I move:
That Seanad Éireann approves the policies set out in the National Economic and Social Plan —Building on Reality.
National Economic and Social Plan: Motion.
With its endorsement by the Dáil and, I anticipate, by the Seanad tomorrow, the national plan, Building on Reality ceases to be merely a Government document and becomes the property of the Irish people — their plan. It will be the basis upon which they can make their decisions in relation to economic and social matters for the three years ahead.
I am convinced that this plan, endorsed by the Oireachtas, should like other plans at an earlier period, cease to be an issue of contention between the parties and become the common ground upon which all of us can build together during these three critical years — build a solid foundation for the future progress of the people of Ireland.
I am glad that the Seanad has taken this early opportunity to debate the document as I know from my own experience of this House, where I started my political career, that it has a capacity for a less partisan debate, and this, I believe, is pre-eminently an issue which should be discussed with a minimum of partisanship.
This plan has been prepared under most unfavourable circumstances — after a period of economic stagnation, declining employment, rising unemployment and with the public finances grossly overstrained, an excessive level of current budget deficit, and an excessive level of borrowing. This background has operated as a serious constraint upon the preparation of a plan for the three years ahead. And there is a further external constraint: we are experiencing a period of limited and, to a degree, uncertain growth in the world economy and in world trade, which makes it impossible for us to base a realistic plan on assumptions about the external environment of the kind that could be taken for granted at the time when the First, Second and Third Economic Programmes were prepared in the late fifties and sixties.
The content of the plan must be seen against this background. There is absolutely no point in criticising the plan because it does not set out to achieve objectives which could not reasonably be projected as being likely to be capable of attainment in the conditions in which we find ourselves. In fact, one of the reasons that has contributed to the generally — but not, of course, universally — favourable reaction to the plan outside the political arena has been the fact that it is clearly realistic in its assumptions and in the objectives which it sets out to attain. It does not promise what we all know is unlikely to be attainable in these conditions and within the timescale of the plan itself.
At the same time, within these constraints the plan succeeds in offering a real prospect of progress in each of the areas in which, by common consent, progress needs to be achieved.
Thus:
— it sets clear limits to Government capital and current spending during the three years ahead, based on specific Government policy decisions affecting each head of expenditure. The imposition of these limits will allow the whole of the increase in national output attainable during these years to be made available for the improvement of living standards and for increases in private investment. This is in contrast to the last four years during which out of the stagnant national output public sector spending has risen leading inevitably to a reduction in the amount available for private investment and for the improvement of living standards
— it proposes measures to create the conditions necessary for growth in employment in manufacturing and private services. In addition it provides additional measures to stimulate both entrepreneurial and social employment, on a scale that is designed to reduce unemployment by something like 25,000 below the figure that would otherwise be attained.
— it commits the Government to halting the increase in the burden of taxation as a share of GNP, and in particular to increasing income tax bands and thresholds with a view to halting, and, to some small degree at least, reducing, the PAYE burden during this three year period.
— it proposes the concentration of Government funded social policies on the neediest sections of our society
— as a result of the financial measures mentioned earlier it will reduce by about one-third both the current budget deficit and the public sector borrowing as a share of GNP. Thus, by the end of the period, the diversion of an ever-increasing share of our tax revenue into interest payments on a mounting public debt will have been halted.
Most important of all, perhaps, from the point of view of the creation of an atmosphere of confidence in which new investment can take place that will produce additional self-sustaining employment in the longer run, is the fact that the plan introduces into our economic and financial system an element of stability that has been lacking since the beginning of this decade. For the first time since the eighties began, workers, farmers, entrepreneurs, the unemployed and young people have been given a clear picture of the shape of public policies for three years ahead; of the steps that the Government will be taking during this period to limit public spending; of the tax environment that will exist during this period; and of the nature and scale of public investment. It is because the plan has reintroduced this element of stability into our system that it has been generally welcomed despite the fact that its targets are necessarily modest by comparison with other similar documents produced in the past under more favourable conditions, and despite the fact that it involves a commitment to restraint in spending under a number of headings, a restraint that cannot be welcome to those likely to be adversely affected by these decisions.
Let me develop one or two of these points in a little more detail. This Government have been determined from the outset to get our public finances under control — both in terms of reducing the current deficit and borrowing to a sustainable level, and in terms of controlling spending within each financial year so that it does not significantly exceed the budget targets.
Indeed, our work on the control of spending within the financial year began when the Government, under my leadership, took office in mid-1981. At that time there had been an unhappy experience of expenditure during successive financial years running very far ahead of budgeted figures, with the result that the level of current deficits and borrowing had been higher even than the very large figures planned by Governments for these years. It was clear that there were serious deficiencies in the control of spending within the financial year, as well as some measure of inadequacy in the decision making process designed to determine what that level of spending should be. We introduced then and have since maintained the most stringent standards in respect of the projection of future expenditure needs on the basis of firm Government decisions taken in respect of public spending under each heading. We also introduced a system of month-by-month monitoring of public spending, based on a monthly profile of the likely pattern of spending in each Department within the budget year. The fruits of this were to be seen last year when the excess of spending over the budgeted limit was less that 1 per cent and they are emerging also in the current year as expenditure is being held firmly within the budget limits set. At the same time the estimation of revenue in the budget has been improved, with the result that the flow of revenue to the Exchequer last year and this year has in each case been extraordinarily close to the figures projected at the time the relevant budgets were drawn up — despite the obvious uncertainties that must arise in connection with such projections.
I mention these facts because they have not yet attracted sufficient attention either in the Oireachtas or amongst those commenting on our economic and financial affairs. I emphasise that it is not mere coincidence that last year and this year our budget targets have been and are being so closely met; this has been the result both of the most stringent self-discipline on the part of the Government at the time when decisions were being taken on the Estimates and in respect of the budget and of an expenditure control system very much in advance of anything ever previously attempted in this State.
The fact that both last year and this year the budget targets have been and are being so nearly adhered to has itself been helpful in restoring confidence in public sector financial management. But this confidence has also been restored because of the evident determination of the Government to take all necessary action to reduce the current deficit and borrowing at a rate compatible with the avoidance of severe deflation of our economy but sufficiently rapid to secure the target of halting by 1987 the process by which, in all recent years, the share of GNP and of taxation absorbed by interest payments on national debt has increased with apparent inexorability.
We are refusing to be deterred from this course of action by facile criticisms of being a "book-keeping Government" or of being over-preoccupied with "financial rectitude". Suggestions that we have pursued these financial objectives without regard to the impact of these measures upon our economy could scarcely be less well-founded.
Our very first act in taking over the reins of Government in November 1982, was to modify what appeared to us to be the excessively draconian reduction in the current deficit proposed by our predecessors; we set a target of £900 million for the current deficit in 1983 as compared with the £750 million target in The Way Forward. Since then we have reviewed our commitment to phase out the current deficit completely by 1987, recognising realistically that with recent and current levels of interest rates, rigid adherence to this target would have had deflationary effects on our economy that would have been profoundly damaging. Accordingly, we have modified this constraint, aiming instead to reduce the current deficit and borrowing by one-third during the three years ahead. I believe that this decision has been vindicated by its acceptance by the financial community, as well as by public opinion in general.
We have thus aimed at, and I believe secured, a sound balance between the maintenance of progress towards a radically improved situation in the public finances, and sensitivity to, and flexibility in respect of, a changing economic situation, with a view to limiting the deflationary impact of the steps that we have had to take.
Turning from this area of the public finances to the employment sector, we have in our industrial policy document taken steps to modify in a sensitive and sensible way public policy in this area with a view to accelerating the growth of investment in manufacturing industry and the expansion of private services. Aided by an improvement in the world economic situation and, thus, more favourable external conditions for exports of goods and services from this country, we have brought to a halt the decline in employment which over the past four years has reduced by 40,000 the number of people out of work in our State. The situation we now face is one in which we can look froward to a recovery in employment in manufacturing and private services that will be only partially offset by the continuing reduction in the numbers at work in agriculture and in the public sector. But we have not been content to accept the scale of employment growth that will be brought about by these measures designed to stimulate employment through refinement of public policies affecting the context for growth in the private sector.
We have in this plan supplemented these measures by a number of imaginative schemes which bring the hope of employment to many who otherwise would, even with a recovery in private sector employment, find themselves without the opportunity of work.
One of these schemes, the enterprise allowance scheme, has already provided 3,500 unemployed people with the opportunity of entering into self-employment and the demand for this scheme is continuing at a rate which gives us grounds for believing that, by 1987, over 10,000 people will through its effects have moved from the live register to self-employment.
The other major scheme, introduced in this plan, is the social employment scheme, designed to provide part-time employment for people who have been unemployed for a long period of time and who are in danger of losing hope of reentering the labour force, and, possibly, in some cases, in danger of losing the capacity to work. The implementation of this scheme is at present being pursued energetically by the Minister for Labour, with co-operation both from other Departments and from other agencies such as local authorities, who have shown a commendable willingness to join with us in making the fullest use of the opportunities provided by this scheme to offer employment to as many of the long-term unemployed as possible.
While this scheme is designed to provide work for 10,000 longterm unemployed during the first year of its operation, I am hopeful that we shall be able to do a good deal better than this — but here, as elsewhere in the plan, we have deliberately set out targets cautiously. I would prefer that we over-achieve on modest targets than that we fail to achieve unduly ambitious ones.
The plan also contains a clear commitment to halt the rise in the burden of taxation which has been such a striking feature of the last few years, as the bill for the massive increase in public spending during the late seventies and early eighties has come home to roost with the taxpayer — with whom ultimately, the buck for all public spending eventually comes to rest. There is, I believe, universal agreement that the overall burden of taxation must not be raised any further and that any reliefs that can be provided must be concentrated on the PAYE taxpayer. The plan provides accordingly. The estimates of public spending for the years ahead, set out in the Plan, Department by Department, so far as current spending is concerned, and also in considerable detail in respect of capital spending, have been confined within the limits that can be financed by the present level of taxation as a share of modestly rising national output.
It was not easy to achieve this result and the implementation of these provisions will involve sacrifices on many sides. But I believe that it is the clear will of our people that from this point onwards priority be given to halting the increase in the burden of taxation and to moving as rapidly as possible to a reduction in that burden; it is accordingly their will that the total level of public spending must be limited and restricted, however painful that exercise may be.
The measures by which expenditure will be controlled are set out in detail in the plan; I believe that it is important that everyone should know from the outset precisely what are the limitations on public spending that we propose in order to achieve this taxation objective. It will be clear to anyone who examines the plan that we have been particularly concerned to limit the cost of the general overhead of public administration. We have preferred this course of action to the alternative of cutting out programmes which, in one way or the other, serve the public interest, either by promoting investment and production, or by providing for the social needs of our community.
This has meant that the public sector is being asked to bear a very large part of the impact of these measures. Numbers in the public sector, which already have been reduced as a result of the measures we have been implementing since we first took over Government in 1981 will continue to fall, and in the plan we have specified the limits of the resources available for public service pay during the three years ahead. This latter provision is an essential feature of the plan. There can, in fact, be no plan in any real sense of the word without such specific provision being made. The failure to make such provision in all previous plans in fact prevented them from containing any financial targets whatever in respect of current spending. In the absence of any such element in any previous plan, public spending has consistently run out of control, contributing both to the steady increase in the burden of taxation, and to the high rate of inflation in the economy.
I recognise that in deciding to include in the plan specific cash limits for public service pay, the Government are taking a step which requires from the public service, a very great effort of sacrifice and self-discipline. I know that there are many outside the public service who fail to appreciate the nature and extent of its contribution to the life of our community, and who have no understanding of the extent of the commitment and dedication that the vast bulk of the members of the public service show in serving our society. The fact that the structures of the public service have been allowed by politicians to atrophy over a long period of time, and that restructuring and reform is now needed in this sector, is not, and should not be seen as, a reflection on public servants who have loyally worked the system as it is, whatever they may have thought of it, and who have readily accepted changes, even radical changes, when Governments have set their minds to make such changes.
I believe that the sense of commitment and dedication which I have mentioned will help to secure an amicable agreement on how the resources set aside by the Government for the public service during the next three years should best be deployed during this period.
This plan is designed to face and to tackle the three different sets of problems, which have accummulated, one on top of the other, as we face into the closing two decades of this century. The first of these problems is one which has been foreseeable for more than two decades, namely the impact of the demographic revolution which began in 1961 with the decline, and eventually, the reversal, of the persistent, and for much of the fifties, enormous problem of emigration. It was possible to calculate then, more than 20 years ago, that the scale of the annual labour force increase that would be facing us in the eighties and the nineties would require for its absorption into employment a sustained growth of national output beyond anything that had been achieved in Europe even during the height of the post-war boom. So it has proved, although we have succeded in accommodating, for a period at least, part of this increase into a rapidly expanding educational sector, and especially during this decade into third-level education.
What could not then be foreseen were the other two factors which have operated to make the achievement of such a rate of economic growth — never likely to be easy — in practice impossible for the time being at least.
The first of these has been the slowing down in the rate of expansion of the entire world economy following the double shock of the first and second oil crises. It may be that even without these two traumatic events it would not have been possible to have sustained into the last quarter of this century the historically quite exceptional rate of economic growth achieved world-wide during the previous 25 years. However that may be, the fact is that the growth of the world economy and of world trade is today, and has been for some time past, much lower than could have been foreseen in the sixties, and our capacity as an open economy to achieve a high domestic growth rate has been affected accordingly.
The second unforeseen factor has of course been the extent to which the mismanagement of our own finances during the past seven years has deprived us of the limited leverage that we might have enjoyed had we husbanded our resources and retained the financial lee-way necessary to offer our economy some domestic stimulus during this period of slow external growth. Far from being in a position to promote growth in this way we have since the beginning of this decade been constrained by the scale of our current budget deficit and our borrowings to raise taxes and, now, to hold down public expenditure.
This is the background against which this plan has had to be prepared. The constraints have had to be recognised and faced. We have had to cut our cloth very stringently but also I believe reasonably skilfully — making the most of what little lee-way remains to us in steering the economy towards the achievement, even if on a modest scale, of each of the goals that must now be ours — the expansion of employment and reversal of the rising tide of unemployment, the holding down of taxation, the tackling of social inequalities, and the stabilising of our public finances.
No criticism of the plan that is not set against this background and that does not face these constraints has any objective merit. Senators will, I know, be conscious of this reality and I look forward to their constructive contributions to the discussion of the national plan.
I welcome the Taoiseach to this House, the House in which, as he said, he started his political career. He mentioned that he hoped we would have a very constructive debate on this plan in the House. I am sure we will, but I do not think he should expect that we on this side of the House should concur with everything he says and that if we do not concur we are not in actual fact being very patriotic, because that is what is implied. Now that the plan has been passed through the other House he feels that if we do not go along with it then it is not as it should be. Plans of this nature — I presume this plan is no different from any other one — give a little bit of truth to the advertisement which was placed in the newspaper by the person who was looking for a one-handed economist. When he was asked why he wanted a one-handed economist, he said he was fed up with people saying to him "on the one hand" and then "on the other hand". I am afraid there is an element of on the one hand and on the other in this plan because as it is drawn up it is based not on specifics but on what might happen in international or national affairs in the next couple of years.
Today we are discussing the plan here, tomorrow we will vote on it and the day after that the same difficulties which are being faced today will be faced by each and every one living in this country as though this plan had never been produced. The introduction of the plan has given politicians, economic advisers, political analysts, and media gurus a respite from the actualities of life and has allowed them to mull over, analyse, and generally dismiss this plan as being nothing more or less than an attempt by theoretical economists and political and media handlers to fool the people of Ireland.
There is a need to meet the crisis of today and in meeting the crisis head-on to give hope that the future is not something to be dreaded but something to be looked forward to with hope and confidence, based on the reality that exists and not the spurious reality of the economic plan. In the past few years we have heard no hint of encouragement to the people of Ireland, young or old, that they should remain here and be able to live in relative peace and relative comfort and not be hindered by any Government-spancelled doctrinaire economic mores.
We live in a country in which nobody is satisfied with his lot. Unfortunately the actions of the Coalition Government have exacerbated the situation. The incentive for people to become selfemployed has been taken away. The incentive to employ people has been eroded by the penal taxation and levy systems that exist for both sides in industry. The incentive to work has been eroded by taxation and also by the policies of the Government which have made workers suspicious of their employers and equally envious of the rewards gained by people who do not have the privilege of being able to work. We are now in a situation in which industries where high skills are needed are not able to train apprentices and this will lead to the point when, even if there is an upturn in the economy, we will not have the skills available to take advantage in the engineering, construction and allied trades.
The plan goes through every aspect of the economy with what at first reading of the précis given out with the full document seems to be a fine-tooth comb but on further examination, turns out to be nothing more or less than a re-hash of the documents on industrial policy published in July, the Green Paper on the national income related pension scheme, the Green Paper for social insurance for the self-employed, the Programme for Action in Education published in January, the 61st Report of the NESC, the Programme for Government, 1981-1986, the McKinsey Report on CIE and reports of the working group on the four year plan for agriculture. Why has there been such an effort to portray this amalgam of reports as the panacea for all our troubles?
If we are to have constant re-hashes of Government reports, I believe that the only people to benefit will be the printing industry who will welcome the business and will be able to cope with the extra workload by the use of high technology printing methods with very small increases in employment. No document produced in recent times has been critically analysed to such an extent as this one. Certainly there has been no document which has been rejected so emphatically by all the social partners in Ireland.
The plan does not, as the Taoiseach suggested in his summing up in the other House, restore confidence in the financial stability of our economy, the confidence of people of older and middle years in the State or the lost confidence of a whole generation in the possibility of effective democratic Government in the interests of social justice. The Taoiseach is right when he refers to the danger to our social stability deriving from social injustices. Society has been destabilised in many ways in recent years. I agree that in the sixties men of vision created the spirit and atmosphere to remedy the problem.
The Taoiseach does neither himself nor his plan any good by continuing to run down the policies and personalities of the sixties. His suggestion that economic recovery has to be the cause of moral decay is monumental in its naivete and an insult to the people who were involved in improving material standards for industry, workers and the underprivileged throughout the sixties and early seventies. If there were more people in the Government who were committed to economic growth we might have more confidence in the results of this plan.
The plan presents itself on a very broad base of economic conjecture at both international and national levels and it can be so far out in so many facets that it is probably more useful to economics students than to anyone who wants to plan for the future in business. In the first section, at paragraph 1.19 we find what I see as the first major fault in the plan. It is suggested, apart from the international recession, that labour cost increases were the other major cause of our non-competitiveness. It is true that there were labour cost increases but there were other costs which were of more significance such as energy, transport costs and taxation levels.
It is suggested in paragraph 1.20 that the decline in output is starting to level off and that overall growth should resume early in the period of the plan. From statistics produced by the CSO or any other source it is hard to see how this conclusion is reached as cement sales and employment levels are down and the lack of any major input into the construction industry by Government will not bring about a significant change in the near future. The Government suggest the extra amount of moneys to be put into the road programme will bring about a significant upturn in the construction industry but it is a fact of life that road building is very capital intensive, not labour intensive, and since quite a major proportion of any road building programme will be done by our local authorities then the benefit to our economy by the programme will be lessened by the fact that the work will be done to contain the loss of jobs in the public service rather than to improve our overall economic situation.
The bald statement in paragraph 1.27 that over the three years to 1987 the evolution of unemployment will depend on the generation of jobs, the retention of existing viable employment and on the growth and number seeking jobs is factual. However, what concerns me and anyone who has to cope with the job situation is that the Government have no plan to decrease the number of people out of work. The figures for current unemployment are already running ahead of what the plan envisages and although we wish we could say otherwise the facts do not give much hope for a brighter future based on the plan as produced. The Government have not produced in the plan any of the means to create the rapid employment growth as laid down in paragraph 2.4. For example, where are the plans to encourage a degree of initiative and management effectiveness and plans for better industrial relations? How can we improve wage-cost competitiveness when we see a constant and increasing take of direct and non-direct tax from wage packets?
We agree, as is stated in paragraph 2.12, that the past number of years have been traumatic for two main groups, the school leavers and the growing number of long term unemployed. There has been a significant increase in the number of older workers being made redundant. I fear most for those over 35 years of age who lost their jobs as there is absolutely nothing for them in the plan. We have condemned to the economic dungheap people who have many years of experience to offer to employers and in many cases to the country. We have lost years of both academic and non-academic training which has cost the State and individuals so much.
We agree with the aims as stated in paragraphs 2.24, 2.25 and 2.26 which are recommended by the National Planning Board. The plan states at paragraph 2.55 that the Government recognise the opportunities that exist in the fishing industry but makes no mention of the fact that on the advent of Spain to the EC we will have an increase of fishing in our waters which is likely to wipe out our fish stocks and our small fishing fleet. There is no acknowledgment in the plan that the size of the Spanish fishing fleet and their knowledge of Irish fishing grounds over many centuries will do lasting harm to an industry which already has major problems because of quotas, energy costs, capital repayment costs and the problems associated with illegal fishing even by the Spaniards in Irish waters.
The Spanish fishing fleet has 17,500 vessels involved, with a gross registered tonnage of 750,000 tonnes. The Irish fleet consists of 1,600 vessels with a gross registered tonnage of 36,000 tonnes and the Spanish fleet catches over 70 per cent of the Community fish take. One of the main worries that has not been adverted to in this report at all is the fact that the Spaniards have well over one hundred third country agreements and that these third country agreements will be brought in by the Spaniards to the EC as happened in the case of very many other countries who were allowed to keep agreements with third countries. The fishing industry on the advent of Spain is going to face not alone the problems that it has now but major problems that will be very hard to overcome.
The problems of the agricultural sector are to a large degree totally ignored in the plan. The Taoiseach did not mention that we have on the Order Paper here to be taken in conjunction with the plan the Bovine Diseases (Levies) Regulations, 1984, which will add £7 million to farmers' costs in each of the next few years from 1 November of this year. I am not surprised that it was not referred to in the plan but it is something that Members in this House will be adverting to fairly often during the course of this debate. The plan states the problems in agriculture but does not go into any depth about how to promote recovery. There is a clear acknowledgement that the industry is in decline and there is no sign of commitment to halting the decline.
It appears from the plan's objectives that only those with a high degree of education and those planning profitable business developments will be helped in the future. Those who can afford most to pay will benefit from the very excellent ACOT and farm development services. Mention is made at paragraphs 2.47, 2.48 and 2.49 of the need for greater land mobility and leasing and retirement schemes but no solution to any of these problems is put forward. We are told that these are all being examined and I presume will be in the next plan which is proposed to be produced after 1987.
In the section on tourism the objectives are laid down but there is a total lack of information on the planning by Government to achieve the objectives. It appears that the onus is being placed on the industry to produce the goods. It is by and large because of Government policies on taxation and energy costs that tourism is not doing as good a job as it is geared to do. The only positive part of this section is paragraph 2.58 which would expedite development at Dún Laoghaire and the more important plan to set up a harbour authority in Rosslare where there is a need for a vast improvement in passenger handling facilities. Since air fares are soaring and there is a huge increase in people travelling by ship, improvements at Rosslare are of paramount importance. CIE at present manage the harbour and due to inadequate funding the majority of tourists do not have the most pleasant first view of Ireland. It is not because of the surroundings of Rosslare but because of problems arising from the work which has been going on for many years without any end in sight.
At paragraph 2.59 the plan introduces a very controversial and almost universally accepted non-starter. The proposal to extend licensing hours is not needed or likely to be of any benefit to the tourism industry since our tourist, generally speaking, is not the type who wants to spend extended hours drinking. The tourist who comes here is not the type who goes to the beaches in Spain. Our industry is based on ethnic tourism. Many such tourists stay at home or go out for a few drinks with relatives and friends. Alternatively the tourist who comes here wants to see what we have to offer in terms of archaeology and places of historical interest. The only area where there might be some value in this extension is the seaside town where there are large numbers of caravans and it is very hard for young parents to get out on a Sunday night. That is the only area where I would see any merit in this proposal.
The reduction of excise duty on spirits was necessary in order to discourage the huge cross-Border trade which has built up in recent years but it will have a detrimental effect in that it will encourage more people to drink spirits than the pint of beer or stout, which is larger in volume but has a smaller alcoholic content. This trend is already being seen. It has reached the stage where a pint is dearer than a "Paddy" and certainly a lot dearer than white spirits. It is very nearly as dear as brandy. Our priorities are wrong.
The Government in Paragraph 3 admit to a serious deterioration of our road network and if the provision in the plan to increase expenditure on this network is implemented it will be more than welcome. I am disappointed not to see any mention at paragraph 3.25 of the long overdue works on the New Ross-Waterford road.
On transport it is stated at paragraph 3.40 that legislation will be introduced in the next session to allow free availability of transport licences. Any examination would show that there is a need for some liberalisation but full liberalisation would lead to even greater efficiencies than we have at present. We have a licensed road haulier system which gives a very professional service at costs which at times are very much below economic returns and are based on the returns which road hauliers were getting in 1979. These hauliers are competing at home and abroad while putting up with constraints such as the high imported cost of road haulage vehicles due to import taxes and VAT which make them much more expensive than those of their foreign competitors. Spare parts are also enormously expensive here due to VAT and 25 per cent import duty. Road tax, insurance and fuel bills are higher than anywhere else in the Community. They still manage to keep our exports flowing and in the end the main beneficiaries of this excellence in road haulage are the banks, the hire purchase companies, the oil companies, the tyre companies, the insurance companies and especially the Government. If we liberalise further we will have a build up of non-professional hauliers and firms investing in road vehicles which are not really necessary and will be under-used. I believe that in the end the cost to the consumer will be more expensive.
Paragraph 3.43 lays down broad outlines for the break up of CIE and it is very hard to comment on this until we see the arrangements.
I am very disappointed that the plan makes no mention of native coal having any part to play in our energy requirements. With the type of technology available I am of the firm opinion that Irish coal, even if of low quality, could be used by Irish firms using the fluidised bed system and I hope more thought will be given to further studies in this field which will be of enormous benefit to the economy, to Leitrim, Tipperary, Carlow, Laois and my own county of Kilkenny. A certain coal importer in Dublin wants to import 50,000 tonnes of anthracite which will be sold at approximately £200 per tonne. I am sure this type of anthracite is available in Ireland and I am certain that we should give more thought to the use of crow coal, low grade anthracite and high grade anthracite such as is available. We should consider whether we should make an attempt to burn lignite and crow coal and this could be discussed with the people in Northern Ireland. The lignite around Lough Erne is not being used to the greatest possible extent and this is a major national resource which crosses the Border to Arigna.
The provision of natural gas to towns and cities should be speeded up. I am not sure whether there is an ideological basis for the delays. It would seem to be so because the only extension to the natural gas grid has been through Clonmel by a company which is owned by the local authority. It would appear that the licence was given to them while licences are being withheld or delayed elsewhere.
I feel, as do many other people, that the drive to create new employment has been largely aspirational and lacking in palpable expression. Despite the various measures taken at local and national level over the past few years to promote the training and employment of young people, their job prospects have worsened as the recession has deepened. As the rate of unemployment has increased, so has its duration. Over 2 million young people in the Community have now been without a job for more than six months and almost 1.5 million for over one year. In Ireland the seriousness of youth unemployment is emphasised by the fact that over 60,000 people aged under 25 are registered as unemployed. It is felt that the special problem of youth unemployment in Ireland is directly related to the numbers seeking work for the first time. Under the plan there will still be overlap and duplication in the services provided for training, recruitment and job creation. I hope a serious attempt will be made to rationalise these services and adapt them to the needs of the users.
The brunt of the effort in job creation in the plan seems to concentrate on the introduction of the new social employment scheme which will offer part-time work on a half-weekly basis for one year to persons who have been unemployed for over a year and are drawing unemployment assistance. I am not too sure how this scheme will work in reality but for the sake of the unemployed I hope it can be made work and that it will not create problems with our employed who earn close to £70 per week after deductions and do not have the buffer of a half week's social welfare benefit.
In paragraph 4.14 "alternance" is a new word to me which does not suggest that it is anything else but on the job training allied with some element of off the job training. The word might be new but the concept is not. I am disappointed that the only mention in the whole document of sport is at paragraph 5.32. It says that a national lottery will be advanced which will help in the attainment of sporting excellence, in the preparation of athletes or in the spread of sport in general, and it then goes on to say that only part of the proceeds of the lottery will go to sport. There is no mention where the rest will go. I presume that, like road tax and so on, it will go into the Exchequer. If we are to have a national lottery for sport, the money should be used for sport and nothing else. If it is used for sport, the added benefits will not alone increase excellence in performance in sport but could lead to what is continuously being mentioned here by the Government: reduce the need for very expensive medical centres.
Paragraph 5.76 says that in future community care will take over to a larger degree from in-hospital treatment. That is a lovely aspiration but anybody working in the community care area at present will tell you there are not enough people involved in this area, that there are not enough small buildings and that there is not enough emphasis being put on community care. The aspiration is there but unless money is provided to give the people working in community care the financial help needed, I am afraid that aspiration will not be achieved.
The only mention in the plan that will benefit local authorities is that there will be an increase in spending for roads and that in 1987, when farmer taxation comes in, the farmer tax collected will be given to local authorities. There is no mention of the problems local authorities are facing now or that they will face in the next couple of years. There is no mention of the fact that 90 per cent of local authorities have run out of money, that they are paying enormous bank interest rates and that they are running down their services because they are not getting enough money from central Government. We are told they have the right to fix charges for water, sewerage and any other services which might be needed. That type of charge is an increase in taxation the bulk of which is borne by people who cannot afford it.
There is a new £5,000 grant to house owners living in local authority houses for more than three years. It is hoped that they will give up these local authority houses thereby releasing about 6,000 local authority houses. Again, I think this aspiration will not be fulfilled because of the cost of providing new houses, although it may be that in certain limited areas private builders can provide a house at a cost below the local authority cost. This might work but I do not think it can. Local authority house building in the future will be tied into this £5,000 grant where people are going to give up their houses thereby releasing them for those who need them. I do not think this will work but I sincerely hope it does.
Paragraph 5.89 is not mentioned in any publicity about the plan. It states quite categorically that no longer will local authorities pay for house repairs. It is suggested that if people are lucky enough to get local authority houses they should maintain them. That is not the way the Labour Party should be looking at this. The Irish Congress of Trade Unions, to which the Labour Party is affiliated, produced a document stating that the privatisation of housing should not be allowed to continue. I am surprised that the Labour Party would get involved in a plan which essentially is trying to privatise housing for those who are in need.
The plan is based on the need to get our economy to balance. However if our economy is brought into balance, by sending some of our people to Germany, Sweden, France or wherever while the people at home are unemployed, I do not think it matters whether our economy is in balance or not. The plan does not give me and has not given anybody to whom I have talked, a feeling of optimism. I do not think it will achieve, as the Taoiseach says, its very modest aspirations. I sincerely hope that a lot of what is in this plan works. The Government are trying to implement it, but I am afraid that the people have rejected it. However, at the end of this debate I hope they will see that there are other options apart from the options in the plan. Many of these options will be spelled out by spokesmen on this side and have been spelled out in the Dáil over the past number of months. For the sake of our young people I hope the plan works, but from my reading of it I cannot see that it will.
I should like to join with Senator Lanigan in his welcome to the Taoiseach. It is not his first visit to the House and he is always very welcome. He said his political career began here. That is some solace for us because we can aspire to achieve the same high office.
Some of us do not want to go anywhere else.
I know that. That is already on the record. We gave the Senator the opportunity.
The publication of this plan Building on Reality on 2 October has created an environment in which all of us can make a critical analysis of our responsibilities, our achievements to date and our expectations over the next three years. All of us includes the Government, who must have a primary role in creating initiative and the correct climate for us to have confidence in ourselves. Listening to Senator Lanigan I have no doubt that I can include also the Opposition who play a very vital role in this country. The plan must be seen to be constructive and supportive where necessary. If it is not seen in that light, the population, and particularly the young population, will lose faith in the democratic process and may turn to other alternatives. There is a responsibility on all of us, in Government or in Opposition, to be seen to be trying to achieve something worthwhile for this country, and by working together we can do this. I should like the Civil Service, the semi-State sector, the private sector whether employers or employees, and their respective unions — the Federated Union of Employers and the Irish Congress of Trade Unions — to be self-critical. To put the record straight for Senator Lanigan, the Labour Party are not affiliated to the Irish Congress of Trade Unions although they might often think we should be, but the majority of members of the trade union movement are affiliated to the Labour Party. I am pleased to put the record straight. We have an input but we do not dictate the policy of the trade union movement. The Labour Party was founded out of the trade union movement.
The Senator must be reading the wrong magazines.
I wish the Senator would read about the actual structure of the trade union movement. The Labour Party was founded as the political arm of a very important movement and one which, I have no doubt, will make its contribution to the fulfilment of this plan. We must include in our consideration of any plan the elderly, the under-privileged, the sick, the homeless and particularly the unemployed. All of these groups can now make a critical analysis of the plan. Any plan has good points and bad points. You cannot have everything you want in a plan because if you do it will not suit everybody. There are bound to be sections in the plan of which we can be critical and would prefer if they were not included.
We are asked in the Seanad to approve all the policies set out in the plan. There are several areas that I will not touch on because it would be inappropriate for one speaker, apart from the Taoiseach and somebody who will be responding to the debate for the Government, to deal with all the sections. I will not touch on the area of education — not because I do not think it is important; it is a vital area and one about which there is a tremendous commitment in the plan but I will leave it to a spokesperson from this side of the House and also from my party to deal with that matter. The question of CIE is one I would like to discuss in the greatest possible detail because I have an intrinsic dislike for the McKinsey report. I am not sure from the new structures envisaged what is required of CIE or the employees. I will leave it to the trade union movement that represents the employees in that public service, on which all of us to some degree or other depend so much, particularly in the city areas.
I will not deal with the area of forestry. There is a commitment in the plan to the replantation of our forests. There is a tremendous need for an addition to our forest plantations. There are facilities in this country to process all the timber that the State can produce and thus fill the export market. Forestry is of vital importance and some other speaker will deal with it. As a party we will be making an input, through a submission to Cabinet, on how we think the area of fishing and mariculture should develop.
Tourism is also a vital area but I will not go into it in detail. I share the views of Senator Lanigan on the extension of drinking hours for a particular reason. It is quite obvious to anybody involved in tourism that there is a need for this facility to be available. Tourists are used to it in their own country, and there is also a need for extensions in certain parts of the country at particular times of the year. The courts recognise this by giving extensions to certain areas for festival purposes. It is appropriate to have a plan designed for tourism. I would remind Senator Lanigan that it is unnecessary for a pub to remain open up to 2.a.m. There is no obligation on the owner to do so. If there is a need for an extension in a particular area the people concerned can make the necessary application. Unfortunately there is a liberal interpretation of the closing hours in many parts of the country and it is not confined to seaside resorts. It is appropriate, from a tourist point of view that we should put the record straight.
I will deal with a few specific areas of which I have some experience. I welcome the decision of the Government to have a more gradual approach to the reduction of the budget deficit. Desirable and all as it may be to achieve a greater reduction over the lifetime of the Government, to do so would have led to unacceptable effects on the level of employment and on the weaker sections of the community. The unemployed and the weaker sections, can expect a general and well-deserved improvement in their lot over the period of the plan.
In the area of social welfare expenditure, that will increase by approximately 25 per cent over the period of the plan and it will be one and a half times greater than public expenditure in any other area. All of us have a major responsibility to the weaker sections of our community, whether it be the elderly, the retired or those of pensionable age. I also welcome the introduction of the family income supplement. It is being made retrospective to August to take into consideration the removal, in part, of the food subsidies.
The new child benefit scheme is also outlined in the plan and this will be of major importance to the mother to whom the payment will be made and also to the people who will benefit most from it. These payments will be regarded as assessable for income tax. People in lower income brackets who receive the child benefit allowance should not assume immediately that they will be taxable but they will be taken into consideration for it. People on higher levels of income who get the money paid directly to the mother will pay tax on it. My interpretation is that the people who will benefit from the scheme will be those who are unemployed, social welfare recipients or those who are employed and who are in the 35 per cent tax band. Everybody above that will not benefit from the scheme. Nobody would expect the Government to hand out money ad lib to people who do not need it, especially when it may be required for other sections of the community.
I also welcome the announcement by the Minister for Health and Social Welfare of the double payment at Christmas. This will amount to £20.35 million which will benefit approximately 414,000 people. It is appropriate that it should be stated by the Government that that is their commitment, thus eliminating the anomaly that occurred in the past where the Government could have been seen to be responding to pressure from any particular section. This is a genuine commitment of the Government.
The fact that we are now after many years of waiting about to produce a document that will set down a national pay-related pension scheme for everybody will be one of the most welcome developments. It is part of Labour Party policy going back over a number of years. It is appropriate that people be afforded the facility of contributing to their own pension scheme while they are gainfully employed and that we will not have the fiasco where people at a certain age divest themselves legally of all their possessions and then qualify for a Government pension, never having contributed towards it. It is appropriate when a farm is passed on to young people that there should be recognition of that fact but it is common knowledge that it is now being done for the sole purpose of qualifying for the pension. That is a misuse of public funds. The sooner people pay towards their pension the better for everybody concerned. It is also appropriate that they should be protected if they make their contribution.
The family income supplement is being brought in to compensate people for the partial removal of food subsidies. I should like this Minister to monitor its effects not just on the lower paid worker but also on people on social welfare, particularly those people who are not presently in receipt of pay-related benefit in addition to social welfare. There are areas of hardship because of the removal of food subsidies which, of course, was a blunt instrument. We should make proper plans to ensure that there are no problems for people in the lower income group.
The £2 billion which is being made available by this Government in the social welfare area is an indication of their commitment and is also an indication of the magnitude of the problem and the level of dependency of the old and the unemployed on those who are working. We have a major social responsibility and an urgent need for tax equity. That is self-explanatory. If only a limited number of people are paying tax, there is only a limited amount of money to enable us to support those who are unable to support themselves. That is an urgent cause for tax equity.
Our health services are of vital importance costing, as they do, over £1 billion. As a member of a health board I would like to assure the Taoiseach and the Minister for Health that I am aware of my responsibilities. My first responsibility is to protect the level of the service provided for those in need and entitled to it, and to effect economies where possible. Over a number of years the South Eastern Health Board have managed to do this. We have tried to effect economies and have been successful in doing so in non-pay areas such as areas of energy costs and others, and we have managed to achieve this without a diminution in the service to the people.
We now have no option other than to look at other areas in this sector. We have not had job losses or redundancies in the health board areas, but because of the embargo we have not replaced retiring staff and we have had to deploy some members of staff to allow us to fill essential posts. We are now down to the real nitty gritty. Our primary concern is to ensure that there is an adequate delivery of the service. We now have to look at every area to ensure that that happens, and we have to ask everybody to make a sacrifice. We are down to the area of automatic locum. I read a contribution in the other House by a colleague of mine who is a member of a health board also. It was almost inferred in that contribution that we were asking for automatic suspension of all locums which we did not do.
The chief executive officer of the health board was asked specifically to look at areas that did not need automatic replacement by a locum but we accepted that where there was a need for a surgeon or a consultant of any faculty it would have to be met. The health board are not unmindful of this. We have not had a slashing cut in the health services and we have not put any lives at risk. We have not charged anybody for any services in the hospitals. We have problems in trying to meet our budget and we are continuing to do that.
In the whole lifetime of the plan over three years the Minister hopes to save £10 million per annum. If this is to be achieved in a uniform way throughout the health services, serious consideration must be given to equity in staffing levels in the various health board areas. I know from working on a health board that the South Eastern Health Board does not compare favourably with other health board areas. This anomaly should be rectified.
The staff embargo applied in a blanket way throughout the health board areas could have serious consequences on the level of health service any board can deliver. I am asking the Taoiseach and the Minister for Health to take into account the anomaly that has arisen because health boards in the late seventies in order to comply with a job creation programme, were almost asked to employ people whether they were required or not. Now we have hospitals in this city which have five times the level of consultancy cover other hospitals have. A few hospitals in the country need consultancy appointments and an embargo on them could be quite dangerous.
People have a major responsibility to make contributions to the health boards. In the south-east we are owed £5.496 million in non-paid health contributions, youth employment levies, and income levies. If there is a problem about financing health boards, I am asking those who benefit from the service, and need the service, and demand it, and are entitled to it under the 1976 Act, to face up to their responsibilities, even if they argue about the total bill that is due, they should at least make some contribution to the health boards to ensure that this vital part of the public service is maintained. That applies to quite a large number of people at the moment.
Like Senator Lanigan, I am a member of a local authority. This is a key area of local democracy and has proved in the past to be able to deliver a widespread service to many people at a significantly reduced cost in comparison to central Government. We are looking for a total reform of the local authority areas. The Taoiseach has committed us to holding local authority elections next year. I agree that it is appropriate that the local authority elections should be held as soon as possible, but it would be inappropriate to have local elections if the whole area of reform is not completed. When you have not sorted out the problems about the boundaries, or the functions of authorities, or the areas of structures, or any other function of the local authorities, to hold elections in a sort of a vacuum would be unwise.
I will keep an open mind on this until I see what level of progress is being made by the Minister for the Environment. I have had discussions with him. I have tried to find out what he has in mind. I know he has Cabinet constraints upon him and he is unable to divulge to me what his plans are. In local authorities the first area of reform must be finance. The plan recognises that, and makes local authorities responsible for the collection of the new farm tax. That new farm tax is a replacement for the PLV system which was found to be unconstitutional. The responsibility of the local authorities to collect this tax will be matched by their ability to provide the services. Each local authority will decide how and from whom to collect it and at budget time we can decide what level of service we can provide to each county.
Nowadays everybody makes a demand on the local authority service. Very few people want to pay for it in any way. We have the problem of trying to collect local authority charges. The row happened only because it has been extended to the urban authorities and to the corporations. For many years people living in country areas controlled by county councils have been paying these charges. There has not been a word about them. This goes to show what you can achieve if you can get enough people involved in something and making quite a lot of noise about it. The councillors have the right to make charges and to have schemes for people who are not already exempt. We are not worried about the people who are exempt. They have the power to have different sets of charges for different people, based on their ability to pay.
The county managers have the right.
The county managers have the right if the councillors fail to accept their statutory obligations. I agree with the Senator. Many councillors ran away from the problem and did not set up a proper scheme by resolution of the council and because they did not, that left the manager with the power to bring in a flat scheme in most areas, which is very beneficial from the management point of view. They now have a flat rate for everybody, irrespective of ability to pay. It is a matter for the councillors to take aboard the problem.
I would look upon the scheme of local authority charges as being a temporary one until such time as we have approached the problem of the restructuring of finances of local authorities. We will have other areas of reform taking place, particularly in the area of boundaries and the level of representation depending on the population. That is appropriate, because in Dublin and developing urban areas throughout the country people are under-represented by members of local authorities. Local authorities catering for a sparse population could be top heavy with councillors. We must look at this whole area.
I will just deal with finance again for the moment. An effort must be made to re-organise local authority and its finances. The sooner the day comes the better, when we stop demanding from central funds money which can only come from one source, either the PAYE worker or borrowing and we have problems in both areas. We have a major responsibility. I noticed Senator Lanigan smiling when I talked about the possibility of some local authorities losing membership.
Leave them alone.
Perhaps he had his mind on a future Seanad election where we would have to travel the highways and byways of every county to try to find one person for whom we could even consider voting. We must also look, in the area of local authority, at the question of capital investment that is projected in this plan. It is a tremendous injection. It has given a lot of confidence, not alone to existing roadworkers in the county council areas. In the past, we have had some problems of people working short weeks, half a week, a week on and a week off, all of which we found were more expensive than keeping people working full time. Our county tried to overcome the problem and, thankfully, had no redundancies.
The capital injection in the plan going up from £100 million to £125 million next year, to £140 million in 1986 and £155 million in 1987 represents an excess of ten per cent over the projections of the road development plan. The resultant increase in direct and indirect employment arising from that will be a major economic factor in all the areas involved and a new contribution will be made to the infrastructure of our regions which is so vitally important if we are to make any efforts to expand our industrial development programme. This new £5,000 non-repayable grant was confirmed by the Minister for the Environment last week which is the way to govern. You make a decision and you abide by it, and on 2 October this new plan comes into operation. I have had consultations with engineers over the last week in regard to the purchase of land to build local authority houses. Already there is a demand to be included in the scheme. Already people are trying to get out of the areas they are living in now. People who never were used to living in urban areas are confined to living there. The Government, through the Department of the Environment, had provided a house for them there and naturally they took it. However, people are happier at times to be living just out of the town or in the country and this new scheme of £5,000 plus £3,000 in the mortgage interest subsidy scheme plus the £1,000 new grant will make a major contribution in that area of moving people and assisting them to move. That special category loan of £20,000 with no income limits, is a major contribution to people in the local authority area to enable them to better themselves. There is nothing wrong with that philosophy. By so doing, we would release many badly needed houses for people who are on our housing lists all over the country, for many years living in caravans and unfit houses. If we can have a scheme that will release houses to these people, we will then be making a major contribution to shortening the housing lists, both in Dublin and throughout the country.
You give £20,000 and reduce the number of years for repayment from 20 to 18.
An Leas-Chathaoirleach
Senator Ferris, without interruption.
We also would like to think that the building industry would not avail of this opportunity to escalate the cost of houses. I hope that this £5,000 will be a maximum and, if not, that a proportion will be given towards the actual cost of the house. Otherwise, all the house prices will be inflated to take account of these schemes. That happened us in the past and this Government should have learned from the previous Government of the problems created in this area.
The building industry will benefit in its own right. It does not need this kind of movement of money from the Government to the building industry. There is enough in this plan, in roads and in other areas, to benefit what is, in fact, a major industry that will help a large number of the unemployed. I am pleased also that the councils will be involved in this new special, social employment scheme that is in the course of preparation by the Minister for Labour. I know his commitment to it. I know from my experience as a public representative that most people want to work. In spite of all who say otherwise, my experience is that everybody who has any commitment at all to his or her country wants to work. Any scheme towards eliminating the humilation of signing for the dole would be a major step forward in any social legislation. I welcome this new scheme particularly because I believe it will do that.
I am glad that local authorities are being chosen as the first employers to implement this scheme, but I have a word of caution for the Minister for Labour in the area of PRSI contributions that will be made on the payment of £70. The PRSI contributions must be arranged in such a way that workers in the scheme, those long term unemployed that opt for the scheme will qualify in the future for any credits that they might already be obtaining by signing on. We have a system at the moment under which people get a credit when they sign for employment and a similar credit must be given to people under this scheme. If we just use the rate, which is the level of contribution to protect people for workmen's compensation, for this kind of person that would be a disincentive to participation. The Minister should examine that particular aspect of the scheme. Apart from that, it is an extremely good scheme. I would hope for the day when it could be extended to other areas in the community. However, local authorities are the primary employer because so much work needs to be done at local authority level and this scheme could make a contribution towards it.
I would like, when we do extend the scheme, that it be extended into agriculture because the drop in the level of employment in agriculture is continuing at a startling rate. Each year we lose about 1,000 people who had been gainfully employed in agriculture. There is tremendous potential in agriculture, particularly in horticulture, and I am glad that this plan points to some of the areas that were outlined in the four year farm development plan, which was, first of all, requested by a previous Minister for Agriculture, Mr. Lenihan, and was presented to Mr. Deasy on 4 May of this year.
I am glad that the plan includes, many of the recommendations of the four year plan in agriculture which was produced, not by the Government but by all the sections in the agricultural world that could make a contribution to that most magnificent part of our economic development, the development of agriculture. It plays a very important role and it is only appropriate that the plan should take note of that. Our total agricultural exports amount to about £6 billion, which is about 30 per cent of our total exports. If the plan recognises that importance, as it does, this social employment section would possibly evolve into that area, particularly the area of horticulture.
Land drainage is mentioned in the plan. It is appropriate, particularly in the west that we proceed with the cost-effective development of the land drainage scheme, and I am glad that the plan outlines that. I am pleased also to see the doubling of the payment for beef cows and, of course, the new drive in tuberculosis eradication. We have made tremendous strides in disease eradication for brucellosis simply because the participants in the scheme can recognise immediately the losses they can be subjected to from brucellosis. They can see the aborted calf, the loss of milk, and their whole livelihood running away from them if the have not taken an active part in the brucellosis eradication scheme.
Unfortunately, the same cannot be said for the TB eradication scheme. As a member of the Animal Health Council who were set up to advise the Minister, I can say that there is a new awareness, certainly among members of the council, that something radical needs to be done in the area of TB eradication. It is not just a question of money, although money is of paramount importance for the success of this scheme. However, it is not a lack of money over the past 20 years that has caused this scheme to fail. There is now an awareness that in areas which cost no money the disease is spread laterally by uncleaned lorries, by the removal of reactors not directly to the factory but on an interim basis to a dealer's land or to commonage which it is not generally known who owns or what dealings have taken place among people who graze it, and by the illegal movement of animals between herds and out of herds to outside land adjacent to other clean herds. Statistics shown recently indicate that animals can escape the testing net for up to two years.
Considering the total input by the Government and the taxpayer into TB eradication and that all these things are still happening, albeit illegally, a major effort must be made to make farmers aware of their obligations in the protection of their own herds. The time is coming when farmers should not allow a lorry to enter their farms unless that lorry is cleaned properly and certified as being cleaned. I ask that all livestock marts ensure that the facilities to do that are in place. The ministerial order worded that a lorry would be cleaned "as soon as practicable" does not do justice to the problem of TB eradication. This scheme must succeed. If it does not succeed we will not have a livestock trade with Libya or any other part of the world. Unless we achieve a certain standard of disease eradication in our herds, eventually we will not have markets.
The motion to increase levies in regard to this will be unpopular. Farmers feel, rightly, that they have never made a gain on the TB scheme or any other disease eradication scheme. Every farmer in the country who must by law participate in this scheme has lost money. Therefore, maybe we should look at the levels of compensation. Certainly we should look at the levels of compensation under the depopulation fund. Proposals have been made to the Minister in this regard and I ask him to take cognisance of them. It is important that people would not be afraid to tell a veterinary surgeon that they have a reactor on their place. Most farmers are intelligent. They inspect their stock after they are injected on the first day. The veterinary surgeon is paid for the number of tags he writes down in the TB eradication report. I would like to see a greater tightening up of the manner in which the animals are subjected to reading on the reading day and the double check that takes place to ensure that all the animals are presented. People can sign documents to say that all the animals are presented, but if the level of compensation is not right, maybe because somebody could be put out of business, the reactors may not be disclosed on the day of the reading. If that happens and the animal gets a blue card updated, there could be a movement of animals between herds and to innocent purchasers. I would like to see a tightening up in this area.
Regarding the plan, I would like to tell Senator Lanigan and his colleagues who will be making a contribution on this section that this increased levy will apply for one year only. The farming bodies have had a number of discussions about the possibility of paying for a round of testing. This year, because of the amount of money available, we were unable to perform a complete round of testing. A complete round of testing is important. It is not the only thing that will eradicate disease, but it will identify disease. It will not identify the cause of the disease. We should spend a great deal more money on epidemiology and all areas of research to ensure that we know what causes the outbreaks.
This levy then will be the first to disappear, will it?
No, we promised that the 1 per cent income levy will disappear also.
And charges at——
It says specifically one year ——
An Leas-Chathaoirleach
Senator Ferris, I would ask you not to ask Senator Lanigan for contributions. He has made his contribution. Would you address the Chair, please?
Thank you, a Leas-Chathaoirleach. I will abide by your ruling. I enjoy the cut and thrust. Sure, you enjoy it yourself too.
An Leas-Chathaoirleach
Remember where you are.
Yes, a Leas-Chathaoirleach. It is a levy for one year but there was an option that farmers could pay for one round of testing and the Government would pay for another, with some reservations on behalf of the veterinary profession. I do not know why. They were assured of a continuing income in this area, and I was disappointed that agreement has not been reached now that the levies are doubled. It is perhaps of greater urgency that they look at this area of paying for a round, because one is paying for something. They have much more regard for the end result than to have everything handed down to them by the State, particularly in this area where their livelihoods are at stake. The farmers recognise that and they are anxious to make a contribution. I would prefer to see them doing it directly with their own veterinary surgeon than to have levies initiated which go into a pool and then come back out again. Admittedly, the amount collected in the levies is only a fraction of the increased expenditure in this scheme for the next three years. As a member of the animal health council I welcome that increased contribution to ensure that we come to grips with this horrible disease of TB in livestock in the eradication of which for many reasons we have made very little progress.
The plan contains a comment about the abolition of the Land Commission. Here I am critical, I hope constructively so. Up to quite recently the party I represent — I happen to be chairman of their agricultural committee — envisaged that possibly the Land Commission were under threat. Of course, they were right because the Government then announced suddenly the abolition of the Land Commission and the movement of all their staff into other areas such as adjusted acreage. That is a retrograde step unless — there is still time to make some redress in this — the Government address themselves to the problem of what agency we should have in place of the Land Commission. As a party we intend to make a submission to the Cabinet as to how the Land Commission should be replaced and what functions the new agency should have. One of their primary functions should be to acquire land which is under-utilised for one reason or another. We have never advocated that we take land forcibly from people who are using it properly, but there are people who do not want to use land correctly. It is appropriate that that land be made available to people who are prepared to work it. I envisage that this new agency would implement a system of land acquisition, distribution and transfer and would ensure priority access to farming and farm land for all small and medium farmers who have the competence or potential to manage viable units and reach acceptable living standards as is enshrined in the Common Agricultural Policy. It would also make land available to individuals who have received adequate training and experience in farming and who do not now own land and have no alternative source of income. I am talking about unemployed people in rural Ireland who, with assistance from a land agency, could have access to land and use the enterprise allowance scheme to make a contribution in the area of horticulture. I would like to see access to land for farm workers who are trained and experienced in farming and may wish to pursue a career in full time farming on a viable unit. I would like to see the agency having some power of deterrent to prevent utilisation or ownership of land by individuals who derive most of their income from nonfarming interests, such as the professions, and have no direct training or experience in farming. We had in the past, tax incentives for people to buy land although such people did not need it. When such people are in the land purchasing market it makes it more difficult for people who would like to get into farming and could usefully do so, to get more involved.
I would like the new agency to develop a strong central authority to implement the policy objectives particularly in the area of land acquisition and transfer. Our party will be making submissions to the Cabinet on these topics because we feel agriculture is important. Land usage is important and we should not throw our available land open to the markets of the world and the cheque book people outside the Community when people here could usefully participate in working the land.
On the question of farmer taxation, I note there has been some problem about the land tax. Generally speaking, the farming community welcomed it because it allows them a certain initiative without being penalised. They have not been used to keeping accounts in the past and they are reputed to have spent in the region of £40 million trying to prove whether or not they were entitled to pay tax. That is probably an inflated figure.
The farmer who can afford to pay accountants can afford to pay a lot more tax.
Exactly. One thing about this tax is that it envisages double take of tax from the farming community. I will ignore the interruption from my left. It is difficult to be Left of me but Senator Ryan would like to think he can match that. Under the scheme which came into operation on 5 April 1984 we brought every farmer into the tax net. They were obliged to give a profile of themselves, their names and addresses particularly, the level of farming enterprise they had and the number of livestock units. Out of the 90,000 farmers eligible the Revenue Commissioners managed to get out over 20,000 of which 13,000 made returns. About 37 per cent of the 13,000 were not liable for tax. I assisted some of them, for no fee, to complete the profile and I was delighted to learn later that they were exempt from further recognition by the Revenue Commissioners for three years. About 63 per cent of the people who returned a profile were liable for taxation.
The new scheme eliminates some of that. It talks about adjusted acres. I hope the people who will be working on this will take into account what an adjusted acre is. For a farmer with 80 adjusted acres — on the calculation we have that amounts to about 120 acres—who has a big input in dairying I would be worrying what his income might be. It must be an incentive to feel that up to that all one pays is £10 per adjusted acre to the local authority and there is no other obligation to the Exchequer. There should be an obligation for that section, and all sections, to make their health contributions, pay the youth employment levy and so on, because it is appropriate that if we are to have equity everybody will be seen to have made his fair contribution. The trade union movement are not too happy about this basis of tax equity. However, reading the wording of the document on farmer taxation I note that it allows a certain element of take which everybody feels the agricultural sector should be making. We should adopt a wait and see approach and see what the income from the old system over the next two years will be and then assess what the take from the new tax should be. That is the appropriate way to move forward.
The trade unions have made the point forcibly that this plan depends to a very large extent on the private sector. I hope they meet their responsibilities because their performance in the past has been disappointing. I accept, as a socialist, that in a mixed economy it is important that all sides should play their part in creating jobs and not just making profit. I hope the responsibility we are placing on the private sector by way of incentive and so on will be matched by performance. The figures outlined for job creation in the private sector, whether in manufacturing or service industries, are outlined in the plan in detail.
I should like to refer to the role of the trade unions in the success of this plan. The Taoiseach in his contribution outlined the importance for the success of the plan on the support of all sections, particularly from the trade unions. The trade unions represent the vast majority of people in every walk of life. As a member of a trade union I have a long loyalty to the trade union movement and I will defend their right to represent the interests of their members when there is not a national pay agreement. The interest of members can only be protected through negotiation, conciliation and arbitration. I have no doubt that the trade union movement will play their role in this vital part of the plan. In the private sector, in particular, the trade unions have over the last year or so, when we did not have a national pay agreement, negotiated on an individual industry basis, whether they were co-operatives, the building industry or the tourist industry and managed to achieve wage agreements by discussion and negotiation.
This brings me to the thorny section in the plan which deals with the trade union movement and the public sector. The plan states that there will be a specific cash limit for the three years of the plan. Do I take it that there will be a limited amount of money budgeted each year and that unless there are increases in borrowings or increases in taxation, or an additional budget the trade unions will be forced to negotiate within the constraints mentioned in the plan for only a specific amount of money that is available to share out? The trade union movement will be asking us, and considering themselves, how they will meet that on the basis of equity, especially when it is applied to the public sector. In the past, most increases in the public sector, apart from special awards, were given on a percentage basis. It is easy to know the greatest beneficiaries from such increases. I ask the public sector, and the trade union movement, to look at the incomes of the elderly as a guideline as to where they should be moving in this area. I might refer also to the State Directory of the Public Service, published in 1984 showing their levels of pay. We see there levels of pay ranging from about £5,000 to £37,442 annually at the top.
One does not need to be a mathematician to work out the anomaly that would be demonstrated if one applied a percentage increase to any of those figures. I hope the trade unions, in their wisdom, will ensure that the greatest need in this area is met equitably. In the past the same trade unions accepted postponement of an award which had been negotiated, in good faith, between themselves and a previous Coalition Government. There was a sum included in the budget of that year to cover the public service pay award. Such award was capable of tolerance at that time but a previous Government arbitrarily postponed it.
I know that the trade union movement will not be incapable now of showing similar tolerance and understanding in the knowledge that at least this Government have placed all their cards on the table. We know that if increases are to be sought over and above those advocated in the plan they will warrant additional budgeting, borrowing or taxation of the already overtaxed sections. Unless there is absolute tax equity, or a spread of the tax intake then any increases in public service pay can come from those sections only.
I agree with the trade union movement thinking that there should be a broadening of the tax net, with a larger capital tax intake thereby lightening the burden on those in the PAYE sector.
In my opening remarks I said we should all be capable of a critical analysis of ourselves. I hope that this plan will prove to be the basis on which we can begin to build on reality.
I have listened with interest to a number of speeches in both Houses on the national economic plan. Probably the singularly most important omission seems to be an almost fatalistic acceptance of the inevitability of high levels of unemployment. There is, of course, the almost ritual obeisance to the problem of unemployment. But how many of the long speeches in this House will be devoted to any great degree to that problem? The particular tragedy is that the only sources of advice heard or listened to by Irish society today on this problem are those represented by the voices of the right who have hypnotised this country into believing that there is a right-wing magic formula based on low wages, reduced public expenditure, decimation of trade union rights, the paring of the welfare system and the introduction of privatisation in numbers of areas. We have been led to believe — if not hypnotised into almost total acceptance — that this is an infallible route to full employment. The truth is that, with the possible exception of the late seventies and in recent times in the United States — and there are very good arguments to be made that this is quite an exceptional economy for many reasons — those policies, which have been tried either explicitly or implicitly until the late thirties by most Governments managing economies, failed miserably in all of the major objectives of any national economic plan. What we are now seeing from the right is what we always get from the right — an attempt to go backwards, to revert to old ideas. Traditionally new thinking, innovation and ideas in political economy and political thinking have always come from the left.
Therefore one would have hoped, in an economic plan that is the combined wisdom of two parties who claim to be either social democratic or socialist — and where the socialists or social democrats lie within the two parties is a matter of political opinion rather than of fact — that irrespective of the political views of a given party, or those of any party in this or the other House, there would be three basic objectives: the first would be the fundamental requirment to restart, and expand economic growth. Beyond perhaps some elements of the Green Movement in Western Europe there is no political party which does not accept the need for renewed economic growth as the prerequisite for dealing with the problem of unemployment; the second area in which any economic plan should demonstrate fundamental strategy is in addressing itself to the questions of unemployment and the creation of jobs. It is worth noting this repeatedly. Certainly it is a consensus among politicians because we in this and the other House deal on a day-to-day or weekly basis, through our clinics with the victims of unemployment. It is absolutely necessary for us to state repeatedly that the basic purpose of economic growth is to create jobs. But let it be said that most of those from whom the economic advice is emanating — and which is being accepted by the media, by the Government and all the major political parties — will immediately dismiss any suggestion as to from where such jobs will come. Newspaper reports of the meeting of the Dublin, Economic Workshop in Kenmare some week-ends ago suggested that the director of the ESRI ask that question: where will the jobs come from? One of our most eminent economists quite obviously shrugged his shoulders and said: we do not know, we must leave that to market forces.
That is the bottom line of the economic advice which has created the sort of hypnotic consensus about which I am talking, that we really do not know from where the jobs will come. They do know that the present system does not work; they know where they want to go to, but sadly, at the end of it all, they will say that that is the end of their role as economists — to tell us how to get out of this mess, that the jobs are a matter for market forces. That has been repeated consistently by this array of right-wing academic economists who seem to have virtually taken over the Irish media. I shall return to that later.
The third strategy of economic planning — the one on which there is less likely to be agreement and quite definitely the one on which there is likely to be very widespread disagreement — is the achievement of social justice. In fairness to it this plan does address those three issues—the issue of restarting growth, of creating employment and of developing social justice.
In the light of some of the, shall we say, slightly negative comments I will make later I would like to commend the report. If it does no more, at least it incorporates the basic definitions and structures of social policy. In saying that I do not mean the strategies, outlines and final plans but the basic concept of social policy. That is done apparently with approval, since there is included here without comment, remarks of the NESC Report No. 61 to the effect that the values which underpin all social policy should include societal acceptance of the dignity and right to personal development of the individual, the value of bonds of mutual obligation within society, the importance of fair shares within the community and the securing of basic rights within a democratic framework.
I would respectfully suggest to the army of right-wing economists of the free market variety most of whom, I would respectfully suggest as being of one shade or other of blue that those particular social policy values are irreconcilable with the sort of economic structures they would foist upon us. NESC Report No. 61 suggested a number of aims for Irish social policy, and they are incorporated in the plan, paragraph 5.4 of which states:
The Government are also concerned with the wider question of social justice, of appropriate legal provision, of institutional reform and the development of public education and information and, more important, action aimed at grappling with the structural and other causes of poverty and inequality in our society.
This is not the first time that this Government, or spokespersons for them, have taken and used such fine rhetorical language about social justice. The trouble is that that fine statement of policy is, to say the least, inadequately reflected in the Government plan, and to say the most is almost entirely ignored in the plan.
For instance, if we are to have social justice there must be fundamental commitment to the redistribution and the transfer of income from those who have to those who have not. Yet in many areas of taxation, which is one of the more fundamental but not the only instrument of income redistribution, it appears to me there has been capitulation to various powerful vested interests. There is a suggestion that Irish public opinion will not tolerate higher levels of taxation.
Let us be very careful and clear about this. The reason there has been such a violent reaction to levels of taxation in our society is because of the effectiveness of certain lobbies in preventing Governments from introducing measures that would ensure equity in the taxation system. When trade union demonstrations about tax equity began they did not appear out of thin air. They appeared when the Government at the time backed down on a number of efforts to increase taxation yields from farmers. It was that which provoked the outrage of PAYE people. It was not the basic question of taxation itself but the obvious and visible capacity of one major lobby to force a Government to change their mind at a time when other people were carrying more than their fair share.
It is extraordinary there should be so much hand wringing about the enormous expense farmers have to incur in order to draw up their accounts, when every individual going to work in a factory or office also has to pay taxation but without being able to use an accountant with the same degree of expertise as many of those poor unfortunate farmers. As I said earlier in a disorderly fashion, if the farming population could afford to pay £40 million to pay accountants to avoid paying tax I would regard that as a fairly good indicator that it is well within their capability to pay a substantial and considerably greater level of tax than that currently being paid by them.
I will not get involved in long arguments about land tax and its merits or demerits — I see mostly merit in a real land tax — but to suggest a total yield of £80 million from a section which produces about one-third of our total exports is to be offensive to the rest of our society. I did a quick sum and I reckoned that £80 million is about the revenue the Government would get from putting an extra 20p on the price of a pint of beer. Therefore, the total direct contribution from farming taxation is about the equivalent of an extra 20p on the pint. That is the real contribution.
Two different measuring sticks are being used. On the one hand, PAYE taxpayers have to carry an enormous burden because of inequity, and on the other hand what is being sought from other groups is only a fair level of taxation. Basically, we have two approaches, the approach to those who are burdened with what is admitted to be an unfair but apparently necessary level of taxation and the approach to those of whom it is expected that they should pay only a fair level of tax. Incidentally, £80 million is far less in real terms than the farming community would have paid in one form or another, including rates, ten years ago, not withstanding the enormous increase in farming prosperity in the last ten or 12 years.
I think that the whole capitulation on capital taxation should be commented on. In the thirties, when we were an impoverished country in the middle of an economic war, capital taxation could contribute between 1 per cent and 3 per cent of total Government revenue. Nowadays it achieves about one-tenth of that, and to suggest somehow that there is less capital available to justify capital taxation than there was 50 years ago when this was an impoverished country is to mislead the community. The difference is that the political will is now lacking.
It is funny that when everyone else is being asked to make sacrifices, when political promises are being broken left, right and centre, one thing that is sacrosanct is the 10 per cent of zero rate that manufacturing industry is allowed to luxuriate in. That, of course, is because we are hypnotised by the threat of a massive multi-national withdrawal and the consequences for employment here. It is about time we began to call some of that bluff — a large part of it is only bluff. We have the lowest industrial wage rates in Western Europe. In multinational industry we have high levels of worker productivity, as high virtually as anywhere else in Europe. It is not in the new manufacturing industries that there is a problem with productivity in Ireland. It is in old Irish industry and in agriculture that our productivity is weighed down. Therefore, there is a good case to be made that the £1,400 million profits generated by export-orientated manufacturing industry last year should be subjected to a level of taxation. A 10 per cent level would yield £140 million, a 20 per cent level nearly £300 million. That amount removed from the burden of PAYE taxpayers would relieve their problem considerably. Probably I will be accused of being unpatriotic for suggesting that because I may frighten away the multinationals. It is an extraordinary reflection on ourselves that before all else we must worry about those mysterious and extraordinary multinational corporations. Regrettably, powerful vested interests, apparently uncontrollable in our society, have deterred the Government, as they would have deterred a Fianna Fáil Government, from realistic taxation.
There is also less than total frankness about public expenditure. It amounts to deception in some cases and at the very worst there is almost a conspiracy to deceive the community. I will give a couple of examples. In the plan there is the commitment at paragraph 7.60:
the Government have made provision in the Plan for an increase of 28 per cent by 1987 on the expected 1984 outturn for Social Welfare.
That issue was highlighted in a summary of the plan and in the media reports of the plan when initially published. This 28 per cent was regarded as a major victory for social justice. I went through table 7—1 on page 136 and I discovered that on the basis of the budget provision for social welfare for 1984 the actual increase in expenditure for 1987 will not be 28 per cent. It will be 23 per cent. That means that somehow £50 million will have disappeared over three years out of the pockets of the less well off and the most impoverished in our society. It was confirmed for me by the Department of Social Welfare that they expect to spend less in 1984 than was provided for in the budget. Therefore, what they were talking about was not an increase over the 1984 estimate but an increase over 1984 expenditure. The Government are saving this year on social welfare in order to give the impression that in later years they will be very generous to social welfare recipients. That £50 million is being used to pay the double week at Christmas for all those except the army of the undeserving — the unemployed — who never get a double week, apparently because they do not deserve it. It has been standard practice for successive Governments of all political complexions not to give a double week's money at Christmas to the unemployed.
The real increase in social welfare over the next three years will be 23 per cent. That item was highlighted and an inflated value given to it, 28 per cent, when it turned out to be 23 per cent. It is very handy to be numerate because one can check up on these things.
The second area in which there is something quite sinister is expenditure on Justice. In this area we are given a number of commitments. One is that there will be no increase in the number of gardaí employed over the period of the plan. The second is the severe restraint, amounting almost to a wage freeze, in public sector pay. If one looks at the increase in expenditure on Justice it works out at the second highest in the entire range of Estimates — at 28 per cent over three years, or £80 million. It is a 28 per cent increase on expenditure in a Department where there will be no increase in staffing and no increase in wages. This is not capital expenditure: it is current expenditure. It is not stated anywhere but it appears notwithstanding public sector embargoes etc. about 1,000 extra prison officers will be recruited over the next three years. This was never boasted about. We never heard anything about this in all the statements about the plan. Of course, it is a necessary followon to that obnoxious legislation which we unfortunately passed a few years ago. It suggests a certain dishonesty that that vast increase in one Department passes through without as much as a comment. Perhaps some people working in the media noticed it but in all the talk about levels of expenditure this extraordinary increase in expenditure in the Department of Justice went without being noticed.
Then we have the sort of games that are played with us in the area of housing. There are admittedly four references to the homeless throughout the plan. It is to be welcomed that this category of need has been recognised. There are within this document statements of policy about housing policy which are so fundamentally contradictory as to raise questions about the real objectives of the Government in this area. I will just give a basic example. At paragraph 5.76 there is a welcome proposal to make a grant of £5,000 available to local authority tenants purchasing or buying a private house. It is a good idea although I hope the building industry will not cash in on it. But how do I reconcile that with paragraph 5.86 which talks about the average weekly rent in local authority houses being too low and attempt to persuade the better off among local authority tenants to move out of local authority houses — an objective I agree with and support? It states that: "many are paying rents that are too low in relation to their incomes". That section of local authority tenants who presumably have the highest incomes are about to be moved out of local authority houses and it is proposed, after they are gone, to raise the level of rent substantially "to a level more in line with the actual cost of local authority housing".
What is the point in providing local authority housing for people who cannot afford to pay for it if they are to be charged rents "which are more in line with the actual cost of local authority housing" and when we will syphon off from the top of the local authority tenant structure those who can most afford to pay those rents? Somebody is kidding somebody. Either those who are badly off, unemployed or on very low incomes will be shafted for enormous increases in rents or else this statement is untrue.
I suspect that what is intended is a dramatic increase in rents for those left in local authority houses, who will because of the £5,000 grant be the people who can least afford to pay increased rents. I can see a quite ridiculous situation developing where local authority tenants on very limited incomes will pay more of their income on rent than, for instance, people who buy houses from the Housing Finance Agency and pay a fixed proportion of their income on rent.
The average rent in 1983 was about £7 — for new houses the rent was £10 weekly. People had to pay £7 rent for obnoxious housing in both of our major cities which is classified as local authority housing. For somebody with a wife and two children in a unit of local authority housing, who is getting about £70 a week on the dole, as it stands now he is paying about 14 per cent of his income on rent. It is suggested that person can afford to pay more? If so, how much more? I see a quite deliberate decision to reduce effectively the living standards of people at the bottom of society.
Senator Ferris quite rightly mentioned one of the facts of life about public sector pay which is such a central part of this strategy. There are huge variations in public sector pay. There are 20,000 or 30,000 teachers in the public service. Their salaries would be well above the public sector average of £11,000. There are obviously large numbers of people far below that £11,000 average. It is quite unjust and socially retrogressive to suggest that a wage freeze which I, for example, could probably sustain without any great damage to my lifestyle or family circumstances, could be sustained by somebody working as a messenger in a Government Department or as a street cleaner or doing very basic manual jobs in the public sector for £100, £150 or £180 a week. It is quite unjust to impose the same wage freeze on those people. There is a significant spin-off from that freeze which people have chosen to ignore. There are thousands of public service pensioners who will, over the next three years, get increases in their pensions far below the increase in the cost of living and far below that of social welfare recipients. Their pensions are not tied to the cost of living, as much employer and Government propaganda suggests, but to public service wage levels. If public service wage levels are frozen for three years, public service pensions are frozen for three years. It will be a substantial saving to the Government but it will be a saving at the expense of the elderly and infirm who are public service pensioners. It is unworthy of a Government which claims to be committed to social justice. They could at least make a distinction for public service pensioners.
Even if we have to accept the model of an economy based on the outlines contained in this plan, there is so much that could be done in the area of legislation which would cost little or nothing. For instance, there is the whole question of children's legislation. It is astonishing and hurtful that a Government who lay claim to social justice and social commitment can, in paragraph 5.44, dismiss the reform of juvenile justice in the following trite statement:
The Government are also committed to bringing forward revised measures in regard to juvenile justice. This will be the subject of a third Bill which is under examination at present.
This is more than ten years after the task force was instituted. It is two or three years since the task force reported and at least two years since Deputy Michael Woods announced that a Children Bill was almost ready for publication, incorporating this and other areas. After all that time, a reforming Government can say no more than that they are committed to bringing forward revised measures to deal with juvenile justice, this in the light of the indecent haste with which the Criminal Justice Bill was rushed through. It may have seemed slow to many people but I still believe that it was indecently rushed through and indecently defended against the attempts of many of us to protect our children from it and yet we have no sense of similar urgency in terms of protecting our children from the ravages of the 1908 Act. There is nothing either in this plan for social progress on the humiliations of the unemployed. I will quote from a document that should be read by all of us in public life, that is the Economic and Social Research Institute's report Employment and Unemployment Policy for Ireland. On page 319 it is stated:
Even if the social dangers inherent in having unemployment concentrated by age and district can be averted, there is, however, a more general social problem to be faced. Apart from having to contend with the low income, which seems inescapable, most unemployed also have to suffer from reduced esteem, including in many cases their own. This is not only unfair, in that the unemployed individuals are not themselves responsible for the high level of total unemployment, but socially damaging, as the fall in status can put strains on family, social and community relationships. The principal counter to this problem lies in a relaxation of the strongly negative attitude that is often prevalent with regard to the unemployed. Those in a position to be heard should repeat consistently that to be unemployed is a misfortune, not a personal failing, and they should be quick to counter ignorant assertions that it is only their own laziness or the generosity of the welfare benefits which prevents the jobless from obtaining work.
A manifestation of the low regard for the unemployed lies in the nature of their transactions with the State bureaucracy, either in seeking jobs or in drawing their benefits or assistance. To permit greater dignity to these transactions would cost money, both for increasing staff numbers and for improving the physical environment of the relevant offices. Even in a period of financial stringency, a strong case could be made for such money to be spent, as a public and visible recognition that the victims of prolonged imperfections in economic management are deserving of normal human respect.
For relatively small expenditure that could have been done and it could have been contained in this report. It is not there and in fact what is there is a suggestion that unemployment benefit and unemployment assistance should be linked to wage levels, effectively accepting the argument that to do otherwise would increase the disincentive to work as if there was a close correlation or a close relationship with the unemployment rates and wage rates. In fact they are substantially less. The average payment of unemployment benefit or assistance is £50 per week per beneficiary which is a long way off even the lowest levels of wages and in fact I would respectfully suggest that this linking of unemployment assistance to wage rates is a Government attempt to lower wages in yet another way in Irish society.
There is nothing in this document about social welfare appeals. Probably the most galling and the most offensive procedure anyone on social welfare has to go through is the antiquarian and indeed socially degrading structure of the present social welfare appeals system. There is no mention either of the quite appalling supplementary welfare system with its extraordinary vagaries and unevenness of interpretation, all of which bear heaviest on those least able to bear it.
Last week, all of our major political parties displayed their extraordinary timidity in the area of social reform in the way in which in the Dáil they talked around the question of vagrancy for a number of hours conjuring up visions of armies of homeless descending on Grafton Street, intimidating tourists, begging and frightening people. The Deputies decided not to deal with the question but to wait for the Law Reform Commission to report. Only then will they decide whether people should be sent to prison for begging and, secondly, whether it should be a crime to be wandering abroad without visible means of support, again the only penalty for which is a prison sentence. The entire political establishment in Dáil Éireann, including the Minister for Justice, ran away from those two questions for reasons that escape me. The Minister said he, too, would prefer to wait for the Law Reform Commission's report. If we are to wait for the Law Reform Commission's report on that issue then the whole question of legislative-based social reform is not a political reality, it is just a useful piece of rhetoric on the occasions of ard fheiseanna and so on.
Many people of the left are not prepared to face up to what is the fundamental question, the question of jobs. I am not talking of jobs that are suddenly plucked out of a hat without questions as to how they are to be financed. There is no doubt but that the creation of wealth through the manufacturing and productive process is a fundamental prerequisite for any real dealing with the question of job creation. It is extraordinary that all through this report in a strategy which admittedly is well intentioned to create this wealth there is such a glorious contradiction between, on the one hand, the request for patriotism, the request for commitment to society — the Taoiseach made reference to this here today in expressing the hope that public servants would respond to the need for pay restraints — and on the other hand the quite unashamed assertion that we must create what is called the climate for enterprise so that those with ideas and wealth will invest their money. Apparently it would be naive of me to suggest that the same requests for patriotism, the same request for social concern, the same request for concern for other people, would be directed towards those who take decisions about investments, those who take decisions about enterprise, as are being consistently directed towards those whose livelihoods depend on fairly low levels of pay. That is the glorious contridiction that runs through the strategy of both Fianna Fáil and the Coalition on the question of wealth creation. They are apparently incapable of believing that those who control wealth and capital will operate on any basis other than their own greed and selfishness but that those of us who earn a wage, whether manually or otherwise, can be persuaded to accept that sort of patriotic self restraint while others are not only escaping the restraint but are being offered increased incentives.
There is so much talk about incentives, about taxation structures and about all of that in the area of industrial development, but industrial development does not come from strategies of investment or from strategies of incentive or from anything like that. Industrial development comes fundamentally from an idea. It comes from people with ideas for new products and it is an area in which this country has failed quite gloriously in the past 20 years of reasonable industrial development, in other words, the area of indigenous new products based on ideas developed in this country. Ideas are the basic prerequisite for indigenous manufacturing industry, not incentives, not taxation structures and not even marketing. I suggest that the source of ideas has been and always will be young people. I do not believe it is possible for old men in their fifties and sixties to generate ideas on the scale and with the imagination that our young people can do it. The example of the United States where the whole micro-chip revolution is by and large a young persons' phenomenon is a good example to look at.
I would suggest, as a contribution towards the development of ideas, that since virtually every area of third level education is now financed to a greater or lesser extent by the State — about 80 per cent in the case of the universities and 100 per cent in the case of the remaining sectors — every single economic and economically related third level course, engineering, architecture, economics, commerce and all those areas, should contain a module on new product development. Everybody who graduates in engineering, in science or in any of those areas should be expected as part of their final year programme to produce an idea for a new product. State funding should not be available to any course which did not accept that because what this country needs, more than it needs capital investment, more than it needs jobs, is ideas. It needs ideas incidentally in many areas apart from the economic area. Even if we get the levels of economic growth — I would hope we would get beyond the pessimistic 2 per cent or 2½ per cent that the plan suggests — nobody, and I least of all, is persuaded that that will generate the sort of levels of employment which can solve our economic and unemployment problems.
Therefore, it is worth while referring again to the report of the Economic and Social Research Institute which clearly and in some detail proposes a strategy whereby they recognise that economic growth is the basic prerequisite for dealing with the problem of unemployment. They then go on, in the flight of what I described earlier as the hypnotised consensus, to suggest that part of and indeed fundamental to the strategy for dealing with the unemployment crisis, must not just be the stabilisation of employment in the public sector but an expansion of employment in the public sector.
The report produces a substantial amount of evidence from other OECD countries to suggest that it was the case in every OECD country in the period of low unemployment and of virtual full employment, that public sector employment increased more rapidly than private sector employment. Let us get away from this image of the public sector around the neck of the magnificent entrepreneur. In all those countries, with the exception of the United States, where public sector employment by and large increased more rapidly than private sector employment, overall economic growth rate was higher than in the United States and considerably higher than it was here.
There is no basic conflict between high levels of public sector employment and high levels of economic growth. That is an ideological issue. It is not in any way a basic law of economics. It is a position taken by people with a particular ideological perspective. It is not true or objectively sustainable. There are circumstances in which it might be true and circumstances in which it might not be true. The Economic and Social Research Institute proposals in this area fly in the face of the new right and the new media economist and represent a real strategy for jobs as distinct from a strategy for the creation of wealth without any concept of what to do with it.
If we are to do more than make ourselves the agents of an economy and instead make the economy the servant of ourselves, then we should begin to think in terms of the public sector as a major area of job creation, fuelled of course, by wealth creation both within the public and the private sectors. Let it be said again that there is an increasing ideological hostility to the whole area of public enterprise based on a mixture of, in some cases, the errors made by some public sector companies, and also on a quite deliberate distortion of the achievements of many companies in the public sector who are burdened by Government policies which give them large social functions.
For instance the ESB, for social reasons, are forced to keep turf burning stations open, although they are the least economical. I agree with that decision, but it is unjust, unfair and quite demoralising to those who work in what is a relatively efficient industry to say then it is their fault that they are not making money on the scale required. That sort of political interference in commercial decisions by State-sponsored bodies highlights the need for a body such as a national development agency to act as a protective layer between the obsessive interference of politicians in many of the commercial operations of semi-State companies and those bodies.
I admire the Taoiseach enormously — I will never forget him saying at a conference in Kilkenny that in order to deal with the problem of poverty we need to subvert the established economic order. To have the Taoiseach use the word "subvert" was, for me, an enlightening experience and I still think it is true. The present economic order and the concept of social justice are fundamentally irreconcilable. The Taoiseach said it and I, like other people present, did not think that he was going to produce a social revolution, but it reflected his commitment to social justice. It is a tragedy, therefore, that this report does not reflect that as much as it reflects the current fashion of the right wing pariahs of economics who have a quite clear economic ideological conviction to a particular viewpoint which is not based on any sort of human need concept of economics but on a model which suggests that we are all little economic functionaries who will respond to material incentives in a particular way and suggests that the best way to deal with us is to make us work a little harder by taking a little more away from us. It is based on quite clear, vested interests which have suffered as social democracy has developed in this country in the last 20 years and who now want to take back the little that was taken from us. Incidentally, most of those right wing economists have one thing in common, they are all in secure employment, probably more secure and vastly better paid than anybody in the public sector that they so loudly deride. They have been feeding a very compliant media and apparently have been winning the argument with the Government because it is quite extraordinary that a strategy for employment produced by the State's own Economic and Social Research Institute, written by the entire staff of that institute, could be so easily repudiated in a Government strategy.
The Government strategy contains one of the basic underpinning elements of the ESRI strategy which is a substantial reduction in the relative levels of public sector pay, not in the numbers but in the pay levels. They have failed to build in that strategy an expansion of the public sector and the numbers who can be employed within the public sector. Ultimately it comes down to what is and is not politically acceptable. This is where the Government and indeed Fianna Fáil have failed miserably. It is on the levels of taxation which are politically acceptable and the way that burden is distributed throughout the community — because it is from taxation that both public sector employment which is a necessary part of dealing with the unemployment crisis can be funded — and also from which transfers can be made to those in greatest need. The levels of acceptable taxation are political questions. The fact that the economic consensus now states that taxation levels are too high is a basic obstacle to dealing with the problem of social justice.
I dispute the possibility of full employment ever being possible in a low taxation economy. The United States have never got much below 6 per cent unemployment, even at the height of their boom period and that was an exceptionally high performing economy. It also left enormous gaps in poverty, health and in housing, within that high level of growth. Therefore, I respectfully suggest that that particular model is of no significance. We should look to our Western European partners who have built full employment on the basis of high levels of public sector employment and high levels of taxation. That is the way forward. It is not popular, it is not fashionable, but it might perhaps be better than the blind ideology which seems to motivate many of those who stand, not so much on the right as in the limelight in Irish economic thinking today. It is regrettable that we will have to go through painful social traumas before these ideologies are demonstrated for what they are — far more ideologically committed, far more rigid in their thinking than many of us who are accused of standing firmly on the left.
I regret that at the basis of all this is an unwillingness on the part of Government and Opposition to tell the public that you cannot have decent education for your children without high levels of taxation, you cannot have security in the area of defence and the Garda without high levels of taxation, you cannot have the health services without high levels of taxation. If that was the argument that was put to people it would be relatively easy to get high levels of taxation accepted. We are getting instead a sniping at the entire fabric of social services, not based on any evidence of waste in any substantial quantities, not based on widespread abuse but on an ideological demand to reduce public expenditure per se. That, deep down under all the gloss and trimmings, is the regrettable conclusion of this report.
In conclusion, I commend to the Government something simple, taken from the New Internationalist of July 1982, on how to change your life. It is a cartoon and, since we do not have audio-visual aids here I cannot display it to the House and it will not be contained in the Official Report. It starts off by saying “Begin where you are”, so let us have less of this talk from the Government about what we would do if things were other than the way they are this minute. Those of us who are working for change in society in one form or another have no such luxury and neither have Governments. You start where you are and you work from there.
The second thing is to learn how the other half lives and that includes understanding that within the public sector there are not just the people on £15,000 a year but people on £80 and £90 per week and when you categorise the public service in terms of job security do not forget that there are road workers and street sweepers whose jobs are anything but secure.
The third thing is to be self-critical, something that politicians by and large as a profession are singularly poor at but which would be a useful attribute for all of us in politics and particularly for Government.
The fourth point is "Do not burn yourself out" but that will not be a problem with any Irish politician so I need not pursue it much further.
The fifth point, and the most difficult one in Ireland as it stands, is to believe in change, to believe that it is possible to do something about it. I am convinced that the number of Members of the Oireachtas, between Dáil and Seanad, who actually believe any more that anything like full employment is possible would be countable on one hand. People are now talking about getting unemployment down to 100,000 where ten years ago the agreed national aim was zero unemployment.
The final and most useful reminder from that little piece of information is "Ask a big enough question". The question we should ask again is not whether it is possible to reduce unemployment, not whether it is possible to get it down to 150,000 or 175,000, but whether it is possible to eliminate unemployment. If it is not possible, we should tell our people so because then they might be prepared, and I suspect they would be prepared, to look at alternative economic systems which would be able to do that.
I would like to be associated with those words of welcome to the Taoiseach and also the Minister of State, Deputy O'Brien, who is to be with us for this debate. This economic and social plan, Building on Reality, is a very welcome document. It is something that was urgently required at this point to deal with an extremely unsettled situation in the Irish economic scene.
I strongly welcome the plan as presented. It contains a very high element of long term positive strategy. In spite of what might have been said already or alluded to or inferred by innuendo, I am quite satisfied that there is absolute and positive long term strategy in the plan and this is something that has been awaited for quite some time by people wishing to invest, wishing to know where they were moving and so on.
The plan largely gives a long term programme. It does, to a degree, eliminate the uncertainty and lack of expectancy that there would otherwise be with regard to budgets on an annual basis. It gives us a pretty certain solid foundation for a period of three years. It is important that confusion and uncertainty be cast aside, in so far as it can be done, because confidence is the most important incentive that we can present to anybody to move forward in this or any economy.
I would like to emphasise — and people miss this point very often — that in an economic programme or an economic and social plan the contribution of the Government is to create circumstances and the environment to make it possible for jobs to be generated by those with enterprise and a progressive attitude. This is something that people often forget. Governments are expected to do this, that and the other. There is a limit to what the Government can do but they can positively help in this area of creating the correct and proper environment. I am satisfied with the emphasis being laid in this plan on the whole concept of inflation and interest rates being brought to the lowest level during the three year period. That is the kind of environment that will attract people and make people here invest their money in our economy. It is something that we badly need.
This is a definite plan. It is not something that will be tinkered around with, but I would like to think that this central framework would allow an opportunity for certain flexibility and manoeuvrability as time progresses and as the dictates and the demands of the moment require.
There are two very positive objectives in the plan which do not need stressing but are, perhaps, worthy of mention. Firstly, the plan sets out quite positively and clearly to tackle this very serious unemployment question. I will in a few moments make reference to some of the points where it can positively and objectively realise its targets here. Secondly, it sets out to remove the inequity that exists in the whole taxation area. There is no point in our denying this. There is inequity in taxation and we must not alone remove this inequity but must positively be seen to do so. I am satisfied that the plan is a positive step towards solving the inequity in taxation and providing greater employment. These are matters not easily resolved but nevertheless I am satisfied that the Government will successfully tackle them. Let us not forget that we are at a very critical point in these two areas. We cannot sustain any higher figure of unemployment. We are at a figure vis-à-vis taxation where certain elements in our society will not find it possible to pay any higher. This is really a turning point. I optimistically and confidently believe we can realise the targets.
The plan faces up to the hard realities. There is no point in denying that they are hard realities to face. We must together endeavour to achieve prosperity and social and economic justice for the good of the country in the time ahead. There is no way that any single section can of its own accord achieve the sort of things that are positively laid out here without full team work.
The unemployment question and the taxation question are matters of top priority. The other factor, also a top priority, is our endeavour to avoid insolvency in our economy and restore health to our public finances. This is something we cannot overlook. We have been living rather dangerously from a country's point of view in recent times and we must bear that clearly in mind.
There is also uncertainty to which I have alluded already. We can remove that uncertainty in the years ahead with the confidence I have referred to.
There are a number of key areas in the plan that are worthy of mention and which have been debated in both Houses. The fact that this plan sets out to achieve the creation of 50,000 new jobs over the period is very important and warrants emphasis. Direct Government measures will provide more than 10,000 full time jobs and more than 10,000 part time jobs. As I have stated already, the Government can do only a limited amount, but the main bulwark will come from the atmosphere the Government create.
The modernisation of our national road system, of our whole infrastructure, is vital and £420 million will be invested in this area over the period. There are a number of other areas I could deal with — health, education, the introduction of a national lottery and the £5,000 grants, which have already been referred to this afternoon, for persons leaving local authority housing. That is to be lauded because it will provide houses for persons who badly need them. There is a target of 50,000 full time jobs in the plan, a target where total employment will grow by almost 25,000 jobs, even before the special measures are taken into consideration. Then we have the other areas where 10,000 jobs will be created, and which I have already mentioned. At the end of this period we should see a situation where we will have at least — and I reckon that this is a pessimistic point of view rather than an optimistic one — 10,000 fewer persons unemployed than we have at present. People might scorn that, but it would be no mean achievement. I believe our unemployment position will be a great deal better than it is now.
There are many targets being pursued to tackle the unemployment question. We have glibly glossed over this before. It is worth referring to the enterprise allowance scheme, the scheme for social employment which provides part time jobs for long term unemployed, and the new training and replacement scheme for the long term unemployed. All of these, together with the Youth Employment Service, are to be lauded and will do a great deal to help the unemployed.
The agricultural sector is very basic to the success of our economy. A thriving agriculture will, and must, play a major part in any effort to put our economy right again. There are a number of measures in regard to agriculture in the plan, mostly taking effect from 1986. These include a headage payment for suckling beef animals of £70, an increase of £32; land drainage in the west will be given a very strong impetus; there will be radical changes in the bovine tuberculosis eradication scheme and substantial additional funding will be made available under the new arrangements. This additional levy, which will be discussed here today and tomorrow, the Bovine Diseases (Levies) Regulations, 1984, will only apply to 1985. That fact is not realised.
Some people have tended to denigrate the extra taxation on farmers. It is very small in comparison with what is at stake — the future of the cattle and meat industry. If this levy is effective in eliminating brucellosis and tuberculosis, in particular from our national herd it will have been a small price to pay. It is a small amount of money compared with what our Minister for Agriculture and others achieved in their very satisfactory superlevy deal earlier this year. There is no point talking about niggardly points and losing sight of the major issues.
ACOT and the farm development service have a vital role to play in the future because an enlightened farming community is essential if we are to move forward. Up to now there was a tendency for education for farmers to be of secondary consequence, and far too often it was left aside. In future there will be emphasis on this aspect and educational standards will be set for entrants to farming. Looking at farming as a business will be more the order of the day than has been the case up to now. There will be provision for a certificate in farming for progressive farmers to enable them to get State development aid. These measures will be designed to increase the rate of land mobility so as to ensure that agricultural land will be in the hands of those best fitted to utilise it. While land mobility is a very emotive subject, nevertheless, it is important that we make certain that land is in the hands of those who will use it to its maximum potential. This is something we must not lose sight of: we have a limited acreage of land and we cannot afford the luxury of those limited acres being left unused or partially used.
The main area of Exchequer investment will continue to be the farm modernisation scheme with special emphasis on investment in livestock housing. An important sector of the farming industry is our agricultural exports. Up to now they have not got the attention which would have produced results that would be beneficial to the country. Added value has been talked about, but unfortunately very little has been done about it in recent times. Thousands of extra jobs could be found by paying more attention to added value. There is vast potential in the substitution of many of our imports by home produced goods. In the food industry, for example, we have the position that between animal feed and human food we import goods valued at approximately £800 million per year. We could conservatively reduce that figure by at least £300 million per year and that in itself would create many more jobs. It would help our balance of payments deficit quite considerably and without any question it would add enormously to the prosperity of this country at this time.
Debate adjourned.
Sitting suspended at 5.30 p.m. and resumed at 6.30 p.m.