Skip to main content
Normal View

Seanad Éireann debate -
Wednesday, 17 May 1989

Vol. 122 No. 17

Finance Bill, 1989 [ Certified Money Bill ]: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

The point I was about to make when we adjourned at 6.30 p.m. was that in the midst of this crisis that has developed in the country a number of other things have happened which have gone almost unrecorded. One of those has been the extraordinary improvement in productivity in this country. Productivity is the real measure of whether a country is developing economically, or at least it ought to be if there is any proper system of distribution.

Let me give some figures. It depends on how you compare things, whether you base them on official exchange rates or purchasing power parities. We will take official exchange rates, because they are the official measures. In 1971 agricultural productivity in this country was 46 per cent of that in Britain; in 1986 it was 94 per cent. In 1971 industrial productivity here was 93 per cent of that in Britain; it is now 114 per cent. The production per head of the average worker in Irish industry is now higher than that in Britain. In terms of services, there is a similar increase. Even more impressive is the growth in productivity of the Irish workforce by comparison with the smaller countries of the EC, like Belgium, the Netherlands and Luxembourg, where industrial productivity has increased from 61 per cent to 77 per cent of industrial productivity in those countries.

There are other interesting statistics about productivity that I do not propose to dwell too heavily on. What is quite clear is that there has been a dramatic increase in the productivity of our agricultural workforce, of our industrial workforce and indeed of our workforce in services over that period from 1971 to 1986 while at the same time — and I am quoting from the same report that I referred to earlier —"Living standards have remained entirely static". In other words, those who are at work in this country in agriculture, industry and services are producing in the various areas more and more, more efficiently, but the country as a whole is not seeing any benefit from that.

It is a long and interesting discussion as to why it should be that our workforce in its various areas is vastly more productive than it used to be but our living standards have remained static. It is easy to say that it is because of the state of the public finances. In my view it is because of an inability related to our taxation system to capture the benefits of that increased productivity. We have persisted with a low wage economy policy. We have persisted with a low corporate taxation policy. Therefore, if you have a poorly paid workforce dramatically increasing its productivity and you have corporate profits increasing at an astronomical rate and you do not have any method of retaining any significant proportion of those, then the benefits of that vast and substantial increase in productivity will not be available within the country. It is something close to a scandal that such dramatic increases in productivity have produced no significant improvement in living standards. It is an appalling record of the inadequacy of our ability to grasp the benefits of dramatically increased productivity.

Of course, one of the reasons why living standards have improved — not the only one — is that we have chosen in some cases to use taxation to distribute some of that benefit in terms of services. We are now liable to give away that in return for nothing, in return for no benefit in terms of employment, in terms of long-term damage to our employment creating possibilities because of the fact that our workforce will become increasingly poorly educated as the educational services fall apart; as our health service becomes a two-tiered service, with a good service available only to those who can afford to pay, and pay heavily, and an appalling service available to the vast majority. It will become a less and less pleasant environment in which to live and in which to bring up children. That will be the price in the long term that will be paid for a simplistic, in my view, strategy of economic development.

I have a few concluding remarks to make on the Finance Bill. There are a couple of very specific proposals that I regard as important but which are absent from Irish taxation legislation. The first is something that operates in some of the Scandinavian countries. It is a very simple way of ensuring a relatively honest payment of income tax, that is, that every citizen's income tax payment — not their allowances but the amount of tax that each citizen pays in any given year — be a matter of public record. It is not something that should bother the vast majority of people on PAYE, because, if you know the value of their mortgage, it is possible to work out within a few pounds how much tax they would be paying but for a large sector of our society the simple disclosure of the amount of income tax they pay would be sufficient to create the sort of public uproar that would guarantee the political will to enforce a fair taxation system.

It is the sort of thing, that is not fashionable in this country. Given that all our financial institutions can advertise absolute confidentiality when they are trying to attract savings, one wonders confidentiality from whom. They are hardly going to disclose it to competing institutions. They are hardly going to disclose it to other customers. One presumes, therefore, it is confidentiality from the State but one wonders why it should be confidential from the State. One can only imagine there is only one reason it should be confidential from the State and that is in order to enable people to avoid paying the tax they should be paying on that money. This effectively means that all our allegedly law abiding financial institutions are involved in a conspiracy to defraud the State and should be prosecuted accordingly, because that is what they are doing. They are involved in a conspiracy to defraud the State, they are providing facilities for people to avoid paying their lawful taxes and accordingly they are quite clearly, and have been for some time, a disgrace to the country.

The other question is the question of section 23 lettings, indeed section 23 of the 1981 Finance Act as amended by sections 27, 28 and 29 of the 1988 Finance Act. If one is prepared to be reasonable and not be too excessive, these are reasonable proposals to encourage people to purchase or develop new apartments or houses for letting. The idea as presented to the public was that the construction cost of such new developments can be offset against the rental income. The interesting thing is that the purchase cost may be offset not just against the rental income of the new development but against any income from any other rental properties.

What this means is that, while the new rental houses and apartments have to meet minimum standards — and they are generally of a high quality — there is no such condition attached to the other rental properties on which relief is claimed, for instance, a landlord of slum properties — and there is a considerable number of what can only be described as slum properties in the private rental sector in this city. I remember far too well from my own student days a considerable number of what could only be described as slum properties. Such a landlord can buy a new section 23, as they are called inappropriately, an apartment or house, and as a result he could enjoy the income from his slum properties effectively tax free.

It is extraordinary that we would have a tax provision which effectively subsidises slum landlords. I cannot believe that it is an accident. I have to believe it is part of this mythological enterprise culture based on a romanticised image of the entrepreneur. It is one thing to try to create conditions for the development of decent private rental accommodation. It is another thing to make provision in the Finance Acts for tax breaks for slum landlords simply because they take advantage of one small section of the Finance Act. I will repeat again. Somebody buys a section 23 apartment and the tax that would be due on all rental income from all other properties can be offset against the construction costs of the one section 23 property. It is quite outrageous. It achieves no purpose that I can imagine other than to create an incentive to maintain slum dwellings. I cannot see in any way how it can be justified other than a fear of the problems that might develop if these provisions were to be taken away — in other words, to a certain extent it is a rewarding of friends.

Neither is the tax relief linked to standards of good practice in the management of either the new or existing properties, such as the use of written tenancy agreements, rent books or a minimum period of notice to quit. It is quite extraordinary again that simple things like that, that would not cost a penny, are left out of an attempt to create a good market in private rented accommodation. It is in some ways a little puzzling that, at a time when a market ideology is extremely fashionable and at a time when there is quite a deliberate policy to try to encourage people to look to the private sector for housing rather than to the State sector, we are not prepared to create the conditions in terms of standards, tenants' rights and things like that which would encourage the other side of the equation, the demand for private rented accommodation to expand. We would concentrate it entirely on creating a supply of private rented accommodation via section 23.

Of course, most people with families or with any long term future where they are living will not move into private rented accommodation without some sort of security of tenure, some sort of guarantee of standards, etc. They do not have them and it is extraordinary that the section 23 provisions make no provision for it. It is essential that tax concessions under sections 23, 27 or 28 should be linked to proper standards. Standards should obviously involve conformity to by-laws where applicable. It is an extraordinary thing that there is no obligation on somebody who is claiming a section 23 concession to satisfy the Revenue Commissioners that they have properly conformed to the by-laws of the local authority within whose jurisdiction the property has been constructed. We do it for all sorts of other areas, but we do not do it for people developing property.

Take, for instance, simple things like the provision of rent books. It has been possible for the Minister for the Environment since 1982 to make rent books compulsory. I am entitled by law to a receipt when I do my shopping in a supermarket. I am not entitled by law to a receipt from a landlord if I am in private rented accommodation. Can somebody please explain to me why that is a difficulty? The only reason I can imagine is because of some delusion about the need to protect these frail, fragile creatures called entrepreneurs who are liable to be frightened off by the least inhibition of their activities.

I believe in an enterprise culture, but if the image of the enterpreneur as vigorous, independent, resilent and self-sufficient is any way true when a few simple regulations, which would improve the quality of market demand for the property which he or she is attempting to let, far from destroying his or her market, would in fact improve the quality of the market within which he or she was operating. I am not deluded enough to imagine that it is going to happen this year, but I would suggest to the Minister that the whole question of section 23 properties ought to be re-examined, not necessarily to get rid of section 23 at all, but to ensure that section 23 allowances only apply to section 23 properties and not to every property from which rental income is being derived; secondly, that section 23 allowances only apply to houses that meet appropriate standards in terms of letting; and, thirdly, that proper conditions for letting apply to section 23 properties. It is an extremely important area. I know there was an attempt to raise this issue by way of an amendment on Committee Stage in the other House but it failed on a matter of procedure and was ruled out of order. I raise the matter here to invite the Minister to comment on it with a view to future action.

I would be inclined to vote against the Finance Bill. The whole taxation philosophy in this country is quite uneven and one-sided. I can see that this Government have made some improvements but until the burden of taxation is taken away from work and goods and services and put on capital, property, land and wealth, the basic fundamental requirement of fairness in our society cannot be met. Without fairness in our society it is impossible to persuade our citizens that it is worth while paying taxation in order to provide decent services.

I welcome very much the improvement in the economy that has been taking place in the past couple of years. Indeed to bring this about has been a major task and a major achievement, especially in view of the fact that so many issues and problems are involved, including external ones. This Bill is something that is vital to the lives of all of us and is of concern in our day-to-day livelihood and activities. Apart from some of the more fundamental issues contained in the Bill, I am particularly glad to see and to note that there are other issues included. At first sight some of these might appear irrelevant in view of the important commercial and economic sections in the Bill but nevertheless, it is a tribute to the thoroughness and the wide-ranging effect of the Bill that these items are included. It is with these items — concerning what I might broadly call cultural issues — that I will concern myself in these brief comments.

The first relates to relief for expenditure on certain buildings in designated areas. For the first time since 1982, the Finance Bill this year provides for relief for the expenditure on the repair and maintenance of certain types of houses — principally what one might call heritage houses, rather notable and important buildings provided these houses are open to the public on a limited number of days each year. I am now glad to see that an extension of this concept has taken place in this Finance Bill. It is very helpful in the general revitalisation of so many of our towns and cities to see this particular provision which will allow income tax relief and so encourage people to come and live in inner city areas. By doing so, houses that are historically or architecturally significant will be renovated. Indeed, part of the apparent run-down of so many of our towns and cities, or at least sections of them, is due to the general neglect, occasioned at least in some cases by monetary costs of so many houses and, consequently, street scapes.

I am not going to isolate examples but we all know one of the main arteries of communication in this city, and indeed one of its main exits and entries — Gardiner Street — has been so run down that it is now virtually a blitzed and, in part, a deserted area. I trust that, with this quite innovative and adventurous approach, we will see before very long, coupled with urban renewal, a major improvement in our cities. I wonder where this is going to stop. I know these houses have got to be in designated areas but I hope the Minister could be a bit flexible in this and if it happens that there is one part of a street outside a designated area which is considered to be of sufficient architectural merit that, too, might be included. I have no reason to doubt that that sort of flexibility will or does exist. The advantage, as I have said, of all of this is certainly to improve the living quality in our towns and cities and to bring about a revitalisation which is so badly needed in so many of our towns.

The second issue I would like to comment on is something which I think has been a great success over a number of years. It may not appear very spectacular to people as such but I think it has been something of great value from the artistic and cultural point of view, and that is the relief to writers and artists. We often pretend to think of ourselves as an island of saints and scholars and so on but it is rarely that something is done for these people. Again, for any country the presence of creative work, whether it be in writing, painting, sculpture or other artistic activities, is something that is very valuable indeed. It was the Taoiseach, as Minister for Finance, who initiated this scheme many years ago and it has worked quite well. Certain additions or improvements have been made by way of appeals and so on. One of the reasons it has worked reasonably well — and I understand it has — is that a certain amount of common sense has been used in its application, and indeed without common sense nothing is going to work. Over the past 20 years or so, the measure has been used in this way and the people who applied for relief were not treated in a very bureaucratic fashion.

Finally, I would like to mention the section dealing with value added tax, that is the amendment of the Sixth Schedule to the Principal Act. It specifically deals with value added tax on works of art. Here again I am certainly full of praise for the fact that this sum has now been reduced from 25 per cent to 10 per cent. Again, this is going to help artists, and indeed the Irish cultural scene, quite considerably. At the moment because value added tax is so high, it is encouraging quite a number of works of art to leave the country. Apart from that it is also difficult, not only for individuals but indeed for galleries and public institutions to acquire works of art. Most of these institutions are working on a fixed budget. Now that their expenditure, or at least their budget for purchasing works of art, will be reduced by a considerable amount — nearly 20 per cent — will, I believe, help with the public element of art just as much as the private element.

There is another aspect to this which I would just like to comment on. I hope this measure will contribute to the return of a number of works of art to this country. Unfortunately, quite a lot of very valuable items have been leaving the country through the auction rooms, not only furniture and paintings but pieces of sculpture and so on. I hope this amendment will keep a greater share of our works of art at home and, at the same time, help to repatriate Irish works abroad.

I am also pleased with the extension of this provision to literary manuscripts of cultural and artistic importance. Again, we have a very notable literary tradition but unfortunately a great deal of that material is leaving the country. It is one of the sad facts that there are institutions in America which are drawing people there to work and study some of the literary material that has left this country. If we want to build up and develop the thrust of getting people to come to this country, the more we have here the better. It would seem ridiculous that our Joyce manuscripts and so on have left the country; at least, thank Heavens, the Yeats material is largely still here. It is very important that we are encouraged to maintain and to keep as much of this material here as possible but this is not the place to go into this in detail.

The Bill lists a certain number of objects and also types of objects but I am not going to quibble about that. In section 63 various objects are listed such as prints, drawings, lithographs and so on but there is an item which is also quite important and which is not listed here — I do not know whether it is necessary to have it listed in this way — and that is, the archaeological material which, of course, has been leaving the country in very considerable quantities and not coming back. As I have said, I do not want to go into detail on this but it would seem strange, for instance, if one section of the National Museum could buy back some material at 10 per cent value-added tax whereas another section of the museum had to pay the full 25 per cent. If that is so it is something that might have to be looked at for the very good reason that it could cause certain anomalies between different sections of one institution.

As I said at the beginning, I welcome this Bill and I congratulate the Minister on his achievements.

The Minister commenced this debate today with what I would call a spiel of blatantly political ebullience although I could more accurately use the word "nonsense". He started by saying that the transformation which has taken place in the public finances has been effected in the last three budgets but this is a patent misrepresentation of the facts. The genesis of the modern economic problems of this State dates back to a decade ago when banana republic budget economics were applied here in the late seventies and were continued into the early eighties despite the alarm bells ringing. No one can be blamed for that other than the converts from recklessness to rectitude who now sit in Government. The Minister was an office holder in the period 1977 to 1982 and he took part in the implementation of that madness. The present Taoiseach, as is well known, spent the years 1977 to 1978 skulking and sometimes sulking in that Cabinet, often describing the economic Ministers who were implementing that policy as "expletive deleted eejits." He eventually got the long and much coveted reins of leadership in December 1980.

We are on the Finance Bill, 1989.

Yes, that is exactly what I am talking about. He went along his merry way implementing with even greater abandon the madness of 1977. I am relating that to the debate as it has developed here today.

You are going a bit far back.

It was raised by others who spoke on this issue today and I have no memory of your taking issue with them. For the accurate record, let it be stated that in 1977 the Exchequer and public service borrowing requirement stood at £1.24 billion or 9.7 per cent of the value of the gross national product. By the time Fianna Fáil left office eventually in late 1982, the Exchequer and public service borrowing requirement had reached over £4 billion or a frightening 20.3 per cent of the value of the gross national product. In 1987 when we left office, the borrowing requirement was 13 per cent of gross national product. A lot of rubbish has been talked about the national debt, its levels and all the other attendant arguments that go with it. In 1977 the total national debt, a combination of external and internal debt, stood at £4.229 billion. Again when Fianna Fáil eventually left office at the end of 1982 it was over £12 billion. It had trebled in that period. I am not stressing the damage the national debt caused to the economy because at least 65 per cent — or perhaps even more — of the national debt is generated from internal borrowings and that is not as damaging as many would say to the economic fabric of the country. The national debt at the end of 1986 was £21.6 billion. At the end of 1987, after Fianna Fáil's first year in office, it stood at £23.7 billion. At the end of 1988, the last fiscal year for which we have figures, it stood at £24.6 billion which is 2½ percentage points higher than it was at the end of 1986.

The Minister devoted quite an amount of his time to lower Exchequer borrowing, low inflation, low interest rates and better competitiveness. He spoke too of the effect of good budgetary results on the business and financial community. No doubt the business and financial community, or at least a majority of that small sector of the whole community, are very happy because of better returns and higher profits in recent years but, alas, these higher profits and better returns have hardly reached beyond that magic circle. The 243,000 people who are unemployed have had no benefit bestowed on them as a result of low interest rates or better profits in the business and financial sector. The 80,000 plus, mostly young people, who fled this country in the past two years find no meaning in the Minister's precocious quoting from the phraseology of political economy.

I was amazed when listening to Senator Ryan talking about our emigrants. I take issue with him. He stated that he had no sympathy for young people who were educated in this country, as he put it, at the expense of the taxpayers and were then leaving the country. That is to completely and totally misunderstand the nature of the problem. About 95 per cent of these people, well educated or not, are leaving this country because there is no economic opportunity for them or, to put it more simply, they cannot find a job here. That is why they are leaving. I am amazed that Senator Ryan who, I understand, has socialist leanings, should make that quite extraordinary statement——

He said we were better off without them.

——about the hordes of young people who are leaving the country. Going back to this phraseology of political economy, listening to the Minister here today and listening to his colleagues I was reminded very much of what Daniel O'Connell said to Robert Peel in a debate in the House of Commons in the 19th century. It was a debate on economic distress and famine in Ireland. The then Prime Minister, Robert Peel, met all O'Connell's pleas with a spiel of laissez faire economics. O'Connell very tellingly said: “Prime Minister, you cannot respond to the cries of want with quotes about the political economy”. In today's Ireland the unemployed, those who are below or on the poverty line — and incidentally that is about one-third of the population — and the tens of thousands of emigrants who are leaving are having their arguments and grievances met with quotes like that by the Ministers in this Government.

I will speak for a moment about agriculture which is my bailiwick in this House as spokesman for my party. I will quote some figures from the National Development Plan 1989-1993 published recently by the Government. The national farm survey of 1987 showed that two-thirds of all family farms had an income of less than £5,000 per annum and only 10 per cent of all farm in the State had an income in excess of £15,000 per annum. In the less favoured regions like the west where. Members will know, I come from, three-quarters of all farms had incomes of less than £5,000 per annum. Let us remember that in this country about 18 per cent of the workforce are still engaged in primary agriculture, that is, living and working down on the farm, as they say, with over 30 per cent of the total workforce employed in primary agriculture and the spin-off area of the food and drinks industries.

What has this Finance Bill done for this all-important sector in the national economy? I would argue, absolutely nothing. The horizon for the agricultural industry in 1989 is full of danger signals. Interest rate increases alone this year will add £20 million to farm costs. The rise in inflation can depress farm incomes in the current year by about 3 per cent. Let us remember that the rise in the general level of agricultural incomes in 1988 was purely due to external factors. The US drought and the previous year's sales of grain to Russia gave an unexpected boost to world agricultural prices and trade which was well reflected here but that will not be repeated this year.

There is a range of technical-market problems this year also to be reckoned with. Sales of marketable cattle will be down by at least 8 per cent in 1989. Average gross margins on livestock production, which is by far the largest component in Irish agriculture, will be about 5 per cent this year, down in real terms on 1987 and 1988. The average margin per acre in this enterprise in 1989 will barely top £120 for each acre deployed. Returns on cereal production in terms of yield per acre and the acreage deployed in cereals will fall significantly again this year — and I have this on the authority of Teagasc.

On the structural side of the agricultural industry, is there any provision in this Finance Bill to remedy the problems which are well identified in the National Development Plan, 1989-1993? I would argue, absolutely not. I ask these relevant questions of the Minister and I hope when he is replying he will give answers. What, in a meaningful way, is being done to draw down Structural Funds to provide income aids for small producers? The income plight of these people has been well identified in the Government's national plans. What structures are being put in place to implement them? What organisation will be involved in implementing integrated rural development programmes? Will increased headage payments, a cornerstone of the structural outreach to small, uneconomic farmers be paid this year? Will the Government accept an extension of the Directive to the severely disadvantaged areas, so unjustly excluded from the benefits of the Structural Funds in 1989? I hope the Minister has a reply to these all-important questions.

There is another area on which I wish to take issue with Senator Ryan. He spoke about the agricultural and industrial output in this country over the past 20 years or so. I will not take issue with him on the industrial issue but I must take issue with him on the agricultural issue because he said that agricultural output increased quite significantly per head of workforce employed in the industry in the 18 years 1971 to 1988. It is quite true, if you use that as your yardstick, that agricultural output per head increased but what he forgot to mention, of course, was that the number of people who were employed in agriculture in that period almost halved, so you are dividing the total value of your agricultural product by about half the figure you were dividing it 20 years ago. Of course, those with the most elementary knowledge of simple arithmetic will know that by doing your sums that way, the output from agriculture has increased. However, far more relevant to that debate, which Senator Ryan did not mention at all, is that the average real income of farmers in that period, in those 18 or 20 years, is barely half the average real income to industrial workers.

I appreciate your interest, and indeed the interests of all of us in agriculture. You can make passing references and repeat what Senator Brendan Ryan said but you cannot have a full debate on agriculture on the Finance Bill or ask the Minister for Finance to tell you what is the agricultural policy. You can make as many references as you like but we are really dealing with taxation and that is the responsibility of this Minister. You would have to look to one of the other Ministers to find out what they will do about agriculture.

With great respect, we are dealing not alone with taxation but with the way the Government spend their money. The Government here have a major influence on the prosperity of the agricultural industry.

Government expenditure is dealt with on the Appropriation Bill and we are now on the Finance Bill, but we will not have an argument about that now. At this hour of the night I do not want a full debate on agriculture.

Of course we will not have an argument but I stick to my original point.

You have it said now.

I will finish my points of riposte to Senator Ryan in any event; I am coming to the end of my submission. The Land Commission has been abolished. What do the Government intend to put in its place? Do they consider the need to give a chance to young or small farmers who badly need additional land to stay in or get into business in the first place? What is being done to set aside a realistic reserve of milk within quota regulations to give an extra quota to young farmers who are setting up in the business with an adequate quota, or indeed no quota at all?

Senator Connor, the Land Commission is not being abolished under this Bill. You should deal with whatever Minister has abolished it and let Deputy Reynolds deal with finance. He will answer what he is responsible for.

I will be arguing the point that if the Land Commission is abolished it should be replaced by another land agency which would have to be financed out of this budget. That is the point I am making. This Finance Bill does not address any of these headings. What we are developing — it is Bills like this that are doing it and we are talking about Government policy here — is a two-speed agriculture industry with dairying and perhaps sheep production doing well while the other enterprises like livestock, pigs, cereals, etc. are doing badly. A Chathaoirligh, you will be delighted to hear that is the end of my submission to the House.

Thank you. I do not like interrupting any of my colleagues, but I wish at times the relevant Minister would be addressed with regard to his responsibilities.

I just want to make a brief comment. As the Minister knows, generous tax relief is available under section 23 of the Finance Act, 1981, as amended by sections 27, 28 and 29 of the Finance Act, 1988. Purchasers of new apartments and houses for letting can offset the construction cost against the rental income from both new premises and any other rental properties and it is really to these other rental properties that I want to address myself. While the new rental houses and apartments have to meet minimum standards and are generally of a high quality, no such conditions attach to the other rental properties on which relief is claimed. This is wrong. For example, a landlord of slum properties could buy a new section 23 house or apartment and as a result he could enjoy the income from the slum properties effectively tax free.

Neither is the tax relief linked to the standards of good practice in the management of either the new or existing properties, such as the use of written tenancy agreements, rentbooks, or a minimum period of notice to quit. In contrast, the corresponding legislation in the UK which encourages investment in rental property, links the tax relief to secured, that is to say, long term tenancies obeying certain conditions. Here in Ireland the section 23 tax relief, as I understand it, can be claimed from example by landlords whose tenants of long standing are still only on week to week leases. I believe figures given recently in reply to a Dáil question showed that the average tax relief granted under section 23 amounts to about £10,000 per claimant.

This generous tax relief should be made conditional on standards of good practice in both the new and the existing rental properties. These standards should include, for example, (1) conformity with the by-laws, where applicable and with basic standards similar to those enshrined in the Housing (Private Rented Dwellings) Standard Regulations, 1984, which lay down minimum standards for formally rent controlled dwellings; (2) the provision of rent books or similar proof of rent paid; and (3) written tenancy agreements. This might in some way obviate what I would call the loophole of people offsetting too much against older buildings or slum dwellings that are not up to standard.

That is the comment I wished to make. Perhaps the Minister would like to reply to it.

It strikes me that we must be a highly efficient and effective House if we can hope to do in one or two nights what it took our less able and less energetic colleagues in the Lower House weeks if not months to do. We should pat ourselves on the back for showing how to deal efficiently with legislation. In welcoming the Minister for Finance on his first visit to the newly refurbished Seanad, I hope he will take back to the Lower House a number of hints on the quick, able and brief dispatch of business so that we can push through the business of legislation, which is our prime function.

It is a very easy option when one does not have the responsibility of being in Government to take a Bill and to proceed to take on everything that is wrong with it, but I do not intend to do that tonight. It is too easy. I am conscious that the second last speaker did a very able job on behalf of the Government against some of my own colleagues. I feel in a kind of besieged position here tonight against, as it were, the grand coalition or everybody bar the Left. We should leave nine chairs on this side of the House to give us a bit of space over here.

This Finance Bill reflects the close cooperation at the moment between the Government and the social partners. Those on the Left of politics will very often criticise the outcome of some of those deliberations, discussions and negotiations. Perhaps they will criticise them behind closed doors more than anybody would do in a public forum such as this.

The changes in taxation in the past two years do not satisfy me. They certainly go further than the Government's commitment in the Programme for National Recovery. Since I will be fairly critical of other things I would like to put those points on the record also.

That is the soft soap.

That, in effect, is a very pragmatic response to an issue. My belief about the present economic climate is that it is one of those interesting moments in history when the Government, the trade union movement and those in industry have a common objective for once, that is, the common objective of wealth creation. It is one of those times in this century when it is in all our interests to develop and expand wealth creation. There are different reasons for it. Wealth creation is attractive from all points of view, but for different reasons. Wealth creation is very important to the trade union movement and to those on the socialist side of Irish politics — I would put myself in that category — because we wish to see a fairer and more equitable division of wealth.

There cannot be a fairer and more equitable division of wealth if more wealth is not created. Therefore, from the point of view of the left wing of politics, it is essential that wealth is created so that we can share it more equitably. That is a very pragmatic response. The Marxist approach would be to divide what we have now. However, the pragmatic response is that we will not be able to do that this side of the revolution. The only way we can improve the position of those who are less well off in society is to create more wealth and hope that the new wealth can be divided better than the old wealth, in other words, that those who survive on wages, those who aspire to be part of the working class might also share in the wealth which, at the moment, is the wealth of the oligarchy of Irish society. That would be the principal objective of those on that side of the fence.

There are people who pretend to be interested in creating employment but those of us, with our eyes wide awake, who were dragged up in a Kerry background and look very closely at things like that, know that what they are really doing is creating profit. Those people on the way to creating profit, con the rest of the country into thinking they are really in the business of creating employment. They continue the con job even while they continue to sack workers in the interests of rationalisation or more efficiency. Those people are also interested in wealth creation because it is a response to their greed need. The greed need can be harnessed for the good of the country at this time.

Of course, the Government also have, as a clear objective, the creation of wealth. The Minister set out in this Finance Bill to clear the obstacles to wealth creation. The Government's view is that wealth creation leads to greater income, greater flow of money and, therefore, greater income to the Government through taxation. That suits the Government's pragmatic response because they are not prepared to take on the 10 per cent who hold the wealth. They are not prepared to reallocate that. Therefore it is in their interests as well. So, in practical consideration of where we are at the moment, it is in all our interests to create more wealth, but we must insist that when that wealth is created it is divided in a fairer way.

I disagree completely with these people, including Gay Byrne — he was at it again this morning on the "Gay Byrne Hour"— who say we should be paying less tax. It is not less tax we need in this country but more tax — more tax of a different type perhaps, but more tax. I do not want the Minister to say: "This is more of it; more tax from somebody else". I am not saying that. We should have an equitable form of taxation.

I noted the Minister's views on employment and unemployment, the creation of one and the elimination of the other — take your pick. It would be begrudging not to say that one welcomes any improvement in the employment figures. There certainly has been an improvement in the employment figures but they are minuscule and I want to put them in the context of emigration. This has been referred to by a number of speakers, some of whom are very close to me but I would not agree with all of their comments about emigration. I will say this much, and I want to state it very clearly, because this has serious implications for all aspects of the taxation system. The birth rate in Ireland at the moment is in or around 55,000 souls per annum, the rate of emigration is in or around 40,000 bodies per annum, and when we add the death rate to that, we are very close to a falling population.

A falling population has a negative impact on every part of national life. What is happening is that graduates are leaving the country. In this month's publication by FÁS it gives a list of monthly trends but it refers to a survey of the 1987 graduates. Forty-seven per cent of those surveyed were in some form of employment but of those in employment, one-third are in employment abroad. The gap does not mean unemployment because many of them have gone on to postgraduate studies and similar types of further studies. The actual figures are not as bad as I have said there but the main point I want to make is that one-third of the graduates in 1987 are working abroad. What does that mean? I would like the Minister to respond to me in terms of balancing the books.

Those of us who survived and exploited the educational system to come through three levels of it have something to give to this country, and should be required to do so. I never tire of making the point that when I first enrolled in a third level institution, before I was allowed begin my course of study I had to sign a very official legal form giving an undertaking to the Minister for Education that I would work in the State for five years before I dared consider emigration. That is only 20 years ago. In other words, the State said to me: "We are investing a lot of money in putting you through third level and we need you in this country. If you are going to leave this country you will have to buy your way out of it". That was the precise position. I did not leave and here I am today making a marvellous contribution and I could have been lost.

Money well spent.

It is important to keep that in mind. The Minister said that the employment figures "were not impressive" which is an under-statement or the over-statement — I am not sure which, I must get my perspective right in this. It does not meet the needs of those people who have left the country or those who are unemployed. It is not just figures. It is a matter of dignity, of contribution to the State and of participation, which are all aspects of unemployment which have to be looked at in a Finance Bill for the greater good of the State.

The exports for last year improved by approximately 13.9 per cent. I have looked at the figures for all of last year on a month-by-month basis and I have looked at the figures to date for this year. I am very worried about them because I see what is happening. There is a coming together. The balance is swinging the wrong way at the moment. No matter what the Government do about it, it is inevitable because it is part of an economic development over which the Government have no control. There is no point in looking for credit for it now and in a year's time trying to distance themselves from it and blame problems on the Deutsche Mark or whichever is the dominant currency at that time. We can assume that it will be the Deutsche Mark.

I would like the Minister to have the honesty to say that we are no more than a "green mark" at the moment in European terms and that we will not aspire to be anything more than that for a long time to come. I am not saying that is necessarily a bad thing but it is important to accept the realities of life. There are a number of things we have failed to address. The low inflation of the past number of years, coupled with the increase in exports over imports of 14 per cent last year, has meant that there is a larger amount of disposable income available at present. Those people with money have more money than they used to have years ago. Because inflation has gone up very little, 3 per cent, the standing cost per annum for commitments is basically the same. That means that the people with money have more disposable income and such people in times of low inflation traditionally spend. Similarly, in times of high inflation and very little disposable income people tend to save. This has got to do with the psyche as opposed to any logical reason. That has always been the trend and always stands up to examination.

When people have more disposable income, what do they do with it? I am delighted the Minister has come back so that I can continue my economic lecture which should be very helpful in planning the future state of the country. I can see he will listen with avid interest.

To recap I was dealing with what we are doing about disposable income at the moment. What do people do with it? They spend it. People spend extra disposable income on two main things, houses and cars. We sold more Mercedes last month than in any month since Mercedes started operating in this country. There are two ways of looking at it. The Minister may stand up and say we are doing great and it might go down very well in a certain class and strata of society but it is not any indication. It means we have created wealth but we are not redistributing it.

The Minister would always say that his objective would be to a fairer distribution of wealth. There are measures in this Bill which go some way towards improving the situation. I know he would not claim to have sorted out the problem, but I am making the point that not only have we failed to redistribute but we have badly failed to redistribute wealth. At a time when we are told we are in the worst shape we have ever been as a State, we sell the highest number of Mercedes that have been sold in any month. That is only one indicator. It is an indicator that will not be in the next issue of the statistics for the month or in the Iris Oifigiúil but I am interested in having it on the record of this House.

We have a greater disposable income, and we start spending it on cars. The Mercedes bit is only an aside. It is not just the Mercedes. The sale of cars has zoomed up. The saddest part about that is that every single one of those cars contribute to a worsening of our balance of trade because they are all imported and every single penny of a disposable income spent on new cars is worsening the balance of trade. At an earlier stage in this session I made a very strong recommendation and plea to Government that we would get our act together and get into line with the rest of Europe and stop driving on the wrong side of the road by having cars with steering wheels on the same side as the rest of Europe and driving on the same side of the road as the rest of Europe. It would then be easier to shift assembly points from parts of the European mainland to this country. It is time we got moving on that.

That is just one thing. People are spending too much money on cars and the balance of trade is worsening. The Minister nods to the Central Bank; the Central Bank nods to the market; the short term lending rate goes up and suddenly money gets tighter. Before that happens somebody pulls the plug on the property market and people who could not sell houses for £28,000 six months ago are now being offered £50,000 and people are pleading to give it to them. People are lining up at the door with £50,000. Where did the money come from? These people had not a shilling to buy property six months ago. It is the greatest scam imaginable. It is hype and I have to agree completely with the Minister for the Environment on the issue. Somebody is conning somebody.

At the same time the punter will lose because the punter now says: "Property is going up. Invest in property". In all of Europe no other population has a higher density of house ownership per 1,000 of population. We have this great thing about owning our own houses. Not only do we own our own houses but we go into debt to do it to the extent of whatever income we have available. The person earning X thousand pounds a year will work out how expensive a house he can buy. I have never understood that approach but that is the approach. How expensive a house can I buy? How expensive an address can I buy? People say: "This is what I can afford. Take it to the limit". Therefore, they commit all their disposable income to that property. They might have bought a new car, which has worsened our balance of trade figures, or they might have changed a car, or whatever, some time earlier. Now the Central Bank are tightening up. Now the interest rates go up. Now the repayments go up and people who committed their disposable income have not got enough income to meet their commitments. Then we are back on the downward spiral of the building societies taking over houses as we have seen over the past five years. What does that resolve? The Finance Bill has to approach that spiral and intervene on it.

I want to get back to the question of exports. Basic planning has to be reflected here in a whole lot of ways. Recently I was looking at the changes in terms of where workers are placed. In a set of figures given between 1984 and 1988, the numbers of workers employed in service industries increased; the numbers of workers employed in agriculture related industries reduced from 16 to 15 per cent; and the numbers of workers in manufacturing industry also decreased. It is not a good development that the numbers of workers in industry should decrease. When I was going to primary and post-primary school you could have sliced the allocation of workers in thirds: one-third in agriculture-related, one-third in service-related, and one-third in industry. That was not useful either because there was a preponderance in agriculture for a country like this.

Certainly the present developments are worrying. I want to put to the Minister some of the things I have reflected on. It is important to recognise that the countries who spend the greatest proportion of their GDP on research and development are countries like France, Japan, Sweden, the USA and the UK. If you take the European figure, only Spain spends a lower proportion on research and development than Ireland. I raise that point for two reasons. First the Finance Bill should not be directed at business expansion schemes only. I welcome that move and I welcome the tightening up by the Minister in that area. I welcome the tightening up on the abuse that was taking place under the business expansion schemes.

There must be a more refined instrument here. We must look at rewarding research and development in a very serious way. Not only are we not improving that situation but we are worsening it. I want to give an indication of how we are worsening it. Because we do not have research and development, many of our industries are dependent on the use of products as basic raw materials, products whose patent has expired. This is what allows Irish small industry to compete in Ireland with the multi-nationals. I will give an example of what I am talking about. A small chemical company in Ireland are working in agricultural chemicals or whatever. They are using as their raw material chemicals that were patented at some stage and they can only use them when the patent has run out. At the moment — I know the Minister will be aware of this from his former ministry — that patent is 16 years. Much of our industry is based on starting up in the 17th year and remember a lot of our industries are competing in the world market with countries who do not recognise the patent at all, the Third World, the unrestricted etc. I know the Minister's former Department were considering bringing legislation which would extend the patent from 16 to 20 years. I can cost that in jobs.

In this Finance Bill we should actually be giving support to industry in all sorts of ways and we should be directing it in particular at research and development. The reason I am so hot on this particular one is that the Minister refers to 1992 and the changes that will take place. I am conscious of European conventions on these things to which we are committed. European conventions which will put us, as we stand on the periphery of Europe, competing with the multinationals and the major industries of the rest of Europe on level terms. Therefore, we should adopt as many protectionist policies as we possibly can in the intervening period in the hope of getting support when the plug is pulled on us in 1992. It is far easier to make a case to show the devastating results that will take place at that point. Beyond that point are we going to stand on our own two feet? How can we stand on our own two feet if we do not have the investment in research and development?

At the beginning I referred to the Government's negotiations with the social partners and in particular to the trade union movement. I want to refer to the present arrangements on public service pay which have been welcomed by many sides. They certainly will help categories of workers in the public service. I would also like to hear words of praise for the public service from the Minister because, too often in discussions, Ministers said our objective is to cut back on the public service, cut back on public expenditure without explaining to the people that what they are really talking about is worsening the quality of education, worsening the quality of health care, etc. etc.

The public service is that part of the State structure which looks after us from the womb to the tomb, or should, but quite certainly from the birth cert to the death cert. Everything in between has to be dealt with through the public service. For that reason also, I was very pleased to hear as an aside the Fianna Fáil chairperson of one of our joint committees stating yesterday that privatisation is not the answer to everything in discussing Aer Lingus. We are now beginning to see that. The work done in this Chamber is an example of how work can be done efficiently and within time. It must be recognised that implementing pay awards to the public service is an investment in the future of the State.

There is one thing I do not understand which is relevant to the Finance Bill: I do not know if the Minister has been asked this question in the other House. Although they have had three months to wander their way through this Bill they do not seem to have made any major inroads to it. As I said earlier, the efficient dispatch of business by this House in doing in two days what it takes the other House three months to do is certainly something which should be reflected upon by all concerned in terms of how best to deal with legislation.

There has been no mention of the Gleeson award. This goes back to the earlier point of investment in the State. Where are we going to if we are going to lose all the best people in the public service to private industry? It is essential that we pay people to reflect their value and worth. Therefore, I urge the Minister to give a commitment here that the outstanding parts of the Gleeson report will be implemented. I am sure his advisers will support me in that. I hope they write in supportive comments when they come back. If I may be so bold, I would advise the advisers to write in on the last page of the script "and, of course, I intend implementing in full the Gleeson award" and the Minister is on his own from there on. I ask people to consider that.

I welcome the Minister's commitment to increasing the level of self-assessment. I believe he would give credit to the previous Government who also worked closely in this regard. I believe that all sides of the political spectrum would agree that the idea of putting responsibility on people to make a returns promptly and also making them responsible for what is wrong is very effective. I am bothered about the penalties. It is extremely odd that in the history of this State we have seen all sorts of fiddles and frauds in taxation but have we ever imprisoned anybody for defrauding us in relation to income tax or any other taxation? Have the full rigours of the law ever been brought to bear on people who have defrauded us of millions of pounds over generations? I am not asking the Minister to be defensive about that and I am not asking him to defend the Judiciary because I know how popular they are with the Government at the moment but I want a statistical response from him so that I can include it in my election address next week.

The saddest part of the Bill is the issue of capital and corporation tax. There should be a more equitable distribution of wealth and a fairer share-out of wealth. We have failed in that and I would like the Minister to say he agrees with me that they have failed to do this. I will not play again the tax amnesty returns of last year except to say: "I told you so for years".

Senator Norris welcomed in glowing terms the Minister's response on the inner city dwellings. I would also like to put on record that it is a reflection on the Minister that he was big enough and generous enough to give credit to Senator Norris but, in fairness, he has always been a big man in dealing with such issues. However, while it is impressive — I totally support it — to give specific tax relief to people in buying and renovating buildings which are historically and architecturally significant, it is important to also look at property tax and the lack of returns from it. I am very tempted to relay one story the Minister told in private company about a few people in Dublin paying tax on their houses, which included the most senior Minister and the third most senior member of Government. That sums it up. It is fair for the Minister to say: "The postman would bring in more names and addresses of people who should be paying property tax than we have got in the last year". That is what I have always said. Perhaps we need more people working in the Revenue Commissioners, hunting out extra money for the State. I enjoyed the number of requests recorded over the weekend from people living in upper-class areas, such as Ailesbury Road and so on trying to have themselves redefined as living in Sallynoggin to avoid property tax that would accrue on their dwellings.

I welcome the way the Minister addresses the business expansion scheme. I know it is good because I was in the company of two accountants on the night he announced it and they were fuming. Therefore, it had to be good. I bought them both a drink. Before reading it I was in a very receptive frame of mind about it. It was disgraceful what was going on. The development near the East Link bridge was sold out in six hours. The people involved were laughing at us. I was delighted that firm action was taken to hammer that one immediately. I know that people got away with it beforehand but at least it has nipped, not quite in the bud but half-way up the stem, a desperate abuse of that scheme.

In relation to the business expansion scheme, I noticed that none of the finance houses were advertising in the last week in March for people to invest before the end of the taxation year in business expansion schemes but they were giving all sorts of sweeteners. They were saying that if we invested with them now they would guarantee 10 per cent on top of the premium. I have never known a bank to take a risk. I have often seen them make bad decisions but that was because they thought they were not taking a risk and it was just bad judgment if they lost money. Neither have I ever seen a finance house take risks and I have certainly never seen a stockbroker take a risk and I have discussed that with my colleague stockbroker, Senator Ross, on a number of occasions.

I thought I was clear on the scheme but as the months pass the BES gets cloudier and cloudier. The Minister said the relief will only be granted to those who redeem after five years at market value. If a number of people invest at the maximum of £25,000 — the maximum total amount in any scheme is £2.5 million —in a business expansion scheme in 1989 the commitment is that it has to remain there until 1994. Of course, the total amount of the investment is offset against tax so for a person who is on a 50 per cent rate of income tax there is an immediate saving of £12,500. The money which was going to the State is now diverted into this investor's pocket to encourage him or her to make the investment. That is a 50 per cent return in income in the first year and that is hard to beat. I cannot think of a better investment. Shanahan's Stamps went to the wall looking for 15 per cent.

This is a straightforward operation but then the Minister says they must get it back at market value after five years. I take it that is the market value in five years time, in other words the quoted price, the market price, the exchange price, or the sale price in 1994. That is fair enough as well. If the banks or the finance houses invest with us and will give a 10 per cent or 5 per cent return on top of the initial investment at the end of five years, is that the £25,000 invested now which nets me £12,500 immediately, plus the capital appreciation over the five years — let us say it has gone up to £40,000 in five years time — that I will redeem £40,000 at market value? Does it also mean that the bank can put 10 per cent on top of that? I see the Minister shaking his head which, I presume means no.

I would like to have that cleared up. I have made it clear that it is a very good return on income. Let me say immediately that I welcome that. If it takes that to screw the money out of them, or at least to find out if they have the money, whatever it takes to expose it, let us get it on the record so that we have them in the system, have the names on the computer and deal with them for evermore. I hope the Minister is not asking too many of them at the moment where they got the money. I would wait a year or two. There is plenty of time to ask them when we have more in the scheme. I would not like to get rid of any of them at this point. The only problem I have about the BES is that it might be more directional. I like the idea in the Finance Bill of excluding certain areas like the city of Dublin, county of Dublin, Cork, Limerick, Galway and——

Waterford.

I am sorry to hear that. Even the entrepreneurs and exploiters of Waterford are being caught as well. It is a good thing. I hope it does not threaten a left wing seat in the forthcoming election.

This scheme could be more specific. I would like the Minister to be more specific. I know it is easy for me to say this now but perhaps it might be honed down a bit more and the Government could decide on directions for investment. Let me give an example. Let us say the Minister brought in an amendment saying the BES will continue but this year it will be applicable only to investment in the expansion of, say, tourism and fisheries. I am not for a moment suggesting the Minister should do this. I am just using an example to indicate what I am talking about. It allows the Minister to direct private investment because they will follow the sweetener, one way or another. The reason I am conscious of that is that I was explaining to the Minister on one occasion recently the concept of additionality which arises from the European structural funds.

The only way the Minister will ever get to the application of the concept of additionality is if he can direct private investment. I do not think it will be directed this way because people will only invest in the least risky proposals. The Minister should sweeten them up to get them into the risk business and then get direction and with the State contribution and the private contribution we might finally arrive at the concept of additionality. I hope to be around when that first cheque is handed over. I will go over to Brussels at my own expense to see the receipt of that £9 billion when it first comes through. I certainly will not hold my breath, not this side of an election, anyway.

In going beyond the narrow area of investment in industry, in the development of the State, we have failed in the Finance Bill to direct investment in the areas which are most in need. I mentioned research and development. I could also mention other things I believe that, for instance, the fishing industry has been neglected. I would like to know what kind of investment has been made in the fishing industry through the Business Expansion Scheme since it was initiated. That is the issue which for me has the greatest potential for growth. I also want to raise one awkward question about investment in ships and boats etc.

The Minister did not say yachts, unfortunately.

I will say it when I am replying.

The Minister used language which was unnecessary. Yacht is one word which would have been grand and I would have been saying: "Well done". A senior member of the Government put the boot into that one and somebody was afraid to take him on. Where BES money is being used for the purchase of a ship, that ship must represent a beneficial addition to the Irish Shipping Register. I know what the Minister means but other types must be considered as well. It might well be said that it is the only transport to Inishvickillane and even that has to be protected and might be a necessary addition to the Irish Shipping Register.

I want to know the difference between a ship and a boat. It is important to know that. I know my colleague, Senator Fitzgerald, who knows a little about Inishvickillane and who is also in the fishing industry and knows a bit about fishing, would be very upset and might have to move across to this side of the House if he felt that investment in any ship needed for fishing, in other words a fishing boat, might be ruled out. I know the Minister has no intention in this legislation of ruling out investment in the fishing industry. I just want clarification on the point that it allows investment in a boat, for instance. The Minister might clear that one up for me.

You would not buy much of a fishing boat nowadays for £2.5 million but that is another business altogether. The people who want to buy fishing boats have to get loans from Norwegian banks. They will not get enough money at home to do it. That is part of the reason we have failed in the fishing industry. I looked at the figures for employment based on the fishing industry. I found that in European terms approximately eight people are working on processing or on-shore jobs for every person working at sea. In other words, there are very few fishermen — sorry for the sexist term, but it is very hard to say fisherperson — working at sea. There are eight people working in a dependant industry, mainly fish processing for every person working at sea. That is the European average.

I do not know the latest Irish figure but I know the Irish figure for two years ago. It was just over .9 per cent. In other words, we have gone only 10 per cent of the way. We have one person working where the European average is nine. That is disgraceful. Where does the fault lie? We have failed to make investment in that direction. We are afraid of Spanish trawlers coming into our fishing areas. Our fishing industry is older than the Spanish fishing industry. Why should we be threatened by them? Somebody should be put up against a wall on that one. We have been trying to invest in that industry for years and years. I saw how people were wrecked in it and how families were wrecked over the years, coming from a fishing town myself. I believe that it should be direct investment. We have failed to do it. I throw that out as one of the areas to which we might direct investment through the Business Expansion Scheme.

On the whole question of imports and exports the Minister for Finance should also look at perks and investment down the line. The Department of Finance should be prepared, for instance, to subsidise the teaching of modern European languages in Ireland at all levels, primary, post primary, third level and community. I looked at the recent report of Coras Tráchtála — leaving out Greece, Portugal and Spain — in relation to the European market and I discovered that the market where we were doing worse was Italy. It is a huge market. It is virgin territory for us in terms of ground unfurrowed for us.

I also looked at another set of figures and statistics on the teaching of European languages in Irish schools. Which of the European languages is the least taught of the main ones? It is Italian. If I want to do business with people I like to be able to talk to them myself. I could not handle interpreters in a business situation. We lack that investment. It is something the Government should look at not as an investment in education but as an investment in industry. There should be an investment in modern European languages. This is raised regularly by politicians who say we would have to take on the teachers' unions and teachers etc. We would not have to take on the teachers' unions or anybody else.

They are decent people.

They are decent people. They are committed to improving the country and the education service. If the Minister decides to invest money in the teaching of modern European languages, there will be nobody quicker than the teachers' unions to tell him how to do it, and then it is finished and on to the next business. I ask the Minister to keep that in mind. It also boils down to the question of careers guidance and counsel. These are issues which are directly related.

I have to listen to people from CII and those people who call themselves the Irish Management Industry. Those people should carry a health warning for what they have done to industry in this country. Many of them have left a trail of destruction behind them. They tell us what we should be doing when they are the ones who are supposed to be doing it. They can criticise everybody else as they go along the road. If there are things wrong in the country let us all take our share of the blame for what we are responsible for. Let us put the boot into everybody else. This is an example of where we need an investment. There has to be an investment made in infrastructure. It is not good enough to let it all happen on its own.

It is almost cant to talk about the young Europeans. We are the young Europeans. I have looked at all the predictions about the falling birth rate and I have also looked at another figure, the average number of births per 1,000 population in European terms and I have compared the Irish one. We are very close to that figure at the moment. There is certainly no reason to think that we fall below the European average in that area. With a possible visit from the Pope coming up, we could do massive things for pupil numbers, teachers' jobs and population bulges in the near future.

I believe we have a very real role to play in the new Europe. We need languages; we need to invest in education; we need, most of all, to have the young people. Somebody made a comment there — I think it was Senator McGowan — on the fact that we are part of Europe, that people working in Europe should be seen as part of the European Community and not seen as emigrants. That is a bit trite. I know the general direction in which he was going. With easier connections and easier access between the mainland and Ireland we can participate in Europe in a great way. I see no reason why in ten, 12 or 20 years time Irish people should not be at the head of all major European institutions. I have no doubt that that will happen provided we produce the right people. I always believe in having daoine sa chúirt because I know if they are there they will also do the chauvinistic thing and look after their home.

I want to talk about the whole question of capital gains and share income. I know it is a subject close to the Minister's heart but people are getting away with murder and I would put the boot into them. Income is income and if you make money you should pay taxes. Let us call it all income and make it simple. There are enough sweeteners in the different schemes. Special capital gains just because the share prices goes up or whatever is just not on. There is no way in the world to justify that. If it is income, it is income. If I get a cheque for £10 it does not matter what it is for. I am £10 better off and I should be taxed as such.

I see a lot of sense in protecting risk in the smaller companies where there is a genuine risk. I will run with that but I do not see any reason for this special treatment in terms of the money gained through investment in shares. It does not make any sense any more. The new schemes have overtaken it. It hits the small man. The Minister is a racing man. I will take a perfect example of what I am talking about. The week before last a well orchestrated PR effort was emanating from Senator Magner's county and it was Saratogen all over the place. There was no other horse in the race. I am referring to the Guineas.

(Interruptions.)

This was the week before. Facts are the facts at the time and the facts at the time were it was all about Saratogen. The unemployed, the income earners, the wage earners put their hard earned shillings on Saratogen in the bookie's shop. Before they even got their betting slips back they paid their tax — the fools. They had their tax taken from them before they actually got their betting slips back. The State is entitled to do that. If they were smart enough to walk around the corner to Davys they could have invested in classic throughbreds at 33 or 34 on the Monday before the race.

I would say 39.

No. There is investment in the stockbroker's shop by one set of people and in the bookie's shop by another set of people. It is the difference between the tax up-front people in the bookie's shop or the people who get a £4,000 break, or whatever the amount is, who are entitled to earn up to £4,000 before they have to pay any tax on it. The real sickener is this. Not only do they not have to pay tax but, having invested their money at 32 on the Monday, on Friday — who is interested in the race; it has been all over the papers all week — the shares are 39 and now they sell the shares and who cares who wins the race. You have won the race anyway. You have not paid any taxes on it. The small punter in the meantime is watching the television on the Saturday afternoon at 3.40 p.m. and Saratogen is still out there somewhere. He was not in the frame or anywhere else. The punter has paid the State tax due and has lost his or her money. The person who invested in shares in the horse has collected at somebody else's expense.

There is something wrong with the system. I do not want to be too colourful about it. I believe we should cushion risk but I do not believe we should reward Scrooges. That is really what we are doing. If somebody is going to let it ride on the horse's nose and risk rule 34 on the Monday, as happened to poor old Senator Fallon, there is some sympathy for that person. He is a real player. He will never be rich because rich people do not take risks. This is how you get rich.

There is so much in the Bill that I would go on much longer. I know there is a matter for the Adjournment debate and I was warned not to go on too long. I would like to wind up by saying the Bill is like the curate's egg: good and bad, hard and soft. It makes an effort to approach certain problems. There are things in it to which I take grave exception and there are other things which are a step in the right direction.

If I may make a comment on what happens in another place, I was impressed that the Minister was able, with facility, to take amendments from other people into and to accept, as he said, that not all wisdom is always vested entirely in the Department or Minister for Finance. The Bill was the better for those changes that were made. I would like to go into it in the long term but the sad part of it is that it will not address the problems of society. It has tightened up certain aspects of taxation and various issues but I still have to ask how can we have the best sales month ever in Mercedes when, in the same month, we cannot supply health and education services. There is something wrong somewhere and we need to address the basics so we will begin to redistribute wealth in the future. In the meantime, I welcome the Minister to the House. I hope he enjoys his stay and that we will see more of him.

There is more to running the economy than just the sales of Mercedes in one particular month. If you were talking to the same Mercedes dealers, they would tell you they did not sell too many for the last four or five years. I do not think anybody is unaware of the very poor state of the motor industry over the last four or five years and that inevitably it comes to the time when you cannot run the car any longer and you decide to change it. Having said that, I am quite conscious of the fact that cars are imported into the country but our exports are also increasing. I have no reason at this stage of the year to change the forecasts I made at budget time that we will have as good a balance of payments surplus at the end of this year as we had last year despite the fact that inevitably consumer demand rises. We import 57 per cent of our requirements in this economy which should not be as high as that or anything like it.

Because we are one of the most open economies in Europe, inevitably when consumer demand rises, as it is rising, and I know I forecast something around 3 per cent on budget day and it is probably pushing nearer to 4 per cent at this stage, inevitably you are going to have imports being sucked in. What is important, in an open trading economy, is that our exports not alone keep pace but keep exceeding imports. That is exactly what is going on. I am watching that trend very closely. I did sound a note of warning on a few occasions that while international trends in inflation keep rising as they are rising, it is even more important still that we in this country make sure we keep our costs moderated and do not allow any unjustifiable increase that would add to inflation. Inevitably because we import 57 per cent of our requirements, as international inflation rises so too will our inflation rate rise. What is important is that we keep our relative position. At the end of February our inflation rate stood at 3.3 per cent. I know it will be higher than that at the end of the year, but when one looks at the market for most of our small to medium size industry, which is Britain to a fair degree, one sees an inflation rate there pushing 8 per cent and indeed forecast to go higher.

I do not think we can judge the whole economy on the number of Mercedes cars bought in the last month. If the Senator got the opportunity of reading my speech he would see that I said there was an increase in car purchases of 35 per cent in January. I am not using the good statistics or the bad statistics. I use the whole lot. They are there to be read.

Many other points were raised by the last speaker. In relation to the BES, to put his mind at ease about these bankers who he says are not benevolent societies and I agree with him — they never have been benevolent societies — what happens in the BES scheme is you put in your money and you must leave it in for five years. What was happening up to the time I brought this amendment in was that financial institutions were guaranteeing you your return plus 10 per cent in some instances. What they really meant by that was that you got your £25,000 back plus 10 per cent on top of the £25,000. If the shares in the company in which you invested your money had depreciated by 100 per cent you only got 10 per cent of that.

You did not get 110 per cent.

No, because also in that calculation of course was the fact that you got income tax relief. That is why they were able to show an investment return of 18 per cent to 19 per cent. That included the tax relief you had got. Really what they were looking at was not the £25,000 but if you were paying 56 per cent you were talking about maybe £12,000. You were getting back £25,000 plus 10 per cent which was £27,500 and that was why they were giving you such a big return, over five years maybe 19 per cent a year.

However, as I say, all shares that carry options, that carry that sort of guarantee, are gone from the date of the Finance Bill publication. In other words, the funds that are available for the BES scheme are now being redirected back for the very purpose for which the BES scheme was brought in by Deputy John Bruton in his time. They are gone back now to the original purpose and that is high risk investment allowing tax relief for it. It does apply indeed to fishing trawlers. What is a ship? A ship is a real ship but because of that loose terminology it was possible to describe a good size yacht as a ship. There was a number of loopholes in the BES scheme but many of these have been plugged in this Bill.

The difference between a yacht, a boat and a ship can become very complicated. If you call a boat——

Let the Minister continue, please.

We are talking about real ships that can get finance under the BES scheme. As I say, the scheme was never intended to be more than part of the financial package of any business. It should never have been seen as replacing traditional borrowing. The Senator is quite right when he said that it was moving to the situation of replacing traditional borrowing with guarantees from the banks and all the risk gone out. The whole purpose of the scheme has been undermined.

The Senator referred to a development in the docks and there was another one in Dublin 4 where there were fancy town houses being build, being called tourism villages, and consequently qualifying for BES relief. All that is gone. The reason I specified the borough's boundaries was clearly to get rid of that sort of abuse. To do it any other way would be far too wide. I was asked in the Dáil if I could not draw new maps and say: "You can have your development in such and such a place". You will find that the only boundaries available to me are those sort of boundaries. I have not time to draw a map. As I say, we do not get into that sort of area in the Finance Bill. We do the best with the boundaries that are there to tie it down as tight as we can to make sure that we do not let the people who were manipulating the scheme continue to manipulate it.

Many other areas of tax evasion and loopholes are being closed in this Bill. There was reversed annuities which had become a bit of a scam. There was the question of the McGrath type loophole which was being sold clearly around town. In addition there is the general anti-avoidance measure which I thought the last Senator and some of his colleagues might be only too glad to welcome.

Yes, I accept that.

Then we have the power of attachment. To answer the Senator's theoretical question to which he said he knew the answer — why he asked it I do not know — but the answer is zero. He knew it was zero before he asked it but in case he thinks I will not put it on record, it was zero.

What was zero?

Imprisonment for tax fiddles. He asked me how many cases were brought forward under the penalties he was talking about. I presume what he meant was imprisonment. I said "zero".

I just wanted to get that on the record.

I agree with the development of languages. As far as I recall from reading something not all that long ago, French seems to be the language that is being taught more in our schools than any other language. Why that is I do not know. I would have thought that Spanish, Italian and German would be equally important for people thinking about 1992. There are people in the private sector looking at language school projects at the moment. Indeed my colleague, the Minister for Education, is making her own arrangements in relation to how she is going to attack the teaching of languages. I remember reading somewhere that people who would have been counterparts of Senator O'Toole, when they became excess in Germany were retrained for word-processing and so on. Perhaps some of the excess we have here could be retrained in language teaching. I do not know whether that would accord with the Senator's union principles but it is certainly a practical suggestion in relation to some of the people he talks about.

It certainly would. I made that suggestion a year ago.

You could be right. To answer all the questions I asked here I would have to be Minister for Agriculture, Minister for Energy, Minister for Education and every other Minister in the place. I am not going to wander into all those areas except to give as much information as I have available to me.

I think there are enough measures on the Statute Book now to attack tax avoidance and it is there to be done. Self-assessment is certainly going well. The penalties are there. I brought in an amendment to the Bill for somebody who would make a bona fide return for property tax, as mentioned by Senator O'Toole, who would find that the market had moved so much and that they might find themselves under penalty. There is an appeal mechanism there for doing it but the penalty does not apply anyway unless one is 50 per cent wrong. I mean you could be 50 per cent wrong and they still would not heed you.

The last speaker mentioned tax relief and entrepreneurs. I do not see anything wrong with tax relief for entrepreneurs. He might not agree with that. I still do not see anything wrong in the small companies market in reintroducing the capital gains tax for a year. Those are the companies that find it very hard to get finance out there and I think it is wrong to categorise them all just as thoroughbreds. I think that is wrong. How do I know that the same company will not produce a winner in three weeks time and you could be eating your words again?

And if they win they should be taxed.

And investment decisions are a matter for the individual themselves. If they want to make a good or a bad investment decision the Minister for Finance cannot take them by the hand and tell them: "That is good one and that is a bad one." That is entirely their own decision, their own risk. If they win, they win and if they lose, they lose.

You are entitled to tax.

That is the way it is. I have no intention of adopting a "hands on" attitude to every decision-maker in this country. It is his money, let him decide what he does with it. I am only charged and the Government are only charged with the responsibility of deciding what is to be done with the taxpayers' money. For that I will be accountable. For personal investment decisions I will take no responsibility, good, bad or indifferent. There are enough sensible people around——

The Minister is entitled to tax them.

We cannot have this chat.

Of course I am taxing them. I will just explain capital gains. The relief the Senator talks about, which is £2,000 for a single person and £4,000 for a married couple, if you make anything over that gain in one particular year, you pay 60 per cent capital gains tax on it. Does he want 100 per cent? — I think 60 per cent is too high.

The Minister should, too.

In fact, I might well be looking at it between this and next year and Senator O'Toole will probably be saying a lot more against me.

It is all income.

The people who risk their money are entitled to a return and I will always uphold that principle. Risk-taking is what it is about. If we have a country where there are no risk takers we will have no investment, no development, no jobs, and we will end up simply looking to the State to do everything. I am not sure what the Senator was really advocating because if he is advocating that then I would certainly totally disagree with him. I do not know what he was advocating. As he said, it is easy to stand up when you are not in Government and talk about all the things that are wrong, but I have not heard any suggestions as to how I might tackle the things the Senator believes are wrong. When one is in Opposition it is easy to take that approach.

If they make income they should pay tax.

I made it clear in the Dáil that if there were good sensible suggestions, as I proved in the Dáil, that could improve something, I would certainly take them on board irrespective of what quarter they came from. I want the Seanad to think about it in the same light as well. I am sorry Senator Connor is not in the House. He must think I am the Minister for Agriculture. He talked a lot about economists, economics and statistics but I would advise him in the nicest way possible to change from the French-park school of economics and go elsewhere to try to get a few facts right. One of the first things he said was that there were 243,000 on the unemployment list. He is 10,000 out there for a start. Sometimes I do not have great faith in economists.

The Senator tried to turn on its head the Exchequer borrowing requirement as a percentage in GNP. I could not follow that argument except that the official statistics are there. It was about 13 per cent in 1986 when they went out of Government; it is down in this year's budget to 5.3 per cent and it will be better than that. The fact is that the national debt was doubled in their four and a half years in Government. If it had not been doubled, I would have £1,000 million of a surplus in this year's budget to do a lot of the things that people in the Seanad and elsewhere advocate that I should do. The fact is that happened. It is costing £7,000 for every man, woman and child — that is the debt that is on every person in this country — and it is costing £40 a week for every person who is working in this country and paying tax. That is why it is so important that the debt be stabilised. Not alone has it to be stabilised, it has to be reduced if we are serious about reducing taxation.

Senator Connor went on to ask why we were not using the Structural Funds to pay headage payments, why we were not doing other things with the new Structural funds. I will not waste the time of the Seanad on this. All I will do is give him a little bit of information which he does not seem to have got and that is the Structural Funds in agriculture come into play on 1 January 1990. They are not in place in 1989 and, consequently, all the things he talks about will come onstream after the new Structural Funds come into play in the Commission on 1 January 1990. It is not the Government's fault they are not in operation in 1989. The Commission had not their regulations in place and were not ready to implement the Structural Funds as they refer to agriculture in the FEOGA and guidance funds until 1 January 1989.

We have been carrying out surveys in a whole lot of other areas in agriculture. It is our commitment to increase the size of the disadvantaged areas, and indeed to increase headage payments as well. All that will be part of the new Structural Funds when the Commission in Brussels make up their minds and make their final decisions in relation to aspects of the plan that is with them. The plan is in Brussels and the questions that the Senator addressed will be answered when they come into place.

I would like to thank the Senators who contributed to the debate. I appreciate their contributions and the general welcome for some parts of the Bill. I know that you can never hope to please all of the people all the time but we try to do our best for most of the people most of the time.

Senator Bulbulia took me to task on quite a number of counts. She felt that my introductory speech indicated no philosophy, that there was no evidence of planning for economic growth and employment but merely a concern with the public finances as a one item agenda, that there was no concern with poverty and that what was being done about tax reform was minuscule. I will take them one after the other.

I would have thought at this stage that the Government had made their philosophy and overall approach clear to everybody. Whatever doubts may exist in the Senator's mind, I think there is an understanding throughout the community of what the Government are trying to achieve. Indeed, the clarity and consistency of Government policy is the single most important factor underpinning the economic recovery that is taking place. The effort to represent the Government's concern with the public finances as a one item agenda approach to the country's problems is, in my view, rather outdated. Every reputable commentator now accepts that the problems of the public finances and the problems of the economy, including the major issues of unemployment, poverty and emigration are all inextricably bound together. One cannot deal with one problem on its own. All these problems have to be tackled together in a consistent and coherent way.

As I indicated in my opening statement, the Government's overall philosophy is fully set out in the Programme for National Recovery which was agreed with the social partners. That programme laid out our agreed approach towards tackling the problems of the public finances and generally getting the right fiscal and monetary climate which would be conducive to economic growth, towards getting a low cost competitive environment to encourage more jobs, towards building up the various sectors of the economy, towards greater equity and fairness in the tax system and particularly to encourage wage moderation and secure a real increase in take-home pay for workers. Last, but not least, the programme gave very specific undertakings in regard to helping the less well off sectors of the community and securing greater social security.

This programme has produced a consensus in dealing with our economic problems to which Senator Hillery referred and which I believe has been so crucial to all the progress we have made as outlined by me in my opening address. The programme has now been complemented by the National Development Plan which copperfastens the basic policy approach for the years ahead and sets out a major programme of investment designed to boost the economy to show that it can work effectively and produce more jobs. This approach is obviously working and while, as I acknowledged in my speech, there is still a long way to go we have made a breakthrough on jobs and employment is now increasing again for the first time for many years.

The independent support for the official 1989 employment and unemployment forecasts has come from the Economic and Social Research Institute in its latest quarterly economic commentary. The institute is now forecasting an increase in employment and a fall in unemployment which are almost the same as in the official forecast. Another encouraging feature of the ESRI's figures is the forecast of a doubling of the rate of employment growth in the year to April 1990 as compared with that in the year to last April.

As regards emigration, I accept that the present rate of emigration is a most serious problem. The only way to bring about a reduction in this rate is to continue to pursue the policies which have been so successful since we came into office in 1987. According as the rate of employment growth increases and as unemployment continues to fall, we shall undoubtedly see a considerable fall in emigration.

On the question of poverty the fact of the matter is that this year's budget introduced the biggest package of welfare measures in recent years. As Senators Fallon and Hillery have already pointed out, most of this has already been legislated for in the Social Welfare Act which went through this House recently and that is why I did not dwell on the matter in my opening remarks. Only one element of the package, the novel addition of £200 to the exemption limits in respect of each dependent child, is provided for in the Finance Bill and I did refer to this in my opening speech. This innovation will be of major importance to low income families, whether they are on PAYE, in small businesses or trades, or even in agriculture, if their income is as low as Senator Connor says it is. A married man with five children earning £7,000 a year, irrespective of his business, is now totally out of the tax net.

Besides the taxation relief designed to help those on low incomes I introduced in the budget a whole range of proposals carefully selected to target priority areas of deprivation and poverty. These will in general be implemented from next July. Before outlining some of the main improvements about to be implemented, it is essential to make the point that the value of social welfare payments has actually increased significantly in recent years both in purchasing power and relative to take-home pay. This is something which is often lost sight of by commentators. Long-term unemployment assistance rates increased by some 24 per cent over the two years 1988 and 1989 with a 12 per cent or £5 a week increase in 1989 alone, that is from £42 to £47 a week. Child dependant allowances were increased this year by up to £2 per week per child in respect of a third and subsequent child. These represent very valuable benefits for the most deprived sections of society. In addition, all welfare recipients had their payments fully protected against inflation by means of a general increase of 3 per cent.

As I have said, those on the lowest rates of welfare receive substantially higher levels of additional support over and above the general increase. The special needs of larger families were also catered for in the budget which provided for the payment from October next of the higher rate of monthly child benefit of £21.75 in respect of the fifth and subsequent children. At present this higher rate is only available for the sixth child and upwards.

Other improvements provided for in the 1989 budget include the introduction of a new social assistance scheme to provide for the needs of widowers and deserted husbands with dependent children. This scheme will be introduced from October along the lines of the current non-contributory schemes for widows and deserted wives. Payment of child dependant allowances in respect of child dependants of long-term recipients up to 19 years of age instead of 18 years of age at present while in full-time education and provisions to allow pensioners to carry over unused free electricity units from one billing period to subsequent periods subject to an overall ceiling have been introduced.

That is a fair package. It is not as much as any of us would like to do but certainly within the existing financial constraints I think it has gone a fair distance. To be accused of not mentioning poverty is way off the wall in my view.

I am glad the Minister mentioned it in his response to the debate on the Bill.

I came in here with a Finance Bill. I introduced social welfare provisions to be carried through by the

Minister for Social Welfare and I did not feel I should talk about social welfare or agriculture or industry but with the Finance Bill before me but now that the Senator has asked I have given her the response.

Senator Bulbulia will forgive me if I say that I take with a grain of salt what she said about a consensus on tax reform across political parties. In the case of one of the small reform items in this year's budget and Finance Bill, the restriction on mortgage interest relief which, to use her own phrase, is minuscule in relation to the package of reliefs we are providing, Fine Gael sought to amend that small provision and to water down that restriction. This Government have achieved much more in tax reform in the past two years than anybody thought likely or possible and our actions speak louder than words. In only two years we have come from a situation where income tax relief was simply impossible to one where relief is not only possible but is happening on a scale far beyond what was envisaged in the national programme just 18 months age. I do not think that Senator Bulbulia can really argue that £700 million in reliefs is, in her own words, minuscule.

As regards the future, the Government are acutely conscious of the need to further reduce the income tax burden to facilitate increased employment and to help restore the reward for effort and enterprise. We have begun this process and we will continue it. We are firmly committed to further income tax relief as the National Development Plan clearly states. We will proceed not by means of fancy tax reform plans but by real achievement. The objective is straightforward. It is simply to reduce the tax that people have to pay. We have pointed the direction in which we are going by the reduction in actual rates of tax this year and we will press ahead as quickly as possible. I agree with Senator Bulbulia in this respect. A reduction in the burden of personal taxation is an essential part of the restructuring of the economy. It must go hand-in-hand and also be consistent with the continued reduction in Exchequer borrowing.

I will now deal briefly with some specific points raised by Senators. Senator Fallon expressed concern about the easy availability of credit and the influence this may have on spiralling house prices. I understand his concern in this regard. However, as I said earlier, it is the Government's and the Central Bank's expectation that following recent meetings with the main credit agencies, the banks and the building societies, those agencies will exercise the required prudence in their lending operations. The Seanad can be assured that the Government and the Central Bank will continue to monitor the situation closely.

Somebody asked where is all the money coming from. Basically what is happening is because of the competition between the lending agencies, between the building societies and the banks and the insurance companies who are out there fighting for market share, what used to be the rule of thumb of two and a half or three times your wages has now been dumped up by some of the companies to three and a half and four times and this certainly has contributed in part to the spiralling of house prices. I would issue this advice, and it was expressed here by Senator Fallon. The farmers of this country made a mistake in the 1970s and I hope the people buying houses will not make the same mistake again. I hope they will not go beyond what their earning capacity will allow them because we will continue to have fluctuations in interest rates because we are such an open economy and because international exchange rates and interest rates can be volatile and we cannot be immune from them for all time, although we have done extremely well over the last 18 months in relation to them.

Senator Fallon mentioned restriction on life assurance relief to 80 per cent of the amount which previously qualified. There are a number of points I would like to make about this restriction. The first is, of course, that life assurance relief is, as the Senator will be well aware, very expensive in terms of tax foregone by the Exchequer. It was estimated to cost some £48 million in the current tax year if no restriction had been imposed. The second is that the 20 per cent restriction contained in the Bill is intended to make a small contribution to the substantial cost of this year's package of income tax reliefs. It will save some £9.6 million — £5.8 million in 1989. Even taking this into account, however, the income tax reliefs contained in the Bill will cost over £200 million in the present year.

Senator Fallon also alluded to the fact that the recent increase in house prices had not been reflected — indeed, some other Senators referred to it as well — in increased receipts in residential property tax. The following facts are relevant in this regard. Residential property tax is payable on 1 October each year by reference to the value of the property on 5 April of the same year. This means that the tax payable in 1988 was based on house values in April 1988 — in other words, before the recent surge in property prices. Tax due in October this year will be based on values in April this year and so should reflect the recent increases in property prices. Many more houses should now undoubtedly come within the tax net.

The final point is in relation to insurance. The incentive to invest in life assurance may have diminished slightly in more recent times. It should be noted that the overall impact of this year's income tax relief is overwhelmingly in favour of the taxpayer — in other words, despite the restriction, taxpayers will be in a stronger position to invest in life assurance if they so wish because of the very favourable income tax package provided for in the Bill.

In regard to the future, I have taken note of course of what Senator Fallon had to say about this relief and I will bear it in mind. But I would also make the point that life assurance for many years in this country was seen as a traditional method of saving. The whole industry has changed. It has now gone into unit funds, unit links, and so on, and it is changing business from what it used to be as a traditional saver. However, I will bear the remarks of Senator Fallon in mind for the future.

On the reliefs in the film industry, I would like to thank Senator Norris and the other Senators for their general welcome for various sections in the Bill. He referred to the downgrading of the Film Board. The main reason for the gradual running down of the Film Board since 1987 was that it had totally failed to meet the objective of development of the Irish film industry on a commercial basis. When the board was set up in 1981, it was agreed by the Oireachtas that this commercial orientation was fundamental. Between 1981 and 1986 the board issued almost £2 million in loans for film development but, by the end of 1986, only £54,000 of this loan finance had been repaid. The board had also given grants during that period. In the last two years financial and other assistance had been given to film makers by the National Development Corporation, the IDA and CTT. This assistance is on a much more commercial and employment directed basis than was the case with the Film Board. The Arts Council perform a similar function in regard to those films which fall into the artistic rather than the commercial category. The council are a very suitable body for carrying out this role, especially in regard to the film script and pre-production stages.

The new incentive I have introduced this year, along with the availability of BES funding for film making, should be of great assistance to film makers and is a response to the concerns and the shortcomings that were in the scheme up to now. This type of incentive based scheme has certainly brought results in Canada and Australia and hopefully, by this time next year, we should see some response to what I believe is a fairly generous relief.

In regard to section 23 relief, questions were raised by Senator Harte, Senator Ryan, Senator Lydon and others, so quite clearly this is a matter to be looked at very seriously.

Senator Harte suggested the introduction of certain requirements in order that rented residential accommodation might qualify for section 23 relief. The aim would appear to be to deny section 23 relief for the cost of new building if the other rented properties did not meet these requirements. These proposals appear to be related to the protection of tenants' rights and are thus more appropriate perhaps to the Department of Justice rather than to tax law. However, general law relating to landlord and tenant matters is the responsibility of my colleague, the Minister for Justice, but for the standards area I will certainly undertake to the Seanad to talk to my colleague, the Minister for the Environment, who has under consideration certain aspects of the private rented housing sector, including physical standards and the question of the mandatory issue of rent books to all tenants. Local authorities have wide powers under housing legislation to take action where there is also substandard accommodation.

If I understood what the different Senators were saying to me, it was that section 23 relief is being used to take advantage of second hand accommodation, for want of a better description at this stage, which is in substandard condition and the income from which is being used to wash through a new section 23 relief in respect of a new house and that it is not the best way to use taxpayers' money. I take full note of what Senators said, if that is the correct interpretation, and I will certainly have a look at it between now and this time next year.

Senator Harte raised the problem of the refusal of an excise refund to a disabled driver. This illustrates the difficulty with the existing scheme which motivated me to do away with the existing mandatory criteria and to introduce the new arrangements. The existing criterion stipulates that an individual must be wholly or almost wholly without the use of each of his legs and the Revenue Commissioners are obliged to determine whether or not someone is eligible for an excise refund in the light of this restrictive criterion. The subsection of the Finance Act, 1968, containing this wording will cease to have effect when the regulations provided for in section 92 are made by me. It is, however, my intention that the new medical criterion that an individual must be severely and permanently disabled will be of much wider application than the present very restrictive criterion. The required regulations will be made by me in a matter of weeks.

Senators will appreciate that I cannot comment on an individual case. If, however, I receive full particulars in relation to Senator Harte's question, I will look into the matter and communicate directly with the Senator.

Contrary to the suggestion made that the Government were forced into changing this scheme, we did in fact make an effort to change it last year but agreement could not be reached. I made it quite clear in the Dáil, and in public some months ago, that I was anxious to find a resolution that was broadly acceptable to the very real concerns of this section of the severely handicapped and disadvantaged in our society, that I was not interested in having a very tight bureaucratic scheme, that I was more inclined to be liberal on the side of the people who were looking for his relief. Consequently, in consultation with the Opposition speakers, we sat down and worked out what we believe is a full answer to these particular problems that were arising under the existing criteria.

I look forward to this scheme being broadly acceptable, while at the same time making sure that the abuses that were there in that scheme are fully stamped out. I am doing that by making sure that the engine involved in major changes to suit an invalid person is not more than 2,000 cc. I am sure Senators will be aware, as I am, of a recent case in the High Court looking for £53,000, that Mercedes 280s were brought, that Porsches were bought and that the poor taxpayer was paying. I am interested in a liberal scheme, but I am certainly not interested in seeing any abuse of it and I will ensure that that sort of abuse will not continue.

Senators

Hear, hear.

Senator Bulbulia referred to Deputy Bruton bringing the abuses of the BES scheme to the notice of the Government. I want to say that she is slightly off the track as well. I myself made the first clear attack on the abuses of the BES scheme at the Institute of Taxation dinner. Two weeks later we read about it in the papers by commentators and about a week later by Deputy John Bruton and others as well. We are very attentive. We are not asleep in the Department of Finance, as people might suggest we are. In fact, that is borne out by the fact that a very recent tax avoidance scam was advertised in the papers and you will find it is plugged here right in the Finance Bill as well. There may be others I do not know about, but I certainly took all the action necessary in relation to all the tax avoidance schemes I could see that had no relation whatsoever to bona fide transactions.

Senator Harte called for the removal of VAT on hurleys. This request has been made to successive Ministers for Finance over the years but it has always been rejected on the grounds that to remove the tax would breach EC VAT law by which we are bound. I am sorry to have to disappoint the Senator again, but this still remains the case.

I thank all the Senators who contributed to the debate. I look forward to discussing the provisions in more detail on Committee Stage. In regard to some of the other specific questions that were raised, the information on which I do not have available to me tonight, I will certainly make available during the different sections of the Committee Stage tomorrow the specific facts and information I was asked for.

Question put and agreed to.

It is proposed to take the Committee Stage and other Stages of the Finance Bill tomorrow, at the conclusion of all of the remaining Stages of the Great Blasket Island Bill.

Committee Stage ordered for Thursday, 18 May 1989.

When is it proposed to sit again?

Tomorrow at 10.30 a.m.

Top
Share