably in the past year and, while we are thankful for that, it must be realised this was due largely to the fact that imports of raw materials and machinery for manufacturing industry diminished. Imports diminished because of lack of consumer demand resulting from the recession. In so far as the improvement in the balance of payments was due to a slackening of imports, it was merely a symptom of the recession. We have the good news and the bad news situation, the good news was that our balance of payments improved but the bad news was that it was largely due to the fact that there was a recession here, that there was a lack of demand for goods for industry and for consumer goods because people simply did not have the money to spend.
It must be realised also that the satisfactory position in regard to the balance of payments will not continue if the recession eases. If and when that happens, on the one hand there will be increased demand in industry for raw materials and for machinery and, on the other hand, when people are somewhat better off there will be an increased demand for consumer goods. Then the balance of payments will be a problem again. While we can be thankful in the present situation when we have so many other problems with which to deal that the balance of payments is not a major problem for the moment, we must remember it has not been solved. The moment we begin to get rid of some of our other problems regarding the general trading recession, the problem with regard to imports will almost certainly arise again. In so far as the balance of payments has been improved by exports we can be truly thankful. We can say our export performance has been very good and great credit is due to all concerned. I shall return later to the question of exports.
While acknowledging that there has been some improvement in the national finances, this is due to the fact that a consensus was gradually built up in the past two or three years by all parties, by economists and by commentators generally as to what needed to be done. We are fortunate in debates of this kind at this time the debate is largely on how best the job can be done rather than on what needs to be done. There is a consensus, there is an agreement, and that is a tremendous improvement on the situation of three or four years ago when there was great disagreement with regard to the remedy.
To make a recovery from our financial difficulties it is acknowledged that a level of taxation that can rightly be described as severe and onerous is necessary but this can be tolerated only if it is realised that the limit has been reached, that the level of taxation will be imposed only for a certain length of time and that it will be eased gradually when the measures begin to take effect. It is also true to say that in so far as recovery from our difficulties entails a control or reduction in public services, this can be tolerated only if there is an expectation that in due course these restrictions will be eased gradually.
In deploring our financial situation there have been many critical comments on various measures, schemes, and plans introduced by successive Governments during the years. There have been criticisms by economists, by newspapers and by commentators of all kinds who attribute most of our financial troubles to the fact that politicians introduced all kinds of measures that were merely vote catching, that were unnecessary and extravagant and that should never have been introduced. In the light of the financial situation of the past few years, it must be acknowledged there is some validity in these criticisms. It must be acknowledged that some of the measures imposed a strain on our finances that was too much and that some of the measures were not as effective, or possibly as necessary, as they seemed to be at the time. However, it would be quite wrong to lay all the blame on politicians and on parties for what has happened in this respect. We have to accept some of the blame but not all.
It must be realised that most of the measures that were criticised were in response to public demand, that most of them appeared to be for a good purpose and were designed to meet a real need. It can fairly be said that in many cases the end result was not due to the conception of the measure but to the way it was implemented. It can be said that in many cases important and good measures were administered so incompetently and in a manner that proved to be far more costly than should have been the case and that is the real criticism of many of the measures. Because of the way they were administered, the public did not obtain the benefits envisaged or if they did they did so at a cost that could be described rightly as extravagant. Much of the criticism directed at politicians should be directed at incompetent administration, bad management techniques and what can only be described as irresponsibility on the part of the public service for the way in which they administer these measures, leading to lack of effectiveness and extravagance.
I do not think it is necessary to go into the details of these measures. Senator FitzGerald dealt with many of the cases and the kind of things that have been done but I should like to refer to two examples in entirely different areas of the way in which measures can be administered ineffectively. Everybody must have been amazed a few months ago to learn that the filling of ten jobs in the public service cost £100,000. It is unbelievable but apparently it is true. This is totally unacceptable. If it happened in the private sector there would be at least one other job to be filled at the end of the day. I doubt if anything has or will be done about this glaring example of waste of public money.
Another depressing example which can be described as a national scandal is the appalling cost and equally appalling ineffectiveness of the campaign to eradicate bovine disease. This has been going on for many years and the cost is so great that it is impossible to measure. At the end of the day we are very little better off than when the campaign started. Nobody can blame politicians or the Government for introducing these measures and nobody can say that they were not absolutely necessary and very much in the national interest. However, the way in which this measure was implemented was so costly and ineffective that we have achieved very little for this huge cost.
In regard to the appropriation of public funds and in particular to the very severe financial difficulties in which we find ourselves, in future the Government must look carefully at every penny they spend to ensure that the purpose is necessary and that the country can afford it, however desirable the measure may appear to be. The Government must also ensure that the public get value for their money and that the measure is effectively administered at the lowest possible cost. The taxpayer is entitled, particularly at present when taxation is so severe, to an assurance that his hard earned money will be spent to the best possible advantage. This is not something that can be tinkered with. It is not a matter for bland assurances by the Minister or the Government generally that there will be a tightening up and improvements in efficiency. This is something that calls for far-reaching measures and, above all, a placing of responsibility on those who administer these schemes to ensure they are administered in the best possible way.
I referred earlier to the commendable level of exports and to the very important contribution to our balance of payments which was made by them. Improvements in international trade must be of great advantage to our country which depends largely on exports. Many people do not realise how important exports are or what a contribution they make to our finances. In relation to our GNP we are one of the most extensive exporters in the world. We have to export something in the order of 50 per cent of our production compared with many of the biggest industrial countries who only have to export something like 20 per cent or 25 per cent of their production. By any test, we are very effective and competent exporters and we must improve and increase our exports in future because the temporary lull in our imports which has kept our balance of payments in control at the moment will not continue if the recession eases. In order to deal with increased imports which I hope will come in future we will have to do even better in regard to exports.
We must be competitive. Nobody in the great big world owes us a living. They will only buy our goods if they are well designed, well made, good value for money and skillfully marketed. Our agricultural goods must also be good quality, well presented and marketed. That is where we fall down in many respects, not merely in regard to exports but also in regard to goods bought at home. They must ensure that what they produce is what the customer needs and is presented in such a way as to appeal to him.
There is a huge market available for our exports. We have many advantages. We are a member of the EEC and we are accepted in many ex-colonial countries in a way in which other countries are not. We have an advantage in that excellent service has been provided by CTT in the past. We will continue to have these services in the future and I am very glad that the Government have continued to give CTT the funding and the support necessary to carry on these services. However, our success in exports depends on hard work, hard thinking and, above all, on a sustained effort. We must never let up. If the price of liberty is eternal vigilance the price of successful exports is continued hard work, continued effort and finding new markets throughout the world.
The progress made in our finances was to some extent at the expense of employment. Employment is undoubtedly our gravest problem. It is a problem to which all of us must address ourselves. It would be impossible to be optimistic about our present employment situation. It seems to be almost an overwhelming problem, but nevertheless it is one to which we must address ourselves and make every effort to find solutions and improve the situation. Jobs cannot be created artificially, or, if they are, such jobs cannot be sustained. They can be created as a temporary means of dealing with the problem; they can be created in a small way, but jobs created in that way are not the answer to the problem. It is only by increased industrial and agricultural activity that sustainable jobs can be created and long-term jobs can be created and sustained.
In addition to increased industrial and agricultural activity, there is one other area which should be mentioned because it has begun to be of considerable importance, and has great promise, that is, rendering services abroad: the kind of thing the ESB are doing in the Middle East and in Africa, providing design services and implementing new electricty systems; the kind of thing Aer Lingus are doing operating airlines in some Third World countries; what some of our companies have been doing with regard to building in those countries; also administering hospitals by providing expert and professional services. This is certainly a new and promising development which will provide employment, and which will probably result in increased exports.
Basically, the answer to unemployment is increased industrial and agricultural activity. Our main objective must be to ensure that this increased activity is encouraged in every possible way. At the moment it must be said that there is very little encouragement for industrial activity. There is very little incentive for industrial activity because as far as the entrepreneur is concerned motivation is minimal. An entrepreneur is a person who evaluates a situation or a proposal and is willing to take risks to turn that possibility into a profitable reality, and as a result jobs are created. For the entrepreneur at present it is a question of risks, frustrations, industrial disputes, restrictions and taxation and very little return, if any, at the end of the day. There simply is not the motivation or the incentive at present for the kind of increase in industrial and agricultural activity which is necessary if the economy is to take off and if increased jobs are to be provided.
I am very glad to see that this has been recognised in the recent NESC report which referred on a number of occasions to this point. In paragraph 3.32, page 47, they say:
An improvement in the profitability of investment opportunities is the main factor necessary to bring about a reversal in the fall-off in privately financed investment. Investment can also be stimulated by improving the confidence of investors in the future development of the economy. Confidence can be boosted by a coherent planning framework and profitability can be strengthened by minimising the cost increases which must be borne by industry, for example, in payroll taxes.
This is a very interesting part of a report which was compiled by an extensive representation from industry, Government sources and trade unions. This report was, I think, unanimous and came down strongly in favour of increased incentives for industry. This is a very important and welcome sign. This is the main way in which employment can be improved in the future.
Some criticism was made recently because some Irish companies invested abroad rather than increase their investment at home. These critics should face up to the fact that the companies did so because of the difficulty of making profits here because of the lack of motivation and incentive, which were minimal. In some cases the profitable investments abroad were not only necessary but had the result of enabling those companies to survive at home in the difficult conditions obtaining at present.
There is one other matter which I would like to mention, that is, expenditure on the arts and the amount which has been allocated to the Arts Council for the incoming year. The figure, although nominally increased, is down, making allowance for the fact that inflation is down in real terms. I appreciate that with so many demands for increased grants for social welfare, health, education and so many other necessary and desirable areas the arts may have a low priority. As regards the theatre, with many hundreds of people out of work — something like 80 per cent with several theatres threatened with closure — some effort should be made to deal with this problem. The situation in which the theatrical world finds itself is largely the result of VAT on theatre tickets. The removal of this, or cutting down the rate very considerably, would have a major effect on the situation in this area. It would very largely be recouped by savings in social welfare if many of these people were put back to work again.
I can understand the reluctance of the Minister to increase the grant to the Arts Council, but a very similar effect would be achieved by removing VAT. With the way things are going in the theatre world at present, he would really lose very little because, as more theatres close down, the return from VAT on tickets becomes less and less. I appeal to him to consider this way of helping the theatre world.
I welcome this opportunity to speak on an area of special interest to myself and some of my colleagues, that is, the whole area of sport and recreation. I appeal to the Government to give special consideration to sport and recreation in 1984. Previous Governments have neglected this whole area to the detriment of many of our people, especially our younger people and our unemployed. I should like to emphasise three major areas for special consideration: the preparation of the 1984 Olympics squad, the GAA centenary year, and the vital need to improve existing recreational facilities for our youth and the unemployed. I will deal with them separately.
Previous Olympics Irish teams have been neglected in both preparation and presentation due to a lack of funding by the Government. An Olympics team representing Ireland in whatever city in the world are very much a reflection of our nation, our youth and our prowess. The fact that they are not funded to compete in the name of Ireland is a serious indictment of all of us, and especially of the Government agencies involved. I appreciate that finances are scarce and that there are other very pressing problems in our community, but sport is becoming one of the greatest safety valves in our community. That is all the more reason why more finance will have to be devoted to it.
Most of the developed countries spend considerably more on the development of sport and the preparation of their teams for the Olympic Games than we do. But for the contributions made by American colleges we would have achieved very little over the past 50 years at any level of international competition. This again is a serious indictment of our country and our Government. There was an increase of 100 per cent in the grant for Olympics training in 1983 and we have a promise that there will be another significant increase for the eventual training and the winding up preparations in 1984. However, when you look at the total grant of £125,000 you realise it is an insult to the Olympics teams who will represent us in Los Angeles. When these athletes perform poorly and fail to get into the finals or to win medals, they become objects of riducle and cynicism to the great sporting community in Ireland. Other countries with similar populations have proved themselves in their performances in bygone years. I appeal to the Government and to other agencies to support our Olympics team as much as possible in 1984. How they compete is a reflection on our standards and if they cannot produce the desired results that will reflect on all of us.
The next area I should like to stress is the centenary year of the Gaelic Athletic Association. The association was founded to preserve our national games and they were very successful over the past 100 years not only in providing a great service for our youth but also in preserving our culture. Our games are unique in the world of sport and we should all be very proud of them. The ancient game of hurling which has its seeds far back in our history and mythology must be a game among games. Outside commentators have always considered it to be so and were always very influenced by it. Gaelic football, like many more football games, is one of the greatest spectator games and is considered one of the finest football games in the world.
The Government should consider this as a very special year not only because it is the centenary of the GAA but also because the GAA project so much of our national heritage in a very positive fashion through sport. They may be nationalistic in their ideas but they have been nationalistic over the years in a positive, creative fashion. I appeal again to the Departments who have the responsibility for giving grants to the GAA to consider giving substantial increases in the grant in aid for 1984 so that this will be a memorable year not only for the Gaelic Athletic Association but also for the Irish nation as a whole. The 1983 allocation was £40,550. When you consider this in perspective and compare it, for example, with the funding of Australian rules football in Australia, then it dawns on you how little we think of our national games. A grant aid of £43,000 is more of an insult than an aid and really such an amount of money can achieve very little.
The 1984 centenary year should be a great opportunity for public representatives on all sides of both Houses to play as big a part as possible in helping their local communities to commemorate this great occasion. It should be totally a non-political event, although politicians and leaders from all sides of the Houses should play a very significant role, if possible.
Much more money should be devoted towards the whole area of recreation, both in the provision of facilities and the employment of trained personnel to administer recreational programmes. Facilities have been greatly improved and I would like to compliment previous Governments on their attitudes and on the programmes they put underway to provide recreational facilities for both built-up and outlying areas. I would like to emphasise also that there is a great potential for creating employment within recreation if it is properly explored. By that I mean the employment of trained personnel to administer fitness programmes, youth training programmes, skill programmes and so forth. In other countries this is an area where major employment is being created. Unfortunately in Ireland due to many reasons we have not exploited this whole area at all. It is only when we see how well outdoor activity centres and recreational centres are working that we realise the employment potential in this whole field of recreation. There are a number of trained and qualified physical education teachers on the dole queues or working part-time hours who would be ideally suited to this type of work.
I welcome the proposed increases in the community youth training programme for 1984. I would point out that this has been increasing since 1982 when £6.4 million was allocated, in 1983 there was a provision of £9.8 million and in 1984 it will be £12.9 million. This shows that the Department of Labour are interested in the provision of youth training facilities around the country. I emphasise that the youth employment levy will raise more finances for the Exchequer next year and this is one of the reasons for the increase.
I welcome the fact that capital grants for the provision of major recreational facilities are being continued and that £1.2 million is being allocated towards the completion of existing commitments in 1984. As well there are increases in the temporary employment schemes. A figure of £3.8 million has been allocated for 1984 which should encompass 300 schemes. Although this represents a decrease from last year, it must be remembered that some of the major projects are now the responsibility of AnCO.
I realise fully that investment in recreation is determined by the amount of finances available, as is investment in any other area. I consider that the provision of recreational facilities is one of the greatest safety valves that our society can have. Apart from the fact that it will provide the working population with a place to recreate in their leisure hours, it will also keep the unemployed population healthy and, what is more, sane. When you see the number of people wandering around the streets and standing at corners you fully realise that the provision of recreational facilities is an absolute requirement. The fact that we have 208,000 people unemployed is all the more reason more money must be poured into recreation.
I would like to mention the manner in which the smallholder's unemployment assistance scheme is being administered by the Department of Social Welfare. The PLV system was done away with in 1982 and the factual means of assessment was brought in for smallholders. Over 13,000 will be examined on a factual basis. The means test has been administered very unequally and unfairly around the country. I know and have seen cases where it has caused much despair and many problems for families. I would appeal to the Minister for Social Welfare and the junior Ministers involved to draw up a proper factual assessment and means test system as soon as possible. The small farmer has been an integral part of our countryside and I want to see the small farmer to continue to be so. A country of big farms and big units is not desirable in Ireland. It will create unemployment if small farmers are deprived of their assistance and forced to move of the land. For that and for other reasons I think the whole system should be reviewed. I would like to appeal to the Minister for Social Welfare to review this system for the good of all the people concerned, especially the small farmers of the western seaboard.
I support Senator Deenihan in his plea to the Government for some special consideration for this GAA Centenary Year, coming as I do from North Tipperary near Thurles, the cradle of the GAA where this year's all-Ireland hurling final will take place, and knowing that this organisation is not only contributing magnificantly to the social and recreational life of this country but it has been part and parcel of the national tradition for many years. Something special and characteristic of the year should be considered. The organisation have sought the abolition of VAT on hurleys as one consideration. It is up to the Government to support in every way possible the work of this great national movement, this voluntary organisation, in this special year.
The opportunity afforded to Senators during the course of this afternoon and again tomorrow is one where we can have a very serious look at how the funds which are provided by the Government each year are spent in all the different sectors. From my own experience in this House, on health boards and county councils very often we seem to be closing the door when the horse has bolted. The accounting systems of many authorities are obsolete. Very often we find ourselves examining an abstract of an account two and three years after these developments took place. Using those criteria to determine whether expenditure was properly spent and what sort of structures should be used for the future, no commercial concern would be able to stay in business in the modern world with information coming forward after two to three years.
My first suggestion is that we modernise our accounting systems throughout all our services to obtain much more quickly information with regard to how moneys are spent. It is all too sad to hear of the scandal of the disease eradication programme, of office blocks where leases are taken out and rents paid for as long as three years before the people for whom the buildings were originally intended and for whom the leases were signed take up occupation.
Debate adjourned.
Sitting suspended at 5.30 p.m. and resumed at 6.30 p.m.