I welcome the Minister for Finance to the House and, as it is his first occasion in the House, I congratulate him on his appointment on behalf of all the Members of the House and wish him good luck in his onerous task in 1992.
Appropriation Bill, 1991 [ Certified Money Bill ]: Second and Subsequent Stages.
Question proposed: "That the Bill be now read a Second Time."
I thank the Chair for his kind remarks. I am very happy to be able to address the Seanad this morning. This is the first time I have had the pleasure of speaking to you as Minister for Finance and I am looking forward to an interesting and constructive debate.
The annual Appropriation Bill gives statutory effect to the departmental estimates for the supply services, both non-capital and capital, including all Supplementary Estimates that were voted and approved by the Dáil since the enactment of the previous Appropriation Act.
This year's Bill appropriates to the various services set out in the Schedule the sum of £7,199,991,000 comprising the Estimates totalling, £6,991,629,000 as set out in this year's revised post-Budget Book of Estimates, and Supplementary Estimates totalling £208,362,000. As usual the Bill also authorises the use of certain departmental receipts amounting to £917,581,000 as Appropriations-in-Aid.
Although Supplementary Estimates of over £208 million have been passed by the Dáil this year, this does not mean that Exchequer spending is overrunning by that amount. The 1992 Abridged Estimates Volume, which I published last Tuesday, shows the provisional outturn for total voted services at £7,143 million, some £57 million lower than the total amount appropriated in this year's Bill. This reflects the fact that savings in certain spending areas will help defray the extra resources required on those Votes for which Supplementary Estimates were needed.
Apart from giving statutory effect to the Estimates, the Appropriation Bill has another vitally important function. It provides a statutory basis for calculation of the "four-fifths" issues which the Minister for Finance is authorised, under the Central Fund (Permanent Provisions) Act, 1965, to make from the Exchequer towards meeting the cost of the following year's services during the period before the Dáil has an opportunity to consider and pass the various individual Estimates.
This allows for the smooth continuation of services from one year to the next. If the Appropriation Bill is not passed by both Houses of the Oireachtas before Christmas, the provisions of the 1965 Act could not apply and there would then be no statutory authority to spend voted moneys in 1992, at least until the Dáil resumes.
This year the Appropriation Bill is also being used to make a technical amendment to the Provisional Collection of Taxes Act, 1927. The amendment is set out in section 2 of the Bill. The necessity for this section arises out of the proposal, contained in the review of the Programme for Government, that the Dáil sits on Fridays.
Under the Provisional Collection of Taxes Act, 1927, the Dáil can impose taxes by Financial Resolution, but taxes imposed in this manner will lapse unless they are ratified by being incorporated in the subsequent Finance Act. So as to ensure a reasonable amount of time for debating and examining in detail taxes imposed by Financial Resolution, the Provisional Collection of Taxes Act imposes strict deadlines on the passing of the subsequent Finance Act. If these deadlines are not met, taxes imposed by Resolution on the preceding budget day will lapse. These deadlines are that the Dáil must complete the Second Stage of the Finance Bill within 30 sitting days after budget day and that the Bill must be signed by the President within four calendar months of budget day.
As I said earlier, the necessity for the legislation contained in section 2 arises from the proposal that the Dáil should meet on Fridays. Up to the present, the practice has been for the Dáil to sit on three days each week. If the Dáil is now to sit on Fridays, there will be four sitting days per week and the 30 sitting day rule would leave insufficient time to prepare the Finance Bill for presentation to the Dáil.
Up to the present, with three day sittings per week, the "30 sitting day" rule allowed a Minister for Finance about 12 weeks to prepare the Finance Bill. The budget is normally on the last Wednesday of January. Thirty sitting days after this day amounted to ten weeks of Dáil business. Taking account of a break for St. Patrick's Day, ten weeks after the last Wednesday in January invariably overlapped with the Easter recess. So depending on the length of that recess, the Minister for Finance normally had 12 to 13 weeks to present the Bill to the Dáil. If the Dáil is now to meet on four days per week, the 30 day rule would allow no more than seven to eight weeks to prepare the Bill. The legislation could not be prepared within this timescale.
No doubt Senators will wonder why the Bill could not be ready in eight weeks. The process of preparing the Finance Bill is as follows. Every proposal for inclusion in the legislation has to be examined in the greatest detail by my officials. All foreseeable problems, whether problems of principle or of administrative feasibility, must be solved satisfactorily. This process involves close co-operation with the officials of the Revenue Commissioners and, in certain cases, with officials of other Departments. Each proposal is then submitted to me for approval. When I have considered, and amended or approved, a proposal, officials of the Revenue Commissioners prepare a preliminary draft of the proposed section. This is sent to the Parliamentary Draftsman and a text for each section of the Bill is prepared. When this process has been gone through for the 100 or more sections that normally comprise the Bill, the draft legislation is assembled and submitted to Government for consideration and approval.
The Bill must then be printed and checked. It has to be published in time to allow all Members of the Dáil time to examine it before the Second Stage is taken. It is my firm wish to have the Bill ready for the Dáil as quickly as possible after budget day, but it would be unrealistic to undertake that it could be got ready in less than the 12 weeks or so that it normally takes.
The intention of section 2 of the Bill which we are now considering is to accommodate a move to Friday sittings while continuing to afford the Government 12 weeks to prepare the legislation and to have the Second Stage taken. However, a rigid 84 day rule would not be practicable. Because of the variability of Easter, there would be years when an 84 day rule would allow only nine or ten weeks for the preparation of the Bill, as the Dáil would be in recess when the 84th day elapsed. Because of this, the legislation before the House today provides that if the Dáil is in recess on the 82nd, 83rd or 84th day following the budget, the Second Stage must be passed within five sitting days of the resumption.
As a consequence of changing the "30 day rule" to an "84 day rule", it is necessary to provide for a situation where the Dáil is dissolved between budget day and the passing of the Second Stage. Under the "30 sitting day rule", were the Dáil to be dissolved, a problem does not arise. By definition the Dáil is not sitting and so for the purposes of the Provisional Collection of Taxes Act no sitting days elapse. Under the proposed "84 day rule", however, a dissolution of the Dáil would eat into the 84 days and it could happen that Financial Resolutions would lapse as a consequence. Therefore, section 2 (b) provides that should the Dáil be dissolved the period of the dissolution will be added to the time limits, that is, the "84 day rule" and the fourth month rule will also be extended by the length of the dissolution.
I understand that the occasion of the Second Stage debate on the Appropriation Bill is availed of by the House to discuss economic developments over the previous 12 months, so I will make a few brief comments on the year coming to a close.
I think we would all agree that this has been an eventful 12 months, not just in Ireland but internationally as well. We started off with the uncertainty created by the Gulf crisis and are ending the year with the dissolution of the Soviet Union. The turbulence on the international political scene has inevitably had serious knock-on effects on world investment and economic performance and we could not avoid being affected by such international economic uncertainty. But we did at least manage to achieve some growth in our economy whereas some of our main trading partners did not.
Economics is an inexact science and economic growth can be an elusive goal. It is not too long ago when this country experienced a period where there was virtually no growth. In the first half of the eighties growth in GNP averaged only one quarter of 1 per cent. The national accounts, published recently, showed that we achieved outstanding economic success in the 1987 to 1990 period. Growth in GNP averaged over 5 per cent. Inflation averaged 3 per cent, the national debt to GNP ratio fell by 20 percentage points and unemployment fell dramatically by 53,000 reflecting the boost in private non-farm employment. Unfortunately, this period of sustained success has been interrupted this year. This was of course realised at the time of the budget.
When Deputy Albert Reynolds addressed the Dáil on budget day this year he made it very plain that the budget was framed against a very uncertain international background. He made it clear that the level of growth experienced in the recent past would not be sustained into 1991 and there was no attempt made to disguise the risk that the international downturn could be worse than had been allowed for and that this would adversely affect us. Attention was drawn to the manner in which such a slowdown could have repercussions for unemployment and, therefore, public expenditure. We now know of course that the recession in the UK and the US has been much deeper than anybody had anticipated and that 1991 turned out to be a year in which a turbulent political scene led on to a subsued economic one.
However, even in this disappointing year there are some encouraging signs, one being that despite the lower growth this year employment here appears to have held up very well. In the 11 months to end-November receipts from the employment and training levy and PAYE increased by 7 per cent and almost 8 per cent respectively as compared with the same period in 1990. While factors other than employment influence the trend of these receipts, the trend nevertheless supports the view that employment has been holding up well this year.
Also some of the favourable and very important trends experienced in recent years have continued into 1991. Inflation, for example, at 3.2 per cent, has remained well below the European average and it is expected that another surplus will be recorded on the balance of payments this year.
There is no denying that the unemployment situation has been most disappointing. It is important to appreciate however that this has been caused largely by the recession in the UK with the result that there has been a virtual cessation of emigration — as I have already mentioned the indications are that employment has held up reasonably well here.
On the budgetary front, the economic slowdown and international uncertainty has meant that the target EBR figure of 1.9 per cent of GNP will not now be achieved. When the end-June Exchequer returns were published it was clear that problems were emerging. On the receipts side, significant shortfalls were evident in tax revenues. This reflected, among other things, the sharp fall off in purchases of new cars from the high level attained in 1990 and a lower yield from stamp duties reflecting slacker activity in the property market.
On the expenditure side, the economic slowdown was increasing unemployment costs. These factors, together with some slippage emerging on other fronts, especially health, left the Government facing an overrun of at least £200 million at that time.
The Government, however, did not ignore these danger signals. Some of these factors were outside our control and simply had to be absorbed. The Government were firmly resolved, however, that the threatened level of overrun had to be addressed in a decisive way so as to reduce the impact in 1991 and to mitigate the adverse knock-on effects for the 1992 opening budgetary position.
In July, we set in train a wide-ranging examination of 1991 expenditure allocations and other non-tax areas to see where savings could be made to help alleviate the overrun then emerging. The result of this examination was a package of adjustment measures of over £100 million. This resolute action by the Government has helped contain the budgetary drift this year to a level well below the threatened overrun of £200 million emerging at mid-year.
In fact, on the revenue side of the budget developments over the period since July have been quite satisfactory. We said then that tax revenue would build from the disappointing position at end-June, when it was no more than 1.3 per cent ahead of the same period in 1990, to within one percentage point of the budget projection of a 5.8 per cent increase. The revenue flow has since performed consistently in line with that assessment and by end-November was 5 per cent up on the tax revenue yield over the first 11 months of last year. I do not expect much further improvement in December.
Mindful of our responsibilities to the less well-off, the Government nonetheless paid a Christmas bonus to welfare recipients this year despite the difficulties on the budget. Overall, I think that containing the ERB to about 2.5 per cent of GNP as compared with the initial budget target of 1.9 per cent is a commendable achievement. In reality of course the proceeds from the Irish Life flotation will bring the actual ERB well below the budget target of 1.9 per cent of GNP. This achievement is put in perspective when one realises that back in 1986 the EBR was almost 13 per cent of GNP.
Continued firm control of spending is an essential precondition for achieving the Government's medium term targets. We have again demonstrated our resolve in this regard with the publication of the 1992 spending Estimates earlier this week which show continuing restraint on spending. As Minister for Finance, it is my firm intention to endure that these targets are attained for the benefit of all.
I commend the Appropriation Bill to the Seanad.
Let me at the outset welcome the Minister to the House. He has been here on many occasions in the past in his old role as Minister for Labour. He has always taken the workings of this House very seriously and listened very carefully. I think everyone in the House would send genuine warm good wishes to him on taking up what is a very awesome responsibility at a particularly difficult time.
The Minister in his speech said that we are coming to the end of a very eventful year. I would think it is much more than that; we are coming to the end of perhaps the most distressful year in modern history. I do not think even the most long-serving Member of this House or the other House can recall a time when there was such general unpleasantness as exists at present or when there was such generalised distrust and disharmony within our political life.
The past four months in particular have been characterised by scandals, allegations, counter-allegations and a general air of nastiness. It has been a very unsalubrious time and there is little sign of any real improvement during the coming months or little prospect of any relief from what has been happening. It looks as if we may even have more of the same.
It is now two-and-a-half years since the present Fianna Fáil-Progressive Democrats coalition came into office. Whatever good that Government have done is now a matter of history. They are daily coming apart at the seams. Their moral authority is in shreds and, as a Government, they have lost all cohesion. They have neither direction nor purpose at present and the targets, one by one, have been abandoned or not been attained. The Minister in his speech did little to change that perception. The hopes he held out were exceedingly feeble. They are a Government who are paralysed and frightened, like a rabbit caught in the glare of approaching headlights.
Day by day, we see this process of disintegration and until the process is halted our fundamental problems will not be tackled. While this remains these Houses will lose all credibility so far as the public are concerned. There is only one way in which this process can be halted and that is through a general election. Nobody wants an election, especially a winter election. At a time when the electorate are so volatile and incensed such an election could provide some very unpleasant surprises, but nonetheless one is needed. It will only be through such a purging that the air can be cleared and a new start made. The sad fact is that this Government cannot heal themselves. They are in no position to implement reforms and they can forget about leading anyone anywhere. The country simply cannot afford to stagger and limp along in the present manner.
The damage to our overall political life cannot be exaggerated. The "Today Tonight" MRBI poll may be somewhat exaggerated but it does give an indication of how great and deep is the damage in terms of credibility and authority. The most urgent task facing both Houses is to undo the damage and restore lost credibility. No one can do this for us.
It is significant that on the Order of Business this morning all groups in the House talked about the need for reform. Unless both Houses set about that task in a genuine way the erosion of public confidence will continue. We must begin right here in these Houses. My party have long been convinced that if we are to improve the national performance there must be a radical shake up in the whole system of politics and administration. These institutions must become more accountable and more accessible. They must be more capable of making innovation and of responding quickly to the emerging problems.
The first priority at this stage is to introduce reforms that ensure scrupulous integrity in public affairs. We have major proposals in that regard, proposals which we have put into the public arena and on the Floor of both Houses of the Oireachtas. The first priority must be a system of a declaration of interests for politicians which would be supervised by senior constitutional officers — for example, the Ceann Comhairle or the Comptroller and Auditor General — to ensure that there is no impropriety in the event of conflicts of interest.
There should be a similar protocol for senior executives and board members of State bodies. There should be objective tests for significant appointments which heretofore have been bestowed as a perceived matter of political patronage. I refer particularly to the appointment of judges at all levels. There should be new legislation to make the planning process far more transparent than it is at present and to curb abuses in planning.
A transformation of the way in which the business of both Houses of the Oireachtas is conducted is long overdue, but I am not going to dwell on that. We are in the process of a major debate in this House on that matter and the time has come when that debate should be drawn to a conclusion and when we should begin to put into practice the proposals put forward in that debate. My party have put forward very serious proposals in this regard. They include a new, properly resourced committee structure of both Houses to improve the scrutiny of spending, with an eye to value for money as well as mere accountability. Full, open consideration should be given to legislation to make this possible. Our timetable should be significantly extended. There is a need for new rules of debate in both Houses to allow for consideration of matters of great urgency. We agree to the Minister's proposal that the time for the preparation of the Finance Bill be extended. Opportunities should be taken to ensure that other reforms are brought in.
We want to see the Oireachtas more involved in debate and action on the creation of jobs. One of our key criticisms of the negotiations with the social partners is that the Houses of the Oireachtas have been excluded. I believe very strongly in the whole concept of partnership. It has worked very well over the past number of years, but it has been damaged to a certain extent by the exclusion of the elected representatives of the people. They have played little more than a rubber stamping role in this whole process.
My party believe that there should be much greater accountability by State bodies, both commercial and non-commercial, to both Houses of the Oireachtas. We also believe that there should be an expanded role for the President. We have seen in the past year how impressive and constructive the Presidency can be in national life. The Presidency is a major national resource and, in consultation with the President, we should expand the role of the Presidency as a major national resource.
As regards reforms that we ourselves can make, I would put two points to the Minister. The first relates to the whole question of the funding of political parties. There should be some form of State funding of political parties. The best model we can follow is the model in Germany. In the Constitution of 1937 there is no mention of political parties. That Constitution is written almost as if political parties are a legal figment, as if they do not exist. Consequently there is no law regulating the way in which political parties operate. The German constitution was written in 1949 at a time when people were very conscious of the fragility of parliamentary democracy. It states very clearly that there cannot be parliamentary democracy without political parties. Therefore, they realised the necessity of erecting a legal framework within which those parties could operate and of giving them the means by which to do their jobs efficiently. The Germans are accountable and efficient and they recognise political parties as the essential element in the operation of the parliamentary system. We differ in that respect and as a result we behave as if parties are some sort of undesirable legal fiction. We should consider a system along the lines of the German model because Germany has the best parliamentary system in western Europe.
Money should be made available to political parties but in return parties must be fully accountable for all moneys received and all moneys spent. It is highly undesirable that parties be dependent on subscriptions from business, as is the case at present. It is also highly undesirable that such subscriptions are not openly declared. That creates a perception that politicians and parties are beholden to business. I do not believe that legislation has been influenced by these contributions but the public believe it has been so influenced, and the sooner this matter comes into the open the better. I would like the Minister to consider the whole question of the funding of political parties. The present position whereby members of political parties spend most of their time fund raising is very bad for political parties. It keeps people out of parties and distracts the attention of people in parties from making a much more constructive contribution to policy issues and so on. Reform is not a one way process; we must also be prepared to consider the funding of parties.
I would ask the Minister, in advance of the introduction of the Ministerial Pensions Bill to this House next session, to seriously consider the growing disparity in facilities for Members of both Houses of the Oireachtas. It is unacceptable that the facilities for Members of this House have fallen so far behind those for Members of the Dáil. Most Members of this House work as hard as Members of the other House — sometimes doing similar work, sometimes working in a different way — and it is undesirable that the facilities differ so greatly. I would ask the Minister to bear this in mind when considering that Bill.
The Programme for Economic and Social Progress has loomed very large in the public mind over the past week or so. The position of my party on the Programme for Economic and Social Progresshas been clear from the beginning. It gives me no pleasure to say that we have been proved right on what happened. We said here almost a year ago that we did not think the Programme for Economic and Social Progress would work. We felt that the targets set were unrealistic. The economic indicators referred to by the Minister at that time created an unrealistic basis for the achievement of the objectives of the Programme for Economic and Social Progress. I believe that the Minister's predecessor had a very clear idea of what was going to happen but he did not get his way on the matter. The measures in that programme came more from our Elysée Palace than from the Department of Finance.
At the moment we have the worst of all worlds. An agreement was freely entered into by consenting adults, an agreement from which one partner simply cannot walk away. Perhaps the Government are bluffing at present and will find the necessary money. If that is so I do not know why they are reneging on the agreement because it is doing no good. If the Government are playing a game of high level poker they should stop doing so.
If the agreement is broken unilaterally by the Government the consequences, I believe, are too enormous to contemplate and are out of all proportion to any good that may come to Government from the abandonment of this part of the agreement. If the Government go ahead I believe the public service unions are in a situation where they will have great difficulty in restraining their members. I know from talking to nurses, gardaí and others in the public service that there is a real sense of anger which has been fuelled by the various financial scandals which have blighted public life over the past four to five months. People believe there is one law for the rich and another for the ordinary PAYE paying public.
We have an extraordinary sense of timing. On this morning's "Morning Ireland" great play was made of the fact that we are now purchasing a new executive jet and a lingering discussion took place on the internal colour scheme, the outward paintwork and the fact that civil servants are in Georgia supervising the final touches to this airplane. I happen to believe we need an executive jet, but we probably do not need a top of the range model as we are getting. However, at a time when we are telling the public servants that they cannot get a modest increase this is being paraded in front of our eyes. Sometimes in the life of Government a situation is reached where own goals are the order of the day: one arm of Government is not sure what the other is doing and embarrassments of this sort are paraded daily before the public. This only increases their sense of alienation and cynicsm.
The Minister should not — and I think I know from his own contacts that he does not — underestimate what will happen if nurses or the rubbish collectors go on strike. Think of Liverpool and Britain during the winter of Mr. Edward Heath's discontent. Think of what may happen to the sewerage works, transport, tax collection, education and health care. I believe it will happen if there is no change in Government policy. The Minister should think of the climate this would create in terms of attracting new investment and new jobs. People will not invest and jobs will not be created if television pictures show day by day refuse piling up on the streets, the sewerage system not working and one or two day strikes in hospitals and the tax collection system breaking down. These are the consequences we face of this is not sorted out.
Imagine the social disharmony in our society. The price exacted from our society will be out of all proportion to the amount of money involved. That is the real issue. That is why even now every effort has to be made to see that this particular problem is resolved. It is in nobody's interest that this process goes ahead. The Minister knows well that once the process starts it is very difficult to reverse it. People take up entrenched positions and talk themselves into very hard line positions and people who have their own private agenda begin to emerge on the scene. The atmosphere becomes poisonous and goes out of control. That is where the Government's present position is leading and it is in nobody's interest that this goes ahead.
The trade unions — and nobody knows this better than the Minister — have been responsible and are being responsibly led; but they are under enormous pressure from their members. The whole concept of partnership has been worth while and my only complaint is that the Houses of the Oireachtas have been excluded from all but a rubber stamping role. However, once this social partnership has been destroyed it will not easily be restored. I am asking the Minister to think again. Let him not think he can succeed by dividing the unions or by creating a rift between the public and private sector. That will not work. Every effort must be made to get the dialogue going again to try to resolve this. I do not wish to exaggerate — and I am not — the consequences and the harm that can be done to the entire society if this process starts. There are forces which the unions are barely controlling at present which if let loose have the capacity to do enormous social damage to our entire community.
I want to ask the Minister a question which is related to this and that is the amount of uncollected taxes. Various figures have been bandied about in this controversy. The Comptroller and Auditor General seems to be saying one thing and his figures are being used in very authoritative ways by unions when making their case; but this conflicts with what the officers of the Revenue Commissioners are saying. This is not a debating point. If the public believe that some sectors of society, especially the self-employed and those who avail of self-assessment are getting away with murder, then their reaction of course is one of great resentment and anger. People will ask why they should be taxed to the hilt while others are getting away with it. The amount of tax raised by self-assessment is deeply disturbing. There must be a very serious question mark as to whether the system of auditing is effective and whether it has any real internal credibility. It is vital that we know the real facts. As I have said previously, this is far more than just a debating point.
I ask the Minister if it is possible to set up a small, independent inquiry or commission which would ascertain the real facts and the truth about the amount of uncollected taxes. Are the Comptroller and Auditor General's figures right or are the figures of the Revenue Commissioners right? Surely this is an objective matter and not a question of faith or belief and it should be a question of finding out the real facts. If there are large sums of uncollected taxes out there, then we are talking about a national scandal. People are right to be angry and resent paying their taxes if there is no sense of equity. However, if the actual figures are much smaller, then the figures are being used in a mischievous and damaging way that removes a fundamental pillar of rational debate. It should not be beyond the wit of this Government to set up a small independent group or commission acceptable to all sides that will report back on the actual extent of uncollected taxes. We should once and for all try to get to the truth of this. If there are large sums of money that are not being collected for whatever reason, for heaven's sake let us, with the support of every party in both Houses, get that money. However, if the figures are being used in a less than honest way by those who are making the point and the money is not there, let us find that out also. Nothing is doing more harm to the whole public debate than the lack of certainty as to the true picture. I hope the Minister can give me a positive response to that question.
I have made most of the points I wish to make and I will conclude on a general point. I believe the Government have also failed in their reforming agenda. There is a great number of mainly non-financial reforms that could be implemented which would make this a better, more open and tolerant country in which to live. There are a whole range of mainly small single issue reforms on the liberal agenda which if implemented would diminish the degree of discrimination in society. "Liberal" is a word which tends to frighten people away, but I believe the Minister would agree with me that most of these reforms are capable of being implemented.
One of the very disappointing things about this Government has been the very slow way in which they have tackled these areas of reform. I shall name just two or three of them. There is a need for greater provisions to support the family and various members in the family. There is a need for another Child Care Bill to cover barring orders for offending adults and to lead to mandatory reporting of child abuse cases. There is a need to strengthen family support group training for work with troubled children. There is a need for much greater provision of child care facilities for working parents, and although that matter may seem trivial it is now a matter of major concern for many families. There is a need for a new Family Property Bill, especially in the light of the recent High Court decision. There is also a need for a range of other provisions which perhaps do not come under the aegis of this Bill.
I have one other point to make on the changes that need to be made. The Minister for Justice said in this House more than a year ago that the Government on foot of the decision of the European Court would introduce legislation to decriminalise homosexuality. It seems that commitment, if not gone back on, has been greatly stalled. That is unfortunate because the issue should be faced head-on. There is a need, partly because of the judgment of the European Court and partly because it is the right thing to do, to decriminalise homosexuality.
Senator, you are straying away from the agenda of the House.
I am, but I shall stray back now.
My general point is that the Government programme has not been acted upon. I use this occasion to make that point in a general way and I shall come back to it in the House on other occasions.
As I said at the beginning, we have been living through an extremely distressful time in Irish politics. I believe that there are no winners out of what has been happening in the past couple of months. I also believe that unless the various problems are sorted out one by one, and sorted out quickly the real loser will be the art and the science of politics itself. Those who work in the world of politics, the institutions, the political parties and the general cohesiveness that holds us together as a society will all be affected. I believe it is a great privilege and an honour to be elected to either House of the Oireachtas. To be involved in what the late James Dillon always referred to as one of the great vocations — the vocation of politics. I decry those outside who knock politicians. In my ten years in the Oireachtas I have found that most politicians——
Acting Chairman
I must ask you to conclude, Senator.
I am concluding, Sir. For the most part those who are involved in politics are honest and honourable people who have at heart the concern of the society of which we are all a part.
My final word is one of warning. Unless we can get our House working properly, get our act together, we will not be in a position to restore that public credibility which is rapidly ebbing away with great and harmful consequences.
I welcome the Minister to the House. I congratulate him on his appointment. He was an extremely resourceful Minister of Labour and my colleagues on this side of the House and I have every confidence that he will make a masterly job of the Finance portfolio.
I was interested to hear Senator Manning and particularly the way in which he opened his contribution. He talked of it having been a stressful year, talked of cynicism and pessimism in the mind of the public and said that it was a time of distaste. By the end of the Senator's contribution, however, I was asking myself whether I would sit back and leave him alone, because he retrieved his position. However, I make the point that it is rather trite for the Senator to say that the year past was very difficult for politics in general. I suggest that the Senator and Members of his party look within their souls and ask themselves these questions: "Have I done credit to myself during this past year in Irish politics? Have I done a service or a disservice to the art of politics? Have I lived within a code of behaviour that is understood among all politicians?" I think that perhaps Members on that side of the House might need to——
Acting Chairman
Senator, I think you are straying slightly from the agenda and I should appreciate it if you would address the motion before the House.
I shall try to come back onstream.
When addressing the Appropriation Bill one has to have regard to the Government's strategy going back to 1987. That strategy was aimed at reducing the debt, fostering economic confidence, minimising inflation and ensuring confidence in the Government being serious about what they are doing — the Government were trying to rectify the public finances in the hope that Ireland would be able to generate much greater economic activity.
It is also important to pay tribute to the trade union movement since 1987. The trade unions have been very pragmatic. They have been very moderate and understanding in their demands and very conscious of the nation's difficulties. In no small way the unions have contributed to the overall harmony that has existed in industrial relations.
At the time of the budget the former Minister for Finance, Deputy Albert Reynolds, obviously foresaw certain difficulties in setting targets. He then indicated that it would be a period of uncertainty and he projected growth of 2.5 per cent. That was a sober projection when one considers that we had growth of 6 per cent per annum in previous years. Unfortunately, we experienced the advent of the Gulf War and a recession in the United Kingdom and the United States which meant difficulties for Ireland, particularly because about half of our exports are sent to the United Kingdom and the United States. Rather than sitting back and relaxing, when the present Government foresaw a £200 million overrun in mid-year, they took corrective action. There was a shortfall in direct revenue and an economic slowdown, which resulted in increased unemployment and the cessation of emigration. The Government's resolute action has meant that while we were targeting a 2 per cent external borrowing requirement we will now come out with 2.5 per cent growth at the end of the year.
One great feature of the corrective action taken by the Government was that the Government made sure that the less well off in society were protected. Social welfare spending has increased dramatically. The Government since 1987 have certainly been very conscious of targeting social welfare spending to those who are most in need. Increases in social welfare payments have all been in line with inflation and many of them have well exceeded inflation. It is interesting to note that all of the long term rates are at the priority rate recommended by the Commission on Social Welfare. The Government are to be congratulated on that.
It is also said that taxpayers have had a tough burden to bear, which is quite true. In 1980-81, 11.5 per cent of taxpayers were paying tax above the standard rate. By 1987-88 that had risen to 44 per cent but, because of the adjustments effected in recent years, I understand that is now down to 40 per cent and, with the Government commitment it will be reduced even further. It is very easy to recommend that the tax burden be reduced but that must be done in a cohesive way.
Many changes have taken place. Within the Revenue Commissioners' remit there has been a major overhaul of the tax administration system. For example, self-assessment for the self-employed has been introduced. Tax enforcement itself has been improved enormously. It is easy for an Opposition to recommend that we have more people paying less tax while, at the same time, recommending more money for roads, housing, sanitary services, health and education, all very costly in their own right. Any responsible Government must ask themselves where is the money to come from to pay for these increases? The Opposition will also say we cannot increase borrowing or raise taxes. Were we to follow the parameters we did from 1980 to 1987, we would be again travelling the path of higher inflation, less competitiveness, higher prices and even greater numbers unemployed.
Modest recovery is forecast in our economy next year. I understand the growth is likely to be from 1.5 per cent to 2.5 per cent. In Britain the economic recovery promised in the second half of 1991 failed to materialise, in the third quarter, output grew there by 0.3 per cent with an attendant decline in retail sales of 0.5 per cent below the September level. The predictions are that growth in the United Kingdom is likely to be much weaker than had been hoped or which might have been usual in earlier economic cycles. It is now accepted that consumers are unlikely to accelerate retail demand. Therefore, Irish exports to the British market next year probably will be constrained on that account by the narrowing of the differential in our respective inflationary rates. In setting parameters the Minister for Finance must be especially careful.
Senator Manning mentioned taxation and its collection, an extremely important issue. The highest figure I have heard bandied about is £200 million. I understand that the Minister and his officials maintain it is something in the region of £30 million. One must be fair to the Revenue Commissioners in that self-assessment has led to an overall improvement in tax collection, with many evaders being taken to task. The statistics emanating from the Revenue Commissioners' current audit are interesting. We should be fair to them in that when they are conducting an audit they are usually certain where that audit should take place and what it should pinpoint. I might give the House two examples: in 1990 there were 1,125 cases investigated of which 694 were finalised, giving a yield of £6.8 million. In the first ten months of 1991 there were 2,000 audits conducted, 754 of which were concluded giving a yield of £8.3 million. One can view that achievement in two ways. You can say those audits were carried out, pinpointing where tax was being evaded, but there is now great professionalism within the Revenue Commissioners' collection system, with accurate pinpointing of areas where they suspect there is evasion and they are successfully pursuing such evasion.
Like Senator Manning, I say to the Minister it is extremely important that, if there is tax evasion, we should pursue and hound those involved, making them pay their fair share. I agree with Senator Manning also that public perception of their pursuit is important, so that everybody is seen to be paying their fair share of tax with no group exempted.
Discussion of the Appropriation Bill always affords Members a little flexibility in being somewhat parochial. May I draw the Minister's attention to the free port at Ringaskiddy and suggest that since its designation as such, it has been a failure. I suggest the reason for its failure is as follows. If one looks at the Financial Services Centre in Dublin or at the Shannon Free Airport zone, both incur a 10 per cent corporation tax rate only in the services sector. The only advantage the free port in Ringaskiddy has over any other is that it is not subjected to VAT at the point of entry. After 1992 that will also disappear, and we will have absolutely no advantage. In fact the term "free port" should be abolished then. I hope I will not be perceived as yet another public representative from the Cork area whingeing. I am suggesting to the Minister that there is a major economic benefit to be had from this area, where there is a tremendous land bank which can serve as an incentive to job creation. I ask the Minister to re-examine the possibility of extending the 10 per cent corporation tax rate to the service sector operating out of Ringaskiddy port.
I might refer also to employment, its creation and activities undertaken in that cause. We are told we are extremely lucky to have a very well educated young workforce. That is undoubted; we have a quality workforce to offer foreign employers, graduates and others, ensuring an increased output for any company locating here, but would the Minister bear in mind the relationship between education, training and future employment trends and demands?
We talk about offering extra third level places to our young people, but where are those places to be found? An analysis will show that they are easily found in commercial and art sectors. However, can we be certain that future employment trends will be geared in that direction? Of course, it is important for young people to pursue education and, in particular, acquire a specific qualification which will be appreciated by potential employers and society generally. I ask the Minister to examine engineering courses in particular. The IDA predict that the demand for computer science graduates will rise by 20 per cent annually. However, it is envisaged, on present projections there will only be an 8 per cent increase each year. Therefore, there is likely to be a shortfall of graduates in the engineering sector in excess of 50 per cent each year up to the year 1995. This is an issue which has to be addressed. I also understand that there will be a shortage of graduates in the electrical and electronic engineering areas. It can be seen from this analysis that we might be wasting a valuable resource. The Government should embark on a process of educating career guidance teachers, parents and pupils on the employment prospects in the engineering sector in the immediate years ahead. Our ability to produce engineers will determine our ability to create employment for people who are not engineers. Whether or not we like it, engineers will be the essential ingredient in making the entire operation viable.
I should like to see far greater cohesion between the IDA, the Higher Education Authority and the Department of Education. It is now possible to anticipate demands and if we plan properly we can meet these. The last thing we need is a lack of trained graduates as this would have a debilitating effect on our efforts to create employment. Many of the training courses provided in the past may not have been as relevant to job demand as they should have been. Indeed some of the courses still coming on stream are not totally relevant to ensure placement of graduates at the end of the day.
There is also a need for far greater integration between the IDA, FAS and the Department of Labour. The FÁS centre in Cork is extremely successful, very resourceful and very well managed. However, not enough courses can be provided in the computer related and electronics areas. I understand there are some difficulties in the provision of word processors, laboratories, etc. In view of the Taoiseach's recent statement that there will be an extra 25,000 trainees — people who will be taken off the live register — the Government should grasp this nettle and allocate resources to what are deemed meaningful courses which will give employment in the future.
In conclusion, I should like to wish everyone a happy, peaceful and holy Christmas.
I am pleased to see the Minister in the House. I should like to congratulate him on his appointment as Minister for Finance and wish him well during his tenure in office. I am glad the Minister for Finance made the effort to come in here to listen to this debate today. Last year the previous Minister for Finance, for whatever reasons — sometimes these are valid — was not able to be present to listen to the debate.
During the debate last year I predicted that we were facing into a stormy period in 1991 so far as the economy was concerned. There was great uncertainty throughout the world at that stage and the effects of the GATT talks, which were in progress, seemed fairly omnious for this country. There was no real recovery in the world economy during 1991. We were in a difficult position last year and it seems as if we are in an even more difficult position now. In many ways the situation has got considerably worse. It has been predicted by the Minister that there will be 275,000 people on the live register next year. This is what he is preparing for in terms of the budget.
Bank rates were increased this morning. This, of course, will create its own tensions and put pressure on the economy. The country has been beset by scandals which should not have arisen and should have been avoided. The public are dismayed, worried, concerned and perplexed about the way their leaders have been behaving. They are perplexed at the manner in which key trend setters — the people who set the tone and values in our society — have been exposed over the past few months. There are also the cuts in social welfare announced by the Minister for Social Welfare yesterday. Indeed, there are clear signs that more cuts are on the way.
Over the past few years the gap between the standard of living of the various segments in our society has been widening. Many of those who have wealth are becoming wealthier. There have been arrogant glorifications of greed and materialism and there seems to be no such thing any more as a social conscience among some elements of society. Concern for the underprivileged and the poor is seen by some elements as being weak, foolish and old fashioned. In addition, many of our old values have been eroded and are now submerged in the language of greed. We have also seen the establishment and glorification of exaggerated lifestyles as worthwhile objectives.
This year we saw the start of the breakdown and disintegration of society in some suburbs of Dublin. We saw the effect of years of neglect and abandonment manifesting themselves in the alarming sight of youngsters stoning gardaí and firemen. This has to be a matter of great concern to us all. In addition, there is the silent constituency of the middle class who are finding the going increasingly tough. These people are finding it increasingly difficult to meet their mortgage repayments, which are set to rise and will continue to present difficulties for many of them. The cost of education is set to escalate and this will create further burdens for this element of our society. Health insurance is also set to increase. We can predict with confidence that insurance premiums will continue to create great difficulties for many people. All this is happening even though these people were led to believe that if they made sacrifices, worked hard, kept their noses to the grinding stone and endured the difficulties for another while things would improve. It now seems as if their expectations will not be realised in 1992 and they will have to wait a very long time before they come to fruition.
I should like to refer to the problems in the social welfare area. The cutbacks announced yesterday mark a new dimension in Government policy. These cuts are the first in a new form of direct attack on the weakest elements of our society. These cuts will make life much harder for those who are exposed to the worst forms of poverty. We should not forget that there is already a rigorous system of controls in place which greatly restricts the amount which can be paid to people by way of benefit. May I ask the Minister if I am right in concluding that a husband and wife with three children on disability benefit of approximately £100-£110 per week will be taxed from now on? If the answer to that is yes, this is a terrible new dimension in the development of our society.
There are also great problems in the area of housing. Given that he is an outstanding constituency worker, I am sure the Minister is only too well aware of these problems. Indeed he must be considerably more aware of these problems than I am. No provision has been made for any worthwhle developments in the area of public housing. There is a dreadful housing crisis in Dublin at present. The people who come into my clinic are bewildered as to what they can do next. I must confess I cannot hold out much hope for them in their efforts to get houses. More than 4,000 people are in need of housing in the corporation area and figures for the county council area are fairly similar. Even in rural areas such as County Clare I understand that there are 300 to 400 families in urgent need of housing. To have any realistic chance of being housed one needs to be homeless. Recently I analysed housing placements by Dublin Corporation in the past seven or eight months and it is clear that about one-third of those housed in that period were classified as homeless. The same position applies in the county council area. Between May and October this year 124 people were housed, of whom 81 were classified as homeless. The social housing programme appears to be just an aspiration and unfortunately people cannot live on aspirations. The Government seem to be endeavouring to put the onus on people to house themselves. The difficulty is that most people who are in need of housing have not the resources to house themselves and for that reason they turn to the public authority.
There have been some increases in the amount of money allocated for health this year, but these increases are fairly trivial. Many people will be forced to become increasingly dependent on private medicine. Many are forced to use private medicine as a last resort and must borrow to do so. Many are forced to turn to their families to bail them out and provide them with the money to get treatment for disorders which need urgent attention. The only way in which such disorders can be treated immediately is by going to the private sector.
Money to build the Tallaght hospital is conspicuous by its absense from the Estimates. The people of Tallaght and of west County Dublin, an area bigger then the city of Limerick which is served by two big hospitals, will continue to be without a hospital. It is always dangerous in politics to make predictions but if there is no worthwhile development in relation to the construction of the Tallaght hospital within the next year or before the next election, a person will be elected to the other House on the platform of a hospital for Tallaght who will join forces with the Roscommon TD who presumably will be re-elected because of the hospital situation in Roscommon. I have no doubt this will happen.
I have attended a relatively small number of meetings in Tallaght dealing with the hospital and the aggravation and annoyance of the people there is palpable. That annoyance will be expressed through the ballot box by the election of a Tallaght hospital TD. If the figures work out in a certain way after the next election the Tallaght hospital will be constructed immediately, in much the same way as the dock site was developed when an appropriate set of figures was worked out in relation to the balance of power in the other House. The case for the Tallaght hospital is clear-cut and I very much regret that it does not feature in the Estimates.
The plight of the mentally handicapped is ongoing. They and their families have been neglected for a long period. People like to talk in terms of the mentally handicapped being special. I suppose they are special politically in the way they are forgotten. They are not able to lobby and they are not coherent. They are not organised in the way some of the other lobbies are and as a result they are grossly neglected. Some mentally handicapped people are dumped into psychiatric hospitals in a manner which is a disgrace to any civilised society. Many mentally handicapped people are dependent on their families to provide services for them which should be provided from public funds. The life expectancy of many mentally handicapped people is fairly similar to that of the population in general. As a result of that welcome advance in medicine these people, some of whom are in their thirties and forties, are still being cared for by elderly parents, who are driven to distraction wondering what will become of their children when they are no longer able to cope. Within a short period many of them will not be able to cope and they are very concerned as to how their loved ones will be cared for.
I make a special appeal to the Minister regarding the provision of money for nappies for some of the mentally handicapped. There is a tremendous level of irritation, annoyance and dismay among the families of the mentally handicapped because of restrictions on the provision of nappies. I hope I do not seem trivial in mentioning this matter. I do so because of representations from these families. The amount of money involved is small and I hope the Minister will investigate the problem and devise a solution. I need hardly emphasise the difficulties caused by an inadequate supply of nappies in the case of adults who are doubly incontinent. I appeal to the Minister to take some action in this regard.
I notice that since Deputy O'Rourke has taken over as Minister for Health she seems to be following a role model developed by the Taoiseach when he was in his toothbrush phase in that Department.
What about his condom phase?
I believe the Minister has something up her sleeve or in her handbag, or so we are led to believe by the newspapers. I notice that she is moving into the toothbrush phase and becoming very concerned about preventive medicine. She loves to be photographed in the middle of a group of children, and instead of giving them little courses in education she is giving them advice on healthy eating, proper living and that sort of stuff. I have been involved in that area from time to time in respect of nutrition and so on and I welcome this worth-while and useful development. I hate to think that it would be used as a gimmick to camouflage the lack of resources in other areas. I hope we are not seeing an elaborate "toothbrush-type" camouflage in the fine mode developed by the Taoiseach. Is the toothbrush the ultimate lever to the top position? I am sure the Minister has a fairly good idea about that and how the "anti-toothbrush" tools work.
It is anoraks I am accused of.
The Minister has given them a good name.
Will the toothbrush or the anorak triumph? They say that Christmas is a time for reflection, a time when people consider the welfare of those who are less well off. In that context I want to mention the plight of the homeless. There is a serious and growing problem of homelessness in this country and that problem has been tackled in what can only be described as a totally incoherent disjointed manner. We should reflect on the reasons for homelessness and how we can hope to deal with this problem. It is a particular problem in Dublin with dreadfully undesirable side effects, such as unfortunate youngsters being exposed to the hazards of drugs, prostitution and so on. That is a matter of great concern.
A report was published recently on the homeless in this country and it highlights the inadequate and disjointed manner in which we have set about addressing this problem. There are enormous variations in the way in which residential homes for the homeless are funded. The qualifications of many of the people who work in this sector are inadequate. There is a very uneven spread of services and there is the ridiculous situation where recommendations are made for the use of certain services which are not available.
When the Taoiseach visited Galway recently he announced that a television channel for the Gaeltacht was to be inaugurated this year. I note from the Estimates that a trivial amount of money is provided for this. I wonder if the clear air coming in from Galway Bay got to the Taoiseach so that he now imagines we can have an up and running Gaeltacht television channel with no expense at all. I wonder how this Gaeltacht TV channel, which I gather would cost about £10 million a year if it is to be in any way worth while, is to be run on £50,000, which is the amount mentioned in the Estimates? One wonders if it is dangerous for the Taoiseach to visit Galway in relation to this kind of development.
There are one or two other points I want to mention before I conclude. One is the amount of money made available for Third World aid. The first reality in relation to Third World aid here is that there are no votes in it.
There are, and there will be.
I hope there will be. I am always reluctant to disagree with a political scientist of the distinction of Senator Manning, but I still have my doubts. The Government are fairly sharp at recognising where the votes are and where they are not, and that is a very important factor in the amount of money which is provided for Third World aid. the Government have effectively cast aside their obligations; they have ignored their obligations to the poorest people in the world. They continue to ignore their obligations and have abandoned any effort to attain the United Nations objective of a contribution of 0.7 per cent of gross national product to Third World aid.
Trócaire have said in response to the Estimates this year that Third World aid has fallen from 0.19 per cent in 1991 to a projected 0.17 per cent in 1992. That is a betrayal of the Irish aid workers who work in these countries; it is a betrayal of the poorest people in the world. For those people aid is a matter of life and death and it is a great pity we have adopted the attitude we have to aid.
I want to make one other point in this area and it relates to the manner in which the figures are calculated. This year the Department of Foreign Affairs drew attention to the special funds which were made available last year because of the Gulf War. Last year they used these funds to make one case; this year they are using the same funds to make a different case. They cannot have that type of argument both ways.
In relation to education, the problems are well known to all of us and, presumably, if Senator O'Toole comes he will deal with them in depth. There is the continuing problem of the pupil/teacher ratio, there is the continuing problems of caretakers and secretaries and the inadequate provision of resources for these people, and there is the continuing problem of fund raising in national schools in particular. The parents associations raise funds by organising race nights, cake sales and so on. In the second level sector I understand many buildings are not being proceeded with. The rationalisation programmes which were badly needed in some areas, particularly in rural areas, are not going ahead because the necessary money is not being made available.
There are still many difficult problems to be solved in third level education. The problem of access to third level education remain a tremendous stigma in regard to the values which obtain in this country at present. Third level education is primarily the prerogative of the well to do elements in this country. Anybody who reads Paddy Clancy's reports will see that their basic message is the same — and that is no reflection on those excellent reports — and that has been going on for ten or 15 years.
I am very disappointed that no meaningful action has been taken to reverse those trends. The people who get into college and into the more sought after faculties are the children of the well to do. I am privileged to work as a lecturer in the veterinary faculty in UCD which is one of the most sought after faculties, and most of the students there come from well to do backgrounds. That is no reflection on them, but the reality is that the balance is certainly very skewed. I wonder if we have the political ambition or the political will to make the changes necessary so that people on low incomes can expect to see their children getting into third level education, and particularly into those parts of the third level sector which are most sought after.
There is another problem in the third level sector relating to standards and the effects the restrictions and resources have on standards. The standards at third level are very high. There have been serious cutbacks in the amount of money available for the third level sector over the last number of years. We are getting close to a situation where, if there are further reductions in the amount available, standards will begin to fall. I also believe that the people in charge of the universities are in a dreadful dilemma in relation to this matter. If they say that standards are falling, even if it is because of lack of funds and so on, they will damage their college. In many ways they are boxed into an enforced silence. If they break that silence they will find themselves in an even worse situation. We should pay particular attention to this because standards are very important, particularly in relation to the matters mentioned by Senator O'Keeffe earlier when he spoke about the desirability of having an adequate supply of highly qualified engineers. One can apply that argument right across the board. If standards begin to fall there, that will put a very serious restriction on economic development here.
For the first time there has been a cut in the amount of money available for the arts. The Taoiseach has made much play of his interest and concern for the arts. To be fair to him, he had done his bit in this area and I do not want to take from his achievements. I would hate to think that after all his years of being concerned with the arts and promoting the arts, he is now beginning to move in the direction of being a philistine. I hope that is not the deduction to be drawn from the cutback in the amount of money being made available for the arts. It is a very worrying trend, it is in sharp contrast to the way the Taoiseach used to behave in times gone by and I wonder if all the experiences he has been through this autumn have had their effect.
I want to turn very briefly to the problem of job creation and industrial development. In many ways quite a large number of the problems which now exist are due to the fact that we have not been able to develop our industry or to face up to the problem of unemployment. Quite a large number of people are only concerned with the short term. In Irish politics a Government can serve for only five years, and most Governments do not last that long. We are talking about short term perspectives. If we are to make real progress in relation to industrial development we must develop long term strategies.
We must also face up to fundamental questions in relation to policy and in particular to the failures of the IDA to identify the significance and value of indigenous industry. The IDA got it wrong in relation to the strategy they adopted in the seventies and the early eighties. We must also evaluate the capacity of organisations such as the IDA to determine industrial policy. One of the great pities in relation to industrial development here is that the Telesis report could not be taken on board — if I am allowed to use that dreadful cliché — by the IDA and many people in key positions in this country. We should have had the wisdom to adopt the recommendations of the report and to tell the IDA where their place is inrelation to the formulation of policy. They have a role in contributing to the making of policy, but ultimately the making of policy is a matter for the Houses of the Oireachtas and the politicians. I do not want to suggest that there are easy solutions. One of our problems has been that we have been far too ready to come up with glib, easy answers in relation to this.
Industrial development will be a long, hard battle. We will have to be prepared to work out strategies and to pursue those strategies over a prolonged period of time.
In relation to industrial development, job creation and the solution to the unemployment problem, it seems that for the most part the options open to us have not been adequately or fully outlined. We certainly have not begun to think about how we would work our way through the various options, what difficulties that process would create and how we might overcome them. The Government should prepare for the long term; I believe that would bring rich dividends.
I understand that we will continue some aspects of this debate in the new session, but I want to make a few points. I thank Senators Manning, O'Keeffe and Upton for their comments. They asked me to clarify a number of points and I will do my best. I would also like to thank the House for facilitating the passage of this very important legislation fairly quickly through the House so that we can legalise all expenditure before the Houses resume in the new session.
Everyone realises the budgetary prospects and difficulties which will arise in 1992. There is no need to go into too much detail, but the opening budgetary position remains well above the level which would be consistent with staying on course for the 1993 target set out both in the Programme for Economic and Social Progress and recently reaffirmed in the Programme for Government. Given the restrictions on borrowing which are implicit in these targets, some further tightening has yet to be done to ensure a satisfactory budget at the end of January. We have won the confidence of investors and customers at home and capital markets internationally for the stance we have taken over a number of years. We have to keep that confidence if economic progress is to continue as it should. That is why we must adhere to our fiscal objectives, continue to reduce the national GNP ratio and work towards a broad balance in the current budget. It is not really a matter of choice and everybody in this House understands that. No responsible person should advocate change in these fundamentals of our strategy. A departure from this stance would very quickly undo the progress of the past few years and undoubtedly damage our longer-term prospects in the emerging integrated Europe.
Deputy Manning made constructive points this morning, but the kind of ecomomic and fiscal policies that have been pursued by the Coalition Government of Fianna Fáil and the Progressive Democrats would be precisely the same kind of fiscal policies which would be followed regardless of who were in Government, because the path is mapped out for the remainder of this decade. Yesterday was probably a good example of that. We are moving to a single central bank, but I suppose people reading their newspapers today or watching what happened would say we have gone a long way towards that already.
It would not be realistic to advocate — I know Senator Manning was certainly not doing so — that there is any policy other than to continue to work towards a current budget deficit of within 1 per cent, broadly balancing it and eliminating it and getting down our national debt-GNP ratio to 60 per cent. It will be a long haul but we have to work towards that. That is the reality and what we are arguing about are the priorities within that strategy. Regardless of which party are in Government after the next election policies cannot change. It is no longer acceptable for people to talk about public expenditure without talking about the options.
Senator Manning and others referred to the Programme for Economic and Social Progress. I assure this House, as I have done in a number of debates in the other House, that it was with great reluctance that the Government are trying to change that programme. In our discussions with the Congress of Trade Unions it is important that we knew precisely what direction we were taking.
In regard to pay in 1992, we tried not to be divisive or clever or to set one section against the other. In our present budgetary position we spend 25 per cent of all our money servicing the national debt; we spend 35 per cent of all our money on pay and from the remaining 40 per cent the Government — and Governments in the future — will have to endeavour to effect savings. We looked at the 1991 position and realised we would have to take approximately £600 million out of the total departmental demands to maintain the status quo.
I agree with the remarks made by Senators Upton and O'Keeffe but to do what they suggest would deal a crippling blow to these services. You have to look at the pay agreements but the reality was that in a year when we had 3.2 per cent inflation and were heading for an increase in the pay bill of over 10 per cent, the Government's decision was to defer the special pay agreements, award increases to low paid workers and then to look at the overall figures. However, even after doing all that, the Government will still pay an additional £240 million to the public sector in 1992. There is also the disputed amount which we had to include in Government policies and some other matters which, as I have said several times, we are prepared to discuss with the Irish Congress of Trade Unions. Even allowing for last week's decision and the decisions in the Book of Estimates, there is still a shortfall on which we have to work after the Christmas holiday. These are the kind of hard decisions we will have to confront in the years ahead.
I now come to tax collection. Senators asked that this issue be taken on board and that certain points be clarified so that people will know precisely what the figures are. We had an outdated and inefficient system of tax collection. The suggestion was made here today that the public sector pay problem would disappear if tax collection was more efficient. Some people say there is an extra £200 million tax out there and that people are just waiting for someone to send a letter. In some instances there has been the implication that if only the Government took tax collection as seriously as they should, there would be no difficulty. If that were the option I would be a happy person heading for my Christmas break — I am not saying anyone here made that suggestion.
We are committed to improving tax collection and tackling tax evasion and avoidance over a number of years and we will definitely push ahead with that. Nobody feels more strongly about tax evasion than I. Wherever there are scams of any kind, regardless of whether the people involved are in high positions, middle positions or low positions in the extended business world, they should not get away scot free. The proposition that there is an additional £200 million of tax out there is not realistic and given the cooperation by the various stock groups, who have a major part to play, and through their work on additional audits, the advice given to me is that we can collect approximately £30 million next year. I will continue to pursue that tax and step up the number of audits.
A year from now we will move into the Single Market where there will be no limitations on people bringing in goods for their own personal use, and all barriers will have disappeared. That will displace a considerable number of people, some of whom will opt for retirement, while others will opt to stay in the system.
I had the opportunity recently to visit the Dublin self-assessment unit, the largest in the country. The officials there were highly motivated. It was not possible to move easily or quickly from the very antiquated system into which liabilities were built. When no reply was received a person was assessed for a notional amount and in that way liabilities were built into the system and nobody was certain what was the real figure. People died, or changed addresses, etc. These notional figures were never real but were used as a mechanism for pursuing defaulters.
I want to assure the Seanad, as I assured the Dáil last week at Question Time, that these old files and records, cannot be written off. We have to pursue the people involved and use whatever resources are available to follow through — particularly the people who ignored the Amnesty in 1987 and 1988. Under the present system audits will be stepped up and it is no longer a question of choosing one in ten. The Revenue Commissioners assure me they have various criteria for choosing and examining the cases they suspect are defaulters.
Comments have been made regarding the announcement made by the Minister for Social Welfare yesterday. It is better that people read, listen and examine what the Minister said rather than what they think he said, because that would cause widespread havoc. The Minister in the other House yesterday said:
The Government have decided that with effect from next April all weekly disability benefit and occupational injuries benefit payments will be treated for income tax purposes. The mechanisms for implementing these arrangements are currently under examination in my Department. It is envisaged that they will include a combination of the statutory sick pay scheme under which for an initial period — say four weeks — responsibility for sickness payments will be transferred to employers with an appropriate compensatory arrangement and, for claims in excess of four weeks duration, other arrangements to integrate disability benefit with employers' payroll systems and with the taxation system generally. Some payments under the occupational injuries benefit scheme will be rationalised.
Disability benefit would be reckonable for income tax from April next and that will not affect the poorer section of the community.
In answer to a direct question posed by Senator Upton, concerning a person in receipt of a social welfare benefit, that person will not pay tax on that benefit payment. For example, a married couple with two children receiving £5,564 a year in benefit payments, and whose income tax exemption limit is £7,400, will not be liable to tax. Taxation will only arise where an individual has additional income which will bring them into the tax net and this will principally arise for people in employment. We will tackle the situation where a person claiming disability benefit for a period can end up with more money than they would have received had they been at work for that period.
We have all talked about employment, the disincentives, and the fact that people can stay in their beds and get more money than those at work. These are inequities in the tax system. It is a great pity when these matters are examined that certain people will not listen. I am not referring to this House now because I think we have had a constructive debate here this morning, but the run for newspapers emotive headlines and the following week will write the opposite piece, asking why Governments, politicians and the committees of both Houses do nothing about inequalities. As soon as a Minister in his first five or six weeks in office begins to examine the inequalities, people talk about Scrooge and so on. The position is that many people have their own job-related welfare schemes, whereby they can get full wages or salary from the employer and then collect their disability cheque through their insurance scheme. We have all read and heard about abuses. That cheque does not go back into the system, although it is supposed to and when it does, it is untaxable.
I did many surveys and prepared many reports with employer organisations and the trade unions on absenteeism. One does not have to be an expert with figures to compare the figures relating to absenteeism in the first eight months of the year with the figures for the last three or four months, and see what is involved in this scheme. When a person reaches the higher rate of tax and is entitled to untaxed disability benefit, he can stay out sick and claim. That is an abuse. I do not say that every person who goes out sick abuses the system but the Government have been asked to look at this. The Minister now proposes to look at the system and that will lead to public debate. The Minister will examine cases in which it is unfair to tax and will examine cases where there is not any abuse and cases where there is inequality and abuse. The Minister will legislate in the Social Welfare Bill at Easter to deal with abuses. People should not react emotively but should consider the issues and make valid points which the Minister for Social Welfare can take into account in preparing his Bill. We should consider, for instance, cases where persons or households with the same gross earnings have different tax liabilities and we should consider situations where there is a disincentive to work by giving a greater net income for being absent from work. I have no doubt that if the Minister was here this morning he would welcome views and comments which he can take into account when preparing the Social Welfare Bill over the next three months or so. The debate will be taken up again in the next session.
I appreciate the agreement of the Seanad to the passing of the Appropriation Bill today. I thank Senators for their support for the Bill which will allow the Friday sittings to operate in the other House and will also facilitate a more successful debate on the Finance Bill.
I extend to the Members of the House and the staff of the Seanad my wish that they will have a happy and peaceful Christmas. I hope we get a well deserved rest from legislative and constituency duties and will return full of energy.
Question put and agreed to.
Agreed to take remaining Stages today.
Bill put through Committee, reported without recommendation, received for final consideration and ordered to be returned to the Dáil.
Will the Leader of the House indicate when it is proposed to sit again?
Contrary to Senator O'Toole's comments this morning, I propose that the Seanad adjourns sine die.
The Seanad adjourned at 1.5 p.m. sine die.