Seanad Éireann debate -
Wednesday, 22 Jan 1992

Vol. 131 No. 1

Programme for Economic and Social Progress: Motion.

Mr. Costello

I move:

That Seanad Éireann agrees that the Programme for Economic and Social Progress (PESP) which was a solemn agreement entered into freely by the social partners, namely the Government, the trade unions, the farmers and the employers, for the welfare of the people of Ireland and for the benefit of the national economy, be fully honoured by the Government; and further that Seanad Éireann fully supports and congratulates the trade union movement in its industrial action to ensure that the Government honour their commitments under the programme.

The House is quiet after the storm we had earlier. I wish to welcome the Minister for Labour to the House. I hope he has a happy period — I am not sure if I should say a long period — in office. I trust it will be both useful and beneficial.

This motion, which was tabled prior to the recent decision of the Government, which has been presented to the public service trade unions, relates to the changes announced on 13 December and the unilateral decision by the Minister for Finance. The Minister for Finance simply stated the Government's position and that the trade union movement could not negotiate on the matter. The new proposals relate to pay and not to the nonpay elements of the Programme for Economic and Social Progress. The Labour Party Senators consider the motion to be valid and have decided to proceed with it. We want a number of issues clarified and I hope the Minister will be able to throw light on some of them.

Social partnerships are a very beneficial development in that they enable the major groupings — the trade union movement, farmers, employers and the Government — to decide on a programme which will be in the interests of the economy and the country. I wholeheartedly support that development. I would, of course, like to see greater consultation with the Dáil Opposition parties and the Seanad in this process because an agreement can be presented as a fait accompli and apart from discussing it we have no input.

The Programme for Economic and Social Progress is a solemn and important agreement. We know what happened in 1987 in relation to the Programme for National Recovery. The trade union movement entered into that agreement willingly and accepted a 2.5 per cent pay increase over a three year period knowning that the rate of inflation would be in excess of that. They were willing to make sacrifices in order to bring about an upturn in the economy, considerably reduce the national debt, and give the new Government an opportunity of getting the show on the road. That agreement was enormously successful and it gave a tremendous boost to the economy by increasing our level of exports over imports. There was a surplus of approximately £2 billion in exports during that period. Obviously, many companies made great profits.

Workers in the public service remained on the same level of pay and special pay claims were deferred until the programme was completed. Therefore, the special awards we talk about in the context of the Programme for Economic and Social Progress are special pay awards which were deferred under the Proramme for National Recovery. The Minister is proposing further deferral. It is a serious matter if a relativity agreement is deferred further by the Government when we had sacrificed so much all along in the line. The agreement has been deferred until 1993 but the question must arise whether the Government will be in power at that time and indeed if they are in power, whether we can believe that they will honour the agreement? Those are two major considerations regarding the special pay that should have been paid by September of this year.

As regards the general pay levels there is no retrospection in relation to the £5 maximum in 1992 and the £6.50 in 1993 even though the Government have promised that the full payments will be made by December 1992 in the first instance and December 1993 in the second instance. I acknowledge that what is proposed in relation to people on retiring is welcome. Any money lost as a result of the ceiling that has been opposed is subject to negotiations with Congress in 1993, with possible payment in 1994. It is not acceptable for a Government who are pretty much on their last legs at present to transfer payments to December 1992, 1993 and 1994. My summing up of the decisions announced by the Minister on 17 January is that they are a rescheduling of promises. They have already broken promises which should have been honoured. These payments are being rescheduled again for a period of time but the Government have no authority to make promises in regard to payments simply will not be around to honour them and if that is the case a new Government can state that they did not make such promises. This is a very serious matter and I would like the Minister to respond to it and I would also like him to clarify a matter that has been of concern to me in relation to a statement he made in his speech.

It seems as though all of the deferments are subject to the new time schedule and also to another constraint under the four-year programme to which the Government have committed themselves, and which involves a budgetary discipline for 1992 and 1993 from which there can be no deviation and which provides that the Exchequer borrowing requirement does not exceed 1.5 per cent of gross national product in 1993. I would like clarification, in the context of these key objectives, of the Government's commitment to honour in full the payment provisions in the Programme for Economic and Social Progress. The Minister has given one set of proposals with a time schedule for December 1992, January 1993 and 1994 — that is in the context of the three-year Programme for Economic and Social Progress— and on top of that is a new programme which was never entered into or known about when the Programme for Economic and Social Progress was being negotiated — the Joint Progress for Government agreed by the Progressive Democrats and Fianna Fáil. What are we to read into that? Are all of the promises about deferment to be totally subject to the Government's objectives as stated in the second agreed programme?

It was foolhardy of the Government to breach their trust. They should honour their commitments. Appendix A, article 7 of the programme states:

This agreement precludes strikes or any other form of industrial action by trade unions, employees or employers [everybody except the Government] in respect of any matter covered by this agreement where the employer or trade union is acting in accordance with the provisions of the agreement.

In other words nobody on the trade union side, the farmers' side, the employers' side or the employees' side can breach that agreement. It precludes strikes or any other action. However the Government unilaterally decided they were going to breach it. Article 8 states:

The parties to this agreement shall meet not earlier than October 1992 to review the operation of this agreement in the light of economic and fiscal developments over the period of the agreement.

There is a blatant breach of the agreement. The budgetary reasons the Minister brought forward, for example, the fact that the economy had not worked as successfully this year as it had in 1990, are not included in this programme. That is not a valid reason, even though the Minister has put it forward as such. This is a blatant breach of the agreement that was entered into. Deputy Albert Reynolds, as Minister for Finance, last year envisaged a borrowing requirement of £460 million but at the end of the year it was £501 million. The budgetary estimate was out of line by a mere £41 million, considering that the entire revenue is £8.77 billion. It is really scandalous that for such a relatively small sum the Government see fit to breach the agreement as set down in the programme. It would be absolutely foolhardy of the Government to continue with the existing pay deferral unless their commitments are very solid. They should not defer all the payments to 1993-1994, with the big question mark that they are subject to the Government's budgetary disciplinary policy. That is leaving the matter totally up in the air and is the wrong way to do business. They should be more sure of their figures and their sums.

The Minister has not referred in his contribution to the non-pay element. He referred to it on 13 December when he said that the Minister for Finance would consider the deferral in a budgetary context. Reading the Estimates I cannot see that provision has been made to honour the non-pay elements of the Programme for Economic and Social Progress. If anybody thinks that I as a teacher, that a health worker or a nurse entered an agreement purely on pay elements they are totally wrong. I consider the non-pay elements to be more important than the pay elements. They are crucial. The quality of life for teachers in the educational system and for the nursing community depends on the non-pay elements and we have got no commitment as of yet to honour those elements. If they are not honoured the industrial dispute that is referred to in this motion will be embarked upon, certainly by the three teacher unions. The three teacher unions have simply deferred their decision until there is a clear-cut statement on the non-pay elements from the Department of Finance, the Department of Labour or from the Minister who is here, and I would be delighted to hear it tonight. The quality of Irish education deteriorated in the eighties. Class sizes are the highest in Europe. We have the lowest spending per capita of any EC country. The OECD report strongly criticised the Government because there was no professional development for the education profession. A teacher may spend more than 40 years in the classroom without a break. That is scandalous. Are the developments built into the Programme for Economic and Social Progress to go down the drain?

It is incredible in this day and age that provision is not made in the primary and secondary education systems for the employment of secretaries and caretakers. A school of 600 to 1,000 pupils has to function without this basic infrastructure being provided by the Department of Education, in spite of the constitutional entitlement. These are just some elements and I could go on about the range of health services provided. Where people have embarked already on a vocational training scheme can they be cut off just like that? I hope the Minister is in a position to state the Government's position on the non-pay elements of the Programme for Economic and Social Progress.

My understanding of the conciliation and the arbitration scheme is that when a special pay claim is granted the Government have two months in which to alter it, and then they have to bring a motion before the House to do so. They are technically wrong to alter it after that time. Since the pay deal was made in December 1990, more than a year has expired. I am not sure of the legal basis for the Minister's action on those terms because no motion was brought before the House to vary what was agreed in arbitration. No attempt was made in the Oireachtas to vary the arbitration award which I understand is necessary. That procedure was adopted when the teachers award was varied in 1985. Would the Minister respond to that as well?

What we are saying is that we are far from a satisfactory resolution of this matter. If the budgetary commitments to the non-pay elements of the Programme for Economic and Social Progress, which are essential to the social, developmental, educational, health and social welfare aspects as well as the commitments to job creation are not incorporated in what the Minister for Finance has to say later, then I have no doubt that what people think is the end of the proposed industrial action will, only be the beginning of a long period of industrial strife.

It would be a shame if the successful social partnership developed over the past number of years were to be jettisoned because of a very small miscalculation in budgetary terms. In the interest of the country, in the interest of the Minister's own party and in the interest of avoiding industrial strife in the future, the Government would do well to ensure commitments are honoured in full.

Mr. Harte

This is the Minister's first time in the House in his new portfolio. May I welcome him and wish him the best of luck in the forthcoming discussions and negotiations and all the difficulties he will have to deal with. I welcome the agreement on the pay aspects of the Programme for Economic and Social Progress. Having regard to the fact that the agreement covers a very wide range of interests for the betterment of society it was imperative that everyone would try to get some sort of agreement on pay.

Acting Chairman (Mr. R. Kiely)

Did the Senator second the motion?

Mr. Harte

I second the motion.

Mrs. Doyle

Is the Acting Chairman in the running tomorrow?

Acting Chairman

Senator Harte without interruption.

Mr. Harte

I hope the non-pay elements will be dealt with satisfactorily. Since I am no longer on the inside track of the trade union movement, I am not in a position to say exactly what the general attitude is to pay, but I take Senator Costello's word that the unions are determined to see that they will be brought to a very successful conclusion. The concept of the social partners coming together is very good for the country as a whole. Naturally one wants to see the agreement succeeding, not only for the trade union movement but for the country as a whole. We will be particularly interested in seeing it succeed for the farmers who have been going through a difficult period over the past couple of years. It may seem strange that as a trade unionist I am backing the farmers and am worried about their income but I would not be a good trade unionist if I was not concerned about the incomes of all people. While I do not have the complete picture I know farmers have been having a bad time and from that point of view I hope negotiations succeed.

The real problem I see with the Programme for Economic and Social Progress is that the Government had to give guarantees to the trade unions and to other bodies and yet there is an absence of detail. For example under the Programme for Economic and Social Progress, our debt which stands at 100 per cent now, must be reduced to 60 per cent by 1996. I do not know how the Government propose to achieve that. I do not know what was said in the course of negotiations, but development of these points in the Seanad might assist the social partners.

I do not expect the Minister to tell us what he is going to agree to, but he can outline some of the ways the Government propose to tackle certain difficulties that will affect the agreement. For example, I do not know whether the Government would admit to errors in forecasting or if they did not take advice when determining the pay agreements. What are the forecasts? Do the Government think they can live up to the agreements they are about to make? Were our economic disasters of our own making or can we blame the Gulf War or other factors? They are important and are of great concern to me and other representatives. When growth is low unemployment is high and, naturally, we are concerned that growth be considered also. We have insufficient detail to enable us decide if the Single European Market will affect growth. What is the outlook? The outlook, according to the relevant Minister speaking in the Seanad, is optimistic, but is it as optimistic as it was when the negotiations at Maastricht took place?

When we look back on 1991, a year of unfulfilled promises, we must ask questions about forecasting. Are we using the correct system of forecasting? Are we taking the right advice? What is the position?

For 70 years we have enjoyed independence yet we have 20 per cent of our labour force unemployed, compared with 4 per cent in Holland, 6 per cent in Germany, 7 per cent in the USA, 9 per cent in Britain, 10 per cent in Italy and 15 per cent in Spain. In essence, we have the highest rate of unemployment in the European Community.

The borrowing rate of 13 per cent of gross national product equates to one-eight of our national production. Will we be able to do anything about the borrowing so that any agreement made will last? I accept that progress here has not been uniform but have we any fall-back position in progress is not uniform? How can we make the worry or concern of those who have to negotiate agreements less acute? What information is available to help in negotiating agreements?

We have been criticised about our marketing. We do not know whether that is relevant to economic recovery but it is relevant to the agreement and to people negotiating the agreement. They must know where we can sell abroad, what we are selling abroad and whether we can do better. For example, the UK is still one of our main export markets. What is the strength of our market in the UK? If that market will be negligible, which appears to be the case, what is the view of the Government? Are there other markets we can fall back on? Can we make up for our loss in that market? Those matters are important when negotiating an agreement. We must get the sums right. We are anxious about market policy. I am concerned that the agreement be a success. I was one of the first advocates of national agreements, long before the social partner idea, because I saw the number of people in the trade union movement who became the victims of free-for-alls. The dog-eat-dog mentality relegated people to very poor positions and, ultimately, kept down negotiations. I recognise results come from national efforts.

I am anxious that the agreement succeeds. I am concerned that perhaps we are not looking far enough ahead and have not taken cognisance of the errors we made in the past or the forecasters made. Will the Minister express his opinions based on his long experience in political life and reduce the worry of people who are going into negotiation.

Acting Chairman

I am calling Senator McKenna to move the amendment. I understand the Senator wishes to share his time with Senator McGowan. Is that agreed? Agreed.

Mr. McKenna

First, I join Senator Harte in welcoming the Minister, Deputy O'Kennedy, to the House as the Minister for Labour. I congratulate him on his appointment and wish him well in that portfolio.

As spokesperson for Fianna Fáil on Labour, I look forward to working closely with him.

I move amendment No. 1:

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

"fully supports and congratulates the Government on the sensitive and balanced package of measures which the Minister for Finance presented to the Irish Congress of Trade Unions and the public service unions on 17 January 1992; endorses the reaction of the latter to the package and welcomes the deferment of the day of action which was scheduled for 28 January 1992 and the basis which now exists for a return to the consensus between Government and ICTU which underpins the Programme for Economic and Social Progress.”

In moving the amendment, I wish to point out that the Labour Party motion is to a large extent irrelevant. It refers to the day of industrial action, which will not now take place.

Senator Costello described the review as a breach of the agreement. That is not so. It would be wrong if any programme for economic and social progress or plan was so rigid that changes could not be made. There has to be room for manoeuvre.

The preamble to the Programme for Economic and Social Progress states clearly that the programme depends on budgetary constraints at the time. There is a mechanism in the programme for any of the parties at any time to ask for a review of it. Effectively, that is what the Government were doing and they did so for very good reasons. When the programme was agreed no one could have foreseen the difficulties in the world economy in the early part of last year or that the subsequent fall out would be as severe as they were.

All the problems arose as a result of those difficulties. For example, the Gulf War had huge repercussions throughout the world, particularly in small countries like Ireland.

We have a very small, open economy and we depend to a large extent on international trade. What happens in other countries, and the performance of other economies affects us greatly. If we put a rigid programme in place and said there was to be no deviation, good, bad or indifferent from that programme it would be a bad programme. We must realise that when we prepare a programme it is based on certain assumptions.

Any person with a bit of understanding and common sense will recognise that we do not have a crystal ball, that we cannot see into the future. We could not foresee the tragic events that occurred in the world at large and particularly in the Middle East with all their repercussions in the early part of that year which had such devastating effects right around the world. Experts predicted that the recession in Great Britain would peter out but statistics show that that is not happening. The reverse is the case and the recession is lasting much longer than expected. That has huge repercussions for us on this side of the Irish Sea, particularly in relation to unemployment which is our single major difficulty here. That has been exacerbated by the recession in America and in the United Kingdom which has resulted in the return of many young people who see they are better off at home and looking for jobs. That adds extra strain. People will say we should be able to provide job opportunities for all our young people, but we have never been able to do that.

There are no soft options. There are no short term solutions to the problems we have today. Unemployment must be of major concern to every politician. We must create a climate of real strength and growth which will give jobs and support all our needs.

At the same time, let me reiterate that our economic performance in recent years has matched and, in many respects, exceeded the performance of our EC partners. The great improvement in our public finances and improved price and wage competitiveness resulted in the economy performing extremely well in the last four years, and the potential for growth remains extremely good. We cannot throw all that aside for the sake of short term expediency. The Government must recognise that. I want to congratulate the trade union movement on appreciating the difficulties facing the Government and for accepting the revised proposals. I want to share my time with Senator McGowan.

Mr. McGowan

I too welcome the Minister, Deputy O'Kennedy, to the Seanad. We are lucky to have a Minister who has a reasonable approach to most matters. The Programme for Economic and Social Progress is fundamental. I am surprised at Senator Costello threatening that, if the Minister does not make certain statements before he leaves the House, we will be facing a serious situation. I believe Senator Harte has a more reasonable approach.

Mr. Costello

Could I correct that?

Acting Chairman

Senator McGowan, without interruption.

Mr. Costello

I have not threatened the Minister.

Acting Chairman

You will have an opportunity to reply.

Mr. Costello

I want to clear my good name. I did not threaten the Minister.

Mr. McGowan

I must claim extra time because I am being interrupted. Senator Harte's approach is better because he recognises that progress has been made. I, too, recognise that tremendous progress has been made by people like the Minister for Labour who is reasonable, and by people like the Minister for Finance who fully understands.

This country has come through difficult financial constraints very well compared to a big and wealthy country like America where the President may not be re-elected because it is alleged he neglected the economy of his country, and instead was flying to Japan and other places trying to recover lost ground.

Mrs. Doyle

Does the Senator think Deputy Haughey will be re-elected?

Mr. McGowan

Yes, if he goes before the people. Desperate calls from the other side of the House——

Acting Chairman

We are dealing with the Programme for Economic and Social Progress in Ireland, not America.

Mr. McGowan

I will try to stay at home. I hope Senator Costello is listening when I say that a progressive and successful trade union official in Donegal told me he had survived for 30 years as a trade union official and that he never brought workers out on the street but had always been able to negotiate and get a satisfactory deal for them. However, he also said a trade union official who is also a politician is a dangerous mix.

Mr. Costello

Is the Senator threatening me? It is a veiled threat.

Mr. McGowan

Today, we have an educated people who make their own assessments and know that at the end of the day it is not the State purse but the people lucky enough to have jobs who are paying. The negotiations were well supported throughout the country. I encourage the Minister, and those good reasonable people who have taken part in the negotiations to stay on course. There are signs that the outcome expected by the majority will be achieved, and I compliment those involved in the negotiations.

Minister for Labour (Mr. O'Kennedy)

First, I welcome the opportunity to address this motion. I should like to reassure the House that the Programme for Economic and Social Progress, which the Government negotiated when it was badly needed, is an essential core element of our approach to the economy and to the partnership which was a feature of the last few years and I hope it will be a feature of negotiations over the next few years. It is a pity Senator Costello did not adopt the same approach as his colleague, Senator Harte, who has been a Member of this House for many years — I think he was a Member when I was a Senator. The Senator's party, who had an opportunity from time to time in Government, did not advance the cause of the programme and partnership that we introduced. I would like to have heard the Senator endorse a concept which is recognised here and throughout the world as being a very important instrument of coherence and common purpose. I have returned this week from a meeting of the OECD Council of Labour Ministers from the 24 most prosperous nations in the world. All of them pointed out that the programme we put in place here was the kind of instrument that should be in place in every members state of the OECD. I would like to have that acknowledged by Senator Costello. I would like to have someone from this House recognise the reality that is recognised abroad rather than concentrating on the negative.

Mr. Costello

I acknowledged that.

Mr. O'Kennedy

Senator Harte showed a more balanced approach to it, the type of approach that I would expect from a trade union representative that I have known for some time and for whom, I am glad to say, I cast a vote on occasions when we were finished with our own votes in the Fianna Fáil Parliamentary Party.

Mrs. Doyle

No. 17.

Mr. McGowan

We will forgive you.

Mr. O'Kennedy

I recognise a gutsy man. We should recognise how important this programme has been to economic progress since 1987. I want to assure the House that this Government will not risk this programme being undermined. I am glad to make specific commitments to it. I had better give some examples of what has been achieved. The economy grew under this programme while our inflation rate was the lowest in the European Community, in sharp contrast to the condition we inherited in 1987.

Mrs. Doyle

What about the unemployment figures?

Mr. O'Kennedy

I will come to that. The exchange rate was stable in the EMS, the balanced of payments was healthy. All the factors which led to strong growth over the period of the Programme for National Recovery between 1987 and 1990 were and could be seen as a consequence of a discipline not just imposed by Government but a discipline and direction which was part of this programme. We increased our competitiveness vis-á-vis our trading competitors and there was a degree of moderation on the pay element.

I want to pay a particular tribute to the trade union movement. Someone put it very well when he said that this has taken the unacceptable risk — hyper inflation and hyper interest rates — out of the equation. For that reason there has been a buoyancy in the enterprise sector, and they owe it to the trade union movement and the other quarters, including Government, to demonstrate their response by generating the maximum economic activity. Workers take home pay has increased but moderate pay agreements contributed greatly to the progress we made on the export front also. Exchequer borrowing was mentioned. Obviously the key contribution has been the reduction in Exchequer borrowing. Good governments do not throw things out or take the easy option and to hell with Exchequer borrowing. Good governments take difficult decisions despite opposition and criticism. We took control of the budget and that was the key to developing and strengthening the economy.

This House needs to be reminded of the facts. Facts are stubborn things, they will not run away. Senators asked what we were about to do about the scale of improvement in Exchequer borrowing already achieved. In 1986, the year before we came into Government, the Exchequer borrowing requirement amounted to almost 13 per cent of our total gross national product. We were borrowing at the rate of one eighth of our total national production, piling up commitments, storing up trouble. Firm and disciplined action was taken which reduced spending and improved tax collection and by the end of 1991 the Exchequer borrowing requirement — excluding the proceeds of the Irish Life flotation — was 2.1 per cent of GNP. That is some achievement. It was not a popular or easy decision but we appreciate the co-operation of the unions and the social partners in bringing that about because we needed to rescue the country from the bankruptcy which obtained in 1986.

As a small open economy Ireland cannot insulate itself from developments in the international economy. Some commentators and political critics wanted us to make judgments on Ireland as if the rest of the world did not exist. They will not be allowed to get away with that delusion. Any slowdown in economic activity abroad has an impact on the domestic economy. I will give some examples of the better performances here compared to elsewhere and any objective analysis will illustrate this.

World trade decelerated to slightly over 3 per cent in 1990 compared with over 5 per cent growth here; Ireland's export markets continue to expand but at a more modest rate than in recent years primarily because of the weaker import demands in the United Kingdom.

Senators have asked about unemployment. The OECD surveys for instance, show that unemployment growth was higher in prosperous countries like Finland, Australia, New Zealand, the United Kingdom and Canada, than in Ireland. Our economic growth by comparison with any of those countries was also much higher. The forecast suggests that we will have a higher rate of growth than Japan, the United States, the United Kingdom, Switzerland and Germany. These are not Irish figures; they are OECD figures. It is right that the Irish people be made aware of the facts despite suggestions that we are always struggling against the odds——

Mrs. Doyle

How many of the countries have 20 per cent unemployment?

Mr. O'Kennedy

I will come to unemployment.

Mrs. Doyle

They started at a lower figure.

Mr. O'Kennedy

The Senator is a lady and I have to treat her as such, through she has a habit of interrupting. That has been a feature of her contributions in this House. Between April 1989 and April 1991 Ireland recorded a 2.8 per cent growth in employment. Over the same period, a number of economics did not achieve anything to compare with that, the United States achieved 1.7 per cent, the UK -0.7 per cent, Denmark -1.9 per cent and Switzerland 2.1 per cent.

Mrs. Doyle

What is the unemployment rate in Switzerland?

Mr. O'Kennedy

I am talking about gross employment. This has been a successful programme and we will not allow it to be undermined by anybody for their own reasons. At the recent OECD conference they specifically pointed out the success and key elements of this programme.

We performed well in 1991 despite difficulties and I will not go into all the details now. For instance, the provisional labour force survey results indicates a rise of 7,000 in non-agricultural employment in the year to mid-April last but let me turn to unemployment — Senator Doyle knows this and I do not suppose she would want to conceal it. Unemployment rose in 1991. Why? In the year to mid-April net emigration fell as employment in the United States and the United Kingdom declined; On average, the number of those on the live register rose by over 29,000, which is less than the actual reduction in emigration. There was a reduction in the underlying rate of increase in unemployment in recent times. That is not to give the impression that everything is cosy and comfortable, but to give some of the facts. I hope that politicians on all sides would record those facts and not try to distort them.

This programme is important because it is designed to promote economic and social development and to prepare us for the 21st century, particularly in the union of Europe and because it is based on co-operation we are determined to maintain it. It has been fully accepted by the parties to the Programme for Economic and Social Progress— and this is a wonderful breakthrough — that macro-economic stability is vital to economic progress in a small open economy. Unless the growth potential of the economy is secured and strengthened by pursuing the sound macro-economic policies to which I have referred, our capacity to meet the objectives of the Programme for Economic and Social Progress will be seriously diminished. The fact that the trade unions accept the macro-economic targets, realities and disciplines has been a great development. The improvements achieved are attributable in no small way to their response to Government leadership.

Under the Programme for Economic and Social Progress, the national debt-GNP ratio is to be reduced towards 100 per cent by 1993. We are on target. I think it was Senator Costello who raised the question of the 60 per cent discipline under the EMS. Given that we are moving consistently towards that figure. I have no doubt that our partners in the European Community will endorse our qualification for full membership of the EMS under European union. We do not anticipate any difficulty in that direction.

When the Taoiseach and I and other members of Government, the Minister for Finance, the Minister for Industry and Commerce and the Minister for Social Welfare, met the social partners we explained to them the difficulties arising from the economic downturn; the difficulties which impacted on our economy despite the fact that we had put effective programmes in place. We delivered a strong message and I have never suggested otherwise but we followed with a series of bilateral contacts, which have been a feature of the relationship between this Government and the trade union movement. We did not stand off. I said — my colleague, the Minister for Finance, is active on this matter — we were not interested in confrontation; only in conciliation. I said specifically, because I respect and admire the trade union movement, that we wanted to confront the outrageous abuses that have been evident in some aspects of Irish business life over the past year or so. Tax evasion must have tested the patience of the PAYE sector to the very limit.

Following those discussions we met the employer organisations. We introduced, and got agreement, for special training and employment schemes to take 25,000 people off the register at no cost to the taxpayer. As we do not believe in sitting back and reacting to others we announced an initiative which was agreed with the commercial banks — the first of its kind — under which the banks will provide £15 million in loans on favourable terms for the creation or development of small and medium business with employment potential. We explained this to the ICTU when we met them.

We also explained the position on public service pay when we indicated that if all the liabilities on public service pay were to be met in 1992, the public service pay bill would increase by over 10 per cent. Obviously, that was not sustainable and, accordingly, we announced that the Government had decided to adjust the package and amend the pay terms. That is now a matter of history and record. The Irish Congress of Trade Unions indicated that the package was unacceptable to them, although it is fair to say that one member, during the course of the meeting, said that perhaps there was a possibility of what he called "sullen acceptance" which we would have understood. Both sides were very anxious to maintain this programme. We are very happy that their determination to do so is evident in their response to the readjusted package which can be accommodated within the projections of the Government's macro-economic policy.

When the whole issue was reviewed at Government the Minister for Finance got the full and vigorous endorsement of the Government to consult again with the social partners. As I am sure by now Members are familiar with the details of the package I do not intend to repeat them although I am tempted to do so because it seems an attempt has been made to distort them. If anyone wants me to repeat all the elements of the package at this hour of the evening I can do so but one thing is quite clear — this has to be put on record — that there will be — if the House will bear with me for one minute——

Mr. Costello

It is a distortion of the Programme for Economic and Social Progress.

Mr. O'Kennedy

I will come back to it in a moment because I want to give a specific assurance in relation to its impact on the overall economy and on those directly concerned.

An attempt was made to convey the impression that we were prepared to reverse, reject and repudiate our obligation to the people who were entitled to special increases. There was never any such intention. The fact of the matter is that the Minister for Finance confirmed to Congress and the public service unions the irrevocable commitment given by the Taoiseach last December to pay the balances of special pay increases due with full retrospection to the dates on which the outstanding phases were due to be paid. He also announced that with effect from 1 December the pay rates of those entitled to special increases would be increased to the levels which would have been payable under the previously agreed phasing arrangements. In respect of all the elements, what is significant is that there will be no income losses.

In the context of the constraints which I have mentioned, which were real the Government are prepared to have further discussions — I want to stress this point in particular, apart from the elements announced in the package which I am glad to say they have now recommended to their constituent members — with Congress in 1993 and before the Programme for Economic and Social Progress expires so that we can agree on a specific timetable for recoupment of the losses arising from the application of the ceilings of £5 and £6.50 per week at the earliest possible dates; in any event not later than 1994. That, too, is entirely consistent with the position we have taken.

As was the original intention and commitment, we want this programme to remain in place with all its vigour until the end of this decade. The review of the position due to take place at the end of 1993, for 1994, will enable us to do just that, particularly in the context of the projected economic growth internationally in 1993-94. It is projected there will be economic growth, although of course no one can ever work on the basis that what is projected will be realised. I think we are in the position——

Mr. Costello

How can the Government give a promise and commitment for 1994?

Acting Chairman

The Senator will be given an opportunity to reply.

Mr. O'Kennedy

We are talking about our capacity, as a Government, to work within the disciplines we have set ourselves — no one has imposed them on us — to work within the GNP ratio.

Senator Costello said an attempt has been made to vary the terms of the teachers' arbitration award but no such attempt has been made. The first phase of the award has already been paid, with effect from 1 May 1991, and the remaining phases will be paid under the Government package with effect from 1 December 1992.

Mr. Costello

They are to be paid in March and September, not the following year.

Mr. O'Kennedy

——with full retrospection to the due dates payable on 1 January 1993.

Mr. Costello

Another promise from a Government that——

Mr. McGowan

He does not like to hear the facts.

Mr. O'Kennedy

It is not a promise, it is a fact.

Mr. Costello

I said that I pointed out that it amounted to a rescheduling of promises.

(Interruptions.)

Acting Chairman

Let us hear the Minister without interruption.

Mr. Costello

The Minister has just repeated what I said.

Mr. O'Kennedy

It is a rescheduling of payment.

Mr. Costello

It is a rescheduling of promises.

Mr. O'Kennedy

I am stating a fact. It is not a variation of the amounts payable which is the point the Senator tried to put across in this House. We should concentrate on the facts and not distort them to suit our own purposes.

Mr. McGowan

He is not interested in the facts.

Mr. Costello

Stick to the Programme for Economic and Social Progress and do not distort it.

Acting Chairman

I would appreciate if Senators allowed the Minister to proceed, please.

Mr. O'Kennedy

We should acknowledge that the stark alternative to the rescheduling of the pay increases due in 1992 would have been further cutbacks in public services, in areas such as health, education and social welfare.

Mrs. Doyle

We pointed that out.

Mr. O'Kennedy

If we had listened to Members on that side of the House we would have driven the country even further into bankruptcy. If we had listened to their recipes we would now have reached 20 per cent of GNP in our borrowing requirements.

(Interruptions.)

Mrs. Doyle

Have the grace to say we were right.

Mr. McKenna

Is the Programme for Economic and Social Progress not a good arrangement?

Acting Chairman

The House should be treated with the dignity it deserves; let the Minister proceed.

Mr. O'Kennedy

The Senator will recognise that there were good, cogent reasons for not taking advice from Senator Doyle's party, who, literally reduced us to bankruptcy. We reduced the figure of 13 per cent of GNP to 2 per cent.

Mrs. Doyle

We were proved right on this issue, have the grace to admit it.

Mr. O'Kennedy

Obviously the Programme for Economic and Social Progress envisaged certain developments involving additional Exchequer costs, notably in the health and education areas, and funding was announced in the 1991 budget for such improvements. The full year costs for these improvements — £23 million has been provided for in the abridged Estimates volume for 1992 which was published last month — and the extent to which it will be possible to make further progress in such initiatives in 1992 is being considered by the Government in the context of the budget. I will not deprive my colleague, the Minister for Finance, with whom I am working very closely on this, and my colleague, the Minister for Education of the opportunity to indicate the Government's position on this. Suffice it to say that I underlined in a radio programme last Sunday that education has always been top priority for our party. We demonstrated that over the years. I was Parliamentary Secretary in the Department of Education in 1970, although I do not claim credit for the drive behind the education policy. We have shown our commitment to education and I have no doubt we will show sensitivity in this matter also. However, it is not appropriate for me to say any more at this stage.

Equity in taxation is an essential feature of this programme. The Revenue Commissioners are putting together a new initiative for 1992 which will be designed to release experienced staff for an increase in audits and at the same time to increase staff numbers engaged in the collection of arrears. We will not stand back and watch the PAYE sector paying as they earn, while others for one reason or another, as I said earlier, avoid or evade their responsibilities in an outrageously unacceptable way. Our performance here to date and our commitment to the future will leave no doubt about the Government's seriousness of purpose in this area. We are committed to reducing income tax rates and to ensuring that all sections of the community pay a fair share of taxes. We are also committed in the Programme for Economic and Social Progress and under the review of the programme to further radical reform of the income tax system in the next two years. We are committed to trying to achieve the objective of a further significant reduction in rates and will work towards the objectives of a considerable widening of the standard base while increasing the personal allowance. My colleague, the Minister for Finance, my predecessor in this job, will obviously address the taxation issues along those lines in his budget next week. This Government — and their predecessor — have achieved a great deal with their partners under the Programme for National Recovery and the Programme for Economic and Social Progress.

Although I was reassured by Senator Harte's recognition of the importance of the motion, it is clear that those who put it forward at this point in the light of recent developments are demonstrating their disregard for the welfare of the public by calling on the House to condone the taking of industrial action, which, happily, did not happen, by public service employees. Thankfully, the union leaders, with whom we have a partnership, were as determined as we were——

Mr. Costello

The Government suddenly found the money when industrial action was threatened. Only for the trade union movement the Minister would have welched on the deal.

Mr. O'Kennedy

There would have been widescale disruption and I am not sorry that we deprived the Senator of that pleasure. I reject the motives behind the motion and we should all be grateful that wiser counsel prevailed. When historians in future look back on 1992 and the Programme for Economic and Social Progress, they will acknowledge that 1992 was a year when industrial relations reached a new plateau despite the difficulties. It will be remembered as a year in which we came of age in the conduct of industrial relations, a year in which it was acknowledged that co-operation is always preferable to conflict, which serves nobody's interests. This represents the culmination of the process of co-operation which was begun in 1987 by the previous Government and continued by the present Government. The Opposition would get some credit if they acknowledged and gave a little credit to the Government's that succeeded the Fine Gael-Labour Coalition, who did nothing about this.

The amendment to this motion quite rightly asked the House to congratulate the Government on their package of measures presented to the trade unions. I do not take the credit because it was a team effort and a major achievement in averting the threatened industrial action by an imaginative packet of measures which meets the concern of public service employees, while at the same time remaining true to the economic imperatives of the Programme for Economic and Social Progress. The amendment also acknowledges the valuable contribution of the Irish Congress of Trade Unions and the public service unions in their response to the package and calling off their threatened day of action. I reiterate the respect the Government have for the trade union movement, for their discipline and co-operation since this programme was launched by the Taoiseach in 1987. We are totally committed, despite the best efforts of some Members of the Opposition, to keep that programme in place. It will remain in place because it will be the key to further economic development through the next decade and beyond.

Mrs. Doyle

It was interesting to listen to the Minister pleading and begging for some credit from the Opposition for the achievements of the last few years in Government. He might have had the grace then——

Mr. McKenna

The Senator is distorting the facts.

Acting Chairman

Senator Doyle, without interruption.

Mrs. Doyle

If the Minister was looking for grace and acknowledgement the very least that he should have done at the outset of his remarks was to recognise that the warnings in relation to the ability of this nation to pay, under the agreement that was signed last spring in the Programme for Economic and Social Progress— by Fine Gael, regrettably, turned out to be justified. We would love to have been in a position to say that we fully endorsed Programme for Economic and Social Progress last spring. In fact we were the only party who recognised economic reality and the fairytale basis of the figures being offered. Indeed it was quite unfair to the social partners who were sitting round the table to lead them down the road and to give them the impression that the Government would be capable of honouring the pay element of Programme for Economic and Social Progress when, as we said quite clearly, it would not be possible. Would that it could have been but it was not possible at the time.

Mr. McKenna

Did the Senator's party have a crystal ball?

Mrs. Doyle

The Minister should have started his contribution here this evening by giving credit to the only party to recognise the reality last spring. I take the point he makes. He might also have given credit to the Tallaght strategy, which in 1987 when Fianna Fáil came in, made life much easier and——

Mr. McKenna

That is the very reason the Senator's party dumped him.

(Interruptions.)

Acting Chairman

Senator Doyle, without interruption.

Mr. McKenna

Is that not the very reason——

Mrs. Doyle

If the Minister wants——

Acting Chairman

Please, Senator McKenna.

Mr. McKenna

Senator Doyle expects us to give credit to the Tallaght strategy——

(Interruptions.)

Mr. McKenna

They got credit for the Tallaght strategy.

Mr. Costello

That side of the House is very unruly.

Acting Chairman

Please desist from interrupting.

Mrs. Doyle

The vultures on the other side of the House are giving the Chairman great practice and I hope he will be rewarded tomorrow when the vote is taken.

Acting Chairman

Will the Senator speak to the motion, please?

Mrs. Doyle

Certainly. I will be supporting the motion but not the amendment. Apart from the political tit-for-tat which has taken place in the House, there are some very serious issues to be addressed.

The insensitive way in which the Government made unilateral moves to dishonour the commitments in the Programme for Economic and Social Progress before Christmas must be recognised for what it was. The Minister referred to the importance of the collective bargaining system, of honouring it, of sitting down around the table and hammering out various decisions and agreements. Yet, he did not refer to the insensitive way both he and his colleagues made the statement before Christmas that they could not pay. The agreement reached last week by the Minister for Finance would not have been hammered out——

Mr. O'Kennedy

As a matter of record and fact——

Mrs. Doyle

As the Minister knows, there is no such thing as a matter of record and fact, only a point of order.

Mr. O'Kennedy

I specifically referred to the meeting the Taoiseach and other Ministers had with the trade union movement to explain what we did and why we were doing it. I referred to it specifically——

Mrs. Doyle

The Minister did not refer to the insensitivity shown by the Government in unilaterally deciding that the commitments in Programme for Economic and Social Progress would not be honoured.

Mr. O'Kennedy

The Senator said I did not refer to the Government's position.

Mrs. Doyle

The Minister should look at the review clause on page 92 of Programme for Economic and Social Progress which states that “The parties to this Agreement shall meet not earlier than October 1992...” What revisionist view can the Minister now offer for changing his mind unilaterally on that? The Minister should thank the unions for accepting the package put to them by the Minister for Finance. The Minister for Finance only put forward that package which, to be honest, really only postponed the inevitable on the pay end, when faced with a one-day strike by the public sector. This is why the Minister for Finance gave a little along those lines. Without the threat of a one-day strike by the public sector this would not have happened. Would that we did not have to face these threats and the unions did not have to face up to the Minister. However, the Minister threatened to unilaterally dishonour an agreement which is an essential part of the collective bargaining process.

Last spring Fine Gael pointed out the difficulties facing the Government. When you enter an agreement, as an honourable partner you cannot dishonour it unilaterally. This point must be clearly made. Fine Gael believe that once an agreement has been entered into it must be honoured in full. Far greater risk is posed to our economy, production, which, as the Minister pointed out, is so important, and employment if collective bargaining agreements such as this one are not honoured. If we break the collective bargaining system and return to where we were a few years ago when we faced industrial chaos, the costs will be immeasurable and will be far greater than the costs of honouring the agreements which were entered into.

The pay element of the agreement has been salvaged by postponing the inevitable for future budgets. The Government have given a commitment to increase public sector pay by 9.25 per cent in the 1993 budget and by 10 per cent in the 1994 budget. I hope the Government, who seem to have the neck to give a vote of confidence to themselves by assuming they will be around to deliver on this commitment——

Mr. McKenna

Fine Gael have some neck if they think they will be in Government——

(Interruptions.)

An Leas-Chathaoirleach

Senator Doyle without interruption.

Mrs. Doyle

Thank you, a Leas-Chathaoirligh, for your protection.

Mr. O'Kennedy

Fine Gael's warm relationship with the trade union movement is coming through here.

Mrs. Doyle

The Minister had half an hour and he should let me have my share of the time.

Mr. O'Kennedy

I have no doubt that Congress are waiting for the Senator and her party to develop a new warm relationship.

An Leas-Chathaoirleach

Please, Minister.

Mrs. Doyle

Changes need to be introduced to the public sector arbitrator's terms of reference to include an ability to pay clause. This omission has caused some of the problems in relation to the pay elements of the Programme for Economic and Social Progress in recent times. I ask the Minister to address this issue. There is an ability to pay clause in the private sector which can be called on by industry if they genuinely cannot pay. Such a clause should be included in the public sector arbitrator's terms of reference.

I ask the Minister to immediately ensure that several of the non-pay elements of the Programme for Economic and Social Progress are honoured. I am thinking in particular of the agreements entered into with the three teacher unions and the pupil-teacher ratio issue. I want to specifically ask him how many of the promised 250 new posts at primary level were created last September or whether that commitment was dishonoured also. I should also like to know the pupil-teacher ratio at second level, whether half of the additional 500 posts were provided in 1991 and if the balance will be provided in 1992. We need specifics and less waffle——

Mr. McKenna

Figures are statistics.

Mrs. Doyle

I should like the Minister for Labour to come to Wexford and tell the 24 per cent of people in my county who are unemployed just how marvellous are the macro-economic indicators. As long as the unemployment figure is 20 per cent nationally and 24 per cent in County Wexford and other counties, the Minister will have to give a better line than the one he gave us here tonight. It was a good try——

An Leas-Chathaoirleach

I must ask the Senator to conclude.

Mrs. Doyle

——but many of us did not buy it. The Minister's revisionist views will not be accepted because the dole queue is the bottom line. The Minister cannot blame returning emigrants for the increase in unemployment. That is not an acceptable reason.

An Leas-Chathaoirleach

I call on Senator Costello to conclude.

Mr. O'Kennedy

May I ask Senator Doyle to clarify a point? I want to be clear on what she requires of me as Minister. She said that she wants specifics and less statistics.

Mrs. Doyle

Yes.

Mr. O'Kennedy

How does the Senator expect me to achieve that?

Mrs. Doyle

How many of the 250 new posts at primary level which were due last September were created?

An Leas-Chathaoirleach

I call Senator Costello to conclude.

Mrs. Doyle

How many of those posts were created?

Mr. McKenna

The Senator does not want statistics.

Mrs. Doyle

The Minister cannot give the specifics. The pay element is only a portion of the dishonourable——

An Leas-Chathaoirleach

I ask the Senator to refrain from interrupting Senator Costello.

Mrs. Doyle

I want the Minister to give me the specifics and not waffle——

Mr. McGowan

Senator Doyle is not——

An Leas-Chathaoirleach

I would ask Senator Doyle and Senator McGowan not to interrupt Senator Costello.

Mr. McGowan

May I——

An Leas-Chathaoirleach

I have called Senator Costello.

Mr. Costello

Thank you, a Leas-Chathaoirleach. I need your protection here tonight. Unquestionably, the Programme for Economic and Social Progress was unilaterally broken by the Government. There can be no denial of that.

Mrs. Doyle

Dishonourably.

Mr. McKenna

It was not.

Mr. Costello

This decision was taken by the Government unilaterally, with no negotiation or consultation. There is no point in Senator McKenna saying——

Mr. O'Kennedy

The Programme for Economic and Social Progress is alive and well, and the Senator knows it.

Mr. Costello

——that it would be a very bad programme which did not have provision for renegotiation. This programme has provision for a review only after October 1992.

Mr. McKenna

Read the preamble.

Mr. Costello

It is specifically stated——

Mr. McKenna

Read the preamble.

An Leas-Chathaoirleach

Senator Costello without interruption.

Mrs. Doyle

I hope that crowd will not write our history books. If they do, God knows what version we will get.

(Interruptions.)

An Leas-Chathaoirleach

Senator Costello has only a few minutes in which to reply and I ask Senators to show him the courtesy of allowing him to reply.

Mr. Costello

It was said that for short term expediency it would be wrong for industrial action to be taken. The issue of short term expediency is in the Government's court.

Mr. McKenna

I did not say that.

Mr. Costello

The Minister for Finance had an estimate of £40 million when he knew what the terms of the Programme for Economic and Social Progress were last year. He was only £41 million out. If this is so, it shows short term expediency on the Government's part to be breaching the terms of the Programme for Economic and Social Progress on that small amount of money.

Senator McGowan stated that he knew a trade unionist in County Donegal who was proud that he had never brought members out on the street. I want to categorically state that it was not the trade union movement who wanted to bring their members out on the street in the proposed industrial action; it was the Government who were doing this by their unilateral decision which forced the trade union movement to compel the Government——

Mr. O'Kennedy

The Fine Gael-Labour Coalition Government——

(Interruptions.)

An Leas-Chathaoirleach

Order. Senator Costello without interruption.

Mr. McGowan

For Senator Costello's information, that——

An Leas-Chathaoirleach

Senator McGowan, please allow Senator Costello to speak.

Mr. McGowan

——trade union official in County Donegal said that every union has to have a hatchet man.

An Leas-Chathaoirleach

I have to ask Senator McGowan to please desist from interrupting Senator Costello.

Mrs. Doyle

It looks as if every side of the Seanad has a hatchet man as well. Are you also going for the position of Cathaoirleach, Paddy?

An Leas-Chathaoirleach

Senator Costello without interruption, please. I am absolutely stunned at the way Senators are behaving and I will suspend the House if this continues.

Mr. Costello

I hope I will get back the time I have lost because of these unwarranted interruptions from the other side of the House.

I say to the Minister that I support the Programme for Economic and Social Progress. I am a supporter and a promoter of a social partnership. I do not knock it. It is because I support it wholeheartedly that I want to ensure that the agreement is honoured. We cannot go forward to another programme if the Government decide that all the other partners must fulfil their part of the bargain but because the budgetary calculations are £40 million out, the Government can breach the agreement. That is why the trade union movement had to take such resolute action. That is the only reason the Minister and the Government climbed down.

I acknowledge the good work that has been done over the years reducing Exchequer borrowing and I applaud the Government but it was only done with the co-operation of the trade union movement. That is why it is so important to retain their co-operation. Once it is breached it is breached forever and there will be no trust. Why are the public sector workers always the first to feel the economic squeeze? I am sure everybody has seen the posters — why squeeze the public servants all the time? In the Comptroller and Auditor General's report for this year he identified quite clearly £426 million that is collectable at present. Why is that money not brought in? If that were brought in this year it would meet all these demands. The Minister has said there is a commitment to tax equity and tax collection, but that £426 million is money we can get our hands on immediately.

Mr. O'Kennedy

We will hear from the Minister for Finance next week.

Mr. Costello

I have very specifically asked for a commitment or for some information from the Minister about the non-pay elements which are critical for certain sectors of the public service, and I have clearly identified the health and education areas. I have seen nothing either in the Estimates or in the Minister's speech — he has kicked it for touch to the Minister for Finance — to convince me that there is anything substantial being delivered in this area. What are the specifics on the pupil-teacher ratio? The commitment in that regard was delivered in 1991, but will it be delivered in 1992? Where is the money to bring the vice principals outside the quota, for the career guidance teachers, to meet the commitments to the disadvantaged or for in-service training? We have the worst record in Europe for professional training for our teachers. Where are the commitments to that? Where are the commitments to the £17,500 required to ensure that there is a secretary and a caretaker in each school? Until and unless those commitments are met, industrial action is only deferred. I do not want to see a situation after 29 January where the three teacher unions and the health unions get together and say they are sorry but they simply cannot accept this proposal because it is a substantial breach of the agreement they entered into and affects substantially the quality of the education and health systems. These are critical areas because they include a social aspect.

Sacrifices were made by the public service in the Programme for National Recovery over the three previous years. They were bumper years in terms of gross national product, exports, profits and the repatriation of a great deal of money. We cannot be expected to suffer indefinitely and if there is a problem the people in the public service should not be expected to further tighten the belt.

There will be a budgetary bottleneck in 1993 and 1994. Many non-pay elements were transferred from 1991 to 1992 specifically to avoid a budgetary bottleneck in 1991. Now they are being transferred from 1992 to 1993 and 1994 to avoid a budgetary bottleneck in 1992. We have to deal with this at some stage and this is the time to do it. I exhort the Government and the Minister to realise that they do not have a major budgetary problem in financial terms because they can fulfil the commitments in the Programme for Economic and Social Progress. It may involve a slight variation of the Exchequer borrowing requirement and the expected income in tax revenue in the coming year, but I think that can be borne.

An Leas-Chathaoirleach

I must ask the Senator to conclude.

Mr. Costello

If that is not done industrial relations and the social partnership will go down the drain.

An Leas-Chathaoirleach

Is the amendment agreed?

Mr. Costello

No.

Amendment put and declared carried.

Motion, as amended, agreed to.

An Leas-Chathaoirleach

When is it proposed to sit again?

Mr. Fallon

It is proposed to sit tomorrow at 2.30 p.m.