I move:
That Seanad Éireann supports
the following key objectives of the long term strategy for the nineties outlined in the Programme for Economic and Social Progress:
—a substantial increase in employment;
—a major assault on long term unemployment;
—the development of greater social rights within our health, education, social welfare and housing services;
—the promotion of collective and individual social responsibililty in relation to discharge of tax liabilities, fair conduct in business dealings, sensible treatment of the environment and reasonable use of public services and
—the development of worker participation, women's rights and consumers' rights; and
supports the implementation of the agreement on pay and conditions; and calls for the immediate implementation of the improvements recommended in the areas of education, health, employment creation, taxation and legislative reform.
I am delighted the Minister of State has taken the time to listen to the calls of the economy to implement what the Government agreed with the social partners earlier this year. I have no doubt that his response will be far more positive than the very weak Government amendment which fails to address some of the most significant points. That amendment tries to make the Minister's adviser and people like him pay for the cost of the problems of the economy. I intend to defend the public service throughout my speech.
It is important to set this motion in a context and the context which I propose is the 1991 budget speech of the Minister for Finance. Once again this country has been thrown askew by so-called economists who try to give the impression that they know what is going on in the country. Economists in their forecasts over the past 15 years have always been incorrect. For example, last year they told us that the unification of Germany would destroy interest rates. Earlier this year they said interest rates would go up; instead, they went down. They have been consistently wrong simply because they have never been able to grasp the most important factor in the economy, which is people. They have never been able to fit people into their equation.
I would draw the Minister's attention to what the Minister for Finance said in his budget speech earlier this year when he talked about the economic situation and outlook. I would like somebody to tell me where the Minister was right and where the Minister was wrong in January. Many people outside the House, including the economists, have told me how wrong the Minister got it but it does not appear all that wrong to me given the outcome. He compared the performance of last year with this year and his predictions have largely been borne out. He said that growth in the OECD area would decelerate to around 2 per cent and that has happened. It is estimated that it will be about 1.1 per cent. He estimated that the UK market was likely to be very weak this year which has also happened. The Minister did say however that there were good solid reasons why we can maintain progress and he went on to list them.
The point I am making is that the parameters which he indicated were accurate, broadly speaking. The problems which he identified were problems he was aware of at that stage and the cost of various proposals which he had in mind were also well known at that stage. Regarding the Programme for Social and Economic Progress he said:
In the programme what we have done is to forge a powerful shield to protect us in the difficult days ahead... Approval of the programme offers economical and fiscal stability, assurance about employment costs and a foundation for a further period of industrial peace. These are all crucial.
This is the reality of 1991. That is where we began this year and nothing much has changed. In 1987 the Government sat down with the social partners and had a look at the economic situation. The debt/GNP ratio was approaching an intolerable 150 per cent.
The social partners sat down to plan certain achievements during the course of the Programme for National Recovery. I know what those objectives were in the area of debt/GNP ratio and under the Exchequer borrowing requirement figures. I want the Minister to admit to us tonight that we over-achieved, that we did better than any of those economists in 1987 said we would do. Economists greeted the Programme for National Recovery with disdain in 1987 just as they greeted the PESC in 1981. They said it would not achieve what we set out to achieve, but it did, and more.
The present debt/GNP ratio is down to approximately 109 per cent. The medium term objective was to reduce it to 100 per cent by 1993, 1994 and 1995. That is being achieved. I have not heard any economists admit over the last six months that despite all that has happened we will still reduce that figure by at least 1 per cent this year. It would go from more than 108 per cent down to just over 107 per cent.
The Exchequer borrowing requirement will certainly be reduced as well. The latest forecast issued by the stalwarts of fiscal and economic society in Ireland in Mr. Desmond's former company indicated during the week that we can sustain an Exchequer borrowing requirement of approximately 3 per cent or more this year. This figure would enable the Government to implement fully all the proposals and requirements of the Programme for Economic and Social Progress.
By the time we began this programme in 1991 we had achieved greater improvements in the key indicators, such as interest rates, than could be expected in 1987. The consumer price index was hovering around 3 per cent or 4 per cent. Interests rates had shown a continual drop having gone up and down during that period. The Exchequer borrowing requirement has consistently gone down every year despite contrary forecasts from the ESRI, and despite figures issued by the Department of Finance for August. The latest figures from the various stockbroking firms all indicate that these figures will continue to improve. The debt/GNP ratio despite what is being said, will still be improved during the course of this year.
In relation to the Programme for Economic and Social Progress, the social partners and Government after a painful though productive process produced a series of minimal proposals and agreements on pay and conditions. They represented progress however and were welcomed for that reason. There is a lot at stake in terms of credibility and industrial peace, as the Minister stated during the course of that budget speech but the Government risk jeopardising industrial peace by the way in which they are operating at present.
Between 1987 and 1991 members of trade unions, workers in the private and public sectors, and all PAYE members, were involved in a major belt-tightening exercise and put up with hardship. Pay due to them was deferred but they kept their side of the bargain despite the fact that the Government over-achieved on their end of the bargain. Nobody went back to the Government and asked to renegotiate in order that all might reap the benefit. The social partners waited until 1991 and then sat down again for the sake of the country and came to a series of agreements which formed the Programme for Economic and Social Progress.
After four years of belt tightening and in the light of millions of pounds of taxpayers' money being creamed off by unscrupulous entrepreneurs in one scandal after another, the suggestion that public servants now be deprived of their hard-earned entitlements is unacceptable and totally unsustainable. Having given the economy an extraordinary boost it is now time that workers reaped the benefits which accrued during the past four to five year period. In 1987 we set out to achieve a range of objectives that included putting the public finances on an even keel. There is no aspect of public finances for next year which was not costed by the Department of Finance down to the last penny during the course of the negotiations, which took place during December and January of last year.
The famous "specials" that people talk about in an offhand way is deferred money due to various groups in the public service since 1987 and everybody around that negotiating table knew about it. It is comparable to putting off changing your car for a couple of years; it has to be done some time and during that time it is going to cost a bit more and that is the sort of period of attrition the Government are going through at this stage.
The first three years of the Programme for National Recovery brought results far and beyond those ever believed possible. Following the conclusion of the PNR the negotiation of the Programme for Economic and Social Progress represented an effort to allow workers to share the benefits of an improved economy. It represented a consensus among the social partners and any attempt to break or undermine that consensus now is unacceptable. It is a most minimal, though welcome, attempt to develop the Irish economy even though economic indicators are better than at any time since the mid-eighties. I want the Minister to confirm that fact in his response. Many economic factors have been reduced to their lowest level. Nonetheless at the first attempt to pay public servants what is due to them stockbroker economists once again come out with their anti-public service line and proposals.
At this stage three issues are at stake for public servants under the Programme for Economic and Social Progress. These are the special pay increases which were awarded through the conciliation and arbitration process, the public service pay agreement which is the general agreement for all public servants and thirdly, commitments which were made in the areas of health, education, employment, tax, legislative reform etc., which form the third part of the commitments to public servants under the Programme for Economic and Social Progress. There can be no question of tampering with outstanding arbitration awards due to teachers, nurses, gardaí and higher civil servants. They are the last people in the round to be paid and failure to pay their awards would be inequitable and discriminatory. It would not be acceptable on any agenda to renegotiate what is rightly due and what has rightly been awarded to these people.
Why should the teachers of Ireland accept a worsening of their conditions while they see millions of pounds being creamed off by the golden circle club in one scandal after another? Is it fair that teachers in Europe's most overcrowded classes or nurses healing the sick in our underresourced health service, or gardaí whose commitment and service is unquestionable and civil servants who make a superb contribution despite embargoes on appointments should be the people to pick up the tab for the creaming off of taxpayers' money by Greencore, the International Financial Services Centre, Telecom, the beef industry, Carysfort — and the list goes on? I have not heard any of these smart commentators ask when we are going to get the money back from this crowd. I heard that of the £8 or £9 million involved in the Greencore affair, less than £200,000 became liable for taxation. Therefore, instead of paying what should have been £4 million taxation on it, only £200,000, as I understand it, became even liable for taxation as it moved from one tax shelter to another.
I will make no comment on the rights or wrongs of what happened in Greencore because a series of inquiries have been set up to investigate it. I hope the Minister will have the courage to concede that it is utterly unacceptable that someone, whether rightly or wrongly, can earn £8 million and be liable for tax on less than £200,000. Such opportunities for tax avoidance render the taxation regime inexplicable to the ordinary PAYE worker who does not have any choice in these matters. It is just not on. It is time these people were booted out of the country and exposed as unpatriotic, unscrupulous exploiters of a poor economy which is what they have been.
We are currently witnessing an extraordinary period of the double-think in Irish society. We can find millions to pay the land speculators out in Carysfort — again I am not commenting on whether it is right or wrong — but I certainly know that we can find £8, £9 or £10 million so let us not argue about a million or two, whichever way it happens to go but just down the road from there, three or four school buildings are waiting for improvements, for extensions to buildings, to get rid of outside toilets in south Dublin in this day and age and the primary schools building programme is grinding to a halt. Let someone explain this anomaly to parents with children in sub-standard school accommodation, to teachers working under those conditions and most of all to the children who are expected to learn in that environment.
While the nation's finances are reportedly in difficulties we hear of the millions now being hived off by our leading industrialists, entrepreneurs and financiers. We hear of the profits that are being exported and repatriated tax free. We know that tax is being avoided on major profit-making schemes. The burden of the State is falling on the shoulders of the PAYE worker. Yet, predictably, at the first sign of trouble right-wing commentators attempt to victimise the public service, the taxpayer and the worker with demands that the Programme for Economic and Social Progress be renegotiated. Forget about these guys who are still opeating scams every day of the week. Forget about the people who are not paying their taxes, about the efforts being made to devise tax avoidance and tax evasion schemes. The solution is to hammer the public servants, hammer the PAYE worker and hammer the workers at all levels again. If anybody thinks that is going to work this time I challenge any Minister to debate the matter with me.
The people of Ireland are no longer going to be codded by this kind of carry on. It is time we took action to sort these people out and if it means sorting out Governments as we go along, so be it. If that is what it takes to do it, that is what will be done. The wool will not be pulled over anybody's eyes any longer on these issues. It is totally and utterly unacceptable that these stockbroker economist and accountant types should now propose to tell us what to do and how to run the economy, since they are the people who got us into the trouble. They make a career out of designing, modelling, creating and implementing tax avoidance and tax evasion schemes. They are the people who are responsible for costing the Irish taxpayer billions of pounds year after year. They are now the people who are going to try to deprive us of the money required to implement the programmes or proposals of Government.
They are the same experts who stood idly by while millions were being creamed off the taxpayer during the period of the Programme for National Recovery, as has come to light over the past number of weeks while Irish workers were suffering redundancies, rising unemployment, increasing emigration and vicious belt tightening, cutbacks and embargoes at all levels. While all that was going on these smart alecks who would now tell us how to make the public servant and the PAYE worker pay even more were running the scene for their friends. It takes outrageous cheek as far as I am concerned, for these gurus who are responsible for the poor state of the nation's finances to suggest now that the answer is to dig even deeper into the pockets of teachers, gardaí, nurses, civil servants and other PAYE workers. I am waiting for somebody to make that argument and they had better tie me to my seat before it happens. I am not prepared to listen to that kind of balderdash anymore.
Who are the people who are going to suffer most next year if the public finances run out of kilter? Who are the people who are going to have to pick up the pieces? The Minister and I are aware of what has happened over the last few years to the public finances and of the medium-term and long term objectives which were set. We are aware of the way the Programme for Economic and Social Progress is part of a longer ten year programme to set the economy right. It is a long term objective to get the debt-GNP ratio to below 70 per cent. It is a medium-term objective to get that ratio, by 1993-94, down towards 100 per cent. That is being achieved. I re-emphasise that despite all the problems which have been outlined to us over the past couple of weeks, that will still be achieved. Did anyone see any of these economists jump up and down when the latest figures for the third quarter of exports showed them to be far better than the same gurus had predicted in June?
Where are we going now? I have heard nobody in the past three weeks say that we will have zero or one per cent economic growth this year. The most negative forecast of economic growth over the last month has, extraordinarily enough, come from that much beleaguered man, An Taoiseach, who in the course of one of his recent discussions forecast economic growth of marginally over one per cent this year. It could well reach two per cent this year by the time all the fourth figures are in. There are few stockbrokers and economists who will now give odds against its reaching 1.5 per cent.
Earlier this year the Minister for Finance said he expected a 2.25 per cent growth. By the middle of the year the gloom and doom merchants have got the country into its present difficulties told us there would be zero growth this year. That is inaccurate. The Department of Finance on 16 August projected economic growth of 1.25 per cent to which the Minister for Finance is still holding. That was before the third quarter figures came in, which are better than expected and before we received indications from the UK that the recession was over. This recession is going to prove to be the shortest post-war recession of all.
We have been subject to self-fulfilling prophecies of gloom and doom merchants who know nothing about this country and who have never been able to make a proper judgment. They were the people who said Knock Airport could not exist; I keep a list at home of what these people say. They should all be turned into accountants and given profit and loss sums to spend their lives at because they know nothing about the first basis of a sound economy, which is a healthy well-educated population. It never enters any of their equations and they can never project beyond their present experience.
In 1989 the only economists to project a drop in the rate of emigration were those of the ESRI. Their forecast came out in June 1989. We were not in business much at that time but I made reference to it then in the House. The ESRI's medium term report costs about £19 which means nobody buys it. It has only 20 or 30 pages in it and it comes with an executive summary which made no reference to this forecast so it was not reported and probably went unknown. I raised this point many times and got nobody to agree but I am proven to have been right. They are accused of being the optimistic economic forecasters in this country but they have been proved right time and time again and their current figures are also interesting.
Another figure which is better than expected at budget time is the price of oil. Remember the debate on the price of oil in the late eighties, when it was thought that everything would depend on the price of a barrel of oil?
The inflation rate is well within the range forecast. Inflation is down to around three per cent and will remain there. There has been restraint in public borrowing and a reduction in the debt/GNP ratio. The Exchequer borrowing requirement is a matter of discussion at the moment but the forecast this week from NCB stockbrokers that the Government could handle a three per cent Exchequer borrowing requirement for 1992 would allow the Government to implement all the proposals in the Programme for Economic and Social Progress.
The ESRI forecast in the summer of 1991 was for two per cent economic growth. The August forecast of 1.25 per cent came from the Department of Finance. The Central Bank in autumn said somewhere between a half and one per cent and the Taoiseach, in his latest forecast, is talking about between one and 1.25 per cent growth. I am prepared to wager money that it will be closer to 1.5 per cent than to one per cent by the end of this year.
The figures for the balance of payments and particularly for exports are better than expected and are continuing to improve despite all the difficulties experienced in other countries. It is worth noticing that we are well within our projections regarding our main markets, the US and the UK, though not doing as well with Germany, our second European market, as we would like. Nevertheless we are holding our own there.
The implementation of the Programme for Economic and Social Progress proposals at this stage is essential for industrial peace, for the maintenance of credibility in the negotiating process and for the welfare of all those in health, education and other social services who are depending on pay awards contained in it, not to mention the huge group of workers who are dependent on its minimal proposals to increase their incomes.
While all these people have been talking about renegotiation of the Programme for Economic and Social Progress one group have been very quiet and they are the Federation of Irish Employers. They have said nothing about renegotiation because they could not afford to renegotiate. Any renegotiation would cost them an awful lot of money, given the kind of money that the financial services are making at the moment. They will not be shouting for it.
The question of industrial peace is not to be underestimated at this stage. Trade union leaders around this country went to their members earlier this year and put forward a set of proposals formulated under the Programme for Economic and Social Progress. Whatever people might think about it at this stage, it was not an easy task to go to each doubting Thomas in the trade union movement and to say that this was the best deal that could be negotiated with the best interests of the country at heart among a consensus of trade unions, farmers, Government, employers and everyone else. It required a compromise at all levels and because of this I believe we should accept it. An alternative would mean going back to those people who stood up at meetings all around the country and said it should be opposed because it would never be accomplished, that one cannot depend on a Fianna Fáil Government or on a Coalition Government. It would be necessary to say to those people that the Government are now trying to welsh on their committment to the Programme for Economic and Social Progress. This development would set back for years the process of negotiation, agreement and of national consensus from which there would be no recovery. Committments given under the Programme for Economic and Social Progress will have to be honoured.
I have a number of points to make in the area closest to my own heart, the area of education. There are certain commitments under that heading, not least the commitment to set up a proper caretaker service, an ancillary staff service and school secretaries, all for primary schools. That is an aspect of the proposals in the Programme for Economic and Social Progress which must be addressed. People from all parts of the country will be aware of this and many schools are dependant on it. There is a proposal that the capitation grant for primary schools be increased by £30 per pupil. That is a very paltry increase in terms of what it costs to run a school and anybody who has the slightest connection with a school will know that. Nevertheless it is clearly a move in the right direction. Any attempt to pull back on the commitments in education is going to cause a huge problem, particularly the commitments to reduce class size and to set up a programme of caretakers and clerk typing services for schools.
The commitment under the Programme for Economic and Social Progress for extra jobs in the remedial, disadvantaged field must be delivered. There is no question of welshing on these commitments. There is no place on any agenda for renegotiation. People are dependent on Government for this money. I finish with the words of the Minister for Finance in the budget of 1991 when he said about the Programme for Economic and Social Progress:
It is the initial Government contribution to a decade-long partnership for linked economic and social progress... With colder international breezes already blowing
— and these words are going to haunt the Minister —
1991 is going to be the true test of our perseverence on fiscal policy. Be assured, the Government will not fail that test.
Your first test is to honour the commitments which we all signed in the Programme for Economic and Social Progress in 1991. Let us see it delivered.
