Seanad Éireann debate -
Wednesday, 5 Nov 1986

Vol. 114 No. 12

Handling of the Economy: Motion (Resumed).

The following motion was moved on Wednesday, 29 October 1986:

"That Seanad Éireann deplores the handling by the Coalition Government of the economy, which has led to unprecedented borrowing, a record current deficit, and a crisis in confidence, and calls for urgent action to halt the drift into economic abyss."

—(Senator Smith).

Debate resumed on amendment No. 1:

To delete all words after "Seanad Éireann" and substitute the following:

"supports the handling by the Coalition Government of the economy, which has led to a dramatic lowering of the rate of inflation, a significant improvement in the balance of trade and a reduction in the Exchequer borrowing requirements as a proportion of GNP, and calls for the development of policies designed to further improve the public finances and to create opportunities for more employment."

—(Senator James Dooge).

Mr. B. Ryan

I devoted a considerable part of what I said last week to the abysmal failure of the major Opposition party to put forward something in the way of an alternative economic policy. I am on record as having expressed some qualified sympathy with their general outlook but the leader of the party in a recent interview did not do anything to assuage my pessimism about whether they have anything like a coherent alternative policy to bring into force as they come into government. I am convinced that they will do much the same as this Government have done though perhaps with a little bit more sensitivity since they are if nothing else sensitive to public opinion.

As far as the Government are concerned, the truth is that it is very easy to agree with the motion. They set themselves objectives and it is very fair to judge people by the objectives they set for themselves. Unless one gets involved in contorted percentages of percentages of growth rate in various areas one ends up concluding that they made a mess of the target they set themselves. They committed themselves to reducing unemployment. It hardly needs to be said that they failed to do that. They committed themselves to doing something about the state of the public finances. It hardly needs to be said that they did not do much about that. It is too much to keep on blaming a Fianna Fáil Government which was involved in power for four years for all of the present problems. It is important to point out that whatever I might think of Fianna Fáil, they have been in Government for less than six years out of the last 16 and to suggest that all of the woes of the country that began to manifest themselves as far back as 1974 are Fianna Fáil's fault is as bad politics and as dishonest as Fianna Fáil's determination to avoid telling us what their positive economic policies are.

One of the problems this Government have had among a number is their capacity to identify the wrong issue. I would identify particularly the obsession they had with wage levels as a cause of a loss of competitiveness, which to the point of pain, dominated their speeches on the economy in the early period of Government. The ironic thing was that at a time when they were lecturing the Irish workforce that high wages were pricing us out of international markets the statistics for successive years showed record growth rates in Irish exports. If the Government believe in the marketplace their central theme, which was, a reduction in wage inflation, was proven wrong by the marketplace. In the years when they told us we were pricing ourselves out of international marketplaces we had by far two of the best years in terms of growth in exports particularly in the export of manufacturing industry. In recent years there has been a considerable reduction in the rate of wage inflation and reductions in the level of economic performance in the manufacturing industry sector which is the driving force of growth in our economy.

Mr. O'Leary

That is inaccurate.

Mr. B. Ryan

It might be inaccurate but Senator O'Leary will have an opportunity to speak: I am satisfied on the basis of the figures I have seen that the growth in exports in the last two years is substantially less than the growth in exports in the previous two years when we were having this eternal song about Irish workers pricing themselves out of international markets. It is a fact of life that price is no longer the single determining factor in competitiveness, there is a variety of other issues that are related to competitiveness. It is only narrow-minded economists who do not understand the nature of the marketplace properly, who go on telling us that the price of goods on sale is the determining factor in competitiveness. Nobody else who actually operates in the real world, as people like myself have to do believes that anymore.

The second appalling thing this Government have done, and the Minister for Finance last week was a classic example of this, has been to overstate the state of the country and to compare us with countries like Brazil, Mexico and so on. That is a travesty of the position. It is untrue to suggest that we are in anything like the same position. We have a capacity to handle our indebtedness in terms of our relative affluence that none of those other countries have. It is untrue to compare us in this way. It is also devastatingly damaging to business confidence and devastatingly damaging to any effort to induce international investment to move to Ireland. If you have that sort of image our competitors for international investment use it and they can say: "The Irish Minister for Finance said that the Irish economy was banjaxed; the Irish economy was similar to that of Mexico or Brazil." Would you invest in Mexico or Brazil when you could invest somewhere safe and secure like Scotland, Belgium, Luxembourg and so on?

The Irish Government Ministers in their hysteria to overstate the state of our public finances contributed to a decline in international investment in Ireland. Similarly, the collective voice of the new Right economists aided and abetted by Messrs. Tansey and Browne in The Sunday Tribune and Magill have perpetrated an image of this country which is a travesty of the truth about Ireland. We are not a banana republic; we are nowhere near a banana republic. We are still among the wealthiest countries in the world; relatively speaking we are one of the wealthiest. It is a travesty of the truth, it is offensive to the Irish people and it is offensive to the achievements of this country over the last 65 years to start talking about us in terms of us being a banana republic. We have achieved a considerable amount. The simplistic nonsenses imposed on us by those right-wing economists who seem to have a monopoly of the media are equally offensive to our intelligence.

I am sick to death of so-called objective economists who expound a particular ideological line which is incessantly being forced upon us by RTE, by the major newspapers and so on. It is not true to suggest that a reduction in public expenditure per se will bring about growth. It is not true to say that Irish tax levels are excessively high. Most of the Western European social democracies had levels of taxation as a percentage of GNP comparable with our own when they were at our level of development. We may have a problem of public expenditure but that is related to debt servicing. Our level of taxation, as distinct from our level of expenditure, is not excessive for our state of development, for our dependency ratio, for our demographic problems and so on. It is untrue to suggest that some mysterious, magnificent entrepreneurial spirit will suddenly appear in Ireland if tax levels are reduced. People have contributed enormously to de-stabilising confidence among people in Ireland by having a virtual monopoly of the media to say what they like about their own ideological opinions and dress them up as some sort of objective economic analysis. It is not true and it deserves to be dealt with and disposed of confidently.

The model which a number of so-called objective economists, among them one particularly prominent Trinity College economist that I am not permitted to name, have expounded is that of the United States, but that totally ignores the human consequences of the so-called Reagan miracle in the United States, the human consequences of a ten-fold increase in homelessness under the auspices of President Ronald Reagan. One quarter of a million people were homeless in the United States when Ronald Reagan took power; there are now between two-and-a-half and three million people unemployed. Economists dismiss this as a peripheral issue. For people in politics who have to deal with people rather than with economists, that is a very real issue. People in Ireland do not realise that even though we have less than 50 per cent of the wealth of the United States we have an infant mortality rate — and that is a fine index of a caring society — which is less than that of the greatest economic power in the world. Those economists who tell us to model ourselves on American competitiveness and American get-up-and-go ought to realise that that get-up-and-go has created a society where the vulnerable and the weak and the powerless suffer.

The Minister invited us to suggest ways of dealing with the problem. I have a list of seven or eight here, I will get an opportunity to use them again. The real issue in developing this country is not taxation; it is not public expenditure; it is the willingness to invest in ideas. We invest in things; we invest in property; we invest in everything, but we will invest nothing in the ideas of our own people. We have the lowest commitment to research in the European Community, one of the lowest in the entire developed world. If we are going to get ourselves out of the mess we are in it is for us to do it. It is not foreign investment that will do it; it is not the European Community that will do it; it is ourselves who will do it.

The real change of strategy that is required is not taxation; it is not public investment; it is a willingness to believe in ourselves and that is something that most of our major political parties lack because they seem to believe there is a great big thing called "foreign expertise" out there on which we must become dependent. That is a Third World mentality; we are not a Third World country; we are a First World country with the skills, the technology, the know-how, the ability and the confidence to develop ourselves. It is about time we began to develop ourselves instead of depending on other people to do it for us.

Mr. Ferris

The amendment in the names of Senator Dooge and myself tabled for discussion with the Motion deals with specific areas of this Government's handling of the economy to which I would like to address myself. These areas include the rate of inflation, Exchequer borrowing and among other items, opportunities to create employment.

Last week the Minister, in spite of many criticisms — all holders of the portfolio of Minister for Finance will be criticised — gave a very spirited contribution. He laid down a challenge for all the Opposition parties to state now, honestly, what other options this country has to take us as a nation out of the financial constraints this Government have been grappling with over the past four years. That is the kernel of our problem. The Government have been trying to grapple with it; the Opposition would set down their own parameters, but the reality is that if they have a plan that is different from the Government's plan the Minister is prepared to open the books to them and let the country decide if their way forward is better than what this Government are trying to do.

It is accepted that employment creation is a top priority for all of us. When our colleagues were in office unemployment was escalating at a rate of about 40,000 job losses per year. Its present level is also most unacceptable. It is little consolation to us that the level of increase in job losses is down to 3,000 per year. But at least it is an improvement. It arises from many imaginative employment schemes designed by this Government which had never been thought of before by anybody else like the Enterprise Allowance Scheme which increased employment by some 15,000; the Social Employment Scheme which has increased the numbers by 10,000 and the whole concept of additional new grants and incentives in the house repair area and in the new building projects, in the private sector and in the public sector; the £5,000 new stimulus; all the new types and improvements of local authority housing; the roads and sanitary services.

This Government have put more capital into the economy in that particular area than any other previous Government had ever done and it is a known fact that under the jurisdiction of a Labour Party member of the Cabinet in the Department of the Environment recently the biggest road building programme in the history of the State has been undertaken. The level of investments in roads for the years 1985-87 will be greater as a percentage of GNP, as a percentage of the total capital programme, than at any time over the past quarter of a century. In the period 1985-87, 54 major road projections are under way and many of them will be completed by 1987. This is dealing with the infrastructure and if we do not have an infrastructure in this country we cannot have the climate for industrial expansion. This Government and their record in the public capital programme area which does generate employment has been second to none in the history of this State.

Inflation, which was at a dangerously high level of about 21 per cent in 1982, is now in line with other European countries at about 3 per cent. That is why interest rates must be brought down and I know from the Minister's speech that the cause of this level of interest rate is a combination of factors including the EMS, the refusal of Britain to join it — and I join with the Minister in condemning them for that; however this is not the only time Great Britain has been out of step with the rest of the European Community. I am delighted with the Government's announcement confirmed by the Minister of State yesterday that the Commissioner of Restrictive Practices will involve himself in the whole area of the level of credit, of interest rates being charged both by the lending institutions and the building societies, because I think their actions in recent months have been anything but in accordance with the level of inflation.

One significant area of job creation was the setting up of the National Development Corporation. To my amazement this piece of legislation was opposed by both the Fianna Fáil Members of this House and the Progressive Democrats, two of whom had been members of our party before that. I am worried about the indoctrination they have received. With £300 million available for productive enterprise through that agency I look forward to the stimulus that it can generate in the whole area of employment and job creation. The whole concept of the National Development Corporation has been an important priority for the Labour Party and for many years we had striven to have it brought to legislative finality. We argued that there was every reason why the State should get itself involved in the creation of viable, self-sustaining jobs in each and every sector of the economy where scope could be found. The principal reason this is necessary is that despite all the subsidies and incentives and despite all the efforts made to produce a climate as beneficial as possible the private sector had not in its own right succeeded in creating the tens of thousands of jobs we need.

This brings me to the vexed question of the balance of payments deficit and budget deficits and the effects of taxation because these are the areas that are seen by the man in the street as the ones are most likely to affect his living standards. In 1981 the payments deficit was equivalent to about 15 per cent of our national output. In other words, we were consuming 15 per cent more than we were producing. What country in the Third World, the First World or any world could survive that kind of economic development? This year that deficit will be down to about 2 per cent, which in our circumstances is a sustainable level of GNP. Over the past three years we in the Labour Party have closely kept our eyes on this whole question of budget deficits. We have been very vigilant in the area because we had to be. If the budget deficit was kept in line with either the projections of Fianna Fáil or, indeed, with our colleagues in Government, there could have been difficulties for the underprivileged in this community so the Labour Party were identified with trying to protect living standards and ensuring there was a balance between what was required in this country by way of borrowing and what was needed to continue development.

Last night we listened to the Leader of the Opposition saying that if he were returned to power he would abolish DIRT. This was an area in which for the first time there was a major shift away from the concept of taxing a worker at the source of his employment. It was the first time that a major move had been made since the days of capital taxation, which again Fianna Fáil had abolished in their day. We moved into this area of tapping a source of income which had not been touched before for the Government to develop their projects.

There have been a lot of criticism and scare stories about the amount of money that went out of the country as a result. I agree with Senator Ryan on this. It was the first time, as I say, that we had made an effort to tackle the concept of capital taxes and we must realise that in the banking institutions in this country some £1 billion is available in current accounts, only some of which bear interest, but there is a massive £6 billion in deposit accounts and these enormous sums hardly justify the calls we have had about the funeral money of the elderly or the school children's pennies or the charities which were later exempted. This was the kind of money we were talking about. We were asking a contribution from money which was earning money and we only wanted a contribution from what was earned, not from the principal. Anybody who removed money out of banking institutions for that reason must realise that there is no safe haven any place in this world outside of possibly the Isle of Man and some of the offshore islands of England where they have a tax regime that stimulates wealthy people to sustain a lifestyle that is obnoxious to most of us who are concerned about homeless people or people who need houses or jobs or a health service. I am surprised that the main Opposition party should give a commitment without understanding the total implications of the abolition of DIRT. If it is true they want to abolish it, and if it is not true that they want to increase further the borrowing for which they have criticised us, then they must be turning to the PAYE sector who have already cried "halt"— and rightly so because they are at the end of their tether as regards the payment of income tax.

In this whole area of balancing income and payments in which we have tried to play our part, I am quite sure that social welfare recipients, the people on lower incomes, will agree when the time comes and when they see the options that are available from any other party or any other Government of any view, they will have realised that with an input from the Labour Party their particular living standards have been protected to the best of our ability. In July every year they have had increases ahead of inflation, on a level that had not been achieved by any other economy, especially the developed economies in the European Community. This is a record we are very proud of. It is one that can easily be forgotten. As the Tánaiste said, we have made mistakes; there is nobody perfect. Anybody who has not made a mistake has not made anything and what we are contending is that we have struck a balance between what is required in foreign borrowings and expenditure.

We have tried to remove some of the anomalies in the tax system to bring in some form of equity. We have also tried to ensure that the underprivileged social welfare recipients and the lower paid are protected from what is, in fact, a vicious circle in the monetary world, which is dominated by the banking and lending institutions. Whether you take a small farmer or a mortgage holder, their lives are dictated by the financial institutions of this country and that is why I am so pleased that the Government have announced they will bring in the Commissioner of Restrictive Practices to look at what these lending institutions are doing, particularly in the light of the level of inflation that this Government and the policies of this Government have managed to bring down to the present level.

We in the Labour Party have been and will be criticised for our participation in Government, particularly in difficult times. We did it in the national interest which is something the electorate never thank you for. When our records of achievements are identified and compared with past Administrations and indeed with promised or rejected future Administrations my colleagues in Cabinet can proudly hold their heads high. The future of the economic life of the country, which is in all our interests, will have been secured by their participation in these difficult times.

I am pleased that we had the opportunity to have a discussion in this area because it is one in which the public are interested. They want to know if the Government are doing it wrong, what are the available options from the Opposition or a combination of people who may form a future Government and in which all of us will have an interest. Is it additional borrowing? Is it additional capital taxation? Is it additional PAYE taxation? Is it additional spending cuts? Is it savings in existing cuts? Is it savings in existing figures that have been projected by the Cabinet as required? Are we going to freeze the existing level of expenditure in the public service? If so, how will the poorer sections be protected?

I am interested in the future. I want to ensure that the people I represent are not forgotten and walked over by any future Administration. I hope there will be a level of reality in the debate we are having. The Minister quite rightly put it on the mat. What are the other options, what alternatives are available? If somebody wants to see the books to prove what is available, the Government are quite willing to let them.

Mrs. Honan

It would be difficult to identify a time in the history of this State when business confidence was at such a low ebb. Even when the political situation was disrupted by civil war and later by the Second World War, the Irish people were motivated by an underlying strength of self-reliance.

The Minister in his speech here last week brought us onto a plane of multimillion pounds financial deals, borrowing requirements, gross national product and spending and other financial language which I, for one, am not too clear about. Let me tell the Minister that it means less and less to the taxpayers and the people of this nation.

I want to try to confine my words therefore, to the end result of the Government which, indeed, Deputy Frank Cluskey will tell you do not always work out as planned. What has caused this fundamental change in the national attitude? In one word "confidence" or, indeed, the lack of it. There is no confidence in the political leadership of the Coalition Government because there is no leadership. The people listen, as they must, to their jobless youngsters who tread the lonely path to the emigrant ship or plane or to the entrepreneur who finds it impossible to justify commercial or industrial development projects faced with the bleak future with no certainty of a return for investment.

The recent White Paper on manpower policy announced the intention of setting up a national manpower authority. This is a perfect example of cosmetic tinkering with the problem of unemployment, activity without action. Before one talks about job creation there are two essential prior conditions that must be fulfilled. The first essential feature requires that the business environment be conducive to investment. Without that we will still have a highly trained, highly skilled, but unemployed workforce. Secondly, we must not just issue public relation platitudes about job creation and stop there in the belief that the expression of the wish will automatically bring about this fulfilment. Indeed, we must recognise the urgent need for positive action to create employers. There two ingredients, a favourable business environment and employer creation, added to our well trained labour force, will undoubtedly result in the creation of jobs as sure as night follows day.

I ask Senators to put themselves in the shoes of an industrialist faced with the current economic situation. If he is engaged in exports he has the problem of currency under severe stress vis-à-vis sterling, bank interest rates at unacceptable high levels, uncompetitive costs of labour and energy and, finally, high transport costs, which act effectively to him as a local taxation. It will be argued that export profits are tax relieved. What happens if there are no profits as in the case of many industrialists today? On the other hand, if the industrialist is involved in the home market, he is confined to a section that have seen their purchasing power drastically eroded by high taxation, high interest rates and high unemployment. On top of all that the abnormal weakness of sterling makes imports from Britain exceptionally competitive.

Some of my colleagues in this House would not see me making any reference in my contribution here this evening to the arts but in years past the arts and I were not related because we always thought the arts were for the people with a lot of money and I am not in that category. I see the arts in a very different area. No doubt the Minister with responsibility for the arts will claim that Government spending on the arts has increased over the past four years but he knows as well as I do, and certainly the people working in arts organisations know, the real spending in this area has decreased dramatically in real terms since the Coalition Government took office.

I believe that this penny pinching attitude towards the arts is tragic from the point of view of our cultural heritage. I also believe it is short sighted because the arts is an area which offers potential for job creation. There was a time when the mere mention of the arts was enough to turn the ordinary man in the street off. There was a time when arts activities were the preserve of the upper layer of society. Happily this is no longer the case. Thousands and thousands of Irish people are now involved some way in arts activity every week. There are painting groups in virtually every town.

Our country has an envied tradition of theatre. Our writers are renowned the world over. There is a new generation of film makers following in their footsteps. When will the Government face up to their responsibilities to preserve and strengthen this aspect of our national life? The transfer of funds from the national lottery into the arts is all very well but based on their record to date the Government would appear to have little intention of directing a substantial slice of the lottery cake into artistic activities.

Many of us hoped that because of his background in broadcasting the Minister for the Arts, Deputy Nealon, would show an enlightened approach to art funding. Alas, he has merely used his broadcasting experience to evade the issue when he appears on television. The time for ducking and dodging this issue is long past. I call on the Government to make increased provision for these activities. Their failure to do so merely underlines yet again an area where this Administration have failed miserably.

When the Government took office in 1982, approximately 170,000 people were on the dole. Today on the so-called live register there are from 235,000 to 240,000. Every day the Government stay in power there are 48 extra joining that dole queue. Those figures do not include the 80,000 to 100,000 people who have emigrated nor do they include the number on courses.

I do not share Senator Ferris's confidence in the agencies. I must refer to AnCO, I am not being political but all of us made a mistake here. We should be big enough to take a serious look at this. Surely the £800 million could have been spent better if that is the figure AnCO have got since their inception. All of us have people coming back to us after these AnCO courses and they are back on the dole. If £800 million has been spent on AnCO and if the end result of that is people back on the dole after one or two courses if they are lucky, we must have another look at that.

Senator Brendan Ryan was worried about tax because, he said, he was living in the real world. I would love to know what his idea of the real world is. If being a professor of engineering, having a wife who is a full time general practitioner and being a full time Senator is his idea of living in the real world it is far removed from the real world I live in. He agrees with my friends across the floor that we are stupid to talk about doing away with DIRT. It is one of the most bizarre and self-defeating tax measures ever introduced in this nation.

It was originally designed to bring the big depositor that Senator Ferris mentioned more firmly into the tax net, a measure promoted by the Socialist partners in Government. What has been the result? The big boys have moved their money out of the country and the small taxpayer has been left to pick up the tabs for the Government hitting once again the small man, woman and family of this nation.

The Minister for Finance said last week, that the big losers when the actual debit crisis occurs are always the poor and not the well off whose cash is mobile. This is evident in the world today. We see examples of it in other countries which are in dire financial difficulties. The rich have moved their money elsewhere while the poor have had to suffer the consequences of the declining economy. I want to say here this evening most forcefully that these funds have been moved and the money has gone. The funds are not being moved because of a debit crisis but because of DIRT which was put on by the Government. Deputy Bruton was not Minister for Finance at that time but he was a member of the Cabinet.

The rise in interest rates has led to the fall in the value of the Irish Government's securities. This is a most serious cause for concern in Irish financial institutions such as insurance companies who have invested heavily in Government securities. The attitude of the Government's stockbroker in inhibiting sales of Government securities except at low prices is compounding the difficulty. It is important that investors be encouraged to invest in Government securities. They will be disencouraged if it becomes evident that there is no market in them.

Senator Smith, who led this debate for our side of the House, spoke at length on farming. Indeed it would be merely cheeky of me to refer to something that Senator Smith well covered. The Irish Green Pound on 22 September was devalued by 6 per cent for animal produce and 3 per cent for cereals. For milk the effects of the devaluation have largely been eroded because of the change in payment for intervention produce. Therefore, the actual benefit for farmers will only be about one third of the value of the devaluation.

No Government since we got our independence have gone so far to knock the heart, spirit and soul out of the people. I still have faith in this nation and its people, I have enough faith to believe that whenever the Government decide to go to the country that there will not be any doubt about the result. The Americans made a sound judgment yesterday. I am quite sure Ireland will do it when her day comes. In many ways the times of a nation are, to use Dickens's words, the best of times and the very worst of times. This is the worst of times because we face a more severe challenge than this country has ever had to face but it is the best of times because we have a chance to strike a blow and change it. Of course, we will have a Fianna Fáil Government.

I still believe, regardless of the dreadful sadness in the nation, which caused us to put this item down for debate here, that there is enough spirit left although the Government have nearly knocked that out of the people. The Government should go to the country and do their own supporters a good turn. They are even asking them to get it over with. I ask Senator Ferris, his colleagues in Labour and the other sensible Senators on the other side of the House, to support Fianna Fáil's motion here this evening.

Mr. O'Leary

I will not support the Fianna Fáil motion this evening. That may come as a surprise to Senator Honan. I will tell the House why I will not support the motion. I hope that Members of the Seanad on this side of the House as well as on the other side listened to the speech last week of the Minister for Finance who fairly put before the House what is the agenda of political discussion during the coming year. The agenda is made up of whether we are going to tackle the problems we have or whether we are going to run away from them. It will be as difficult for the Fine Gael Party to face up to that reality as it will be for the Labour Party or the Fianna Fáil Party. I am not suggesting that only the Fine Gael Party are willing to face up to these realities. I hope the other parties are equally willing to do so. Up to the present we have the spectacle of Fianna Fáil floundering like beached whales unable to come to terms with the reality of life as it is, not the reality of life as they would like it to be, a complete failure to understand the nature of our problems and to be willing to tackle them.

We have the Progressive Democrats who have inexplicable gaps in their programme. I could not understand why these gaps existed until I read over the weekend that my friend and colleague, Senator O'Donoghue, is obviously helping draw up these economic programmes. Having sold Fianna Fáil down the river and very nearly the rest of us with them he is now working his charms on the Progressive Democrats. Unfortunately, the legacy that he gave to Fianna Fáil and which they passed on to us is still with us. That is the problem because Fianna Fáil are still talking about the solution to the problem being in two areas, one of which I remind Senators is a boost for the construction industry. If you want to solve any problem you boost the construction industry. Did anyone ever stop and ask what are we going to build? Is it needles sticking up into the sky we are going to build, are we going to build more houses than we want? Is it not true to say that we have virtually built enough houses? Is that not the reality? Are we going to build more factories when we have many factories lying idle? Are we going to build office blocks that nobody wants?

What are we going to do to boost the construction industry? Are we going to shovel money into the construction industry so as they can shovel it out to the people who will benefit from it in the construction industry or are we actually going to do anything with it? It is a failure to recognise that the construction industry, like other industries, has changed dramatically. The number of people you need to employ in order to achieve the same results is far less. Shoving more money at the construction industry will not create more jobs.

Fianna Fáil have an alternative proposal, that is to abolish the DIRT. That is grand. I am not in favour of any tax. If you abolish the DIRT and you reduce borrowing, which they are also going to do, then, obviously, you must raise some other tax. Their leader is not willing to tell the Irish people what other tax they are going to raise. I do not mind them abolishing DIRT even though I think it is a very effective and fair tax. I have no money on deposit so it makes no difference to me. They should tell us where they are going to get the money to do it.

Senator Honan is only right in one thing she said. It was a very important part of her speech and I go along with her. There is a crisis of confidence in this country. That is a truthful statement. Anybody who runs away from that fact is running away from reality. It is also running away from reality to pretend that the crisis in confidence is related only to the existence of this Government. The crisis in confidence is a lot more fundamental. It is a crisis in confidence in our political system, in both Fianna Fáil, Fine Gael, Labour, the Progressive Democrats, the Workers Party and Sinn Féin. There is a crisis in confidence and there are things which we can do to help that crisis in confidence and things we can do to hinder it.

I go along with Senator Tras Honan that our people need to be picked up. We need to tell the people that this is one of the best countries in the world in which to live. A recent survey said that in the view of somebody who considers himself an expert in these matters it was in fact the eighth best country in the world in which to live. I will not quibble whether it is the seventh, eighth or the tenth. I am saying any country in that league which is objectively speaking the eighth best country in the world in which to live must in respect of its own citizens be the best country in the world in which to live. If there is emigration the Irish people are not going like they were before to countries with a worse standard of living than ours or a worse quality of life. They are going because they think they are going to the best country in the world in which to live. I am not so sure that the United States of America is the best country in the world in which to live. One of the reasons they think that it is is because we are running down ourselves, we are tearing down the edifice of this nation.

We have got to sell Ireland and we have got to be proud to be Irish irrespective of whether Deputy FitzGerald or Deputy Haughey is Taoiseach or any other alternative which one might possibly comprehend. I refute entirely that this country is not a good place in which to invest. It is good place in which to invest and people who invest in this country get immense benefits as a result. If Deputy Haughey becomes the next Taoiseach, which I hope he does not, it will still be a great country in which to invest. Senators will not find me on the other side of this House telling people that it is not a good country in which to invest.

Mr. Ross

The Senator will not be here.

Mr. O'Leary

Whether I am here or not I still will be telling people that this is a good country in which to invest. We should not be talking down our own country. We should not, for example, as Fianna Fáil are doing, be putting pressure on the market, siding with people who by their very nature are involved in a game of bluff and counter-bluff with the Government stockbroker. That is the nature of the beast. That is what the whole thing is about. One fellow is trying to put one over on the other. Why should we be supporting a person whose sole objective, fair dues to him, is to get the best deal he can for the money he has lent to the State? Why should we be saying that interest rates must go up higher and higher?

Senator Brendan Ryan mentioned at a time when I happened to be reading a document which proved conclusively he was wrong, that the volume of our manufacturing industry was going down. When I challenged him he changed and said exports. I have news for Senator Ryan. He is wrong on both counts. If you look at the document which we all got this morning and if you look at table 5 under the heading, volume of manufacturing industry, you will see that every year since 1981 the volume of manufacturing industry in this country has consistently gone up. The number of people employed within the manufacturing industry has gone significantly down. They realise the problem. This is where the problem lies with regards to the construction industry, too. You can produce so much more with so many fewer people.

With regard to the question of exports, if the Senator looks in the same volume at F.L he will see that exports have consistently increased since 1981 as well. How does a person like Senator Brendan Ryan, for whom I have great time, fall victim to this false sense of gloom? I do not mind being gloomy in respect of those things which are gloomy but I do not want to be gloomy in respect of those things which are not gloomy.

I know there are other speakers who are anxious to speak and I will not take my full time. We have immense problems in this country and we have immense problems associated with the imbalance there is between our current spending and the amount of money we are raising in taxation. There are serious problems which will have to be tackled but in addition to that there are positive signs in the economy as well. On the question of employment you can take the same book and it is all in that as well. What Senator Honan said about employment is right. If you look at last year, the year before and the year before that you will see that approximately 18,000 or more people each year have gone on the unemployment register but if you look at the last six months compared with the previous year you will see it is only 4,000 or 5,000.

Why must we be emphasising the negative? Why cannot we take the positive side and say there is an improvement in that area? Of course there is a vast lot of additional work to be done on that area. I accept that. The agenda has been set. I am quite sure the next general election will be fought on the agenda which was set here by the Minister for Finance last week. That is what will be the issue in the next general election. I am not saying that we will be able to go before the electorate without having made mistakes. Any party who determine to go to the electorate and pretend that the problems the Minister for Finance put before us the other day are not real and do not need to be tackled will be judged harshly by the electorate over the searching period of a general election campaign.

I am confident that members of Fianna Fáil who listened to what I said will, as a result of listening and understanding my point of view, stop and think. I am not saying they will not press this to a vote; I know they will but they should think again and should not confuse their aggressiveness towards their political opponents — and this is a point of view I share — with the greater good of the country and the importance of restoring to our young people in particular a confidence in our democratic system which we, the politicians, failed to maintain by our attitudes in the past ten to 15 years.

Mr. Ross

I was in a quandry about which way I was going to vote on the motion until I heard the speeches of Senators Ferris and O'Leary. That decided me without any doubt that I would vote in favour of the motion.

While it is easy to criticise the Government and to condemn them for their policies, I thought we might hear a constructive defence from them of their policies over the last four years which have resulted in the crisis of confidence we are talking about. I did not hear anything of the sort either here today nor from the Minister for Finance here last week. Senator O'Leary appeared to confine himself on the whole to a political criticism of the Opposition. He may well be right in that but that is not what we are discussing. Today we are discussing the performance of the Government and the crisis we are in.

I was sorry to hear Labour Party doctrine being spouted out by Senator Ferris — an attack on the private sector and praise for the one part of Labour Party policy they unfortunately got in to the legislative book — the National Development Corporation. The National Development Corporation is the biggest white elephant that has ever been introduced in the history of the State, apart from possibly the Labour Party. It has achieved absolutely nothing so far. Senator Ferris spoke about £300 million being available. There is no £300 million available. That is the authorised capital and it is not going to be used. The National Development Corporation have achieved absolutely nothing and will achieve nothing. It is a sop to the Labour Party who have so persistently dragged the Government away from the path of fiscal rectitude and balancing the books. Senator Ferris talked about balance very eloquently. His balance is a long way to the left of my balance. The only thing Senator Ferris cannot balance is the books. The books have not been balanced since the Government came into power.

I do not believe in pure balancing of the books but I will judge the Government on their objectives. There are certain things which politicians in the opposition parties consistently blame governments for dishonestly. Senator Ferris's party did it in opposition and Fianna Fáil do it now that they are in opposition. They claim credit for them when they are in Government. These are all, strangely enough, in the amendment to the motion which the Government have today. It calls on Seanad Éireann to support:

The handling of the Coalition Government of the economy, which has led to a dramatic lowering of the rate of inflation, a significant improvement in the balance of trade and a reduction in the Exchequer borrowing requirements as a proportion of GNP ...."

Those things mainly are outside the Government's power. Governments are consistently claiming credit for bringing down the rate of inflation when they are not at all responsible for it because we are a small open economy. Oppositions are always blaming governments for the rate of inflation, when governments are rightly saying, as the Government said in 1973-77, that inflation rates were beyond their power because of the oil crisis. To put these things down as a credit for the Government in the amendment is dishonest.

In the last part of the amendment we have the extraordinary phrase "calls for the development of policies designed to further improve the public finances and to create opportunities for more employment". This is an implicit criticism of the Government and its policies by Senators Dooge and Ferris. How can they be calling on the Government to do things when they are the Government in this House? Are they dissatisfied with what is going on at present? Are they criticising the Government for not creating enough employment? The amendment to the motion calls on the Government to do things. I agree with that part of the motion. Governments should do these things but Senators have no right to be putting down motions criticising the Government. That makes a farce of the House. I should like to hear Senator Ferris speak again but he has had his say.

There are certain things which the Government should not be blamed for. We are a small economy and world currency movements have a detrimental effect on us. A few weeks ago we had to devalue our punt. The Government cannot be blamed for this. That is beyond their power because we are so small. The world recession is something we cannot do very much about. The price of oil upwards and downwards on world markets which has a dramatic effect on our economy is outside our control. I accept the Government's position on those issues when they claim it is beyond them.

I should like to ask the Government what they have done about those things which are within their power. The main ones are taxation, which they can move around as they like, and public expenditure. In those two areas the Government have, domestically, total control. They have singularly failed by their own objectives and not by any other criterion. This is why they should be condemned here today. They have been capable of doing one thing and have not done it; they have stated objectives and have not achieved them.

Senator O'Leary had the nerve to say that Minister Bruton's speech last week was an agenda for the next year. This is just another agenda. I am afraid the agenda we had before us by the Government in the House and outside it has consistently been completely irrelevant after a short period. The credibility of Minister Bruton coming back to us with yet another agenda does not hold any water.

I should like to say a few things about which I know something. We have had some talk from Senator Honan and from Senator O'Leary about what has been happening in Government stocks during the past few weeks. What has been happening has been very simple — I work buying and selling Government stocks from time to time — people do not want to hold Government paper. It is quite straightforward. They have been trying to dump it at any price on the Government's stockbroker. They did not want to hold it, the Government stockbroker did not want to hold it either and neither do the Government want to hold it. This is as good a barometer as one will find in the economy — the attitude of people in the financial institutions who know much more than anybody in the House about what is going on in the economy. Those who hold millions and millions of pounds of Government paper wanted to get rid of it recently at any price. That is principally because they believe the economy and the Government are out of control in this area. They believe we are on a road which is leading to chaos. There are plenty of people in the financial community who not only believe the end result of this lack of control, which was symbolised in the current budget deficit overrun in September, would be that we fall into the hands of outside forces like the International Monetary Fund but they also believe that it would be a good thing because not only this Government but the Fianna Fáil Governments before them right back to 1977 have shown they cannot control the economy, that we are living in a fool's paradise; that our expectations are too high and that we cannot for some reason, because we have promised too much, balance the books.

I understand the problems of being in Government. They are absolutely immense but people should have a little more understanding especially those in the Labour Party, of the reasons public expenditure should be cut and of the long term consequences of not cutting public expenditure. It is very difficult to cut public expenditure. We heard from Senator Ferris why it is difficult to cut public expenditure. If you do not cut public expenditure eventually you will go bankrupt. It is quite simple. In the end the results of bankruptcy are far worse for the underprivileged, those whom Senator Ferris claims to be defending, than is a certain amount of fiscal rectitude which would have some short term ill effects on everybody.

I have said enough on public expenditure. I will say a few words on taxation. I shall be brief in order to allow Senator Robb in. Not only have this Government offended the business community, the under privileged, the unemployed, they seem to have offended everybody. It is quite extraordinary that despite the taxation they have imposed and kept on, they have offended every single sector of society. From my experience Senator Honan is right that there is no confidence in the business community, but I do not think there is any confidence or any feeling of relief among the PAYE workers or among the unemployed. So far as I can interpret we are getting the worst of all worlds from this Government. The farmers, about whom I do not have a great amount of knowledge, are apparently discontented as well. It seems to be a singular achievement that you can offend every single sector in this society. This seems to point either to enormous insensitivity or total ineptitude. I can tell you what the business community feel — they feel crippled and stifled by taxation, that they have nowhere to go in relation to taxation, that VAT and other taxes are too high, and that there is no point in expanding because they will be hit by taxes left, right and centre. Senator Ferris criticised the private sector and said they have not produced the employment. The one thing Government can do is create conditions whereby the private sector can expand and the one thing this Government have done is crippled the private sector. I should like to give Senator Robb five minutes.

Mr. Robb

I will try to be synoptic and very brief.

Not only is there a crisis of confidence in this part of the country, there is a crisis of confidence in the North. Here we have a weak economy, there we have a subsidised economy. We have to look at what Senator O'Leary asked: "Is the system right?" I firmly believe that whether it is a Fianna Fáil Government or a Fine Gael Government this process of emergency financing is likely to go on regardless every five years, one following the other unless we ask ourselves whether, if we believe in Ireland as Irishmen we have a sufficiently unique system that is appropriate to our development as a people so that we can come to terms with the weak economy in the South and the subsdised economy in the North?

Therefore, I ask you first, to look at the problem of employment because in a high technology area as John Healy has said time and again, the days of full employment in the conventional sense have gone. What we, therefore, have to ask ourselves is how we create a system where we can have an equitable share of available employment and allied to that a share of the profits, the products and the power so that people are not standing on the touch line of our society but feel involved in it and can see they are determining the future and the structures they want to live in.

We must have a fair share of necessary employment, a fair share of profits and products, a fair opportunity for creative activity at community level, fair access to the decision making process and along with that a fair distribution of power and a decentralisation of power to make that participation effective. It is most important that at community level power is given for collective decision making. We must mobilise the technology which is appropriate to the needs of the people of Ireland and also mobilise Irish expertise for Irish problems run by Irish people in Ireland. In that respect we should challenge all our third level institutions to see themselves as fulfilling the demands made of them by the people of Ireland so that their expertise and philosophy to education and development can be mobilised for the benefit of us all.

We have to look on one hand at the resourcefulness and on the other hand at resources. How do we find, develop and liberate the talents of our people and how do we marry those with the resourcefulness of the country in a share-today, conserve for tomorrow situation? In order to do that we need to look at central Government and community power-lessness. The system of central Government should be radically changed. This would require a change in the Constitution. We should look at the unitary list system so that a party who get the number of seats proportionate to the number in central Government — if there are 100 seats in the Parliament and you get a hundred votes whether they come from Kerry or Louth or wherever — they have the right to a seat. That would result in more parties than there are at present in Parliament and a potential for political destabilisation. In order to overcome that we should look at the American system and have Parliament sitting for a set number of years once elected to give a certain amount of security to those who are trying to change things. In that system the TD, the MP, the Assemblyman would be far less likely to be caught up in clientelism and jobbery and would be there to change laws to meet needs which cannot be met legally at present.

Going with that we need to look at how we will decentralise power back to the regions and back to the communities. Let us look, for instance, at the Faroes — 40,000 people with one local authority to every 700 to 800. In Iceland there are 250,000 people, about the same population as Connacht, with 250 local authorities, 40 of which are able to levy income tax, property tax, business turnover tax. Switzerland has almost 3,000 local authorities, one for every five square miles. In West Germany and France the ratio is one for every 2,000 of the population. These are vigorous societies with vigorous economies. We should look, therefore, at the urgent need to decentralise power and particularly economic power.

We should have a new tax system which would decide what proportion of the total tax of each individual is to be collected locally, what proportion is to go to the region, and what proportion is to go to the centre. I suggest that a much higher proportion should go locally so that the people living locally have the power to determine priorities and to determine the criteria on which those priorities are based and to do effective things where they live.

We must strengthen our citizens advice service throughout the country so that people can go there, rather than pestering TDs who should have more important things to think about, to find out where and how they can get the services they need. We should have a community forum in every community in the land to discuss important issues such as the economy, such as the use, abuse and mobilisation of resources. We should have community guilds where we would deal with health matters, education matters and so on. Above all else we need to look again at the Constitution and ask ourselves are we in danger of amending piecemeal this Constitution which has served the people for 50 years rather than saying the situation has changed since it was drafted in 1937 and we now need to think about a Constitution which is more likely to liberate the talents of the people and to redistribute power and effectiveness in the way in which we can do, that is, as Senator O'Leary suggested, mobilise Irish people to have a new pride in themselves, to go forward together respecting difference and recognising the great well of talent and tremendous resources we have which need only to be respected and developed in order to give us a sound economy.

Mr. Cassidy

Why is it that every time we have a Coalition Government a massive crisis arises? We have had four Coalition Governments and everytime we have had the same problems — massive emigration, redundancies and problems of confidence among the self employed. All these problems stem from bad government. I can only come to the conclusion that there is no point in making excuses. They have been in office for four years and if there cannot implement their policies in four years they should not be in government.

The last time the books were balanced was in 1972. During the 14 years since then, Fianna Fáil were in government for four and a half years and Coalition Governments were in power for the remainder of the time. The national debt in 1981, when there was a change of Government, was £12 million. Today it is £23 billion and nothing to show for it but with unemployment increased by 65,000 and emigration stated to be 100,000. If one went to New York or Sydney and saw the population of well educated young Irish people there one would put the figure at nearer 150,000 or 200,000 for young people who have emigrated in the past four years. That is the situation in Ireland today. That is what the youth of this country face. If there was ever a time this country had to look to the youth it is now — to stand up and to give us correct government in the future. The greatest scarcity in Ireland at present is not, as was the case in the past, education. The greatest scarcity so far as this Government are concerned is confidence, confidence to show the way and do the things that will provide a better future for everyone in Ireland.

It seems that we are going to have to put up with this crisis for another while. In order to keep Fianna Fáil out of power, this Government are going to act in a caretaker capacity. We all know what happens when you have power and you do not use it — it is a minus situation. That is what has been happening in Ireland for the past number of years.

I heard many eminent speakers here highlighting many points. In 1981 we were told the incoming Government were going to be the Government of job creation; they turned out to be the Government of emigration. We were told at that time they had credibility, respectability and all the magnificent fine qualities nobody else had. We were possessed by this Government of intellectuals — the Government who had all the answers. They have turned out to be the most disastrous Government this country has had. I say that from my 40 years existence on this island and on the basis of what older people have said to me.

The question of credibility and respectability have been raised in the past few months. The Minister of State at the Department of Agriculture is present tonight. The devaluation of a 6 per cent in the Green Pound was meant to help farmers. At that time meat was £1 per pound and today it is still £1 per pound. Where is the money? Either the meat factories have it, the Government have hijacked it for their own funds, or the Minister for Finance hijacked it for his own capital funds. The farmers whom the money was intended for, do not have it. A 6 per cent increase in farmers' incomes would be substantial and would be of enormous help to them. These are the questions we are asking the Minister.

We were told by the media that this was going to be the Government of credibility and that no one else possessed all their charm, decency or honesty. The people of Ireland will be the judges in the next general election. To try to make a living in this country is regarded as indecent. There is the attitude, how dare anyone show a profit at the end of the year. If there is no incentive there is nothing.

In relation to the DIRT tax, we all know that because of it £1.5 billion has left this country. We all know, too, that there is section in the Finance Act which allows the Revenue Commissioners to go into the banks and investigate the accounts of decent men and women who had to emigrate to England and elsewhere — mostly during Coalition periods of office. These people still kept the spirit of the old soil, kept in touch with their families back home and longed for the say when they could return to Ireland and make a living here. The Government should not allow the Revenue Commissioners to go in and investigate the accounts of these people. They send money to the banks here for the day they come home. I call on the Minister even at this late stage to repeal this provision in the Act. It is bad enough that this country could not provide jobs for these people in the first place and that they had to emigrate but it is a scandal to hammer the nail home and in the final analysis to say to them "You can never come back home because we do not want your savings, we are allowing the Revenue Commissioners to go in and investigate them. Take them out of our country". This has caused enormous panic among our unfortunate emigrants.

We all know of the mooting of certain things which were allowed in the previous budget. The Government are sitting down now to put the budget together. They are going to do their best to bring in a budget for the sake of staying in power and for no other reason but to stop Fianna Fáil from getting into power. I plead with them to stop the scare rumours before the budget. We heard the scare rumours before when, for instance, building societies were to be investigated. These kind of rumours hype up the bad news so that when it arrives it does not seem as bad as it is.

Mr. Killilea

Bond washing.

Mr. Cassidy

That is right. The result is that the country is suffering. The small investor ought to be able to leave his money deposited without interference from the State.

The golden rule should be confidence, confidence so far as the self employed, the young people and the investor particularly are concerned. Unfortunately after four years confidence is sadly lacking.

Question put: "That amendment No. 1 be made."

The Seanad divided: Tá, 26; Níl, 20.

Tá

• Belton, Luke.
• Browne, John.
• Bulbulia, Katharine.
• Burke, Ulick.
• Connor, John.
• Ferris, Michael.
• FitzGerald, Alexis J. G.
• Fleming, Brian.
• Harte, John.
• Higgins, Michael D.
• Hourigan, Richard V.
• Howard, Michael.
• Kelleher, Peter.
• Cregan, Denis (Dino).
• Daly, Jack.
• Deenihan, Jimmy.
• Dooge, James C.I.
• Durcan, Patrick.
• Kennedy, Patrick.
• Lennon, Joseph.
• McDonald, Charlie.
• McGonagle, Stephen.
• McMahon, Larry.
• Magner, Pat.
• O'Leary, Sean.
• O'Mahony, Flor.

Níl

• Cassidy, Donie.
• Conway, Timmy.
• de Brún, Séamus.
• Fallon, Seán.
• Fitzsimons, Jack.
• Hanafin, Des.
• Hillery, Brian.
• Honan, Tras.
• Hussey, Thomas.
• Kiely, Rory.
• Killilea, Mark.
• Lanigan, Mick.
• Lynch, Michael.
• McAuliffe-Ennis, Helena.
• Mullooly, Brian.
• O'Toole, Martin J.
• Ross, Shane P. N.
• Ryan, Brendan.
• Ryan, William.
• Smith, Michael.

Tellers: Tá, Senators Belton and Harte; Níl, Senators W. Ryan and Séamus de Brún.

Question declared carried.

Motion, as amended, agreed to.