This debate on the Appropriation Act, 1985, gives the Members of this House an opportunity to look at the economic activity of the Government in the area of public expenditure last year. It allows an opportunity to have a cautious look forward to 1986. The Estimate figure submitted by the Department of £5,698 million in the non-capital area is an increase of 4 per cent over 1985, or £292,000. Capital expenditure for 1986 is projected at £648 million, which is an increase of 9 per cent over the 1985 figure. This brings the total estimated public expenditure for 1986 to £6,346 million — a considerable amount of money. With this huge amount of expenditure if the outturn is not as projected, no matter how small the fraction in percentage terms, one can easily over-budget or under-budget. In spite of what has been said to the contrary, the Minister managed to achieve many of his budget projections. The Minister has been accused of everything by everybody. He has been accused of being a Thatcherite, if that is acceptable terminology in a parliamentary assembly. He has been accused of monetarist policies, of book-balancing and of disregarding the consequences of all this on the underprivileged. The books of this Government are open to examination by anybody and on examination one will find that the opposite to what is being said in the country is true. The Minister yesterday said that the budget deficit was now running at £1,234 million which is a £50 million increase in the estimated deficit. Some people regard this as a failure. I heard these accusations from the other side of the House yesterday. Senator Fallon insinuated this morning that this is the problem when there is this kind of deficit. This theory is espoused daily in the media by politicians of all parties and by politicians from the Government side of the House who are able to state their case quite well. Indeed, I have heard it from newly formed political units.
The stark economic reality is that if this budget deficit did not exist, the first people to suffer would be the weaker sections of our community — the old, poor, sick and unemployed. I am not ashamed to say that as a Labour representative I am quite confident that because there is a Labour presence in the Cabinet these exposed sectors are protected. This is one of the few ways that have been available to the Government to protect the underprivileged. The budget deficit has to be controlled but not to the extent that was promised before the last election by the two major political parties. If their economics had been followed, the economic consequences for the poorer sections of the community would have been disastrous. They are a section of the community we have a particular regard for in the Labour Party. They may not always vote for us but that is irrelevant. This section of the community must be protected during periods of economic difficulty. It is a fact that this Government over the past three years have managed to achieve in this area levels of payments that no other European Government have managed to achieve, even Governments with total socialist control.
There is rampant economic crisis throughout the western world and we have not been insulated from it. We have a record in this area which has not been surpassed. Even then, there are people like myself and the Minister of State at the Department of Industry, Trade, Commerce and Tourism, Deputy Moynihan, who is present, who feel that we have an ongoing responsibility in this area. I hope that in next week's budget this will be proved when the figures are announced. This is the area of society we must look at with particular concern. It greatly concerns me and, indeed, many other members in my party that during periods of economic difficulties, public opinion favours fiscal rectitude or, if you use other terminology, "back bashing" the poor and underprivileged. This is what fiscal rectitude can do. The weaker sections are the first to suffer.
There are 240,000 persons unemployed. This is an unacceptable figure, representing one-sixth of the total number avilable for work. All of us agree that there are some people in that area who are guilty of "nixers" as they are commonly known. There are people who sign for unemployment benefit and we are satisfied that they are working. This is particularly true in the case of the building industry. Steps have been taken and have been supported by all of us to ensure that this will not continue. Apart from that, I am confident that the vast majority of unemployed persons are genuinely seeking gainful employment.
Senator Smith said yesterday that people are being paid who do not work. I do not think this is what the Senator actually meant but those are the words that would be on the record of the House. People in this area are being paid only if they cannot get work and are available for work. It is up to the system to ensure that those conditions are complied with. We will not have it being said that people are paid not to work. Of course, this is not true. People who I meet regularly at my clinics in the constituency genuinely want to get gainful employment. Every effort should be made by Government to grapple with this problem which is one of the main scourges of our economic situation.
I accept that the scourge of unemployment is not an Irish problem but an international one. I know that within the Community, itself, the levels of unemployment are still increasing to figures like 13 million. What most concerns me is the 240,000 who are unemployed here and I would like to ensure that every effort is made to secure some type of employment for them. Otherwise, I am afraid young people will grow cynical and disillusioned with political structures and may be left with no alternative but to turn to crime and vandalism. There is evidence of this in the country already. It is a major challenge to any Government and every conceivable step should be taken to ensure that this lengthening dole queue is shortened in some way and that schemes, innovations and incentives are used and taxpayers' money should be available for that purpose.
In this regard I would like to compliment the Minister for Labour, Deputy Ruairí Quinn, and his Department for the various schemes they announced during the year. The Minister has addressed himself personally to these problems and has set up training schemes through AnCO, the Youth Employment Agency, to ensure that, when children leave school at secondary level who cannot go on to third level education, they at least have additional skills taught to them so that they can meet the challenge of the new technological era which demands so much of our younger generation.
The Department of the Environment, through its Minister, Liam Kavanagh, made major innovative changes recently in the reconstruction grants which the Minister referred to yesterday. I am sure that the impact of that in many areas will be considerable, particularly in the State sector, the semi-State sector and the local authority areas where productive employment can be created.
There is a feeling abroad, outside the walls of this House, that in some way employment in the public service is not productive. As a local councillor and one involved in local politics, I do not accept that view. I know of very much needed work that can be done which would better the environment and the community by people working in the public sector provided there was a commitment from the taxpayers to fund such schemes. I am sure the Department of Labour social employment scheme is one such scheme.
I know there are enough brains in this Government to ensure that other initiatives can be brought forward which would help in this areas. It is because of this philosophy that I hold that I am asking taxpayers and representatives of taxpayers, whether they are trade unionists or not, who continually call for tax cuts, to realise that this is the only source of income that a Government has outside of borrowing that can be used in the area of public expenditure. If this work is to be created, tax money will be needed to do it. I know that one of the major vehicles for the creation of employment could be the National Development Corporation which we, as a Labour Party, have fought for for so long and thankfully will be law in the very near future as it has passed the other House and will be before us in the month of February. When the National Development Corporation is in place, I am quite sure that the type of schemes that could be available to create employment with the assistance of the public sector and the private sector could make a major difference to the unemployment figures that we are at present faced with.
In an economy like ours, which is a mixed economy, the private sector also carries a major responsibility. In spite of some of yesterday's Opposition contributions in this area, this Government have assisted the private sector to a very large extent. It has given them incentives by way of corporation tax incentives; it has given them cash payments towards the employment of people from the live register. It has, under pressure from all of us, offered PRSI exemptions, it has offered tax relief for venture capital investments and through the IDA we have offered generous grants to people for the installation of machinery and new technology, the building of advance factories and adopted many other methods of selling Ireland as a tax haven for multinationals, all within the private sector. We did it at a cost of £750 million last year.
Although Senator Cassidy said yesterday that this private sector was the only hope for recovery, I must be honest with myself and say that as far as I am concerned their performance in the area of the creation of employment has been disappointing with some notable exceptions. There are exceptions to every rule. In this area of the private sector there has been tremendous advancement, in the pharmaceutical world and in the area of technology and high technology. There have been tremendous breakthroughs in this country in the creation of employment but these newer type industries and the employment opportunities created in them have not been able to match the decimation of employment in traditional industries which have suffered from our membership of the Community.
It would be remiss of me if I did not put on record my welcome for the fact that for the first time in 45 years there is a trade surplus for this country in the region of £300 million. That is to be welcomed. If that type of trade surplus was continued and Ireland became a net exporter of its products instead of importing a lot of what it could do itself the national economy would be all the better for it.
Another area in the private sector which has come in for much criticism from many sides, trade union sides, ourselves and from the people involved in it, is the agricultural sector. The agricultural sector, as we all know, is of considerable economic importance in trading terms. I would like to say a few words in the area of agriculture, which is the brief that I hold for my party. Anybody who has attuned his mind to the problems in agriculture realises that the industry itself is coming into a very very difficult period within the Community. Since the signing of the Treaty of Rome and the inability of successive national Governments through the Exchequer to support the agricultural industry as they were expected to do in pre-EC days, the future of agriculture must lie within the Community and it is there that the changes are obviously taking place.
It is a little over a decade since we became a member of the Community. In that time we have seen agricultural development in Ireland which has been overwhelmingly influenced by the activities of the Common Agricultural Policy. In recent months this policy has come in for heavy criticism, particularly since people have become aware of the large quantities of foodstuffs which are in intervention at some considerable cost to the taxpayer, while there are other areas in Ethiopia and Sudan and other parts of Africa which are devastated with famine. It is important to remember that the original intention of CAP was widely welcomed by all parties in the Community during its years of successful operation. In particular, and we often have been criticised, the socialist members of the Community have been steadfast in their support of CAP. They have been willing, able and capable of suggesting changes in CAP that would streamline it and make it more efficient. They have said, and I quote:
CAP must contribute to the protection and the creation of jobs in rural areas through concerted action by the agricultural, social and regional funds. It must direct Community expenses more towards structural improvement, social well being and regional equilibrium. The CAP must achieve a greater degree of fairness in the support of agricultural income in favour of small and medium sized producers, family farmers and agricultural workers through a better planning of production in order to avoid structural surpluses.
The socialist defence of CAP is on record and was part of their manifesto in the last European elections. It arose following a concern expressed by the Council of Ministers looking for changes in CAP. This concern, of course, is warranted because of the total Community expenditure in support of CAP over the year, which was rising faster than the Community's own resources.
From 1974 to 1979 expenditure in the Community was growing at about 23 per cent a year, which was double the rate of the Community's resources. After a short stabilising spell in 1981 and 1982 there was an increase again of almost 30 per cent in 1983 which necessitated an increase in the Community's own resources which, of course, makes a charge on the Irish Exchequer and has a bearing on overall Government expenditure.
If we look at how important CAP is to the Community and in particular to Irish agriculture, we must also look at what has happened to Irish agriculture even through the implementation of CAP. Employment in agriculture has dropped from 17 million people in 1960 to eight million in 1983. That is a halving of the total number of people involved in agriculture. The worrying thing from the agricultural point of view is that, whereas in 1970 Europe was still largely dependent on overseas supplies outside of the Community for their basic foodstuffs, in 1983 the Community had become self-sufficient in most major agricultural products, which means that the Irish agricultural producer is now faced with a dilemma in that the Community in which it is producing is self-sufficient and unless there are major changes in the areas of direction in agricultural production and unless production is diversified into areas in which there seems to be a future, Irish farmers could be facing a crisis situation over the next few years.
The famine in Ethiopia has brought fervent criticism of the considerable food mountains that exist by people who do not realise that the kind of food that is in intervention and cold storage could not be used in Ethiopia because it would deteriorate overnight. Nevertheless, in 1985 the EC had 775,000 tons of surplus wheat and 991,000 tons of surplus butter. These are official figures. It is a major problem for the Community and for the funding of the Community if the Irish Exchequer has to contribute towards the maintenance of this type of policy. I know it is important for the Irish farmer. What I am saying is that agriculture will be facing major problems in the area of financial assistance in spite of the fact that the Government have been generous with them, and rightly so.
In last year's Appropriation Bill the financial aid available from the State amounted to £383 million. That would include a figure of £101 million EC refunds and a figure of £135 million non-Exchequer investment from commercial State bodies. It is still a considerable amount of money, and rightly so, because agriculture is an important sector of our economy. It is disappointing in its generation of employment but it is important to keep people in rural areas engaged in agricultural production in the knowledge that it is an economic activity that any Government must have responsibility for.
Last year's figures included an increase of 25 per cent in disease eradication programmes, an increase of 99 per cent in input and production aids and an increase of 37 per cent in market intervention. These figures, which were planned, programmed, agreed and spent, have now come in for some critical analysis. In the Estimates for the Public Service as published for 1986 in the area of agriculture I look with some concern at the decreases which are shown on page 47, Vote 39, in the area of livestock improvements and eradication of disease. The figure in 1985 was £22 million for bovine tuberculosis eradication. That is reduced by 14 per cent, to £19 million. In respect of brucellosis eradication the figure is reduced from £4.7 million to £4.2 million, a reduction of 10 per cent. I accept that we have made some progress in eradication of brucellosis, which would allow possible reduction of expenditure under that heading.
I would be concerned about the projected reduction in the area of bovine tuberculosis. I know the scheme has been criticised. It is a scheme into which the taxpayer has put approximately £1 billion in today's terms.
I must consider it from the point of view that it is money that is used for the protection of the national herd. If we do not have a national herd, then we will not have a national economy. So, it is important to ensure that the scheme is operated in the knowledge that it will protect the national herd.
I am awaiting a meeting of the Animal Health Council, of which I am a member, to discover the reasons for this projected reduction. I have no doubt that the economic situation requires that all areas will trim their sails and be conscious of economic activity. I am sure veterinary advice available to the Department of Agriculture through their officials has been transmitted to the Department of Finance for the purposes of the allocation for this heading. My colleagues and I in the Animal Health Council will try to discover the reason for the projected reduction of payments in this area and whether that will have any consequential impact on the progress of the scheme which had improved in the past 12 months.
I have no axe to grind for vested interests. If it was a vested interest that was involved in this, the consequences would not worry me because there are vested interests in the country that ignore the overall national economic situation but have regard to their own bailiwick, so to speak. I do not hold a brief for the veterinary profession or anybody else in this area but I have to have a responsibility for what I know the scheme entails. It is only when I am given the information at the Animal Health Council that I can make a judgment but I must express concern at the moment. I am not aware of the reasons for this projected reduction in expenditure. A three year programme was agreed with some difficulty but it was agreed, nevertheless, in which it was envisaged an expenditure of a certain level was required over three years if we were to come to grips with this problem. I hope the necessary information will be available for me to make a value judgment on the figures that have been published in the Estimates for the Public Service.
In trying to justify any increased expenditure of taxpayers' money we must have regard also to other problems. The next problem, of course, that is faced by the Government is the burden on the PAYE sector. In the agricultural sector public money is required, but it is appropriate that that sector should make a fair contribution to the tax revenue. The agricultural sector cannot have their hand out and not expect to give. I have been vocal in regard to this matter for some ten years since I advocated that the farming sector should pay a fair share of taxation. I know it is an unpopular subject for farmers particularly after an extremely bad year like they had last year but, again, the Government came to their rescue.
It is important, having regard to the attitude that is built into the continuous rhetoric that we hear from farm leaders in this area, that when the chips are down if they do not make their contribution to public tax there is no way that the public sector can be expected to fund their industry. I have no doubt that if the new land tax which has been welcomed generally by farmers were finally in place and the money began to flow from it, there would be less criticism from the farming sector about paying tax: they have always had a problem coming to grips with the documentation and so on involved with taxation.
The PAYE sector, unlike the private sector, have no way of escaping from the tax net so we must in all equity try to spread this load of taxation across the board to all areas, not just to other areas but to all areas, whether it is banking, agriculture, the private sector, the corporate sector or whatever. If this country is to be run efficiently and have money available to it, there is a national responsibility on people to pay their fair share and to have some regard for efforts that are made to bring in systems suitable for various types of activity.
In a submission to the Government in 1985, the Congress of Trade Unions pointed out that there is approximately £620 million remaining in outstanding collectable tax. If that figure stands up to any critical analysis, this could be one of the reasons that the budget deficit is as it is. If there is £620 million in collectable tax outstanding — I take it that these are figures that have either been agreed or assessed or are in the pipeline but have not come into the tax compass — then I have to look upon it as collectable tax and within that £620 million is a figure of £334 million from self-employed.
Of course, within the self-employed there is the farming community, so there is a major responsibility on the self-employed sector to ensure that whatever tax is due from them must be paid; otherwise we are on a no-win situation. For areas that are overtaxed it is little comfort to them to realise that there are sections of the community that at least appear and are seen by the public to be able to get away with it although this Government have taken some active steps to try to streamline the collection of tax. They have taken the public odium of publicising offenders in this area, names of which surprise all of us, in the professions and elsewhere, people who have large amounts of money outstanding by way of tax debts. These tax dodgers have to be dealt with strictly — fairly but strictly — and during a period of economic crisis, when people can afford to pay their tax but are bloody minded about it, then the Government have a responsibility to take action. This Government have done that.
For the first time in the history of the State we have approached the sector that in the past has been able to get away with it. When the cost of running the country was much less there was less of an effort being made by previous Governments to approach this private sector who were, of course, the political support of any Government in a majority situation. As we know from the polls at any given time 80 per cent of the electorate are the people who are privileged and want to maintain that and keep it for themselves and criticise the less well off section and want them to cut back and tighten their belts. When the figures are disclosed about the amount of taxation outstanding from that sector it makes one wonder about the whole philosophy of socialism — you would be accused of robbing Peter to pay Paul when, in fact, Paul is the one that should have had it all the time and was probably the instrument that was used to give it to Peter in the beginning.
Until we come to full grips with the problem of private taxation or capital taxation or any other kind of taxation outside the PAYE sector, the Government should possibly consider the whole area of the principle of self-assessment. I know this is being used in other countries successfully. I do not know whether it would suit the Irish mentality or not because from my experience of trying to collect money from people you have to almost go and ask them before they will give it to you. They are used to that type of system, particularly in the agricultural sector where they are used to the rate collector calling in to them, talking to them, arranging when they will have money from selling cattle or wheat or whatever and he will come back to collect the money on that day. They do not respond to bills in other words, so possibly on a trial basis the Government should respond and go into the whole principle of self-assessment and see if it will improve the cash flow from the private sector.
The building industry has been referred to by various speakers from all sides and rightly so because it is an important industry. It has suffered over the past four or five years. The Government have been blamed for some of this. They have certainly been blamed by the industry itself and they have been blamed by the Opposition. Senator Cassidy said that when Fianna Fáil are in power the building industry booms and when the Coalition are in power the building industry collapses. If it was as simple as that we would know what the issue was. We would know that builders did not want to build for a Coalition Government but they wanted to build for a Fianna Fáil Government and vice versa.
I do not accept for a moment that that is the reason. There must be economic reasons why the building industry is up or down and I would hasten to add that the activities of this Government, particularly in the area of public capital expenditure, has never been surpassed even by a Fianna Fáil Government, so the building industry in the public sector has been booming. The building industry has had more work to do under this Government because the capital investment in 1985 was £1,696 million so there is a continuing investment by the State in the area of capital projects and included in the area of capital projects is local authority housing, school building programmes, hospital building and other Government constructions.
If there are any problems in the construction industry it is certainly confined to the private sector. All us as, including the Minister, yesterday accepted that there was a deflated demand within the private sector in the building industry. I suppose this can be attributed in some way to the difficult economic situation, to the deflated demand for office building or house building but can we hope that there would be an improvement in this area in view of what the Minister said yesterday? Can we hope for that following the reduction in the inflation rate to below 5 per cent in 1985 for the first time in many years? It dropped from 8.6 per cent in 1984, from 16 per cent four years before that to below 5 per cent in 1985.
Apparently one of the factors in the construction industry is the inflation rate. Lower interest rates have been a continuing factor in this country up to quite recently. It is only in the past couple of days that interest rates began to flutter again and I suppose "flutter" is the word to use because our interest rates seem somehow to be dominated by the relationship between the punt and the pound sterling. If something difficult happens to sterling — because it is outside the EMS system, obviously it has a bearing on the relationship of the currencies to each other — pressure is put on the pound and then on interest rates in England followed by pressure on interest rates here, with the building societies looking for mortgage increases. This fluttering within the money market without regard for the inflation rate can have a profound effect on ordinary people and I hope it will be short lived.
During most of this year there was an easing in interest rates. There are various loans available from the local authorities, SDA loans, the Housing Finance Agency loans, and special category loans for local authority tenants. There is also the £5,000 grant for local authority tenants who hand over their keys when they buy or build a house of their own. I do not know what other incentives the Government can give to the private building sector. The Government have put millions into the public building sector, and rightly so, because this is an important part of our infrastructure. All the new grants available now should stimulate activity in the building area and should create employment. Now that we are asking builders to submit their tax numbers and VAT numbers, maybe their employees will be legitimate employees. The building industry has been dogged by employers who were employing people whom they allowed to claim social welfare to make up for below rate wages, and legitimate builders with legitimate employees paying PAYE were not able to compete. When the Government stimulate the building industry they should ensure that the people who are awarded contracts are legitimate with legitimate employees. Only in that way can we protect employees when companies go bankrupt under the 1985 legislation which gives retrospection to 1984. These are the kinds of protection necessary for workers and companies in the event of problems arising. I hope that the incentives to the private building sector will give improved levels of employment. There are people who could work productively in building throughout the country. I hope that the cost of site development land has not been too high or that profit margins have not been too high. If we could get movement in the private sector of the building industry, I have no doubt that unemployment figures could be reduced. The building industry is a major labour intensive industry and that is why I am trying to ensure its success.
A major roads plan involving major road works, including national primary roads, by-passes and so on, was announced by the Minister. My constituency will benefit under this scheme. However, I share the concern of other Senators about county roads. In the past the cost of maintaining county roads was met from the local rating system. We were in a position to strike a rate which always provided sufficient funds to maintain county roads. The abolition of the rates left the Government in a dilemma. They could either take up the slack by way of support grants or ask councils to raise taxation at local level. That system of funding is not sufficient to tackle the problem on county roads. We have a national responsibility as well as a local challenge to protect the public investment that has gone into county roads. I am calling for a co-operative effort between the central Exchequer and local authorities to overcome this dilemma of the scandal of county roads.
People have referred to potholes. Potholes occur because of bad weather and additional heavy traffic, for which the roads were never designed. County roads are deteriorating and funds do not seem to be earmarked to remedy the situation. I hope the co-operation I seek between the central Exchequer and local authorities will be forthcoming.
Health, which was referred to by Senator Fallon, is a major social expenditure. The progress report from the Department of Health, 1985, states that non-capital expenditure in the health services amounted to £1,168 million and that this massive outlay represents 20 per cent of the entire Exchequer provision for non-capital public services; that the health services employ approximately 58,000 people and provide a wide and sophisticated range of services. It says that the present serious constraints on the public expenditure programme have brought disproportionate attention to the adjustments necessary in the areas of public expenditure such as the health service. It says this is understandable given the legacy of inflated expectations arising from the major growth which occurred in the range and scope of services over the last 15 years. In 1982, the non-capital expenditure in the health services was £948 million and capital expenditure was £49 million. In 1985, non-capital expenditure had risen to £1,168 million, an increase of £78 million, and in the capital expenditure area to £57 million.
Senator Fallon talked about health board cutbacks and so on. I served on a health board and at times I was almost convinced about the cutbacks. The reality is that health boards look for amounts which they consider they could use wisely. When the Department, in their overall budgeting, gives them a lesser amount, that is looked upon as a cutback, whereas in reality it is an increase, or taking inflation into account it is at least a holding situation. There were neither job losses nor ward closures in my health board area. We always had a problem trying to meet the final deficit, which was approximately £750,000 but we were owed £1½ million from farmer contributions. The health board were told that if they made an effort to collect the money due, the Government would add what was proved short. Some health boards could not prove what the deficit was. Our local authority was in a position to do so. Only then was an effort made through the legal process to collect money from people, and something like £1 million was paid in farmer health contributions in the past year.
The damning thing about it was that many farmers had never got a bill. The first notice some of them had got, was from a solicitor saying they had not paid their bills, and that if they did not pay up, they would go to jail or legal action would be taken. There is a lack of efficiency about collecting money that is legitimately due. Farming organisations are questioning how they are assessed. They confuse health board levies with income tax. Although it was a levy based on a level of income; it had nothing to do with income tax on taxable income. I convened meetings, as chairman of the board, with the farming organisations to try to explain the situation and to ask them to pay money on account to try to ensure that the health board were able to continue to give the service demanded of them. I found the anomaly of people wanting to pay but who had not got a bill and people who had got bills who did not want to pay and paid only when they went to hospital. Health boards have got a lot of money. Obviously there is some problem in ensuring that that money is spent as wisely as possible and that the service is delivered to the patient. If streamlining the health boards, or abolition of the health boards, is necessary to ensure that efficiency is improved, there is sufficient money there to give a health service which is as good as, if not better than that provided in other countries. Our health service matches and at times outpaces England's where they have a free public health service for everybody.